Many advantages of developing logistics services

Logistics activities in Vietnam have many breakthroughs when import and export goods increase rapidly. Photo: T.H

Sharing about the role of the logistics service industry in serving the import-export strategy of Vietnam's goods by 2030, Mr. Phan Van Chinh, Director of the Import-Export Department of the Ministry of Industry and Trade, said that the development speed of the economy, especially the import-export activities of goods that have a great impact on the logistics market of Vietnam. Logistics activities are located in one of the three pillars of import-export activities, in order to link the stages in the chain of import-export activities.

Logistics activities have made great progress, meeting the requirements of organizing a large volume of import and export goods. In the first nine months of 2022, import-export turnover reached over US$557 billion. Thereby seeing a huge market share from logistics activities.

“In 2022, export turnover is estimated at US$400 billion, if logistics costs account for 15%, logistics market share accounts for about US$60 billion; Import turnover is expected to be more than US$300 billion, if the cost accounts for 5%, the logistics market share is about over US$15 billion. Thus, the potential for development of the logistics market is very large, and businesses need to build their development strategy," said Mr. Phan Van Chinh.

According to the rankings of Agility 2022, the Vietnamese logistics market is ranked 11th in the group of 50 emerging logistics markets globally thanks to the strong transformation of enterprises providing and using logistics services. The compound annual growth rate (CAGR) in the period 2022-2027 of Vietnam's logistics market is forecasted to reach 5.5%. Especially, the economy's strong recovery after the pandemic with GDP in the first nine months of the year reaching 8.83% will be the foundation for the development of logistics.

According to experts, in order to turn the logistics market from potential into reality, it is necessary to have a comprehensive policy from attracting investment to improving infrastructure and administrative procedures and the authorities are building a synchronous and effective legal corridor.

Mr. Dao Trong Khoa, Standing Vice President of VLA, said that currently, Vietnam's logistics market has the participation of more than 5,000 businesses.

Of which, 89% are Vietnamese enterprises with small and medium scale; 10% are joint ventures and 1% are foreign-owned enterprises providing cross-border logistics services.

"The rise of new transport, logistics and supply chain trends in the digital economy has helped Vietnam become a potential emerging market," Mr Khoa said.

In particular, the explosion of e-commerce in Vietnam with the "big guys" such as Shopee, Lazada or Tiki has become a potential opportunity for corporations to invest and develop existing logistics infrastructure, accompanying businesses in developing supply chains.

Besides the advantages, experts also point out many shortcomings in logistics activities. According to Ms. Le Thi Ngoc Diep, Commercial Director, SLP Vietnam Company, the foundation of Vietnam's warehousing system is not of a high standard, there are many logistics enterprises that have not been able to provide the chain of services in the entire supply chain.

Currently, the system providing logistics service chains lacks integration and has not applied digitalization in management and automation in operation. While the demand for a modern logistics system that combines automation, and meeting the growth of retailers and the e-commerce industry in Vietnam is very high.

Discussing the opportunity to break through Vietnam's logistics in the new period, especially smart logistics, experts all emphasized, with the explosion of the industrial revolution 4.0, there have been many applications of science and technology in logistics activities in Vietnam.

The strong development of e-commerce poses more and more modern problems to meet the diverse needs of customers.

This poses issues for many businesses in the logistics industry in Vietnam the need to change and "transform" is an irreversible trend with investment in modern warehouse infrastructure, applying digital and automatic management in operation, the management model is increasingly professional.