Removing logistics bottlenecks

Monday, 2018-07-09 17:19:23
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Vietnamese logistics firms mainly provide domestic logistics services including forwarding services, warehousing, customs clearance, and cargo consolidation, among others.
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NDO - Vietnam is ranked 64th out of 160 countries and fourth among the ASEAN countries in the World Bank's Logistics Performance Index (LPI), with logistic costs estimated at 25% of the annual GDP, which is significantly higher than Thailand (19%), Singapore (8%), Japan (11%), China (21.6%) and the US (9.5%).

According to the Vietnam Chamber of Commerce and Industry (VCCI), the cost of transporting one container from Hai Phong port to Hanoi or vice versa, with a distance of 100km, is three times higher than the cost of transporting one container from China or the RoK to Vietnam.

In fact, Vietnam has invested in building many large seaports, capable of receiving vessels of over 100,000 tonnes and has 70 international air routes, but international maritime and air transport, as well as external services, remain inadequate in addition to poor and incomprehensive logistics infrastructure.

Vietnamese logistics firms are small in scale and lack professionalism, connectivity and competitiveness.

Roughly1,300 Vietnamese firms, mainly small and medium-sized, are operating in the logistics sector, accounting for 25% of the total logistics market share and 72% of the total number of workers in this sector, with only 5-7% of trained workers.

The majority of Vietnamese logistics firms mainly provide domestic logistics services in the areas of forwarding services, warehousing, customs clearance, and cargo consolidation, among others. Meanwhile, 25-30 of the worlds’ leading logistics firms based in Vietnam occupy 75% of the market share and dominate international logistics services.

According to the Prime Minister Decision No. 200/QĐ-TTg dated February 14, 2017 on the Action Plan for improvement of competitiveness and development of Vietnam's logistics services by 2025, Vietnam planned to become an important logistics hub in the region, with specific objectives.

The action plan aims to have the proportion of the logistics sector in GDP at 8-10% per year and the annual logistics service growth rate at 15% - 20%.

The logistics costs are also expected to be reduced to 16-20% of the GDP and the proportion of outsourcing logistic services will reach 50-60%, while Vietnam will rank 50th or above on the LPI ranking.

To achieve the set objectives, Vietnam needs to create breakthroughs in its State management mechanisms, including laws and policies in support of the development of logistics services and to create a healthy and equal business environment in accordance with integration commitments.

It is also necessary to develop leading logistics centres and professional logistics firms, capable of competing both in the domestic and international markets.

Furthermore, Vietnamese firms should efficiently manage the supply chain, save materials and reduce production costs and time of goods movement, while taking full advantage of Vietnam’s geographic location.

The ministries, sectors and localities concerned also need to actively review and ensure the progress of transport planning and projects in accordance with strategies and planning on industrial and agricultural production, import and export, local socio-economic development, and logistics development.

It is also crucial to encourage all economic sectors to invest in logistics services, logistics infrastructure and e-commerce logistics platforms, while promoting the dissemination of information on the markets and the international commitments of Vietnam related to logistics services.