Vietnam Logistics 2016 goes down?

(Vietnam Logistics Review)According to the bi-annual report on competence and efficiency of logistics activities on national level and the analysis on logistics performance index by WB, Vietnam’s LPI’s went down to the rank of 64 (48 in 2014).

At the end of the last June, World Bank delivered the report “Connecting for competition 2016: Logistics in the global economy”, which first recorded the Vietnam’s LPI went down after the increases in the four previous reports: 5/6 parts of LPI went down, only a part had a slight increase.

Logistics performance index

LPI is calculated from the result of a questionnaire answered by experts operating in the field of logistics worldwide. They, based on their expertise and experience from their tasks of forwarding in their countries, give score to the countries from 1 (the worst score) to 5 for each part. LPI 2016 was made from the answer of 1,051 logistics experts’ worldwide working of the fields of forwarding, import- export and express delivery.

The design of the questionnaire is for qualitative evaluations. According to some experts in logistics field, LPI does not show logistics efficiency of developing in a long-term process for a change in infrastructures and policies of a country will take more time than the duration between two consecutive LPI reports to show the efficiency of logistics activities.

Many countries build their national logistics strategies on their LPI. In France, the government emphasized logistics an important element in their competition ability. France’s LPI, however, was ranked 13th only (2014), after surrounding countries. And the inefficiency resulted in the loss of billion U.S dollars. Countries of V4 (Czech Republic, Slovakia, Poland and Hungary) use LPI to evaluate logistics developments of each country and of the group.

Vietnam LPI goes down - reasons?

Mr. Dao Trong Khoa, Head of Transport Department of Vietnam Logistics Association gave an analysis of the fact that why Vietnam LPI went down while there have been many roads, bridges, and ports having been invested by the Ministry of Transport: We do not have a master plan for logistics centers, LCDs, seaports and river ports) and our management is overlapped, which do not facilitate goods flows: a good planning facilitate goods flow and vice versa.

He added although the General Department of Vietnam Customs attempted to have innovation with VNACCS, and then the Customs Code 2014, Vietnam went down 3 ranks- an issue that relevant organizations and sectors have to pay attention to for on-time resolution. Especially, Vietnam has had inadequate investments to the application of IT.

Mr. Nguyen Duy Minh, General Secretary of VLA said we should ask WB for more detailed explanations for sub-categories in 6 KPIs to identify LPI. In the time to come, ministries and sectors should have researches in facilitating import conditions and make good use of foreign checking services to lessen the burden. We should learn African countries to regulate import quality.

Is it worth worrying?

According to many experts in the sector, we should not be pessimistic although Vietnam LPI went down, many important infrastructure projects is pending, connecting infrastructures of transport hubs as Cai Mep port group is inadequate… For everything has just begun: Cai Mep- Thi Vai group port is busy with 20 service routes from large liners, Lach Huyen port will come into operation in 2018 and business enterprises also considers there have been active changes in from the customs sector’s innovations.

These have been feedbacks to relevant authorized organizations. If there are no serious reviews of the limitations and there have been no improvements, it is such a worry to developments of the Vietnam logistics sector.

Solutions for improving LPI

In the situation of integrating to free trade agreements and AEC, the establishment of a national logistics committee with enough power and resources for a national logistics action plan is a mean to improve Vietnam’s LPI and to bring the logistics sector to a new stature.

To help the logistics sector develop, we need an action strategy of national level. VLA has been assigned by the Ministry of Industry & Commerce to report the logistics situation in Vietnam and to propose national logistics development plan 2015- 2020, vision 2030. On March 30th, 2016, VLA had a seminar on the report. And the Ministry of Industry& Commerce will have the final meeting on August 5th, 2016 to finalize ideas for the Decision on logistics development action plan to be signed by the Prime Minister. The Decision will have the core content of 2-3 pages.

VLA believes their suggestions will get attention from the Ministry of Industry & Commerce and will be put on the proposal on the action plan for Prime Minister’s approval to maintain national competition advantages and to maintain Vietnam’s position in TOP 50 of WB.