CEO of U&I Logistics, Nguyen Xuan Phuc: "We haven't formed many alliances to create large joint ventures to counterbalance foreign logistics companies"

… Meeting me at the U&I Logistics office in Ho Chi Minh City. From the 10th floor of the AP building, looking through the large glass wall down to Dien Bien Phu Street during rush hour... Mr. Phuc spontaneously shared, "If we can build strong teams and cooperate well, each business will optimize its own resources and actively and effectively participate in providing logistics services to domestic companies, aiming to expand services to foreign markets." And after that sharing, I began the conversation with Mr. Phuc.

+ Hello Mr. Nguyen Xuan Phuc, let's start our discussion as scheduled. According to Phúc, what factors are driving the development of the logistics industry today?

Mr. Nguyen Xuan Phuc: Logistics is closely linked to the production and transportation of goods. From a global perspective, despite the geopolitical developments and pandemics affecting trade and consumption in recent years, I believe this has only changed the way goods are produced and transported. The logistics industry is still growing, and in fact, it appears to be more diverse and complex than before.

+ U&I Logistics is currently known as one of the leading units in this field. Can you share specific stories about how your company is adapting to the ongoing challenges?

Mr. Nguyen Xuan Phuc: Depending on each market stage, U&I Logistics will have appropriate strategies. However, the consistent strategy that U&I always pursues is to perfect all stages in the service provision process, build a sufficiently large and reputable service network to serve customers, and ensure to implement the motto "for the benefit of customers first."

+ Currently, new technologies like artificial intelligence (AI) and blockchain are changing the face of the logistics industry. What potential do you see these technologies having in improving the process of transporting and storing goods?

Mr. Nguyen Xuan Phuc: Technology is gradually penetrating deeply into life, including the logistics industry. The logistics industry itself is actively and positively absorbing the benefits that technology brings. I won't talk broadly about the impact of technology on improving the process of transporting and storing goods, but I will give a specific example about U&I Logistics. Since we digitized and applied technologies in managing and operating the supply chain, labor productivity has increased by about 30%, and management and operating costs have significantly decreased. Service quality has also been elevated since we introduced an ecosystem of technology applications into operation.

+ What is your view on the role of automation in logistics operations? Do you think this could create opportunities or challenges for businesses in this field?

Mr. Nguyen Xuan Phuc: Automation, as I understand it, is the replacement of human labor with technology and robots. I also acknowledge that, across the entire supply chain, some stages are more automated than others. The distribution warehouse sector is seeing an increasing number of robots. Or in port operations, some ports have automated handling equipment. Automation will be a general trend and an opportunity for businesses that take the right direction in this field.

+ The logistics market in Vietnam is becoming more competitive than ever. In your opinion, what factors will shape the overall picture of the logistics "playing field" in the near future?

Mr. Nguyen Xuan Phuc: Indeed, the logistics market in Vietnam is highly competitive. We not only see competition among companies in various logistics service sectors, but also competition at the local level, reflected in infrastructure investment, planning orientation, and the ability to attract high-quality human resources in the industry. Regarding competition among businesses, there is a classic statement about competition that I believe still holds true: "Competition is good because it forces us to strive to do our best." This statement implies that only companies that excel in their field of business can survive and thrive in the market. The harsh filtering effect of competition drives the market to a state where only the big players dominate, and small businesses may gradually disappear or be confined to niche markets. However, according to me, excessively fierce competition that leads to destructive competition is a scenario we need to avoid. Sometimes small businesses, with limited financial resources, still have useful ideas and solutions that the market always needs. Large companies may face issues stemming from their very size, such as bureaucracy and slow adaptation to change.

+ In logistics operations, supply chain management is becoming a decisive factor in the success or failure of a business. What do you think is most important for managing an effective supply chain?

Mr. Nguyen Xuan Phuc: When we mention a chain, we naturally understand that it consists of many different links. In the field of logistics and supply chain management, risks are always present and can occur at any link in the supply chain. To manage an effective supply chain, businesses need to understand the risks that can occur within the supply chain, have specific risk management plans, and contingency plans in place when risks occur.

+ For a country like Vietnam, with its unique logistics activities, do you think the government, ministries, and local authorities need to change their approach and make suitable adjustments to support the development of this industry?

Mr. Nguyen Xuan Phuc: 20 or 30 years ago, logistics was not mentioned much in policy planning. After Vietnam joined the WTO, logistics began to be discussed more. We now have the annual national logistics forum; in 2017, the Prime Minister signed Decision 200/QD-TTg approving the Action Plan to enhance the competitiveness and development of Vietnam's logistics services by 2025, the first national-level action plan for Vietnam; currently, the Ministry of Industry and Trade is finalizing the draft Strategy for the Development of Vietnam's Logistics Services to 2030, with a vision to 2050.

It can be seen that logistics has now become a key area in policy planning, which is very positive and necessary. The government and ministries are taking the right direction, but issues related to regional linkage, which affect the quality of logistics activities, have, for many years, only been addressed in conferences and resolutions without specific changes. We may need the establishment of a National Logistics Committee to unify coordination and communication between ministries, local authorities, associations, and businesses, and I understand this is also being discussed.

