The Ministry of Industry and Trade estimates that in 2018 the logistics industry will increase by about 12 – 14% and the whole industry has about 3,000 operating businesses.
According to a recent announcement by the World Bank, Vietnam is ranked 39th with a significantly improved LPI (Logistics Performance Index – national logistics capacity index) score in the 2018 Logistics performance rankings. .
Vietnam ranks 3rd in ASEAN (after Singapore at 7th position and Thailand at 32nd position) and is considered to have better logistics service performance than markets with similar income levels.
Vietnam has many advantages to develop the transport and logistics industry: Global trade exchange is increasing along with international economic integration and the successful signing of free trade agreements, geographical location Suitable for building transshipment centers in Southeast Asia, infrastructure: warehouses, highways, seaports, and airports have been improved.
The Ministry of Industry and Trade estimates that in 2018 the logistics industry will increase by about 12 – 14%. The number of transport and logistics enterprises is currently 3,000 enterprises, including road, railway, sea, inland waterway, air… The rapid development of the transport and logistics industry is expected. hopes to turn Vietnam into a new manufacturing center in the region capable of competing with China.
Businesses in the industry also show confidence in growth, with more than 73% of businesses participating in Vietnam Report’s survey saying that the entire transportation and logistics industry will achieve double-digit growth of nearly 27%. The remaining is expected to reach less than 10% in 2019.
Two main trends of Vietnam’s transport and logistics industry
Regarding the logistics development trend in e-commerce – retail, the majority of experts asked by Vietnam Report said that 2018 – 2019 will witness a boom in transportation and logistics in Vietnamese e-commerce.
The increase in the flow of goods traded through online channels has increased the demand for transportation and logistics, especially fast delivery services. The scale of the e-commerce market in 2017 reached 6.2 billion USD, growing by 24%, the number of orders through fast delivery companies increased by an average of 45% in the period 2015 – 2020 and could reach 530 million orders. goods in 2020.
Many retail businesses such as Vincommerce, Mobile World, FPT, Lotte, Aeon… are orienting to develop e-commerce, or e-commerce giants such as Alibaba, Amazon… are entering Vietnam. has made the logistics market more vibrant, accompanied by the requirement for investment in technology and thoroughness in transportation and logistics services.
Regarding the M&A trend in the logistics industry, Vietnam currently has a policy of mobilizing capital from the private sector to invest in infrastructure through the method of transferring the right to exploit some infrastructure (logistics, airports, seaports…) , attracting many large investors with deals expected to have a scale of billions of dollars.
The year 2017 – 2018 witnessed many large M&A cases such as Gemadept transferring capital to CJ Logistics, Samsung SDS cooperating with Minh Phuong Logistics… With the industry being characterized by many small and medium-sized enterprises, mainly providing 1PL and 2PL, the participation of big foreign names is expected to “patch the gaps” in capital, human resources, technology… for domestic businesses.
Three growth challenges of transport and logistics businesses
As a service industry, there are many growth opportunities, but the industry’s challenges are not small. According to a survey by Vietnam Report, the 3 biggest challenges of Vietnam’s transportation and logistics industry today include: Infrastructure such as port systems, warehouses, connections… are still limited and inadequate; Limited capital size, low management and professional qualifications; Taxes, tolls and surcharges are high.
According to assessments of businesses in the industry, although infrastructure has improved compared to before, there are still many shortcomings. The South-North transport axis still depends heavily on roads, and needs more participation from the railway industry. The disproportionate development of Vietnam’s port system when more than 92% of southern container traffic is concentrated in Cat Lai Port leads to overload, port congestion… causing huge waste.
Capital and human resources are the main reasons why it is difficult for domestic businesses to compete with foreign businesses. The majority of over 70% of transport and logistics businesses operating today have small and medium-sized capital, 7% have capital of over 1,000 billion VND, of which the main group of large capital are multinational enterprises.
Regarding logistics costs, transportation costs in Vietnam are currently high (3 times higher than other countries in the region and the world) and are uneven across regions, mainly due to different types of logistics costs. Taxes, tolls and surcharges are currently quite high, indirectly reducing competitiveness compared to other countries.
Improve legal corridors, infrastructure and IT applications
Vietnam Report’s survey of transport and logistics businesses shows that they are very strange
