UPS Technology Helps Gain Advantages
Reported by Dinh Dung
Identifying Vietnam as a potential market, the global logistics service provider UPS has furthered investment, especially in technology, to capitalize on growth and falicitate its business expansion in emerging markets like Vietnam. The Saigon Times talked to Jeff McLean, general manager of UPS Vietnam, about the local logistics market. Excerpts:
Q: Operating in 200 countries around the world and also having been active in Vietnam over the past two years, what would you say about the characteristics of the Vietnamese market?
A: Although Vietnam is still a small market, it has posted high growth rates due to the rapid development in the retail market and the import-export industry as well as the increase of outsourcing activities of multinational corporations since Vietnam officially joined the World Trade Organization (WTO) in 2007. Furthermore, large corporations’ concerns of reducing carbon emission and saving fuel also contributed to the market growth.
However, there are still some difficulties and challenges to the development of this sector in Vietnam being poor and inadequate infrastructure development and scarce human resources.
How does UPS identify Vietnam in the global network development?
Vietnam is the world’s 13th and Southeast Asia’s second most populous country, which facilitates the dramatic growth of industries such as retail and pharmaceuticals. In addition, Vietnam’s highly developed information technology infrastructure in recent years has made it lead the region in electronic technology consumption. Therefore, logistics should be developed to meet and serve the needs of the market. In addition to China, India and Indonesia, Vietnam is the country we expect to achieve a high growth rate after WTO commitments are fully implemented.
The global economic downturn has touched every sector, including logistics. How is your business performance in the local market?
In 2011, revenues and profitability of UPS were higher than 2010, and we were above the plan despite the global difficulties such as public debts in Europe and America, natural disasters in Asia, such as the historic flood in Thailand and tsunami in Japan. UPS also achieved some outstanding gains such as turnover of more than US$44 billion earned by over 4 billion product packages delivered worldwide. In particular, Asia is the region registering the highest growth.
Vietnam’s market size is small. But so far some 1,000 express service and logistics providers have sprung up, of which foreign players account for only 2%. That means the competition in the market has become severe. What do you think about that?
Despite the high number, companies in Vietnam are still lacking experience and professionalism in providing services. They are able to provide only basic services, and mainly focus on price competition. Due to humble add-in value, they have outsourced the services to foreign companies.
As for foreign companies, apart from their extensive global network, they have in their hands highly competitive factors such as technology and experience.
As I have just said, although Vietnam’s logistics market is still relatively small, it is of potential for high growth. Moreover, if the Government has sufficient supporting policies and come up with good planning, this sector in Vietnam may lead the region due to its very favorable position.
What utility services do UPS use to help customers minimize costs and increase competitiveness?
In the healthcare sector, we cooperate with healthcare companies to arrange all forms of logistics — from factory floor to patients’ door. We do all these things in a reliable and disciplinary way. We can help you reach new markets, protect products during transportation, ensure the reliable supply and reduce costs under the development.
UPS paperless invoice is the first improvement in the industry to remove the needs for the commercial paper invoice by integrating handling orders and shipments and transferring commercial invoice data to global customs agencies for clearance. You can easily manage priorities of transportation without papers, on the basis of each shipment or transportation method, to get even more flexibility.
All what you have to do is to enter the details of the consignment in your UPS shipping system. The information can then be accessed in the electronic form and used for the customs clearance. Assisted by electronic transmission, the handling of shipments as parcels or goods transported by airlines can start earlier and get timely clearance.
Logistics values every moment. With our tracking technology, customers will get the desirable control. Our technology allows them to see where their shipments exactly are and each step of the transportation. This visibility also helps them solve any potential problems before they become serious.
Logistics lubricates the work flow in your business. Whatever your products or markets are, we have the expertise to help your business work better.
However, there are many local customers who are not tech-savvy or tech-advanced, e.g. small or family businesses. How can they access your service?
UPS technology solutions empower smaller companies by helping them collaborate with suppliers, make more accurate delivery forecasts, minimize excess inventory and avoid last-minute surprises. In fact, our technologies serve as a business equalizer by giving all companies access to the same powerful business resources and expertise.
With UPS, companies do not have to be tech-savvy on their own. We can manage the technology for them and give them access to our existing technology resources and solutions.
It seems that technology gives foreign logistics companies an edge over local ones. Although the number of foreign logistics players accounts for only 2%, those companies are dominating from 30%-35% of the market share.
The advantages of the foreign companies are technology, experience and people. At UPS, we invest about US$1 billion in technology applications to increase the value of services to meet customer requirements quickly and efficiently every year.
Technology does not make the value of logistics, it makes the power of logistics through analysis. The ability to display data in UPS allows clients to use analysis to uncover root causes of supply chain issues so they can learn more from the information and adjust the supply chain to improve their activities in the future.
For example, at UPS, the main air transport control center is located in Worldport, Louisville, Kentucky, USA. This device can arrange delivery schedule up to 416,000 packages an hour. This place bustles with nightly activities of about 125 aircraft flying to or from places around the world. With the scope of operation like that, a slight change in weather would affect the delivery plan and time. So we have a team of weather experts to check weather conditions from time to time to provide transport solutions to optimizing land, air and sea routes so that the orders can be transferred quickly. The accurate analysis and prediction of weather events will help the company avoid mistakes or unfortunate accidents that may occur during transportation. Information accessing and visual tracking and identifying and reorganizing the delivery schedule are very important competition factors.
We can say that technology helps us improve our position in competition in Vietnam despite changing economic conditions. It has helped us drive both time and cost efficiencies for the company as well as our customers, while improving productivity across the region.
How do you foresee Vietnam logistics market in the years to come?
Although the macroeconomic situation is still bad, it mainly affects real estate and finance sectors. In other industries, there will be a screening for enterprises having long term business strategies and not operating in irrelevant fields. Contrary to the above sectors, consumer products and technology are still experiencing high growth. Therefore, I think the economy will gradually stabilize and recover. Up to that time, logistics will play a very important role in the economic operations. This is the opportunity for logistics companies to redefine their strategic goal to wait in front for the trend.