This is the information raised at the Forum "Logistics Vietnam: Transforming development" organized by the Business Forum Magazine in collaboration with the Vietnam Logistics Service Business Association (VLA) and SEA Logistic Partners (SLP Vietnam) in Ho Chi Minh City, on 19/10.
Cat Lai Port (Ho Chi Minh City) is one of the international transit gateways. Photo: Hong Dat/VNA
Specifically, the compound annual growth rate (CAGR) in the period of 2022-2027 of Vietnam's logistics market is forecasted to reach 5.5% along with the strong recovery of the whole economy after the COVID-19 pandemic with the total domestic budget (GDP) after 9 months of 2022 reaching 8.83%. Statistics across the country currently have 30,000 enterprises operating in the field of logistics.
Among them, more than 5,000 enterprises operate in the field of international logististics, 69 logistics centers of large and medium scale, attracting investment in many fields. At the same time, 89% are small and medium-sized Vietnamese enterprises; 10% are joint venture enterprises and 1% are 100% foreign-owned enterprises providing transnational logistics services.
According to Mr. Dao Trong Khoa, Permanent Vice Chairman of Vietnam Logistics Service Business Association (VLA), there are some big names in the list of 50 largest logistics companies in the world such as Kuehne + Nagel, DHL Supply Chain & Global Forwarding, DSV, DB Schenker, Nippon Express, Expeditors, UPS Supply Chain Solutions or emerging faces such as Maersk Logistics, CEVA Logistics (under CGM-CMA) ...The rise of new transportation, logistics and supply chain trends in the digital economy has helped Vietnam become a potential emerging market.
Along with that, the booming trend of e-commerce in Vietnam with some big players such as Shopee, Lazada, Tiki ... has become a potential opportunity for corporations to invest and develop modern logistics infrastructure to accompany businesses in developing supply chains.In addition, e-Logistics has promoted Vietnam's logistics industry to improve service quality more and more professionally and efficiently. Modern logistics in the world has now developed to 4PL (Logistics chain) and 5PL (E-logistics, logistics based on e-commerce).
The above factors show that there are opportunities for logistics service providers to grasp the trend and expand international cooperation. However, in order to realize the potential of the logistics market from potential to reality, it is necessary to have an overall policy from attracting investment to improving infrastructure, administrative procedures ... and authorities building synchronous legal corridors.
Because although it is a potential industry, in fact, most of our logistics businesses are small-scale, limited in capital and technology as well as the ability to operate in the international market. The lack of linkage between the business community in the same field as well as the lack of connectivity between stages in the logistics supply chain has reduced the competitiveness of Vietnamese enterprises.The Vietnamese logistics business community has also gradually transformed, promoting investment in modern infrastructure, warehousing, applying new science and technology... increase market share and actively participate in global value chains.However, it is limited on the playing field of Vietnamese enterprises when accounting for only about 30% of the market share, the rest belongs to foreign enterprises.
In addition, the logistics infrastructure is not synchronous, distributed, lacking connectivity between stages from transporting goods and materials to warehousing and supply chain management. The scale and scope of services of logistics centers are limited, mainly serving the needs of businesses or within the local scope, have not developed to the scale of serving 1 industry or 1 economic region.
Proactively catching up with the trend
Vietnam's logistics industry is facing the need for innovation, needs solutions and overall vision, shaping a new direction to catch up with world trends, creating a breakthrough for socio-economic recovery in the coming years.
Accordingly, VCCI and associations develop and integrate evaluation criteria for digital transformation into the provincial competitiveness index (PCI); develop training programs to support digital transformation and business analysis for small and medium-sized enterprises. At the same time, coordinate with the Ministry of Information and Communications to develop and implement the Project to support small and medium-sized enterprises to implement digital transformation.
Aiming to implement the above tasks, VCCI has also established a Working Group on Logistics consisting of members of the VCCI Executive Committee.At the same time, it is proposed to establish a working group between the Ministry of Transport and the Ministry of Industry and Trade to review and remove difficulties and support the logistics industry when proposing policies and solutions to develop a project to promote Vietnam's economic growth in the situation of "escalating" logistics costs and serious shortage of containers in 2021.
Especially recently, VCCI has cooperated with VLA to launch the Logistics Competitiveness Index (LCI) Vietnam 2022 project. From PCI's experience, VCCI will accompany VLA to implement LCI, bringing a common "picture" of the logistics business in provinces and cities in Vietnam.From there, help make policies to develop this industry in localities across the country. Thereby, LCI is an effective tool for policy criticism – one of the four pillars of building Vietnam's logistics system, effectively reducing logistics costs and supporting the development of export production, and attracting effective foreign investment.
From an enterprise perspective, Ms. Le Thi Ngoc Diep, Commercial Director, SLP Vietnam Company said that the foundation of Vietnam's warehousing system is not high standards, and many logistics enterprises have not provided deep service chains in the entire supply chain. In addition, the demand for logistics locations close to the inner city (Ho Chi Minh City, Hanoi), as well as the need to build standard logistics according to the global system is increasing.
Moreover, the system of providing logistics service chains lacks integration, has not applied digitalization in management, automation in operation is still a new concept. While the demand for modern logistics systems combined with automation, meeting the development of retailers and the e-commerce industry in Vietnam is very high.
With the industrial revolution 4.0, experts said that there have been many applications of science and technology to logistics activities in Vietnam, but the logistics market, especially e-commerce, poses more optimal and modern operating problems to meet the diverse needs of customers.This poses for many businesses in Vietnam's logistics industry the need to change and "transform" according to the irreversible trend with the investment in modern warehousing infrastructure, the application of digital management and automation in operation, the management model is increasingly professional.