Logistics is one of the important service industries of any economy in the world. In recent years, the logistics industry in Vietnam has developed quite strongly. However, according to experts, the logistics industry still has many limitations and has not developed commensurate with its potential.
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Logistics is one of the country's important service industries. Illustration photo: VNA[/caption]Great potential
According to the Emerging Market Index of Agility, a provider of transportation and logistics services, Vietnam is currently in the Top 10/50 emerging logistics markets in the world. Among them, in terms of international logistics opportunities, Vietnam ranks 4th in the world and is considered the country with the leading logistics development potential in Southeast Asia.
Speaking at a logistics forum in Ho Chi Minh City in mid-December, Mr. Ta Hoang Linh, Director of the European-American Market Department under the Ministry of Industry and Trade, said that with its special location in a dynamically developing region of the world, where goods are concentrated, Vietnam has many advantages in promoting production, export and developing logistics services.
Sharing the same view, speaking at the World Congress of the International Federation of Freight Forwarders Associations (FIATA) in Brussels (Belgium) in October 2023, Mr. Anis Khan, CEO of Intrapass GmbH, headquartered in Switzerland, said that last year, he visited Vietnam and realized the great potential of the logistics industry in this country. In particular, the Government is very interested in and supportive of the logistics industry. These are the advantages for Vietnam to strongly develop this service industry.
Meanwhile, Mr. Edwin Chee, CEO of SLP Vietnam - a logistics company, emphasized that with its strategic location, Vietnam is a prominent transit hub in Asia. Taking advantage of this, businesses can significantly reduce logistics costs. Vietnam will become more attractive to FDI investors and global third-party logistics service providers (3PL).
No small challenge
Based on the above potentials and advantages, the Vietnamese logistics industry has made significant progress in recent times. Currently, Vietnam has nearly 35,000 enterprises operating in the logistics sector, of which about 5,000 are professional enterprises.
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Gemalink international port in Ba Ria-Vung Tau province. Photo: VNA[/caption]According to the latest report of the World Bank (WB), Vietnam ranked 43rd in the Logistics Performance Index (LPI) and is in the top 5 ASEAN countries in this index. The average annual growth rate of Vietnam's logistics market is from 14 - 16%, making an important contribution to promoting Vietnam's import and export turnover over the past many years.
However, according to the Vietnam Logistics Services Association (VLA), Vietnam's logistics costs average 16.8 - 17% of GDP, much higher than the world average of 10.6%. Meanwhile, domestic logistics infrastructure still has many limitations, lacks synchronization and connectivity; seaport planning is still inadequate, there are no key ports... That hinders the improvement of the competitiveness of the logistics industry in the context of strong global economic integration.
Mr. Le Duy Hiep, Chairman of VLA, shared that the connection between transport modes is still limited. The reason is that the capacity of water transport is still low, with inland waterway transport accounting for only 21.6%; road transport is still the most popular mode of transport, accounting for 73%. The total volume of goods transported by sea only accounts for 5.2%, by rail 0.2% and by air 0.01%. Thereby, it increases logistics costs, reducing the competitiveness of Vietnamese goods.
Regarding the domestic logistics network, Mr. Truong Nguyen Linh, Deputy General Director of Vietnam International Container Terminal (VICT), said that the current difficulty in freight transport is that the road and inland waterway infrastructure system connecting to the port is still limited and cannot meet actual needs. Specifically, the road routes connecting to the port are overloaded and congested at many times, affecting the route and costs for businesses. The waterways connecting from the port to the sea also cannot meet the needs of large ships.
Regarding the railway system, Mr. Nguyen Xuan Hung, Deputy General Director of Ratraco Railway Transport and Trading Joint Stock Company, said that the advantage of railway transport is that it is more cost-effective than road transport and faster than waterway transport. However, this type of transport in Vietnam is limited by infrastructure conditions. Vietnam currently has a total of more than 3,000 km of railway stretching from the South to the North; of which, only 15% of the length has international standard rails (1,435m wide) allowing faster transport of goods. With most of the narrow railway length, the maximum transport speed is only 80km/h, while international railways can reach speeds of 160km/h. For example, transporting goods from Ho Chi Minh City or Dong Nai station to Hanoi to access the international railway system takes up to 4 days. Therefore, the amount of goods transported by rail within Vietnam and connected to export markets is very small compared to many other countries.
On the other hand, the World Bank's assessment report also shows that along with improvements in infrastructure, customs and international shipping factors, Vietnam's logistics service industry still has many limitations in terms of logistics service provider capacity, reflected in logistics service quality indicators, punctuality and ability to track goods. Digital transformation of most logistics enterprises is still in its early stages and has not received adequate investment attention.
Furthermore, in the context of the global economy facing many difficulties, increasing geopolitical instability in the world while non-traditional security threats are increasing and changing complexly, the world logistics industry in general and the Vietnamese logistics industry in particular are facing many difficulties.
According to Mr. Chandler So, natural disasters, geopolitical tensions, trade disputes or pandemics can create major challenges for the logistics industry leading to delays, increased costs and supply chain bottlenecks.
In addition, global supply chains are becoming more complex with the participation of many stakeholders and interconnected networks. This complexity poses challenges to the coordination and risk management capabilities of logistics enterprises.
Mr. Chandler So commented that constantly fluctuating consumer demand requires logistics service providers to respond quickly. Meeting changing demand patterns while maintaining efficiency is a significant challenge./.
Yellow River
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