Vietnam has put on hold its controversial $56 billion high speed rail pipe dream that wold have transported passengers, but not cargo, between its two largest cities. The country has higher priorities than getting people from Hanoi to Saigon faster by train.
Trains move cargo efficiently, but in Vietnam they are grossly underutilized. Alhough government data show a 60% increase in cargo by train since 1995, that compares to a 627% increase by truck, 785% by ship and 522% by air.
Surely that’s partly because the Vietnam has a rudimentary railroad system — just a single track between Hanoi and Ho Chi Minh City, for example. That’s why manufacturers and supplies are accustomed to using other options; since 1995, railway market share dropped from 3% to less than 1%.
The World Bank says rail is the most economical means of transporting goods between 300 and 3,000 miles whereas trucking is preferred for shorter distances and air or sea for longer distances.
Transportation infrastructure is essential to Vietnam’s economic future. Cargo currently moves at about 30 miles an hour on Vietnam’s rails. Doubling or tripling that cargo speed will boost the economy.
Investors should be encouraged seeing Vietnam sort out its priorities. People can travel by airplane.