Great opportunity for logistics businesses to regain orders and restore business

Reporter of Industry and Trade Newspaper had an interview with Mr. Tran Thanh Hai - Deputy Director of Import and Export Department (Ministry of Industry and Trade) about this issue.

Logistics is a service industry that is considered the "blood vessels" of the national economy, playing a role in connecting, supporting and promoting socio-economic development. Despite facing many challenges in 2023, the logistics industry is still making constant efforts to regain growth momentum. What do you think about this?

In the context of many major fluctuations in most economic, social and political aspects, affecting the economic development of the world in general and Vietnam in particular, the wave of trade protectionism is increasing strongly.

ông Trần Thanh Hải, Phó Cục trưởng Cục Xuất nhập khẩu, Bộ Công Thương (Ảnh: Cấn Dũng)

Mr. Tran Thanh Hai, Deputy Director of Import-Export Department, Ministry of Industry and Trade

In 2023, the world economy shows signs of recovery after the Covid-19 pandemic, but the recovery rate is slow due to many complex intertwined factors combined with unpredictable geopolitical risks, causing the global economy to face the risk of recession. Weak demand and rising costs are dragging down production, business, investment and trade activities.

The continuous increase in US interest rates has had a negative impact on the USD exchange rate, global inflation, and strong fluctuations in energy and essential food prices. High USD interest rates and competition between major economies have also affected the movement of FDI capital flows and led to major changes in the monetary and financial policies of major economies in the world.

All of the above factors have affected the development of Vietnam's logistics service industry. However, Vietnam's logistics service industry has still made efforts to overcome difficulties to maintain stable growth and high rankings in the global logistics performance index; at the same time, achieved some progress in perfecting legal policies, investing in upgrading logistics infrastructure, connecting infrastructure, improving business capacity, service quality and human resource quality. In particular, newly built and expanded highways, airports, ports and logistics centers have contributed to improving cargo handling capacity, promoting fast and convenient cargo circulation.

According to the World Bank report published in 2023, Vietnam ranked 43rd in the Logistics Performance Index (LPI), among the top 5 countries in ASEAN, after Singapore, Malaysia, Thailand and the same position as the Philippines. The average annual growth rate of Vietnam's logistics market is 14-16%, the rate of enterprises outsourcing logistics services is about 60-70%, contributing about 4-5% of GDP.

According to the Agility 2023 rankings, Vietnam's logistics market is ranked 10th in the group of 50 emerging logistics markets globally, with the industry's size reaching more than 40 billion USD per year. The compound annual growth rate (CAGR) for the period 2022 - 2027 of Vietnam's logistics market is forecast to reach 5.5%, along with the strong recovery of the economy after the Covid-19 pandemic. Vietnam is currently the leading country among ASEAN countries in the number of logistics service businesses licensed by the US Maritime Administration (FMC).

Vietnam's logistics service industry has played an important role in promoting production and business, contributing to the implementation of new generation FTAs. Although Vietnam's logistics costs are still quite high compared to other countries in the region and the world, in the past year the logistics industry has made significant contributions to import and export activities, making import and export activities a bright spot in the economy.

With many expectations for economic recovery and Vietnam's growth target of 6-6.5% in 2024, logistics enterprises expressed optimism that the industry will grow better. Could you please share about the opportunities for the logistics industry in 2024?

In 2024, the world economy is forecast to gradually recover, although the pace is still slow. Even in the last months of 2023, we can see that Vietnam's import and export scale is increasing again, higher than in the first months of the year. This is an opportunity for logistics service enterprises to find orders and recover their business.

The trend of shifting investment, especially from China to other countries, including Vietnam, will create a new impetus for industrial production, creating more supply of goods for logistics services. In particular, the attention of the Government, ministries, sectors and localities to logistics services is contributing to improving infrastructure conditions and the business environment, helping our businesses have more favorable business conditions.

In 2023, the Vietnam Logistics Association (VLA) announced a set of provincial logistics competitiveness indexes. Accordingly, Ho Chi Minh City is the locality with the highest logistics competitiveness in the country. This is also an advantage because Ho Chi Minh City is home to many businesses operating in this field.

Logistics businesses are gradually participating more actively in supporting domestic production, circulation of goods and import and export. What do you note to improve business capacity and logistics service quality?

The number of logistics service enterprises is increasing, gradually improving their capacity and actively participating in supporting domestic production, circulation, import and export. Enterprises participate in many stages in the logistics service chain, gradually moving towards stages with high added value; a number of large enterprises and corporations in the logistics sector have been gradually formed, applying modern technology, capable of competing with foreign enterprises.

