Logistics plays an important role in support of the development of all sectors of the economy. Developing logistic services efficiently will enhance economy and nation’s competitive capacity. Germany is now seen as the leading country in terms of logistic services quality measured by LPI index.
Marine transport is the main transportation mode in international transport activities, accounting for 90% of production and international trade of commodities. The year 2016 saw no improvement in container shipping industry due to the consistent imbalance between supply and demand. Meanwhile, using international air transport for goods transport tends to increase slightly year-on-year, but is also under the pressure of revenue slippage.
Warehousing market tends to expand due to growing demand and is forecast to target at 8.52% of CAGR in the period 2015-2019.
Regarding to port operation, Asia is seen as the market of port cargo throughput at the highest level. There are 16 ports in Asia, including 9 ports in China, in the top 20 largest world seaports. Similarly, Asia-Pacific region, Europe and North America also become dynamic markets witnessing the transportation of goods via international port and airway transport.
In Vietnam, logistics industry is expanding its market size, and made up 9,6% in GDP in 2016. However, its huge potential has not yet been fully utilized. The evidence is that Vietnam enterprises only meet less than ¼ of demand in logistics as the provider of satellite services for foreign companies in operation chain. Furthermore, they mostly offer at 2PL level, not competing market share with internationally professional companies operating administrative chain of controlling supply chain at level 3PL, 4PL, and 5PL. According to World Bank, Vietnam now ranks at 64 in out of 160 countries and in the middle of ASEAN in terms of LPI index. The percentage of logistics cost in GDP remains the highest level globally is the cause of the fact that the price of imported goods into Vietnam is always higher than that in reality. This lowers the competitive capacity of Vietnam in international market.
Transportation activity mostly constitutes to turnover of logistics industry. In 2016, the volume of freight transport was estimated increasing by 10.% comparing to 2015. Specifically, the volume of goods through marine transport, riverway, roadway and air transport whereas that through railway transport decreased significantly (down 22% comparing to 2015). Roadway transport occupied the highest percentage of the revenue of logistics industry. It is seen as the transportation mode of modern transport network and heavily invested, resulting in the rate of CAGR growth in volume of goods through roadway transportation is around 10.25% between 2016 and 2016. However, roadway system in Vietnam is now outdated because of lack of highway and weak load capacity which push up cost, time and risk increase for enterprises. In regards to railway transport, outdated infrastructure and technology that can not satisfy the demand of freight transport lead to the steep decline year-on-year in the volume of goods. At present, Vietnam railway only undertakes less than 1% of goods transportation and ignores international trade. In 2016, the volume of goods through railway transport is expected to plummeting 22%. Marine transport in 2016 also saw a lot of barriers due to ship abundance leading to fierce competitiveness and consistent cost decline.
The structure of Vietnamese cargo ship fleet suffers from serious drawbacks. The density of containers remains at low level, accounting for 3.5%. Besides, unsustainable investment, low quality of ships, the incompetence of financial competence and management ability with ship operators also become challenges for marine transport. The volume of goods which always rises annually indicates that inland water transport of Vietnam is becoming more and more prosperous and plays a key role in connecting domestic sectors of production. The state is planning to give the priority of development to inland water transport.
The sales of warehouse operations and loading and unloading activities show the signal of sharp increase in the period 2010-2015, specifically 16,8% and 12,6% of CAGR respectively. The turnover of warehouse operation and loading and unloading activities in ports constitute the highest proportion.
Port operation now tends to thrive significantly. The Southern port makes up the highest proportion whereas the Central constitutes the lowest one.
Vietnam logistics industry is now facing many challenges such as freedom competitiveness, service quality, adaption of information and technology, e-commerce, human resources, and policies of management which require wise development strategies so that they can boost competitive capacity.
In Decision 1012/QD-TTg dated July 3rd 2015, development planning set the goal up to 2020 that the rate of growth in logistics services will reach 24%-25% per year, contributing 10% in GDP of economy. There are three big sectors such as the North, the Central-Tay Nguyen and the South, equal to three levels known as level 1, level 2, and specific level of logistics center, divided by the development planning.