Monday 11 September, 2017

OPPORTUNITIES AND CHALLENGES Logistics was introduced to Vietnam around 20 years ago. Although logistics revenue remains relatively low at around 2-4% of GDP per year, a large share of the market remains in the hands of foreign multinational companies.

Logistics was introduced to Vietnam around 20 years ago. Although logistics revenue remains relatively low at around 2-4% of GDP per year (while approximately 80% of the market is held by foreign multinational companies), the sector has grown rapidly at 20-25% per year. Logistics plays an indispensable role in production, circulation and distribution worldwide and is a driving force for the harmonious and sustainable development of seaports and the marine economy. Logistics activities account for around 10-15% of annual GDP in developed countries in Europe, North America and the Asia-Pacific region.
The logistics development trend in this century is globalization based on modern information technology and e-commerce, together with the widespread use of pull-based logistics management to gradually replace the traditional push method. The objective is to create added value, reduce transportation costs and expand outsourcing to professional logistics companies. In the context of global economic difficulties and domestic macroeconomic pressure, opportunities and challenges must be carefully considered before decisions are made regarding development of this emerging economic sector.

Container traffic is expected to grow by 17% per year and national export turnover is projected to reach USD 500 billion in the coming years. Sea freight costs are also expected to move closer to global levels; transportation currently accounts for around 40-60% of Vietnam’s total logistics costs. The aim is to stabilize and develop logistics into an important industry contributing around 15% of national GDP annually. Challenges remain. Although Vietnam has around 1,000-1,200 logistics enterprises—more than Singapore and Thailand—about 80% have registered capital of only VND 1-1.5 billion, reflecting limited financial capacity and helping explain why Vietnamese companies hold only around 20-25% of the domestic logistics market.