Logistics having noticeable improvements

(VLR) (Vietnam Logistics Review) Besides some limitations in Vietnam’s logistics, it is undeniable that Vietnam logistics sector has had noticeable improvements.

(Vietnam Logistics Review) Besides some limitations in Vietnam’s logistics, it is undeniable that Vietnam logistics sector has had noticeable improvements.

THE ATTRIBUTES

Vietnam is a country in the progress of development and has not completed its infrastructures. Therefore, its logistics expense has smaller value (over USD 20 bn) than other country in the region but accounts for a great part in its GDP (20%). The needs of using logistics have not been popular in sectors. Transport expense mostly in the field of consuming goods accounts for the greatest part of logistics expenses.

According to research and evaluation from Nomura Institute (Japan), logistics enterprises in Vietnam have only met ¼ of the needs from local logistics market. Local logistics enterprises are holding a small part of the market and mostly operating on the fields of transport and other related fields as ports, stevedoring, and clearance procedures.

Logistics infrastructures are weak and inadequate. Only 10% of the port system is able to take part in international transport; the ports’ capacity is only 50%-60% compared to other advanced ones in the area. Managements are overlapped; there is no organization in charge of logistics activities; human resources are inadequate; technology knowledge is weak and logistics enterprises are mostly small and medium-sized... In multi-modal transports, there has been no combination among transport modals as sea, river, road and airlines. All the above form the attributes of Vietnam logistics.

NOTICEABLE IMPROVEMENTS

Despite world’s economic downturn in 2014, the Government and enterprises have had on-time moves in finding resolutions or in supporting enterprises in their manufacturing activities, contributing in improving sea transport quality services, efficiently exploiting sea ports, and adjusting seaport planning and developing the sea fleet... Sea port infrastructures and connecting sea port infrastructures to ports and railroads have been kept improving and legal document system, administration procedures have also been kept improving in the direction that support enterprises’ activities most.

In the planning to develop transport till 2020, one of the targets is to meet the transport needs with good quality and reasonable fees, with accident and pollution reductions. In the past few years, there has been a breakthrough in calling for socialization in investing in transport infrastructure. Only in 2014, the Ministry of Transport has mobilized BOT investments in 17 projects in National Highway 1 and 3 others in National Highway 14 with the investment capital of VND 43,000bn. Most capitals attracted were in the time from 2012-2014.

It is expected that from 2016-2020 there will be a large number of capital, up to around VND 235,000bn, from outside to invest in transport. Not focusing on road transport only, other fields will be called for capitalsfrom socialization as North-South railroad, Long Thanh international airport, and other projects of sea ports and local waterway...

According to the Vietnam Maritime Administration, there have been active signals in the Vietnam’s fleet. Vietnam-flagged fleet has been able to be in charge of 100% local cargo, except those that need special-use vessels... Around 400 vessels participating in international transport, mostly operating on routes in Southeast Asia, China... Import-export containers to Europe and the U.S are mostly in charge by foreign liners. Another good signal was Vietnam has come out the “blacklist” of vessels captured abroad due to bad conditions. In short, potential and needs to invest in maritime transport is great.

MORE TRANSPARENT POLICIES

From experts, reasons for noticeable improvements mostly from the fact that legal conditions have been more transparent, especially barriers on foreign possessions have reduces thanks to commitments when joining WTO and especially with the support from authorities of all levels. Besides, other transparent policies have been issued, with resolutions on fees and on-time guidelines. At the same time, we have favorable financial market and reduced interests...

With recent new basic innovations from the Ministry of Transport, together with lifting barriers for foreign investors in possessions and in conditions to join the market, it is predicted that Vietnam logistics will be more eventful with merger and acquisition (M&A) activities. More and more foreign investors have paid much attention to Vietnam market, especially in the field of consuming goods, which leads to eventful M&A activities.

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