Vietnam: Logistics industry’s potential yet to be maximised

Vietnam’s logistics industry has yet to have its potential fully tapped, and the country needs timely solutions to meet the surging demand for logistics infrastructure.

A survey by Savills Vietnam showed that the logistics industry is enjoying significant growth thanks to the expansion of the national economy, manufacturing sectors, and e-commerce.

Vietnam ranked 11th in the 2022 Emerging Market Logistics Index released by logistics and transportation service provider Agility, following only Indonesia, Malaysia and Thailand in the Association of Southeast Asian Nations (ASEAN).

Vietnam’s transportation and logistics market is expected to grow at an estimated compound annual growth rate (CAGR) of 7% in during 2021 – 2026.

Director of Savills Hanoi Matthew Powell held that Vietnam is now a destination for many manufacturing and logistics businesses, especially amid the e-commerce boom. This is coupled with soaring demand for high-quality industrial real estate.

He noted currently, many enterprises find it difficult to search for locations for their factories and warehouses. Industrial parks and logistics establishments, especially around big cities like Hanoi, have high occupancy rates, even up to nearly 100% in many places. Industrial property supply is falling short of businesses’ demand.

Some experts said Vietnam needs timely solutions to meet logistics demand as it holds potential for developing this industry and becoming a logistic centre of the region.

Completing transport infrastructure is also important since it will create an impulse for the logistics industry, they said, elaborating that transportation is one the decisive factors of the success of a supply chain. Businesses will seek places with completed transport infrastructure to locate their factories and warehouses to make it more conducive for transporting goods to the domestic and foreign markets.

Powell said investors in industrial real estate in Vietnam are paying more attention to the solutions helping enterprises optimising their operational efficiency. They are referring to experience in developed countries like the US, the UK, Singapore, Australia or Japan to make improvements to satisfy logistics demand.

In early 2022, Logos Property, an international logistics developer from Australia, set up a joint venture with Manulife Investment Management to develop a build-to-suit logistics project covering over 116,000sq.m. and worth over 80 million USD in Dong Nai province, a major industrial centre next to the country’s biggest economic hub – Ho Chi Minh City.

Supply shortages provide an opportunity for international real estate developers, Powell opined, noting that foreign capital has been flowing strongly into industrial real estate, so the shortages will soon be resolved in the coming months.

Source: VNA