What will logistics enterprises face in 2020?

	Vietnam to develop seaport planning
	Connectivity is key to Vietnam’s deeper integration
	How will Vietnam's logistics industry develop in the future?

Mr. Nguyen Tuong, Deputy Secretary General of the Vietnam Logistics Business Association

According to experts, Vietnam is a potential market for development of the logistics service industry because annual import and export turnover reached hundreds of billions of dollars. In 2019, this figure was more thanUS$500 billion. In your opinion, what are the advantages and disadvantages for Vietnamese logistics enterprises in 2020?

-Disadvantages in 2020 will be the same difficulties that Vietnamese logistics faced in 2019, which is the instability of the world's political situation, especially the US-Iran conflict will greatly affect such as the increase in oil price; the US-China trade war also affects import and export activities.

The specialised inspection still faces difficulties. In addition, the National Single Window has helpedto cut many procedures. However, some procedures of ministries and sectors have not yet been connected to this system. Notably, the goal of all procedures processed electronically has not been achieved andsome procedures are processed manually.

In addition, facing the above difficulties, logistics enterprises will have some advantages in 2020. Accordingly, in 2020, logistics enterprises will be determined to do better in 2019. The import and export value is expected to increase. Vietnam’s signing of new generation FTAs will create great opportunities for import and export activities as well as the supply market in Vietnam, especially the implementation of EVFTA will facilitate enterprises with large export value such as textiles, footwear, and seafood, which will lead to the development of logistics enterprises.

The increase in shipping surcharges and seaport service charges andthe competition between between logistics enterprises in 2020 will also be fierce. What do you think about this?

- There are many opportunitiesbut the competition is very fierce. The competition includes two contents. Firstlyis the competition between big foreign logistics enterprises operating in Vietnam with Vietnamese logistics enterprises. Foreign logistics enterprises have advantages in terms of capital, management and human resource, while, Vietnamese logistics lack human resourcesspecialisingin technology. Thus, to compete fairly in the country, the Vietnamese logistics industry must make more efforts in administration and management, especially support from the Government.

Secondly, competition on service pricesis regular competition. The most difficult thing for logistics enterprises today is how to reduce costs.

Notably, low sulphur surcharge (LSS) from 1 January 2020 at seaports will increase and beapplied at ports of loading. Accordingly, all shippers sendinggoods from Vietnam to foreign countries have paid these charges for shipping lines. However, some shipping lines collect LSS from Vietnamese importers to repay Chinese shipping lines. This has increased costs and burdens for Vietnamese importers.

In principle, this surcharge is a part of the freight, those who pay the freight must pay this surcharge. Therefore, we have recommended logistics service enterprises when signing contractsmust request their customers specify the party who will pay this surcharge on the bill of lading, creating a legal basistodetermine who has to pay the LSS.

As you said, the current difficulty of the the logistics industry is costs. Thus, in 2020, how will the logistics industry take measures to cut costs and improve the competitiveness of enterprises?

-Currently 97 percent of Vietnam's logistics enterprises are small and medium-sized enterprises, even micro enterprises. Therefore, most enterprises face difficulties in capital and human resources, especially lacking information technology human resources to apply in order exploitation. The last weak stage is warehouse management technology and cold supply chain.

The logistics industry in 2020 is expected to have higher growth than in 2019 thanks to the useof new technology in the operations of enterprises. It will focus on improving its performance in the supply chain management, by coordinating between service users, manufacturers, exporters, importers anddistributors towards reducing logistics costs.

EVFTA to bring logistics firms both opportunities and challenges

In 2020, the VLA will study the application of blockchain technology in using e-delivery orders instead of paper delivery orders. The IT application will save more than VND 200 billion. At the same time, the useof e-D/O will also reduce transaction time, reduce costs and increase competitiveness of Vietnam's logistics industry.

In the near future, the VLA will also deploy and organise many business delegations to explore markets and study, connect with foreign logistics enterprises to expand their linkages and build more new orders.