The logistics industry has made a strong recovery after the challenging period of the Covid-19 pandemic and is gradually returning to normal operations. Overall, logistics businesses in the market are regaining momentum, with growth rates ranging from 12-15%, depending on the specific business sector.
In this context, the venture capital firm Nextrans has put forth several insights regarding trends shaping the entrepreneurial logistics market in 2023 and the coming years.
Changing Investment Appetite The transactions in 2022 have demonstrated a shift in the investment appetite of venture capital firms in the startup logistics market. In 2020 and 2021, due to the surge in demand for last-mile delivery during the pandemic, last-mile delivery platforms (such as Viettel Post, J&T, etc.) received significant investment.
However, by 2022, with consumer demand stabilizing, venture capital funds are primarily investing in road transport businesses, warehousing platforms, and startups focusing on order fulfillment and delivery to customers (eCommerce fulfillment) to enhance market sustainability.
Moreover, many investors are redirecting their attention towards supply chain visibility, logistics for e-commerce activities, and delivery services. These investments reflect a growing interest in road transportation and technological solutions, areas with numerous decentralized providers actively operating. Particularly, road transport companies are driving demand for the market.
E-commerce Growth Fuels B2C Delivery Startup Development Vietnam's e-commerce consumers are among the most frequent online shoppers in Southeast Asia. With a young population, high internet usage rates, and increasing smartphone adoption, the e-commerce market in Vietnam is expanding significantly. There is future potential for domestic and international post-purchase services, especially rapid delivery services, predicted to emerge from the expanding e-commerce sector.
According to the Vietnam E-commerce and Digital Economy Agency (IDEA), Vietnam's e-commerce sector is predicted to reach $23 billion by 2025. As the preference for fast deliveries grows among consumers, rapid delivery services become a major differentiator for both established e-commerce companies and emerging businesses.
Nextrans venture capital fund predicts that revenue from delivery services, especially same-day, last-mile, and express delivery, will increase by 30-40%. The escalating demand for fast delivery services in the B2C segment, along with the expansion of the e-commerce sector, could boost the growth of these services.
Air Cargo Transportation Holds Opportunities In the logistics sector, Vietnam lacks specific air cargo service providers despite the continuous increase in demand for air cargo transportation. As of 2020, there were 33 active airports in Vietnam, including 8 international ones. Among them, only four have dedicated cargo terminals. Additionally, import-export businesses incur higher costs when using foreign service providers.
Over the past 30 years, Vietnam's air cargo transportation market has witnessed remarkable growth, with an average annual growth rate of 15.3% during the period from 1991 to 2022.
During the pandemic, the aviation industry saw a rapid decline in passenger numbers but a surge in cargo volume. Specifically, air cargo throughput in Vietnam reached 1.5 million tons in 2021, accompanied by a significant increase in international cargo transport rates.
In the first 11 months of 2022, Vietnam recorded 1.28 million tons of air cargo transport, with 1.02 million tons being international cargo.
However, Vietnamese airlines only handled 129,000 tons (12.6% market share) of the total international cargo. This represents a considerable loss for the Vietnamese logistics sector.
Despite the potential, the air cargo transportation activity in Vietnam still has significant gaps. This situation has turned 80-90% of international cargo entering and leaving Vietnam into a lucrative opportunity for 29 foreign airlines, including major global players.
In this context, while IPP Air Cargo withdrew and suspended its air cargo transportation business license, newcomer VUAir Cargo, a joint venture between Vietravel Airlines and Asean Cargo Gateway (ACG), has become one of the upcoming hopes in the Vietnamese air cargo business.
In its first year, VUAir aims to establish cargo services in Asia with 2-4 dedicated B737-800F aircraft, with plans to double its capacity in the following year. Additionally, the announcement of Bamboo Airways' establishment of Bamboo Airways Cargo (BAC) earlier this year is a positive sign for domestic air cargo transportation.
Bui Doan Ne, Vice Chairman of the Vietnam Aviation Business Association, believes that the air cargo transportation market still has room for development. However, he highlights a few crucial points:
First, Vietnamese businesses need to continue expanding their two-way cargo transportation operations as an opportunity for further investment.
Second, the aviation industry competes internationally and requires significant investment. To compete against well-established airlines with decades of experience, domestic airlines need to enhance their capabilities.
Third, aviation businesses need to allocate appropriate attention and focus on training human resources for cargo transportation operations.
Fourth, regulatory bodies and local authorities should provide directions, strategies, and plans for developing air cargo transportation within the aviation industry.
The overall planning for the development of the national airport and air cargo port system until 2030 and the vision for 2050 requires not only swift implementation and resolution of current obstacles but also attracting additional financial resources and investors to establish cargo consolidation points and early formation of cargo terminals at airports.
Cre: TheLEADER
