The 13th Party Congress Resolution has put forward three strategic breakthroughs, including: perfecting synchronized development mechanisms, developing human resources, especially high-quality human resources; building a synchronized and modern infrastructure in both the economic and social aspects to "ignite the country's development aspirations" by 2025, aiming to be "a developing country with a modern-oriented industry, surpassing the low average income level."
Decision No. 221/QD-TTg dated February 22, 2021, by the Prime Minister amending and supplementing Decision No. 200/QD-TTg dated February 14, 2017, on approving the Action Plan to enhance the competitiveness and development of the logistics service industry in Vietnam by 2025, has set forth 61 tasks for the sustainable development of the logistics service sector, with 6 specific objectives. By 2025, the logistics service's contribution to GDP is expected to reach 5% - 6%, with a growth rate of 15% - 20%, outsourcing logistics services accounting for 50% - 60%, logistics costs reduced by about 16% - 20% of GDP, and the world ranking according to the LPI reaching 50 or higher.
To implement the results of the Party Congress Resolution and the tasks outlined above, the logistics service sector in Vietnam needs strategic breakthrough measures to overcome the challenges posed by the COVID-19 pandemic and achieve sustainable development by 2025, contributing to the recovery and sustainable development of supply chains and enhancing the competitiveness of Vietnam's import and export goods.
The COVID-19 pandemic has been a major challenge for the logistics service sector in Vietnam. However, the pandemic has highlighted the essential role of the logistics industry in the economy and society through its services, which have made a substantial contribution to the recovery and development of supply chains, especially in terms of Vietnam's export performance in 2021, surpassing the $650 billion mark and achieving a trade surplus.
A breakthrough solution involves breaking through barriers and obstacles in business operations to ensure the quality and quantity of work, resulting in higher profits and greater contributions to the country.
In this spirit, to restore and sustainably develop the logistics service sector and support the sustainable development of supply chains and the economy in the new and post-COVID-19 safety conditions, the logistics service sector in Vietnam needs strategic breakthrough measures that focus on the following key areas:
Application of Information Technology, Digital Transformation, and Innovation
Application of Information Technology, Digital Transformation, and Innovation: Striving to have 60% of enterprises successfully implementing digital transformation by 2025. Digital transformation is expected to increase labor productivity in the logistics sector by about 30% - 35%, depending on the digital platform used. Currently, labor productivity in Vietnam's logistics sector is lower than that of ASEAN countries, accounting for only 7.6% of Singapore's. Training and upgrading the quality of logistics human resources and improving labor productivity will help enterprises meet the increasing demand for logistics services in new markets and those created by free trade agreements, especially CPTPP, EVFTA, and RCEP.
Implementation of e-DO (electronic Document) for Sea and Air Container Cargo: Striving to complete the e-DO project for sea and air container cargo in the first half of 2022. Upon completion, it is expected to save businesses and logistics service providers approximately VND 500 - 700 billion per year in time and costs.
Research and Application of e-B/L and Other e-Transport Documents: Collaborating with the Digital Agriculture Association (VIDA) to develop digital logistics services for agro-logistics, green logistics, with the goal of achieving Prime Minister Pham Minh Chinh's strong commitment at COP26 that Vietnam will achieve "net-zero emissions by 2050," to support the increase in exports of agricultural and seafood products, reduce post-harvest losses (currently around 25% - 35% depending on the type of product), guide the selection of competitively priced transportation for exports to reduce logistics costs, improve supply chain efficiency, and enhance cooperation between logistics enterprises and agricultural producers.
Development of 3PL and 4PL Logistics Enterprises
Developing strong 3PL and 4PL logistics enterprises to lead other logistics service providers, especially members of the Vietnam Logistics Business Association (VLA). While there are some strong integrated 3PL logistics providers in VLA, such as Tan Cang Sai Gon, Gemadept, Transimex, Sotrans, and smaller enterprises like T&M Forwarding that use the global logistics technology platform CargoWise One, most Vietnamese 3PL providers are still in their initial stages compared to international 3PL providers operating in Vietnam. Rapid adoption of information technology, digital transformation, and high-quality professional training, as well as international cooperation, will help strengthen and develop 3PL and even 4PL enterprises, whether small or medium-sized.
Implementing the opening of representative offices abroad and expanding niche logistics markets will provide additional opportunities for logistics service companies to create jobs in the context of global supply chain shifts that are advantageous to Vietnam during the ongoing and complex COVID-19 pandemic. Proactively seeking partnerships and collaborations with import-export businesses and international companies, especially by participating in the World Logistics Passport project, of which VLA is a member, reaffirms the critical role of the logistics sector as an essential service in the economy and society. This contributes substantially to the recovery and development of supply chains, with Vietnam's export turnover exceeding USD 650 billion and achieving a trade surplus in 2021. The development of 3PL and 4PL logistics companies will enhance the high value-added services in the supply chain.
Development of Air and Sea Freight Transport Enterprises
Currently, Vietnam does not have a fleet of cargo-specific aircraft and relies on foreign carriers for cargo transportation. In recent times, given the challenges posed by the COVID-19 pandemic, international and domestic passenger flights have been limited. Consequently, some airlines like Vietnam Airlines, Vietjet Air, and Bamboo Airways have flexibly repurposed passenger planes for cargo transportation, either by chartering entire flights or through mixed operations, in response to the rapid growth of cross-border e-commerce.
However, it's important to note that approximately 88% of the market share in this sector is held by international carriers such as Korean Air (KE), Qatar Airways (QR), China Airlines (CI), Cathay Pacific (CX), UPS, DHL, and FedEx. In light of this situation, some companies affiliated with the Vietnam Logistics Association (VLA) have invested in the establishment of the Asean Cargo Gateway Joint Stock Company (ACG). ACG initiated its first flight on March 6, 2021, offering fixed weekly cargo transportation services on routes including Saigon – Jakarta, Saigon – Bangkok, Saigon – Incheon, and the initial stage of Hanoi – Incheon, with competitive fares 10% to 20% below market rates. The goal is to develop hubs for transshipment of goods to Europe, thereby contributing to resolving challenges associated with air cargo import and export.
In addition, there's a need to develop a national container shipping fleet in accordance with an appropriate timeline. In the short term, focus should be on expanding the container ship fleet for intra-Asia routes. In the second stage, larger container ships should be deployed for the Vietnam – Europe – America route to reduce dependence on foreign vessels that currently transport 100% of Vietnam's exports to distant regions like Europe, America, and Australia. Encouraging joint ventures and partnerships between domestic and foreign shipping companies is also essential. For example, Vietnam Maritime Corporation (VIMEC) recently formed a joint venture with an Indian company to operate a regular container shipping route (Hai Phong – Ho Chi Minh City) connecting Vietnam with Malaysia and India, with a 10-day reduction in transit time compared to foreign vessels.
Promotion of International Collaboration in Developing Logistics Centers
Promoting international collaboration in developing logistics centers, especially in key economic regions such as the Mekong Delta and the Red River Delta. Currently, Vietnam lacks regional and international logistics centers. Some major logistics centers are under construction in Hanoi and have been established in Hai Phong, but it is urgent to build logistics centers in the Mekong Delta region to meet the demand for the export of agricultural and seafood products, which account for a significant portion of Vietnam's import and export goods. These centers must have international standards to serve both short-term and long-term needs. VLA member companies are ready to cooperate in the construction of these centers.
Cre: Vietnam Logistics Review Magazine.
