Logistics enterprises have set out to dig gold, and Vietnam has become the next big battlefield

In recent years, Vietnam's economic data has become more and more eye-catching. In the latest third quarter of 2022, the preliminary statistical result of Vietnam's economic growth rate is 13.67%, setting the highest growth record in decades. The economic growth rate in the first three quarters reached 8.83%, continuing to maintain a leading position among ASEAN countries.

Vietnam's foreign trade has also entered the fast lane. Vietnam's macroeconomic update report in September 2022 released by the World Bank (WB) said that Vietnam's economy, fearless of rising global inflation and weak economic growth of major trading partners, still maintained the momentum of continued recovery. In August, Vietnam's trade surplus in goods was 2.4 billion dollars, of which the year-on-year growth rate of exports in August increased from 9.8% in July to 22.5%, and the growth rate of imports reached 13.3%. At the same time, it has signed a number of free trade agreements (FTAs) with developed countries, including a new generation of free trade agreements that create opportunities for export growth.

In terms of bilateral trade with China, according to Chinese customs statistics, the trade volume between China and Vietnam in 2021 will break through the US $200 billion mark for the first time, reaching US $230.2 billion, an increase of 19.7% in US dollars and 12% in RMB. China continues to become Vietnam's largest trading partner, the second largest export market, and Vietnam's largest import market. Vietnam continues to be China's largest trading partner in ASEAN and China's sixth largest trading partner in the world after the United States, Japan, South Korea, Germany and Australia. It is worth noting that in addition to mobile phones and spare parts, China is a market that consumes a large amount of Vietnamese agricultural products, such as seafood, fruits and vegetables, cashew nuts, coffee, tea, rice, cassava and cassava products, rubber and rubber products. Among them, fruits and vegetables and rubber are two bulk commodities, with both exports to China exceeding US $1 billion.

At the same time, "Made in Vietnam" has risen rapidly. With the continuous industrial transformation in China, Vietnam has shown a partial substitution effect on China's exports in labor-intensive industries, especially in the clothing, shoes and hats, and toys industries with traditional advantages in Vietnam. Benefiting from the unique geographical advantages, cheap and abundant labor force and favorable tax policies, more and more multinational companies have moved their factories to Vietnam, and the production of some high-tech products has also moved to Vietnam. At present, Vietnam has become the most important manufacturing center of Apple outside China, producing a series of key products for Apple, including iPad tablet computers and AirPods headphones.

The growth of production and trade naturally needs the strong support of modern and developed logistics industry. Vietnam's logistics market is growing with the increase of commercial demand, including domestic trade and import and export trade. In 2022, Vietnam's logistics growth rate is expected to reach 13% and continue to show a strong growth trend.

In addition, Vietnam has become the second largest e-commerce market in Southeast Asia after Indonesia. The development of e-commerce has also provided a strong driving force for the rapid development of the logistics industry.

According to the content released in the White Paper on E-commerce in Vietnam in 2022, it will be 2021. Vietnam's e-commerce growth rate reached 16%, and the transaction volume reached 13.7 billion US dollars. It is estimated that Vietnam's e-commerce transactions will reach 16.4 billion US dollars in 2022, an increase of 20%. According to the joint report of Google, Temasek and Bain, Vietnam will become the fastest growing e-commerce market in Southeast Asia. By 2026, the total commodity value (GMV) of e-commerce will reach 56 billion dollars, 4.5 times the estimated value in 2021. Vietnam is also the country with the fastest growth in online shopping demand in Southeast Asia. According to the research of Google and Temasek, from 2015 to 2025, the GMV of e-commerce in Vietnam is expected to grow by 43%, surpassing all other countries in Southeast Asia.

The rapid development of e-commerce has brought great opportunities for Vietnam's logistics industry. The demand and development of the logistics and warehousing industry are most prominent. The representative projects are those of SLP, Logos Property, ESR and other internationally renowned developers. The warehouse is built in accordance with international standards in terms of height, floor tonnage and cargo handling area. It adopts a new generation of high-quality warehouse model and is committed to ensuring the operation, sustainability and efficiency of tenants.

E-commerce development has also brought a lot of development opportunities to Vietnam's "last kilometer" distribution. With the increasing online shopping volume of Vietnamese consumers and enterprises, the demand for delivery is also rising. However, due to weak infrastructure, lack of credit and lack of experience of practitioners, logistics services can not keep pace with the development of e-commerce. The average delivery time of Vietnam's express delivery is up to five or six days, ranking the second lowest in Southeast Asia, and the cost is almost twice the world average.

