Overview of Vietnam logistics industry
In 2020, Vietnam’s LPI (logistics performance index), which is announced by World Bank is 3.3, ranked 40/160, and 3rd in ASEAN, only after Singapore and Thailand. In addition, according to Agility’s 2021 Emerging Market Logistics Index report, Vietnam’s logistics index is 5.67/10, up 3 ranks compared to 2020, ranked 8th among emerging markets.
Decline in transport activities
In the 2017 – 2020 period, the total volume of goods transported and rotated in Vietnam grew at a compound growth rate of 7.1%/year and 8.1%/year, respectively. However, by Q3/2021, this volume rate has decreased sharply when many provinces and big cities have to implement social distancing due to the return of the fourth wave of Covid-19. Generally, in 9M/2021, Vietnam’s total freight volume decreased by 5.6% yoy. Total freight rotation in 9M/2021 also decreased slightly by 0.3% yoy.
Strong growth in forwarding service
Forwarding services are the strength of Vietnamese logistics enterprises compared to foreign enterprises in Vietnam. This is the service provided by most enterprises in Vietnam (80.3% of logistics service enterprises provide forwarding services in 2020). In which, express delivery, last-mile delivery are important links in the operation of e-commerce channels.
According to the Southeast Asia 20 E-Commerce Report of Google, Temasek, and Bain Company, the scale of Vietnam’s e-commerce in 2020 increased by 16% compared to 2019. In which, the online retail sector increased by 46%. , ride-hailing and technology food increased by 34%, online entertainment and games increased by 18%, and only online travel alone decreased by 28%. It is forecasted that the average growth rate of e-commerce in the Vietnam market by 2025 will rank 3rd in ASEAN.
In the second half of 2021, delivery and delivery activities in the southern region and provinces/cities implementing Directive 16 face many difficulties. Such as shortage of labor in the industry because workers return to the local area, the activities of shippers are limited, etc. In September 2021, delivery activities nationwide, especially in social distancing areas are struggling due to high delivery costs and high risks. However, the fact that Hanoi and HCMC allow delivery staff to return to work with disease-free conditions has eased the pressure on service supply in the context of high and suppressed demand for a long time.
Flourishing in port operations
According to statistics of the Vietnam Maritime Administration, the total volume of goods through the seaport in 9M/2021 is more than 500 million tons, up 3% over the same period in 2020. Although goods through major seaports in the South region have recently been strongly affected by the Covid-19 pandemic, the total volume of container cargo through seaports across the country still maintains a double-digit growth rate, increasing 15% yoy. In which, exports increased by 13%, imports increased by 18%, domestic goods increased by 13%.
The outlook of the logistics industry in 2022
In recent years, the global logistics industry has experienced impressive growth. However, due to the complicated situation of the Covid-19 pandemic, this number has decreased to 5,200 billion USD in 2020 – a significant decrease compared to the milestone of $9,600 billion achieved in 2018.
Up to now, in the context of the strong recovery of the global economy, the logistics industry is predicted to grow to nearly 13 trillion dollars in 2027. Experts forecast a bright outlook for the whole logistics industry when the economic market “warm up” in 2022.
In the Vietnam market, the logistics industry still has a lot of potential for development in 2022. The driving forces to promote the growth of the scale of logistics services in Vietnam in the coming time are:
- The explosion of e-commerce: E-commerce is an industry associated with logistics services. Logistics services play an important role in the trade chain from the seller to buyer with the order fulfillment process, including packaging, transportation, collection,… The average growth rate of e-commerce in the period 2020 – 2025 is forecasted to be 29% and by 2025 will reach 52 billion USD. Accordingly, the good growth of e-commerce in Vietnam will lead to the strong development of logistics in 2022.
- Commodity export growth: Vietnam is currently an export-oriented economy. Vietnam’s commodity exports have grown continuously since 2010. Therefore, Vietnam is now the world’s leading exporter of commodities such as rice, coffee, textiles, footwear, phones, and components. The development of export activities affects the growth of the logistics industry because it increases the demand for international transportation services, domestic transportation, and distribution services.
Grasping those potentials, the Government of Vietnam in 2021 has also amended and supplemented Decision No. 200/QD-TTg on approving the Action Plan to improve competitiveness and develop logistics services. of Vietnam by 2025 with several core goals:
- The growth rate is 15-20%/year. According to the plan, the scale of Vietnam’s logistics market is expected to reach 80 billion USD by 2025.
- Reduce logistics costs, by 2025 at 16-20% of GDP.
- The rate of outsourcing logistics services reaches 50 – 60%
- Ranked 50th or higher by 2025 according to the world LPI