Vietnam’s Logistics Development: Changing perceptions, mindsets and actions

Le Van Hy, PHD, Editor-in-chief|16/08/2023 11:30

Editor Letter: There are over 40,000 logistics enterprises operating in Vietnam. The important factor that are posing for the Vietnam’s logistic sector is the need to innovate operations. It is necessary to strengthen linkages and promote digitalization of supply chain processes; to apply technology, automation, artificial intelligence...

We have entered the last month of the first quarter of 2023, in the context that the world is facing many difficulties and challenges: strategic competitions, geopolitical conflicts among major countries, and the lingering Russia-Ukraine conflict. In addition, major economies have experienced economic downturns... Domestically, opportunities and challengers have been intertwined. Some sectors as leather and footwear, wood processing and real estates are facing difficulties as well.

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According to Deputy Minister of Industry- Trade Do Thang Hai, the world economy and global trade have encountered many difficulties since the last months of 2022. Experts predicted that the situation could not be overcome right at the beginning of 2023. The situation will improve slowly in the coming months. One of the biggest factors affecting Vietnam’s exports is that the world’s import demand for the goods in which we have strengths has decreased significantly.

Andrew Huntley- CEO of Investment Consulting Firm BDA Partners- believes that the challenges affecting the Vietnamese economy are due to impacts of uncertainties in the global economy. According to Huntley, Vietnam is a large exporter, so it depends a lot on the world economy. In the context of many economies with reduced consumption and investment, of course, Vietnam’s export volume in 2023 will decrease and be affected.

Another challenge is the double pressure of inflation and interest rates in the context that Vietnam is still heavily dependent on imported raw materials and energy, while costs of these items have increased significantly and will be very high, affecting production activities as well as competition abilities of manufacturing sectors.

From that general picture, Vietnam’s logistics sector is not immune to the consequences. The drop in orders in 2023 has made many logistics service enterprises worried. From mid-2022, sea freight rates decreased deeply, returning to the time before the pandemic; from the lack of empty containers to carry goods, the whole world has an excess of more than 6 million TEUs, signaling that 2023 will be a difficult year for the logistics service sector.

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According to the Agility 2022 ranking, Vietnam’s logistics market is ranked 11th among the top 50 emerging logistics markets globally. Particularly, Vietnam is currently the leading country in ASEAN in terms of the number of logistics service businesses licensed by the U.S. Federal Maritime Commission (FMC). There are over 40,000 logistics enterprises operating in Vietnam.

In addition, there are uncertain factors threatening sustainability of the supply chain such as epidemics, conflicts... and the trend of greening in commercial activities is an inevitable, which will create higher standards, which means more costs for trade activities and logistics services.

The important factor that are posing for the Vietnam’s logistic sector is the need to innovate operations. It is necessary to strengthen linkages and promote digitalization of supply chain processes; to apply technology, automation, artificial intelligence... to solve weaknesses in logistics and goods management activities at a lower cost and in a more timely manner.

Vietnam’s logistics sector needs to join forces, show greater determination, to turn challenges into opportunities, shifting from a passive state to an active one, and from a survival mode to a growth mode in 2023 and creating momentum for the following years.

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