Logistics industry is one of the fastest growing industries in Vietnam and is estimated to grow at a pace faster than the GDP growth rate. Currently, the logistics service accounts for 15-20% of GDP in Vietnam. However, poor and small logistics infrastructure and – rapidly expanding but currently inadequate – transport infrastructure resulted in a high cost.
Ha Noi, Hai Phong (North), Da Nang (Central) and Ho Chi Minh City (South) are current major logistics hubs in Vietnam. There is an outsourcing trend for logistic services in Vietnam and they are classified in two groups:
- Basic services including outbound transportation/warehousing and inbound transportation/ warehousing.
- Specialized services including warehouse management, inventory management, order processing, vendor management, custom information and support, reverse logistics and climate controlled logistics.
The players in the market are divided into three groups:
- Multinational and joint venture companies (foreign-invested) : targeting global customers in Vietnam by offering logistic packages (such as 3PL package –Third Party Logistics)
- State owned companies/corporations: this group dominates local market on freight transportation and delivery
- Joint Stock and private companies, this group targets customers who are in private sector in Vietnam. Though this group consisting of small & lack of capital local companies but they have potential to develop in the future, currently many of them are competing with players in the first group to offer 3PL package to multinational customers in Vietnam.
Generally, foreign-invested companies can either set up the companies to provide logistics services in Vietnam or participate in some parts of the whole supply chain of services such as follows:
- Warehousing & distribution centers: There are opportunities in setting up warehousing infrastructure, including climate controlled warehousing systems at airports for handling of air freight, at some centers for export such as Da Nang and in the Mekong Delta. Furthermore, warehousing infrastructure should be integrated into other logistics functions such as transportation, inventory management, cold chain, customs facilities and warehouse management.
- Suppliers of software for Warehouse Management System (WMS) and Transportation Management System (TMS) due to lack of these software in most of warehouses and distribution centers in Vietnam.
- Education and training: The lack of skilled and experienced logistics personnel in Vietnam and the growing logistic sector that created a demand in this field. The industry also needs advanced and affordable logistics programs to be introduced in universities/technical schools/ vocational schools.
- Climate controlled logistics: Vietnam exports a lot of seafood, vegetables, flowers and also imports processed food products and drugs. This creates a high demand for climate controlled logistics service. Interational companies can be suppliers of advanced climate controlled warehousing technology, value added services e.g. packaging, tagging, processing of high value seafood for export, etc. Foreign companies can also supply equipment, panels and cold-gas for cold storages and trucks.