Current Status of Freight Forwarding and Delivery Activities: In general, freight forwarding services maintain good growth in the Vietnamese market. With the global advancement of science and technology, companies providing freight and transportation services are actively involved in digital transformation, applying advanced technologies to their daily operations. This is a very positive signal for the Vietnamese logistics market. Additionally, since the post-Covid-19 period, people have become accustomed to online shopping, leading to an increase in demand. Recognizing this trend, logistics companies are also actively enhancing and adapting to meet the needs of the population, improving their quality and competitive capacity.
Significant Developments in Freight Forwarding Activities: In terms of freight forwarding activities, the final-mile delivery activity is booming due to the rise of e-commerce. According to a comprehensive report, Vietnam's e-commerce market is estimated to surpass $14 billion USD. The projected average growth rate of e-commerce from 2020 to 2025 is 29%, and by 2025, it is expected to reach $52 billion USD, ranking third in the ASEAN region. The VIRAC report indicates that over 60% of global retail experts anticipate e-commerce penetration to reach at least 20% of total retail sales. This percentage is expected to continue rising in the retail sector and is projected to increase exponentially in the coming years.
Another challenge for businesses entering the freight forwarding or express delivery industry is the high level of competition. Currently, there are around 800 companies participating in the express delivery market. To attract and retain customers, companies need to make efforts to reduce delivery times, increase transportation speed, and offer competitive pricing.
According to the VIRAC report, the value of the Vietnamese express delivery service market reached $0.71 billion USD in 2021 and is estimated to increase to $4.88 billion USD (equivalent to around 114.68 trillion VND) by 2030.
Illustration 2: Transportation of fresh produce
Current Status of Transportation Activities: According to the VIRAC report, the total volume of transportation and circulation of goods in the first quarter of 2023 continued to grow compared to the same period in 2022. Vietnam's total volume of goods transportation increased by over 16% compared to the previous year's same period. The total circulation volume in the first quarter of 2023 also increased by nearly 22% compared to the same period.
Cost remains a significant issue in the transportation activities in Vietnam. Transportation costs account for up to 60% of logistics expenses. This is due to the heavy reliance on road transportation, which has high transportation fees. In contrast, cheaper methods like water and rail transportation have not been prioritized for development. However, road transportation remains the preferred method due to Vietnam's inadequate infrastructure for utilizing other modes of transportation.
Water transportation has yet to fully realize its potential. Despite its low shipping costs and ability to handle large quantities of goods, water transportation in Vietnam has not seen substantial investment and development.
Expectation to Become a Logistics Hub in the Region and the World:
The Vietnamese logistics market also demonstrates impressive growth. According to the VIRAC report, Vietnam ranks in the top 10 emerging logistics markets wo
