Vietnam logistics sector continues to charm investors

Investment in Vietnam’s logistics sector is on the rise as investors seek to make further inroads into the market of 100 million people with a fast-growing middle class, and cash in on the country's status as an emerging global production hub.

Singapore and Vietnam signed several memoranda of understanding (MoUs) to enhance economic cooperation in key sectors on February 9 in Singapore, which were witnessed by Prime Minister Lee Hsien Loong and his counterpart Pham Minh Chinh. The deals cover activities for 2023 which include deepening agri-trade cooperation through business matchmaking and facilitating Singaporean companies to invest in Vietnam’s agriculture and logistics sector.

A week later, the World Bank Group’s private-sector arm IFC announced in Singapore that more than $2 billion would be invested in Vietnam’s logistics sector over the next five years via a new partnership between the IFC, Singapore’s YCH Group and Vietnam’s T&T Group.

IFC, the largest global development institution focused on the private sector in emerging markets, said it will help the two corporations develop a bankable and sustainable project by providing technical expertise, helping the developers mitigate risks and strengthen environmental and social standards. A multimodal logistics project covering 83 hectares, called the Vietnam SuperPort and located in Vinh Phuc province bordering Hanoi, is being developed by T&Y Superport Vinh Phuc Joint Stock Company, a joint venture between YCH and T&T.

Vietnam’s industrial real estate sector has great potential for developing more projects related to cold storage and logistics and data centers, Savills said earlier this month. The major real estate services firm added the main opportunities include last-mile logistics services and the implementation of the concept of logistics 4.0, created as a consequence of Industry 4.0.

Logistics 4.0 trend

E-commerce heavyweight Lazada Logistics Vietnam last Thursday inaugurated a commodity sorting center called Lazada Logistics Park at the Song Than 1 Industrial Park in Binh Duong province bordering Ho Chi Minh City.

The two-hectare facility has a capacity of one million parcels per day, and is the biggest and most modern logistic center in the industrial province. Lazada said its new sorting center is equipped with modern technologies such as artificial intelligence (AI) and machine learning, and 99% of the sorting lines are automated.

Other modern technologies used include a telescopic conveyor system, dim weight scanners, a wheel sorting system with o-belt modular structures, a cross-belt sorting system, small parcel cross-belt sorting, barcode reader software, auto-outbound function, and mobile telescopic equipment.

“With the new sorting center, we aim to bring our customers the best online shopping experience, with the fastest and most reliable deliveries,” Lazada Vietnam chief logistics officer Vu Duc Thinh said.

“We believe that with these efforts, Lazada Logistics will actively contribute to building a sustainable e-commerce logistics ecosystem, setting new standards and further promoting the overall development of the industry,” he said.

Alibaba Group, Sagawa team up

Cainiao Vietnam, a subsidiary of Alibaba Group’s logistics arm Cainiao Network, announced on March 16 the signing of an MoU with SG Sagawa Vietnam of Japan’s Sagawa Express Co. to promote stronger collaboration in Vietnam's logistics sector. The partnership gives SG Sagawa Vietnam access to Cainiao's premium warehouse facilities in southern Vietnam to support their current and new global clients.

Located at the Cainiao P.A.T. Logistics Park and Cainiao Dong Nai Smart Logistics Park, the premium warehouse space offers a strategic geographical advantage for business tenants thanks to its accessibility. Both parks boast multiple access points that link directly to HCMC, the planned Long Thanh International Airport, and major seaports like Cat Lai in HCMC and the port cluster of Cai Mep-Thi Vai in Ba Ria-Vung Tau province, which is also near HCMC.

As a result, tenants can benefit significantly from the strategic locations, and SG Sagawa Vietnam's global expertise and local network.

Japan’s Sagawa Express launched the HCMC-based SG Sagawa Vietnam in 1997 to offer key logistics services, including domestic and international air freight, sea freight, trucking, and warehousing.

Looking to the future, Cainiao foresees a strong increase in demand for logistics and supply chain services in Vietnam.

"Thanks to competitive operational costs, integrated supply chain sector, and favorable free trade access, among others, Vietnam is a rising manufacturing hub key to addressing logistics needs,” said Cainiao Vietnam general manager Xing Zhang.

“With the ASEAN warehousing and distribution logistics market forecasted to grow at a combined annual growth rate, or CAGR, of more than 10.5% until 2027, Vietnam's warehousing industry is expected to see an 11% CAGR until 2027.

“With such potential, businesses need to align and renew their supply chain strategies to keep up with consumer demand for more efficient logistics services,” he added.

Vietnam has witnessed robust growth in domestic and global demand for local goods, and has a thriving e-commerce market. Therefore, small- and medium-sized enterprises across the country are experiencing a business boom, leading to surging demand for warehousing facilities.

This demand has been further fueled by logistics and supply chain diversification by international companies, leading to the need for logistics services providers to enhance and diversify their inventories and warehouse space.