International logistics enterprises accelerate the layout of Vietnam

Let's take a look at the actions of transnational logistics enterprises in Europe and the United States. Since this year, many international logistics companies have spontaneously expanded their business in Vietnam or announced plans to further invest in local areas. For example, in late March, North American freight giant SEKO Logistics opened an office in Vietnam, with 300000 square meters of storage space, 350 container tractors and 150 freight trucks. Anthony Barnes, CEO of Asia Pacific Division of Express, said that the company saw the growth potential of logistics in Vietnam and was optimistic about the future development of logistics in Vietnam. He believed that with the expansion of bilateral trade, more and more American companies would set up factories or offices in Vietnam.

DHL Express also said in the first half of this year that it would invest in a new project near Hanoi Pai International Airport, the capital of Vietnam. The new facilities are expected to be fully put into operation at the beginning of 2023, with a total utilization space of 4500 square meters, twice the previous storage of the company. In terms of configuration, the new warehouse will adopt integrated solutions including automation, intelligent buildings and energy conservation. In addition, the company has recently improved the freight capacity of two routes, Hanoi Hong Kong and Ho Chi Minh City United States.

Mediterranean Shipping (MSC), the world's largest liner company headquartered in Geneva, Switzerland, said it hoped to build a new transshipment terminal in the coastal border area of Ho Chi Minh City to meet Vietnam's growing trade demand.

While international enterprises are stepping up their layout, Chinese enterprises are also on the move. The Cainiao P.A.T warehousing and logistics center of Alibaba Group Cainiao Network, located in Binli County, Long'an Province, was officially put into operation in the second quarter of this year, with a total area of 110000 square meters. The freight routes to Hanoi laid out by Shenzhen Yunlian Technology Logistics Co., Ltd. will also facilitate the economic and trade exchanges between Shenzhen and the Pearl River Delta region and Vietnam, effectively help the cross-border e-commerce in Shenzhen and the Pearl River Delta region go to sea, and strengthen the economic and trade exchanges with Vietnam. And the progress of Chinese express enterprises in Vietnam is in full swing. At present, Shunfeng, Baishi, Yuantong and other domestic express delivery enterprises have all carried out business in Vietnam. They have launched fierce competition based on their own advantages and are called "from home to abroad" by the media.

As an emerging market, Vietnam has a lot of opportunities for logistics, but there are a lot of problems. If enterprises want to dig gold, where should they start?

Know yourself and your enemy, and you will never be defeated in a hundred battles. It is necessary to understand the main problems restricting the development of Vietnam's logistics. In addition to the problems closely related to the government, such as the imperfect industrial policies, regulations and systems, the lack of supervision and guidance system, the weak infrastructure construction, and the complex import and export procedures that affect the operation efficiency, Vietnam's logistics development still has great pain points: First, Vietnam's logistics has a low level of informatization in all aspects; Second, Vietnam's logistics enterprises are large in number and small in scale, which is difficult to produce scale benefits,; Third, there is a large talent gap. In a word, we need to make use of foreign logistics talent training experience and technical advantages to promote logistics development. Specifically:

At present, Vietnamese enterprises are far behind their foreign counterparts in adopting new technologies in logistics services. Vietnam Institute of Logistics Development (VLI) said that digital transformation is urgent and also a prerequisite for enterprise operation. Enterprises participating in a survey conducted by Vietnam Institute of Logistics Development acknowledged that they encountered many obstacles in the process of digital transformation. Although realizing that the effect of digital transformation will increase the labor productivity of the logistics service industry by 30% - 35%, only about 40% of enterprises in the logistics industry have achieved digital transformation.

Vietnam's logistics industry is in urgent need of digital transformation. Recognizing that digital transformation is the key to overcome difficulties, fierce competition and accelerate the development of logistics enterprises, the traditional logistics center is gradually changing to a new generation of logistics center. DHL, FedEx, Maersk, Meiji, CJ, KMTC, etc. have all joined the competition of digital transformation. With the strong development of the 4.0 revolution, the traditional logistics center has gradually changed to a new generation of logistics center, which uses the fourth industrial revolution technology to improve efficiency and productivity.

Chuji Logistics will further seize the opportunity of rapid development of the logistics market, expand functions, standardize management, strengthen services and innovate thinking, and keep pace with the development of the times. Further enhance the sense of responsibility of enterprises, give full play to their unique advantages, and take the fast lane of information development to build enterprises into the wind vane of industry management. Under the technical innovation of heavy cargo transportation, we will strive to build an international logistics service platform for heavy cargo, and go to sea together with other senior units for international exchange and cooperation.

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