China's Pinglu Canal and Vietnam's tardy use of inland waterway potential

In September, China completed and opened the Pinglu Canal for navigation. Built with more than US$10 billion and running more than 130 km, the canal connects Guangxi's inland river network with the Gulf of Tonkin and can accommodate vessels of up to 5,000 tons.

The canal is meant to provide goods from southwestern China a shorter water route to the sea, creating another link to international shipping routes and Southeast Asia, one of China’s most important trading partners.

From a logistics perspective, the project offers a striking example of how a country can reshape the movement of its goods. China was prepared to spend an enormous sum to create another waterway route because it saw value in changing existing freight patterns, cutting logistics costs, and creating conditions for new investment.

It also raises questions about why Vietnam's inland waterway infrastructure has developed so far below its potential.

Vietnam does not need to build its own Pinglu Canal to benefit from water transport: In the south in particular, the country already has a waterway network that many other nations would have to spend heavily to create.

The Cai Mep, Saigon, Dong Nai, Vam Co, and Soai Rap rivers, together with the Mekong Delta’s dense network of rivers and canals, form natural links between production areas, industrial centers, and maritime gateways. From a logistics standpoint, this is a major advantage.

Goods from Dong Nai, Binh Duong, Tay Ninh, and the Mekong Delta can be consolidated at inland ports or smaller seaports, loaded onto barges and transported by water to gateway ports such as Cat Lai, Cai Mep, Phuoc An, and Hiep Phuoc.

On some routes, a barge can carry up to 300 TEUs per trip, equivalent to nearly 5,000 tonnes of cargo.

That could replace at least 150 container trucks on the road, easing pressure on the road network while providing a lower-cost, lower-emission transport option.

The reality, however, has fallen short of that potential.

For decades, Vietnam's logistics development has focused heavily on roads. That is understandable: road transport is flexible and well suited to increasingly demanding requirements for faster, more precise deliveries.

The problem is that roads are being asked to handle too much.

Containers travel from industrial parks to ports. Agricultural products move from the Mekong Delta to distribution centers. Raw materials and finished goods move between production areas. Empty containers travel from depots to factories. All of this adds traffic on the roads.

When freight volumes grow faster than infrastructure capacity, bottlenecks keep emerging and the wider costs to society rise. Meanwhile, inland waterways have yet to take their proper place in the logistics system.

Having rivers alone does not make container transport efficient. For a waterway to function as a genuine logistics corridor, it needs suitable navigation channels, adequate bridge clearance, inland ports, cargo-handling equipment, warehouses, depots and, most importantly, good connections with seaports and the logistics network behind them.

The issue is not simply the river itself, but how the entire system around it is organized.

That is the question raised by the Pinglu Canal. With such an extensive network of existing rivers and canals, why has Vietnam yet to build an inland waterway logistics system capable of taking a significant share of the burden off the roads?

The answer does not lie in any single project. It requires reorganizing the system as a whole.

That approach is beginning to take shape.

The Vietnam Maritime and Waterway Administration is finalizing a plan to "Optimize Transport Connectivity and Port Operations in Seaport Group 4," covering the seaports of Ho Chi Minh City, Dong Nai, and Tay Ninh, which together handle more than 70% of Vietnam's container throughput.

The plan sets a specific target of shifting 27-29% of freight from roads to inland waterways rather than stopping at broad recommendations.

Several proposed measures address the existing bottlenecks directly.

On infrastructure, the plan calls for early investment in the Cai Mep Ha port complex and Cai Mep logistics center.

It also proposes giving priority to land along the upper Saigon and Dong Nai rivers and along new logistics corridors for the development of inland ports, depots, inland waterway terminals, and logistics centers that can support the restructuring of freight flows.

Another important proposal is to relocate the Truong Tho ICD cluster out of the inner city while increasing capacity at alternatives such as An Son and Hiep Phuoc.

This addresses a problem that needs to be dealt with directly: unless inner-city freight transfer points are reorganized, they will continue to generate new congestion regardless of how much the waterway network improves.

The plan also calls for digitizing data on port infrastructure, shipping channels, inland waterways, inland ports, ICDs, depots and other key logistics facilities so that freight coordination no longer depends largely on the experience and decisions of individual companies.

A good plan, of course, is still some distance from implementation.

Relocating an ICD cluster, improving bridge clearance across several river routes, and establishing data-sharing mechanisms among dozens of port operators and shipping lines all require time, money, and coordination between multiple agencies.

Still, having a defined path toward addressing these problems marks progress compared with simply identifying them.

Vietnam's problem is not necessarily a lack of awareness of the potential of water transport, and it is now moving from identifying the problem to working out how to put solutions into practice.

Vietnam does not necessarily need to build many more large infrastructure projects to lower logistics costs and improve competitiveness. A more important task is to make better use of the resources it already has.