Vietnam needs to have market leaders in logistics

The Government would continue to support local logistics firms in improving their competitiveness and allocate funds for transport infrastructure development.

In a country home to seaport networks and manufacturing hubs like Vietnam, market-leading logistics companies would improve the overall competitiveness of the sector. 

Deputy Director of the Import-Export Department under the Ministry of Industry and Trade Tran Thanh Hai told The Hanoi Times about the necessity for Vietnam to have market-leading firms in the logistics sector to improve the overall competitiveness.

What is your assessment of the capabilities of local logistics firms, especially in the context of the EU-Vietnam Free Trade Agreement (EVFTA)?

Seen as among the largest in the world and with high annual export growth of up to 24%, the European market offers huge opportunities for both local traders and logistics companies. But the question is whether local firms can grasp this opportunity.

In my view, Vietnamese logistics companies are facing fierce competition from both local and foreign peers, and this will only grow in the future.

It is also worth mentioning that most of Vietnam’s logistics companies are small and medium-sized, with somewhat limited financial capacity and competitiveness. Meanwhile, inadequate transportation infrastructure has also led to higher logistics costs in the country compared to others in the region.

What should local firms focus on to improve service quality, and further contribute to the implementation of the EVFTA?

In order for local firms to take advantage of the EVFTA as well as to address its challenges, the domestic players should be active in forming partnerships with European companies and later integrating into their supply chains. For example, local companies should consider setting up representative offices in Europe to better access customers.  

Throughout this process, Vietnamese firms would be able to learn from their technologies, as well as their modern corporate governance.

But this would require companies to step up efforts in terms of financial capabilities, infrastructure, and human resources.

What are the shortcomings of Vietnam’s logistics sector?

At present, Vietnam does not have market-leading companies in the logistics sector. Such companies would improve the overall competitiveness of the sector, as not everyone can provide all services in the logistics chain.

Amid rising competition in the market, those having advantages in technologies would have the opportunity to thrive. But the most important thing is for companies to be aware of their position in the market and address their weaknesses.

What are the solutions for Vietnamese firms to lower logistics costs?

This would require solutions at the national level. In the long term, Vietnam should focus on developing logistics centers at major seaports to better meet transport demands.

The Ministry of Industry and Trade (MoIT) is committed to supporting more policies for the development of the logistics sector.

On the other hand, local firms should be active in restructuring their operation to optimize efficiency, diversify market options and invest in technologies.

As part of the upcoming strategy for logistics development, the MoIT would facilitate closer cooperation between logistics and trading companies in an effort to reach international markets.

There are also favorable policies in terms of credit access and simplification of administrative procedures to cut costs and save time for local firms.