Logistics market is currently blooming with the appearance of a number of logistics enterprises. Brand building seems to be a target of enterprises’ competitions. It is quite simple: the tougher the competitions are; the more competitive advantages on products and services enterprises with strong brands can possess. International logistics groups operating in Vietnam as APL Logistics, Maersk Logistics, DHL/Exel SC, NYK Logistics, OOCL Logistics, Kuehne&Nagel, TNT Logistics are strong brands. Therefore, a Vietnamese weak-brand enterprise cannot sell its services. However, to Vietnam’s enterprises, investing in branding is not always an appropriate explaination.
There are around 1,000 logistics enterprises of all sizes operating in Vietnam, including nearly 80% of unregistered medium or small-sized private enterprises, 18% of state-owned, and 2% of foreign ones (chart 1)
The majority of turnover from the logistics service market is belonging to the minority of 2%. They are famed enterprises in the international logistics service market, and their business model cannot be caught up in the short-term period by Vietnam’s enterprises.
In Vietnam logistics market, large international 3PLs normally compete with one another and tries to make their services different by their brands for their services having similar characteristics: fast- on time- having good services and competitive price. It is hard for service users to distinguish big brands in the sector. And thus brands are use to differentiate.
International large 3PLs’ branding normally focuses on these factors: systematic ability, ability to provide pre-eminent IT solutions; global range of activities; commitment of providing high-quality service; ability to provide diversified services; end-to-end serving network; stable finance resources; nationwide stable service quality; innovative solutions; qualified staff; experience in serving different sectors.
From the factors, it can be seen that Vietnam’s logistics enterprises have completely lower service providing abilities and thus cannot be equal competitors to global groups. So should they compete with one another?
To 80% of local medium and small-sized enterprises, the factor of cost is a real challenge. Besides, the limited ability of providing services both in terms of quality and quantity, and the limitation in range are reasons that Vietnam’s enterprises are able to carry out certain parts of the logistics chain. It also means that they will lose the right of choice and their positions in business negotiation. Therefore is it not very necessary for medium and small-sized businesses to invest in branding as they themselves are not qualified enough. There is certainly no enterprise who wants to “wash their dirty linen in public” – to sell bad products. Instead of investing in branding, enterprises should choose appropriate strategies to improve their service quality to meet market’s requirements.
From surveys, there have been two basic approaches for logistics enterprises in Vietnam the past few years:
- Cooperate or JV with foreign enterprises so that they can make good use of advantages from local enterprises to build the brand at the initial phase or to learn experience for further development.
- Cooperate, or JV with local enterprises by the process of M&A or of being satellites for shippers having large-scaled supply chains.
- Process is carried out through various phases, with increasing scale and appropriate market sector, together with human resource training and IT improvement.
- Self invest in enterprises to serve the local market with assistance from experts, local and foreign consultants
- Outsource parts of supply chains from foreign 3PLs, 4PLs.
With forms of cooperation, JV or M&A, medium and small-sized business can make good use of the position of a foreign brand or of a strong brand to develop its own one.
However it is possible for enterprises to build their own brands with self-developed strategies
There are some Vietnam’s enterprises of large and medium scales as Vinafco, Saigon New port, Transimex Saigon, ITL, Vinaline… most of them are state-owned with much advantages on resources and fame as well for having operated in the market for decades and for having considerable experience and customer networks. Branding does need strategies, not reckless investments for service branding has its own features, not like other visible products.
These are some suggestions for branding developments for branding developments
Srong brands need good services. Therefore, there should be more focus on long-term strategies, not short-term ones. 3PLs need to build a long-term branding for service chain, not only combine them all together to make just-in-time solutions.
Establish groups or executives in charge of branding to make sure decisions related to the brand in the future in consistence with what has been built.
Choose or redesign the brand in consistence with targets and business goals of the enterprise in the future. In case there are many brands, integrate them to a single one.
There should be more focus on the relation than on the difference. It is difficult to create the difference for logistics service brands. Brands have almost identical services, so it is very difficult to find the difference among them in the market. So create the relation instead, especially relation that concerns to customers. An ideal service brand is able to combine clients’ requirements, expectations with the brand’s values and characteristics. The method creates the resonance with clients by bringing them important values and help to make a brand authentic, distinctive, and defensive. Besides pay much attention to develop turnover, not market share for clients using logistics services mainly organizations. Outsourcing simple services with low value does not bring fame to the brand compared to providing high value services to large clients in the market.
An integrated media branding strategy should be built. And the strategy should be professionally designed and tested before launching it.
Each staff member is a spokesperson for the brand. There should be contributions from staff to the enterprise’s brand and everyone in the company should take it into account. Service cannot be displayed or tried. So it is the staff that represents the brand. Therefore branding progress inside the company should not be taken lightly.
