According to VIRAC’s report, the Vietnam Logistics market is ranked 10th in the group of 50 emerging logistics markets globally (Agility Ranking 2023). This is a good sign for the logistics market in Vietnam. To achieve this, the two most important activities in logistics are forwarding and delivery; transportation. How do these in Vietnam work?
Forwarding and delivery activities of Vietnam logistics market in the first months of 2023
Actual status of forwarding and delivery activities
In general, the forwarding service maintained a good growth rate in the Vietnamese market. Currently, with the development of global science and technology, businesses providing forwarding and transportation services are also active in digital transformation and applying high technologies to their daily work. This is a very good signal for the Vietnamese logistics market. At the same time, since the Covid-19 epidemic, people are gradually getting used to online shopping, so people’s demand has increased. Grasping this, logistics enterprises also actively improve and transform to meet people’s needs, improve their quality and competitiveness.
Typically, in the development of forwarding and delivery activities, last mile delivery is growing thanks to the explosion of e-commerce. According to the General Report, the scale of Vietnam’s e-commerce is estimated at over 14 billion USD. The average growth rate of e-commerce in the period 2020-2025 is forecasted to be 29% and by 2025 it will reach US$52 billion, ranking third in the ASEAN region. The VIRAC report shows that more than 60% of global retail professionals expect e-commerce penetration to reach at least 20% of total retail sales. This proportion will continue to increase in the retail segment and is expected to grow exponentially in the coming years.
Besides, logistics activities in Vietnam are greatly affected by cost and infrastructure factors. Weak infrastructure that has not met the development needs of logistics will be a threat to the expansion of the forwarding and express delivery market. Delivery and delivery do, but letting it happen fast or slow depends a lot on traffic factors, warehouses.
Another difficulty of businesses when they want to participate in forwarding or express delivery is the high level of competition. Currently, the delivery market has about 800 businesses participating. Therefore, in order to attract and retain customers, businesses need to make efforts to find ways to reduce delivery time, increase shipping speed and more competitive prices.
Future trends of forwarding and delivery:
According to a report by VIRAC, Vietnam’s express delivery service market is worth US$0.71 billion in 2021 and is estimated to grow to US$4.88 billion (equivalent to about VND114.680 billion) by 2030.
A notable segment that is being interested by businesses in the forwarding and delivery market is agricultural products and fresh goods. In this segment, there are currently few competitors, promising high profits and potential in the future. Some businesses in the industry even accompany farmers and guide the packaging of goods according to standards to ensure product quality. However, this is also a rather risky and risky direction due to the perishable and difficult to preserve characteristics of fresh produce.
Transport activities of Vietnam logistics market in the first months of 2023
Transport operation status:
According to VIRAC’s report, the total volume of goods transported and rotated in the first quarter of 2023 continued to grow compared to the same period in 2022. The total volume of Vietnam’s freight transport increased by more than 16% over the same period last year. . Total turnover in the first quarter of 2023 also increased by nearly 22% year-on-year.
Source: VIRAC’s report
Cost is still a big issue for transportation operations in Vietnam. Transportation costs account for 60% of logistics costs. The reason for this is that transportation is highly dependent on road transport, a type of transport with high freight charges. Meanwhile, cheaper modes such as waterways and railways have not been prioritized for development. But this is still the most popular mode of transport because Vietnam’s infrastructure is not enough to use other modes of transportation.
Source: VIRAC’s report
Waterway transport has not yet fully developed its capacity as expected. Although water freight rates are low and can transport many goods with large volumes, Vietnam’s waterway transport has not yet been invested and developed.
Future trends of transportation
In the future, road transport should be gradually shifted to other modes of transport with more advantages. An example is the development of waterways. Vietnam is a country with a dense network of rivers and a long coastline that is very convenient for waterway development. At the same time, the cost of waterways is cheaper than by road, which is also a prominent advantage. Besides, Vietnam should also continue to develop further by air and by sea – essential modes of transport for national development.
Expected to become a logistics center in the region and the world of Vietnam.
Favorable geographical location
With a favorable geographical position, political and social stability, Vietnam has great opportunities in logistics development. Besides, our country also takes advantage of the advantages of a long coastline with a seaport system with optimal capacity combined with the booming e-commerce growing in both export and import directions. export. These things help Vietnam to be expected to become the world’s center of goods movement, an important link in the global supply chain.
The Vietnamese logistics market also shows an impressive growth rate.
According to VIRAC’s report, Vietnam is in the top 10 of emerging logistics markets in the world and ranked 4th in Southeast Asia (Agility’s annual ranking in 2023). According to Mr. Tran Thanh Hai – Deputy Director of the Import-Export Department (Ministry of Industry and Trade), said that in the past years, the logistics market in Vietnam has made significant progress, the market not only increased in the number of Enterprises whose quality of logistics services is also increasing, making a significant contribution to bringing import and export results in 2022 to the highest level ever of $732.5 billion, up 9.5%. compared to 2021.
However, Vietnam’s logistics industry still has many weaknesses such as: logistics costs have not been optimized; logistics enterprises lack linkage with each other and with production, business, import-export enterprises; The scale and financial potential of Vietnamese logistics enterprises are not stable, the going to foreign markets is not significant.
It is necessary to promote digital transformation in logistics services and develop e-logistics
At the present time, digital transformation is an inevitable part of all economic sectors, including logistics. Digital transformation will help logistics activities take place smoothly, quickly and save labor. Therefore, for sustainable development, a very important thing that logistics businesses must do is digital transformation, using data in their operations.
Today, when e-commerce develops, e-logistics is born. E-logistics stands for electronic logistics, or electric logistics, is a form of digitally transformed logistics to serve the e-commerce industry. In essence, e-logistics is a logistics activity that applies digital technologies to be compatible with the exchange and purchase activities of businesses and buyers in e-commerce, and at the same time accelerate the post-production process. needed for these activities.
E-logistics is a relatively new concept in Vietnam, although in fact, many businesses are applying and applying e-logistics quite successfully. To achieve as expected: to become the logistics center of the region and the world, logistics enterprises need to promote the application of e-logistics to their business models. However, many businesses have not found a way or are still struggling to apply e-logistics to their businesses.
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In short, to achieve the expectation of becoming a logistics center in the region and globally, Vietnam needs to accelerate digital transformation in logistics and develop e-logistics.
The above information is updated from “Vietnam Logistics Industry Report Q1 2023“. The report provides full information on macroeconomics, trade supply and demand of the logistics industry such as express delivery, transportation, port operations, and warehousing activities. In addition, the report also provides forecasts and news about the logistics industry in the future. The report also provides a full range of relevant information and forecasts from the latest updated data.
Vietnam’s logistics activities 2023: overview and challenges for strong development
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