VinFast Global Expansion: Proximity to Seaports
From the end of 2022 to the first months of this year, electric car manufacturer VinFast has announced investments in manufacturing plants in the United States, India, and Indonesia. Earlier, in 2018, VinFast commissioned a 335-hectare complex in the Dinh Vu Industrial Zone, Cat Hai, Hai Phong.
VinFast’s Plants are Strategically Located Near Seaports
These plants are all situated close to the sea or seaports. The location of the VinFast automobile factory complex in the Dinh Vu Industrial Zone was once a shrimp farming marsh. The automobile and electric motorcycle manufacturing plants have a design capacity of 38 vehicles per hour. According to Tri Thuc magazine, the extension into the sea covers an area of approximately 150-160 hectares. The contractor had to construct an additional surrounding dike.
About a 10-minute drive away, the Dinh Vu Port is in close proximity to the Dinh Vu Industrial Zone, also known as Tan Cang Dinh Vu. It is currently the main port, general cargo port, and container port for the Hai Phong port cluster. The port is situated at the mouth of the Bach Dang River on the Dinh Vu peninsula in Hai An district, Hai Phong city. It has a channel width of over 100 meters and a depth of -8.7 meters.
In 2022, VinFast held a ceremony at this port to commemorate the export of the first batch of electric vehicles destined for the US market.
VinFast exported its first shipment to the US from Dinh Vu Port in Hai Phong.
In July 2023, VinFast’s first plant in the United States was inaugurated. This facility has a capacity of 150,000 vehicles annually and will produce and assemble three electric vehicle models for the domestic market. According to the announcement, the VinFast electric vehicle production plant in Chatham County, North Carolina, “marks a major step in the market expansion strategy and the development of a global electric vehicle brand with a self-sufficient supply chain in North America.”
VinFast also stated that this is the first electric vehicle manufacturing facility in North Carolina and the state’s largest current economic development project.
North Carolina, located in the southeastern United States, has a coastline of approximately 320 miles and ranks fourth in the US for economic outlook. According to the North Carolina Department of Environmental Quality website, the North Carolina State Ports Authority owns and operates two seaports on the east coast: the Port of Wilmington and the Port of Morehead City. These ports handle approximately 6.7 million tons of cargo in and out of North Carolina each year.
From Chatham County, the drive to the Port of Wilmington takes approximately 2 hours and 30 minutes, while Morehead City Port is just over 3 hours away. The location of this plant is also advantageous for shipping goods by seaport and sea route.
VinFast’s announced plant projects are all strategically positioned near the sea and seaports.
In February 2024, Indonesian media reported that Indonesian Minister of Industry Agus Gumiwang Kartasasmita stated that VinFast planned to build an electric vehicle manufacturing plant in Indonesia within the year. At the time, Mr. Agus said that VinFast was committed to constructing an electric car manufacturing facility in Indonesia, and the Indonesian government was considering several industrial estates, including Batang in Central Java and Karawang in West Java.
Both of these regencies (an administrative model similar to districts in Vietnam) are located along the coast of the large island of Java in Indonesia. The Batang Port is less than 25 kilometers from the regency center of the same name, a 30-minute drive by car.
On the other hand, Karawang (West Java) is closer to the current capital, Jakarta. By locating a plant here, VinFast could utilize the Tanjung Priok Port (North Jakarta), which is approximately 70 kilometers from Karawang, a drive of just over an hour.
Also in February 2024, VinFast broke ground on an integrated 16-hectare electric vehicle manufacturing plant in the SIPCOT Industrial Park in Thoothukudi, southern Tamil Nadu.
Thoothukudi is a major port city in India with a coastline of 25 miles. It boasts two ports among the top 12 most important in the country: the V.O. Chidambaranar Port (formerly Tuticorin Port) and the Chidambaranar Port.
Siting plants near seaports helps reduce costs and lower product prices.
Sea Transport Costs a Fraction of Air Freight
Placing plants near seaports gives VinFast a competitive advantage in reducing transportation costs compared to other modes such as road, rail, and air. This in turn significantly reduces the price of each VinFast electric vehicle.
According to a study by the US Chamber of Commerce on road transport options between Europe and Asia, sea transport has the lowest cost compared to other transport modes. The study compared the cost of shipping a 40′ container between China (Shanghai) and Western Europe using different modes: sea, rail, road, and air.
The cost of shipping a 40′ container by air is USD 25,000, by road over USD 10,000, by rail USD 5,000-10,000, and by sea under USD 5,000.
Thus, sea transport has the lowest shipping cost, optimizing costs the most. According to an estimate by Best4shippingny, a 40′ container can typically carry 2-4 cars depending on size, a combination of sedans and pickup trucks, or 2-3 SUVs, or 3-4 compact sedans.
This indicates that, assuming a 40′ container holds 3 VinFast vehicles, the shipping cost per car for the example journey is only around USD 1,500/car for sea transport compared to over USD 8,300/car for air freight.