The logistics service industry includes many fields managed by various ministries, and without linkage and coordination, it can easily create bottlenecks.

+ The international market is shifting towards multilateralism and global cooperation. In this context, what significant steps has U&I Logistics taken to develop its business and international cooperation?

Mr. Nguyen Xuan Phuc: In our development journey, U&I Logistics is no stranger to global-scale cooperation. In 2006, when we identified our main segment as the manufacturing and distribution of household furniture, with the motto "For the benefit of the customer first," U&I Logistics embarked on a long journey to win over a major customer from North America. This involved continuous and close exchanges with the partner, even conducting on-site visits to the customer’s facilities in the U.S. From there, we managed all stages, from importing goods at manufacturing plants in Binh Duong, warehousing, customs clearance, to multimodal transportation delivery to the customer's stores in the U.S.

As a result, U&I Logistics has gained the trust of customers in the U.S., Europe, China, Taiwan, and other markets. The name U&I Logistics in the field of bonded warehouse services for wood and furniture products began to gain international recognition from this period.

+ The global business environment is currently facing many challenges such as the post-Covid-19 situation, geopolitical conflicts, trade wars, and droughts. According to Phuc, how should the logistics industry adapt and adjust to cope with these fluctuations?

Mr. Nguyen Xuan Phuc: The Covid-19 pandemic has passed, but many geopolitical and trade developments are still unfolding, making it difficult to predict the near future. One thing that is certainly happening is the shifting of supply chains, notably as major manufacturers seek to distribute their production activities across multiple locations. However, this process is not yet complete, so the picture of global trade and production is still taking shape. A logistics company wanting to effectively respond to these fluctuations must first have the most accurate information to make the necessary preparations.

+ In competition, enhancing the ability to innovate is very important. What plans does U&I Logistics have to ensure it remains at the forefront in applying new technologies and advanced management methods?

Mr. Nguyen Xuan Phuc: U&I Logistics is always ready to apply new technologies and open to advanced management methods, but we do not think of ourselves as being at the forefront. I believe each business will be in its own state when the wave of technology and digital transformation hits, and how to respond will depend on the state of each business. Being ahead or behind is not the main issue; the important thing is to be alongside our customers and answer the question, "What do our customers gain?" If we pioneer the development or purchase of advanced technologies and expensive software but the benefits to customers are unclear, then that innovation, I think, is "change" but not truly "new."

Speaking further about innovation, I know some companies in the industry are also undergoing significant transformation. For example, the SP-ITC port in Thu Duc City, which developed its own port management software and operates efficiently, contributing to making SP-ITC the second-largest import-export gateway in Ho Chi Minh City, after Cat Lai port. Port management software is not new, but the fact that a port in Vietnam independently researched and developed it is truly remarkable, as major ports in Vietnam typically use software purchased from abroad. I think we need to spread more stories of such innovation. Mr. Hoang, the CEO of SP-ITC, is also very enthusiastic about the process of technological innovation and operational process improvement at SP-ITC.

+ The global logistics market is shifting with the rise of e-commerce and personalized consumer trends. How does U&I Logistics perceive and capitalize on these changes?

Mr. Nguyen Xuan Phuc: Every trend brings opportunities and, of course, risks. As a leading logistics service company, U&I Logistics has recognized this trend and is having discussions with potential partners to make market moves and investment decisions that capitalize on the opportunities that e-commerce presents, leveraging U&I Logistics' existing strengths and reputation.

+ To build and operate an efficient logistics system, data management plays a crucial role. How does U&I Logistics use data to improve its operations?

Mr. Nguyen Xuan Phuc: Nowadays, we see that many universities are offering data science programs, similar to how they previously introduced marketing and logistics and supply chain management courses. Phuc and you would agree that educational programs reflect the needs of society and the economy.

U&I Logistics has an ecosystem of technology applications and uses these applications within the ecosystem to collect and process data. The centralized system manages the data and generates the most detailed business intelligence (BI) reports possible to support planning and decision-making.

+ Lastly, what do you think will be the deciding factor for the future of Vietnam's logistics industry in the next decade?

Mr. Nguyen Xuan Phuc: I don't believe there is a single or a few isolated factors that will determine the future of the logistics industry in Vietnam. Instead, it will be a combination of many different factors, such as the development of e-commerce, relevant planning, supply chain shifts, the quality of human resources, and digitalization - all of these play important roles in the industry's future. In this overall picture, I want to emphasize two aspects. Besides the need for significant investment in logistics infrastructure to improve the quality of logistics services and attract foreign investment, I think the connectivity between Vietnamese businesses is still insufficient. Companies still operate relatively fragmented, and we currently don't have many alliances to create large joint ventures to counterbalance foreign logistics companies, leading to a significant waste of shared resources.

+ Thank you. May your concerns and aspirations become the driving force for the development of Vietnam's logistics industry.

Le Van Hy executes