1. Economic infrastructure helps 'boost' logistics
That is the assessment of many experts and businesses in the logistics sector. Logistics expert Nguyen Ly Truong An believes that Agility's observation is very reasonable, as Vietnam's natural geographical position is indeed an advantage, helping the country become a 'magnet' attracting rapid investment in the logistics service industry. In reality, many domestic road routes have seen accelerated investment, significantly reducing transportation time. If the railway system is developed in harmony, domestic logistics will undoubtedly not worry about overload issues and will be able to compete more effectively with foreign counterparts in terms of cost.
Specifically, Mr. Nguyen Ngoc Thanh, the Director of Kim Phat Transport Company, mentioned that the time for transporting goods from Ho Chi Minh City to Phan Thiet has been reduced by nearly 2 hours, from over 5 hours to about 3 - 3.5 hours thanks to the completion and operation of the expressway. Similarly, transportation from Ho Chi Minh City to Can Tho or Nha Trang has also significantly shortened. The reduction in transportation time implies lower costs for businesses, even though overall transportation costs have not decreased as expected. However, more importantly, according to Mr. Thanh, quicker delivery of goods encourages both the service providers and customers.
Mr. Thanh emphasizes: 'When infrastructure develops, the economy and service industries, including transportation and logistics, experience the most noticeable growth. For example, in Binh Duong, thanks to comprehensive and smooth infrastructure, internal and interprovincial roads facilitate faster and more convenient transportation and travel. This becomes an attractive point for investment. On the contrary, the Mekong Delta is considered the rice and fruit basket, the aquaculture hub of the country, but due to underdeveloped infrastructure, its potential and advantages have not been fully exploited. If the high-speed system, seaports, river ports, cold storage facilities, and transshipment warehouses receive more substantial investments, there will be an increase in investments, leading to strong development in the region's economy and a greater contribution to the national economy.'
Statistics from the Ministry of Transport (MoT) show that, thanks to the well-invested infrastructure, logistics costs have significantly decreased. In 2022, logistics costs accounted for approximately 16.8% of the GDP, a reduction from 2018 (around 21% of GDP). Although still higher than the global average (10.6%), the logistics industry in Vietnam has undergone positive changes in recent years. In parallel with road infrastructure investment, the MoT is also actively investing in railways and upgrading terminals for direct export of goods by rail. At the end of September, the railway industry inaugurated a freight train from Song Than station in Binh Duong province directly to China. Immediately after the launch, this transport route attracted significant attention from numerous businesses.
According to Agility's report, Vietnam has entered the top 10 out of 50 emerging logistics markets globally due to its favorable geographical location. This is an attractive factor for international businesses seeking to reduce dependence on the Chinese market. Additionally, the economic, manufacturing, and domestic consumption growth, along with the boom in e-commerce, has presented real opportunities for the logistics sector in Vietnam.
2. Destinations of global giants
At the Logistics Conference 2023 with the theme 'Logistics Vietnam - The Road Ahead' held in Ho Chi Minh City in early October, Deputy Minister of Planning and Investment Tran Duy Dong stated that, according to the World Bank's ranking, Vietnam is currently ranked 64th out of 160 countries in terms of logistics development and 4th in the ASEAN region after Singapore, Malaysia, and Thailand.
According to Agility's assessment, the annual growth rate of the Vietnamese logistics industry is between 14-16%, with a scale of 40-42 billion USD per year. Currently, there are over 3,000 domestic transport and logistics enterprises and about 25 leading global freight and logistics corporations providing services ranging from customs clearance to tax payment. Deputy Minister Tran Duy Dong emphasized that Vietnam is considered to have significant potential, advantages, and opportunities to promote the development of the logistics sector. As the economy recovers and production, business activities, and import-export activities regain growth momentum, the demand for logistics activities is expected to increase significantly.
