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Sunday, November 27, 2022

Vietnam’s logistics sector still grapples with woes

The Saigon Times

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HCMC – Vietnam’s logistics has potential for development but still has many persistent woes that must be resolved.

The first nine months of this year saw a total import-export value of US$557.93 billion, in which exports brought US$282.35 billion and imports totaled US$275.58 billion.

In the ratings of Agility 2022, Vietnam’s logistics market ranked 11th in the top 50 global emerging logistics markets.

The Compounded Annual Growth Rate for 2022-2027 of Vietnam’s logistics market will possibly achieve 5.5%, given the strong post-pandemic recovery of the economy, with GDP expanding 8.93% in the first nine months.

The rise of new transportation trends, logistics and supply chains in the digital economy has helped Vietnam become an emerging logistics market with potential.

The booming of e-commerce in Vietnam with the participation of the Big Four in e-commerce, such as Tiki, Lazada, Shopee and Sendo into the market has created many investment opportunities for investors in developing modern warehouse infrastructure.

However, at this stage, the logistics sector is facing difficulties due to global supply chain disruptions. Furthermore, the linkages between Vietnamese logistics enterprises are mainly of small and medium scale and the enterprises also have limited capacity to make the most of opportunities.

According to a local logistics company director, the technical standards of Vietnam’s warehouse system are not high. Therefore, many logistics companies can hardly provide deep logistics services in supply chains.

Besides a lack of integration in the supply system, digital transformation in management and automation in operation are the current outstanding issues plaguing Vietnam’s logistics. In the meantime, there is an increasing demand for a modern and automated warehouse system to cater to the demands of retailers and the e-commerce industry in Vietnam.

Logistics plays an important role in socioeconomic development. However, the logistics sector still has shortcomings in applying technology, innovation and digital transformation in the past.

High logistics costs, lack of professionalism and low automation and productivity, resulting from the above shortcomings, are the main reasons for making Vietnam’s logistics sector less competitive in the international market.

Therefore, Vietnam’s logistics sector needs a comprehensive policy and an effective and synchronized legal framework to improve its business efficiency and raise its competitiveness in the international logistics market.

According to the Vietnam Logistics Association, there are currently more than 5,000 logistics businesses in Vietnam, among which 89% are small and medium-sized, 10% are joint ventures and the remainder are foreign-invested enterprises such as Kuehne + Nagel, DHL Supply Chain & Global Forwarding, DSV, and DB Schenker.

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