Vietnam has already stepped off China’s economic giant ship. Many only saw the construction of a river in Guangxi, but failed to recognize that Vietnam’s long-held geographical advantage—its lifeline—has quietly been taken away. Even more telling: it wasn’t taken by force, but abandoned voluntarily by Vietnam itself.

On September 16, 2026, the Pinglu Canal officially opened for navigation. With an investment of approximately 72.7 billion yuan, the canal connects the Xijiang River in the north to the Gulf of Tonkin in the south, enabling passage for vessels up to 5,000 tons. These figures may sound like typical infrastructure news, but the real transformation lies buried in corporate balance sheets.

Goods from Southwestern China now reach the sea via this canal, reducing inland waterway distances by over 560 kilometers and cutting comprehensive logistics costs by 18% to 30%, saving society more than 5 billion yuan annually in transportation expenses. For a single 5,000-ton cargo vessel, one round trip can save tens of thousands of yuan in fuel, labor, and port charges alone. Any shipper would calculate such savings without hesitation.

But the core issue isn’t just cost. The key point is that Haiphong Port in Vietnam once depended on this trade flow. In 2025, Haiphong handled 3.3 million TEUs, of which 1.45 million came from China’s Southwest—minerals from Yunnan, chemicals from Guizhou, machinery and electronics from Sichuan and Chongqing—long transported through Vietnam as a transit hub. These shippers didn’t prefer Vietnam; they had no alternative.

To export goods from the Southwest, companies could either travel east along the Xijiang River to Guangzhou, adding 500–600 extra kilometers, or transport goods by land to Haiphong Port for loading. Neither route was cheap, but the latter was closer. Over decades, this path became routine—and routine turned into Vietnam’s geographic leverage.

Yet geography has a fatal weakness: its value depends entirely on the absence of better alternatives. With the opening of the Pinglu Canal, that condition no longer exists.

Goods from Nanning now travel via the canal to Qinzhou Port, all within Chinese territory, avoiding transshipment, foreign policy risks, and customs fluctuations. Costs are lower than routing through Vietnam. If you were a shipper, how would you choose? The logic is straightforward: go where it’s cheaper, go where it’s more stable. Sentiment doesn’t override freight rates.

Industry estimates suggest that in the first year of operation, Haiphong Port will lose at least 30% of its transit volume—roughly 430,000 to 500,000 TEUs—shifting toward the Pinglu Canal–Northern Gulf of Tonkin corridor.

What the canal has seized is not merely market share, but Vietnam’s very rationale for existence as a transit hub. For decades, shippers used Vietnam because no shorter or cheaper route existed. Now, with a viable alternative, there’s no reason to continue detouring. This isn’t about personal conflict—it’s pure cost logic, immutable and inevitable.

Meanwhile, Vietnam’s own logistics system further undermines its strategic position. Logistics costs account for 16% to 20% of GDP—nearly double the global average of 11.6%. Over 70% of domestic freight still moves by road, while waterborne transport accounts for less than 22%.

In short, Vietnam has played a strong hand poorly. Its inland water network remains underdeveloped, multimodal connectivity around ports is fragmented, and despite possessing a seaport, it charges some of the highest transit fees globally. Shippers have endured these inefficiencies for years. The Pinglu Canal simply provides them with a dignified exit.

Vietnam clearly recognizes the threat. Just days before the canal’s opening in September 2026, Vietnam’s National Assembly passed by a large margin an increased funding proposal for the Laojie–Hanoi–Haiphong railway, with a total investment of $11.05 billion. The North–South high-speed rail project has also been confirmed for launch by the end of 2027—delayed by one year from the original plan.

These moves are directionally correct: Vietnam finally understands that the era of passive income from geographic positioning is over. It must now build infrastructure and reduce costs. But time is not on its side.

The railway won’t be completed until at least 2030. Meanwhile, the Pinglu Canal began diverting cargo from day one. The years Vietnam spends building its rail and port systems are precisely the window during which shippers are switching routes.

Looking further ahead, Vietnam faces more than just one canal. The 180-kilometer Decho Phnom Canal in Cambodia, scheduled for completion in 2028, will bypass Vietnam’s Mekong River outlet entirely. Cambodian goods will no longer need to pay tolls to Vietnam.

Since the China–Laos Railway began operations in 2021, Laos has transformed from a landlocked country into a logistics node. The central and western corridors of the Pan-Asian Railway are gradually taking shape, while the eastern corridor remains stalled due to Vietnam’s longstanding caution. The logistics map of Southeast Asia is being redrawn, and Vietnam’s position is becoming increasingly marginal.

Returning to the initial assessment: Vietnam wasn’t pushed off the boat—it chose to cling to an old ticket, waiting in vain for a ship that will never return. The Pinglu Canal was not designed to target anyone. It simply offers a cheaper, closer option for Southwest China’s exports. Vietnam’s decades-long business model—leveraging geographic advantage to collect transit fees—was fundamentally based on the premise that “if you don’t go through us, there’s nowhere else to go.” Now, multiple routes exist. That card has lost its value.

This canal links not just Nanning and Qinzhou, but the entire Southwest hinterland with the ASEAN market. Yunnan’s phosphate ore, Guizhou’s coal, and Sichuan’s advanced manufacturing equipment can now reach global markets at lower costs via this waterway.

For China, this reactivates a vital artery for the Southwest economic zone—entirely within national borders, secure and controllable.

For Vietnam, geographic dividends won’t vanish overnight, but the trend is already etched in stone. The coming years will determine whether Vietnam can genuinely rebuild its rail and water transport networks—or continue clinging to a fading illusion of a “must-pass” route on the map.

Original: toutiao.com/article/1876574706387008/

Disclaimer: The views expressed in this article are those of the author alone.