VN’s logistics firms remain small despite potential

 

Containers at Cát Lái Port in HCM City’s District 2. The country’s logistics sector has potential but most projects are of a small scale.VNA/VNS Photo Tiến Lực

According to the report, Vietnamese logistics enterprises are mainly operating on a small scale, with up to 90 per cent of enterprises having capital of less than VNĐ10 billion (US$429,922) (lower than the average registered capital of the enterprises), 1 per cent of firms have capital of over VNĐ100 billion, 1 per cent have capital from VNĐ50 billion to VNĐ100 billion, 3 per cent have capital of VNĐ20 to VNĐ50 billion, and 5 per cent have capital of VNĐ10 to VNĐ20 billion.

Up to 2,000 logistics businesses are one-member limited liability companies.

Only 400 businesses have joined the Việt Nam Logistics Business Association (VLA).

According to VLA statistics, member enterprises represent over 60 per cent of the national market share, including many leading enterprises in the industry. The leading logistics enterprises currently include SNP, Gemadept, Transimex, IndoTrans, TBS Logistics, Sài Gòn New Port, Delta, U&I Logistics, Sotrans and Minh Phương Logistics, which are all members of VLA, providing services to all strategic markets of Việt Nam.

The application of information technology in logistics is modest and mainly focused on customs declarations and vehicle monitoring and supervision. However, businesses and logistics centres are making efforts to innovate operations. In addition to the main functions of preserving, labelling, packaging, splitting, handling goods and preparing orders, logistics centres are applying information technology in goods management and tracking, as well as accessing location.

Some specialised logistics centres are almost automated such as logistics centres of Samsung, Unilever, P&G, Vinamilk, and Masan. Major logistics centres are currently concentrated in Hải Phòng, Đồng Nai and Bình Dương, applying modern management systems of Gemadept, TBS, Sài Gòn New Port, Transimex, Mapletree, Damco, DHL, Kerry Express and Viettel Post.

Limited connection

Notably, there are 45 logistics centres in nine provinces and cities of Việt Nam, but most of them are second class logistics centres (regional level), and are not yet developed in accordance with the orientation of developing first class centres (national level).

The connection between modes of transport is a major limitation, pushing up logistics costs. This connection is clear on the main transport corridors, with the focus on connecting railways and inland waterways with seaports, urban centres and production centres.

According to Deputy Prime Minister Vương Đình Huệ, MoIT’s report has helped the Government to make an overview of the current logistics field in Việt Nam. These are important data to develop this industry, contributing to promoting trade facilitation in the country as well as exporting goods.

VLA’s data showed that, together with the growth rate of GDP, industrial production value, import and export turnover, retail value of goods and transport services and infrastructure, in recent years, Việt Nam's logistics services have a relatively high growth rate of 12-14 per cent, the percentage of enterprises outsourcing logistics services is about 60-70 per cent, contributing about 4-5 per cent of GDP.

With the World Bank's report in 2018, logistics performance index (LPI) of Việt Nam is ranked 39 out of 160, up 25 places compared to 2016 and ranked third place in ASEAN countries. VNS