Enormous Potential
With its strategic location in the heart of the Asia-Pacific region and its position on international maritime routes, the logistics market in Vietnam is seen as highly promising by the business community and international organizations. This potential for robust growth is especially evident after the Covid-19 pandemic has been brought under control, leading to the recovery and resurgence of manufacturing and business activities.
In reality, the logistics service sector in Vietnam has experienced rapid development, with an average annual growth rate ranging from 12-15%. Currently, there are over 4,000 professional logistics companies providing international logistics services. Across the country, there are 69 large and medium-sized logistics centers, mainly concentrated in industrial zones. Recently, these centers have been transitioning from traditional logistics centers to next-generation logistics centers, incorporating Industry 4.0 technologies.
According to experts, Vietnamese logistics enterprises have gained experience in adapting to and overcoming the most challenging second year of the Covid-19 pandemic. Therefore, the coming period is expected to be a time of significant growth and breakthroughs in the logistics sector. As a result, the logistics industry in Vietnam is facing numerous opportunities arising from free trade agreements and the robust development of e-commerce. In fact, economic experts have even described the Vietnamese logistics sector as having a "golden" opportunity post-Covid-19.
Specifically, the strong development of the supporting industries and the increasing activities in e-commerce are expected to make logistics an attractive investment sector with significant growth potential. Free trade agreements, including the new-generation FTAs that are in effect or will be in effect, will contribute to boosting Vietnam's import and export of goods.
In addition, significant opportunities are opening up for logistics businesses as Vietnam's import and export turnover continues to grow substantially, despite the negative impacts of the pandemic. Vietnam's trade reached over 668 billion USD in 2021 and is expected to reach the milestone of 1,000 billion USD in total trade turnover in the near future.
Some limitations
However, it is important to acknowledge that despite its relatively fast development and annual growth, the logistics service sector in Vietnam still faces several limitations and has not fully realized its potential. At the Vietnam Logistics Forum 2021 organized by the Ministry of Industry and Trade at the end of 2021, Ms. Carolyn Turk, the World Bank Country Director for Vietnam, pointed out that in 2021, under the influence of the Covid-19 pandemic, logistics costs in Vietnam remained relatively high. Additionally, there is a lack of tight and effective coordination among logistics service providers themselves and with manufacturing, trading, and import-export enterprises. The financial scale and capacity of Vietnamese logistics companies are still weak, their competitive capabilities are low, and their international market presence is limited. The workforce in the logistics service sector is inadequate in terms of quantity, quality, and professionalism.
Therefore, Vietnamese logistics companies continue to face fierce competition from foreign enterprises. Experts express concerns that Vietnamese logistics service providers account for about 95% of the market but are primarily small and micro-enterprises offering services with limited value-added. The collaboration between import-export enterprises and logistics service providers is not strong and is less effective.
Moreover, Vietnam still lacks modern and large-scale logistics centers, especially for processing, manufacturing, and storage to minimize damage and ensure export conditions. This became evident during the complex developments of the pandemic, global transportation disruptions, increased logistics costs, and their impacts on domestic production and business activities.
Logistics not only brings significant benefits to the country but also plays a crucial role in transforming the growth model and ensuring sustainable economic growth during the integration period.
Seeking Solutions
To drive a breakthrough in Vietnam's logistics sector, experts believe that there is much work to be done, such as focusing on developing logistics infrastructure, adopting information technology, training and developing logistics workforce, and more. Developing transportation infrastructure, especially maritime routes, is an urgent requirement to maintain supply chains, facilitate goods circulation, reduce costs, and enhance Vietnam's competitiveness.
This requires synchronized coordination among ministries, sectors, and localities to remove bottlenecks and establish large, highly automated, and modern logistics centers participating in international multimodal transport services and cross-border logistics services.
Logistics centers need to be connected with multi-modal transportation means and seaports through modern railway systems following the model of seaports - railways - logistics centers - roads - customers. Furthermore, it is essential to operate logistics centers along economic corridors, particularly prioritizing economic corridors at international border gates with China, Laos, and Cambodia.
Deputy Minister of Industry and Trade TRAN QUOC KHANH: To overcome challenges and seize opportunities for development, the Ministry of Industry and Trade will continue to focus on refining policies and mechanisms related to logistics and sectors that impact the development of the industry. We will also simplify administrative procedures, promote trade facilitation (including online activities), host and participate in important international logistics events, conferences, and exhibitions to enhance global connectivity.
Cre: Trade Newspaper