Cơ hội lớn để doanh nghiệp logistics tìm lại đơn hàng, phục hồi kinh doanh

Vietnam's logistics market is ranked 10th in the group of 50 emerging global logistics markets.

According to the most recent business survey, Vietnam has 34,476 logistics service enterprises with a total of 563,354 employees. The logistics market has the participation of more than 5,000 enterprises providing 3PL logistics services, including 100% foreign-owned enterprises providing cross-border logistics services, with big names in the list of the 50 largest logistics companies in the world such as DHL, Kuehne + Nagel, DSV, DB Schenker, etc.

However, Vietnamese enterprises are mainly small, limited in both capital and human resources as well as international operating experience, and there is no connection between stages in the logistics supply chain and between logistics service enterprises and import-export enterprises. Vietnamese logistics enterprises mainly provide domestic logistics services such as: domestic transportation, delivery, warehousing, customs declaration, goods inspection, ship rental services, etc.

However, compared to foreign enterprises, Vietnamese enterprises currently hold many infrastructures and assets serving logistics activities (logistics centers, warehouses, seaports, dry ports, airports, railways, carriages, trucks, etc.). At the same time, they have the advantage of understanding domestic business practices and customers, but their operations are still isolated, their financial and management capacity is limited, they only serve certain segments, and they lack a seamless connection to provide integrated logistics services.

In the coming time, the competition for orders will become more intense. In addition to the pressure of competition in services, new international and domestic standards on environment, traffic safety, and labor safety also put logistics service enterprises in front of the requirement for innovation.

Global logistics enterprises when outsourcing services require emission standards, requiring logistics enterprises to proactively invest, transform production and business models towards “greening”, improve competitiveness, and ensure sustainable development. In addition, it is necessary to strengthen the connection between logistics business associations and industry associations, between logistics enterprises and production and business enterprises, etc.

As the state management agency for logistics services, the focal point for coordinating and implementing Decision 200/QD-TTg and Decision 221/QD-TTg, what activities has the Ministry of Industry and Trade implemented in recent times to promote the development of the logistics industry, sir?

In recent times, the Ministry of Industry and Trade has promoted its role as a focal point, chaired and closely coordinated with ministries, branches and localities in performing the functions and tasks of state management of logistics services. Specifically: Advising and submitting to the Government for approval Resolution No. 163/NQ-CP dated December 16, 2022 on promoting the synchronous implementation of key tasks and solutions to enhance competitiveness and develop Vietnam's logistics services.

At the same time, regularly urge exchanges, comments, and coordination with ministries, branches, and localities to carry out the assigned tasks in Decision 200 and Decision 221; contribute comments in policy development; coordinate the organization of conferences, seminars, and investment promotion activities; support the connection of enterprises and associations with state management agencies, and the connection of logistics enterprises with import-export enterprises... In addition, regularly exchange and grasp the difficulties and obstacles in the logistics service activities of enterprises to propose and recommend competent authorities to study and handle.

Logistics service activities include many activities under the management of many ministries, branches and localities, but the Ministry of Industry and Trade has promoted its role as a bridge between associations, logistics enterprises, import-export enterprises and state management agencies to ensure close coordination between the parties with the aim of handling difficulties and obstacles, creating conditions for logistics enterprises to develop.

Notably, the Ministry of Industry and Trade issued Decision No. 120/QD-BCT on approving the tasks and funding for implementing the Action Plan to enhance competitiveness and develop national logistics services of the Ministry of Industry and Trade for the period 2023 - 2026; presiding over and coordinating with ministries, branches, localities, and the Vietnam Logistics Service Enterprise Association to conduct research and develop the Project on Vietnam Logistics Services Development Strategy to 2035, with a vision to 2045.

The Ministry of Industry and Trade also actively and effectively implemented the assigned tasks in Decision 200 and Decision 221 such as: Reviewing and perfecting the legal basis for logistics services; reviewing commitments on logistics services in FTAs; tasks on encouraging market development and improving business competitiveness; promoting the role of the Vietnam Logistics Forum; building the Vietnam Logistics Report...

International cooperation in the field of logistics has also seen many positive developments. Activities to attract investment, support the development of logistics infrastructure and international cooperation have also been integrated into Vietnam's diplomatic visits and contacts with countries and international organizations. There have been many trade delegations, memorandums of understanding and cooperation exchanges between Vietnamese logistics service enterprises and international associations and enterprises...

Thank you!

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