In the next six years, the marine shipping will change dramatically from what it has traditionally been run and thousands of Vietnamese container and logistics firms will suffer substantial impacts. It requires them to join hands to pilot digitalized measures based on practical demands and operations of the market.

Managing Director of Marine Connections Vietnam JSC Nguyen Xuan Vinh said sea transportation will continue its momentum as well as see fierce competition of large shipping firms in the world. For that reason, they have to build larger ships which can load up more goods to reduce costs.

Gemadept in Vietnam. Photo: Gemadept

Japanese firms join the market

To take advantage of Vietnam’s logistics market, Sumitomo has invested US$37 million in a major port operator in Vietnam, aiming to seize growing demand for logistics services as manufacturers shift production to the Southeast Asian country amid the yearlong US-China trade war.

SSJ Consulting Vietnam Llc, a company in which Sumitomo Corp owns a 51% stake, has acquired a 10% stake in Gemadept Corp.

Currently, Sumitomo operates three industrial parks near Hanoi and owns a logistics company in the country.

Sumitomo is among the growing ranks of companies eager to cash in on the production shift away from China triggered by the trade war, Nikkei reported, adding that the Japanese firm plans to build a logistics network connecting plants to ports for seamless export of locally produced goods.

Gemadept owns six ports in Vietnam, handling 1.7 million containers for an over 10% market share. In 2018, its ports handled 524.7 million tons of goods, up 19% from 2017, according to the Vietnam Maritime Administration.

The tie-up will undertake shipment for factories, logistics facilities, and ports under Sumitomo’s management, enabling the company to work for more efficiency and cost reduction.

To facilitate the shipment, Sumitomo will develop a smartphone app that will enable truck drivers to reserve loading processes at ports and electronically handle other paperwork.

To save cost, Sumitomo plans to use expertise in Vietnam by shortening waiting time of a cargo to be loaded onto ships which currently takes one to two hours at Haiphong port, the facility about 150 km away from Hanoi.

Tracking the movements of trucks will allow cargo to be loaded both ways. If all trucks carry cargo on both ways for the trip between Hanoi and Haiphong, it would result in annual savings of US$18 million, Sumitomo estimates.

Increased exports have also boosted demand for cardboard boxes, which are used to ship electronics and apparel products. Goods shipped in cardboard boxes account for 60% of total exports out of Vietnam in monetary terms.

Another Japanese trading house, Marubeni, is building a cardboard box plant outside Ho Chi Minh City at a cost of US$110 million which is expected to come operational in 2020. The plant will have an annual capacity of 350,000 tons and will help Marubeni’s quest for top market share in the country.