Solution for logistics development in Viet Nam

DEVELOPING LOGISTICS NEEDS

There should be a focus on local companies, import-export, and foreign capital ones to develop logistics needs. According to WB rating, Vietnam, with an above average LPI, shows the Vietnam logistics has a potential for high growth rate. High import-export turnover and total retail sales show factors boosting strongly the development of the logistics sector. For the market has been dominant by foreign capital company, the parts of market with needs that Vietnam logistics companies should focus on are local and import-export enterprises.

To develop the market, it is important local companies should heighten awareness of these enterprises about benefits of logistics services. Many local enterprises currently have not realized the benefits of logistics services in cost cutting.

In Vietnam, cargo goes through many intermediate stages, which leads to an increase in transaction cost and prices. Besides, enterprises have not been familiar with outsourcing services, and are likely to carry out logistics activities by themselves, which is resulted in the need of large investment capital but not having very high quality.

DEVELOPING LOGISTICS SERVICE PROVIDING SYSTEM

It is an important requirement to develop types of logistics services. Vietnam logistics enterprises mostly focus on small parts in the logistics services supply chain: freight forwarding. This is a very small part in the whole logistics service value added chain. Enterprises should diversify their services as air forwarding, maritime forwarding, quick consolidation or order management… To approach the provisions of new services, enterprises should ensure quality services and reduce cost of providing services by renovating old facilities, buying new specialized equipments, applying advanced logistics administration methods, applying new quality standards… In the process of operation and development, enterprises should have consistent strategies of diversifying types of providing services, aiming to full package services and to the full participation in the clients’ supply chains.

Due to small scale and limited ability, Vietnam enterprises are likely to provide services alone. In the coming time, enterprises should cooperate with foreign partners when providing services to make the process of providing logistics services a standard one. The cooperation with foreign partners will benefit the enterprises: having opportunity to approach management experience, management methods of logistics system; having financial aid; approaching larger markets…

Types of logistics services should be developed in diversifications in appearance, scale, methods and operation… In addition, administrative procedures should be simplified as well as conditions to participate in or to withdraw from the market, which enables more investors and enterprises to take part in the market.

DEVELOPING LOGISTICS INFRASTRUCTURE

Improving existing infrastructure by constructing deep-water port and regional ports; establishing logistics centers at transport hubs that facilitate transportation; gradually upgrade key routes, forming a modern and synchronous road network in the three key economic zones; developing relationship with surrounding countries.

Developing with emphasis on developing seaports: 98% of container transport of import-export cargo is in HCMC’s and Hai Phong’s ports. However, these ones have inadequate navigation ways and depth, it is important to build deep water ports in the coming time. In addition, dredging and upgrading work should be done to passages in the ports to increase their capacity. Encouraging competitions among port for highest capacity of existing ports. Renewing loading/ unloading equipments and coordinating with other transport modals; encouraging the provision of value added services at ports together with functions of modern warehouses.

Solving technological “bottle necks” of the system in order to increase effect and reduce logistics cost; for sea infrastructure, upgrading port systems and fleets; for river infrastructure, building ports with investment in appropriate equipments on main routes; for railroad infrastructure, improving and upgrading existing railroads and studying for building North-South Express railroad; for road infrastructure, upgrading existing roads by enlarging road width and increasing rate of paved road.