Vietnam logistics firms small but dynamic: insider

Foreign-invested enterprises hold the lion's share of Vietnam's logistics market, but domestic firms are becoming more dynamic despite their small scale, said Duong Quang Duy, CEO of VietAviation Logistics.

A World Bank report showed that the growth rate of Vietnam's logistics industry has reached about 14-16% with a scale of about $40-42 billion per year.

However, the logistics industry has also encountered several difficulties and limitations, such as high costs and asynchronous infrastructure.

Regarding human resources, Vietnam will need over 200,000 logistics personnel by 2030, but only 10% of that number is likely to be met. In addition, the quality of the workforce remains low.

Of the more than 30,000 enterprises registered to operate in the logistics sector, domestic firms account for 89%, while 10% are joint venture companies and 1% are foreign owned. Despite holding this large percentage, domestic companies make up only 30% of the market share.

Duong Quang Duy, CEO of VietAviation Logistics, said that in Vietnam, cheap shipping rates and fast transportation are an advantage, especially for agricultural products. Currently, VietAviation's express delivery and logistics freight rates (including by sea and air) are estimated to be about 15% cheaper than international firms.

"International logistics companies are professional service providers. However, they cannot do everything. With more than 20 years working in the logistics industry, I have the desire to build VietAviation into a bridge that helps Vietnamese businesses steadily enter the markets of mainland China, Hong Kong, Macau and Taiwan thanks to lower costs and diversified services," he said.

"VietAviation has cooperated with large partners such as Viettel and Ahamove whose existing facilities are not at full capacity. As a startup, VietAviation focuses on developing its strengths of marketing, technology, understanding of the international market, and communicating to support customers," Duy said.

Meanwhile, Hamza Harti, CEO of France’s FM Logistics Vietnam, said that Vietnam has emerged as a strong contender to become a major hub for regional distribution centers in the Asia Pacific region.

With its strategic location, growing infrastructure, and competitive labor and operating costs, Vietnam offers attractive opportunities for businesses looking to establish or expand their operations in Asia, he said, adding the country’s long-standing trade heritage, and dynamic trade relations with neighboring countries further enhance its position as a prominent logistics hub in Asia.

However, he noted that currently, most domestic service businesses still follow traditional methods that do not bring high value. With the advantage of technical modernization, FM Logistics wants to become a provider of smart technology solutions for Vietnamese businesses to improve service value in the logistics supply chain.

Coordinating with partners and competitors is essential. As an FDI enterprise, FM Logistics does not have its own transport vehicles, so it is partnering with 30 domestic transport service providers, Hamza Harti said, expressing his ambition to make FM Logistics one of the top three logistics businesses in Vietnam.

More investment needed to reduce costs

Sharing the same view, Eric Liang, deputy CEO of Best Global Logistics Co., Ltd. and CEO of Best Express Vietnam, said that Vietnam is a large, fertile market that will continue to boom.

To develop sustainably, units need to invest more to reduce costs, shorten delivery times, and increase service quality, he noted.

According to Liang, the Southeast Asian market in general and Vietnam in particular hold great potential due to the presence of many large e-commerce platforms. Best Express has increased cooperation with these platforms to improve service quality. At the same time, Vietnam also has many small- and medium-sized enterprises that need to transport goods. These are customers that Best Express will target in the future.

The CEO assessed that with the e-commerce growth rate of 16-30% per year and a value of more than $20 billion, tightening expenditures is understandable amid the volatile economic context.

This resource will be spent investing in areas which are expected grow. When the economy is more stable, e-commerce will continue to boom. Therefore, this investment will help businesses quickly meet long-term market needs, he said.

With a network of more than 600 goods delivery offices in Vietnam, the Best Express representative acknowledged that Vietnam's logistics industry is growing thanks to the e-commerce boom, requiring shipping units to invest in networks and service quality.

Technology application is the key to helping businesses grow steadily and serve customers better. Best Express has cooperated with many units to apply cashless payment methods, minimizing risks for both sellers and buyers. Currently, the amount payments by QR code has increased by nearly 85% to trillions of VND (VND1 trillion = $39.33 million), he noted.

Duong Quang Duy, CEO of VietAviation Logistics, believed that Vietnam is one of the bright spots in the region for international investment. Its continued political stability will promote economic development with increased foreign investment flows.

"There is a trend of shifting investments from China to Vietnam due to global supply chain changes. I evaluate this as a good opportunity for logistics activities," he said.