Developing a research model of the factors affecting the development of logistics activities in Vietnam’s seafood industry by using the PEST Analysis

DAO HONG VAN (Lecturer, East Asia University of Technology)

ABSTRACT:

This study is to develop a research model of the factors affecting the development of logistics activities in Vietnam’s seafood industry by using the PEST Analysis (political, economic, social and technological). This study analyzes the impacts of these following factors: policy environment, market capacity, human resources in logistics, information technology, infrastructure and equipment, integration, and future prospects of logistics in the seafood industry on the development of logistics activities in Vietnam’s seafood industry. This study’s conclusions are expected to help policymakers to cary out policies on improving logistics activities in the seafood industry in Vietnam.

Keywords: logistics development, seafood industry, PEST analysis.

1. Introduction

Although the seafood industry can be considered a strong industry of Vietnam in the global market, its potential has not been fully exploited yet. In particular, Vietnam has a coastline of more than 3.200 km with many islands, gulfs and ten thousand hectares of inland lagoons, ponds and lakes. Vietnam’s sea is located at the intersection of the main fishing grounds, so it is considered to have a large and abundant seafood resources. Vietnam has strengths in exploiting and aquaculture in all saline, fresh and brackish water areas. The exclusive maritime economic zone of about 1 million km2 brings 1.2-1.4 million tons of seafood every year.

Developing logistics in the seafood industry, therefore, can be considered a tool for Vietnam’s economic growth. This study builds a model of factors affecting logistics development in Vietnam’s seafood industry, which is helpful for decision makers to improve the effectiveness of commercial activities relating to seafood.

2. Literature review

There are many studies related to logistics and seafood industry in the world, but the works combining these two contents in the same topic and delve into the research on "logistics development in the seafood industry” have not popular yet. Here are some studies relating to logistics in the seafood industry:

M.A. Rimmer and B. Franklin (1997) published the study named "Development of Live Fish Transport Techniques". This research was conducted in Australia. This report provides and analyzes in detail the different aspects of shipping fresh fish. However, keeping the fresh fish quality from the sea to the mainland during transportation poses a big problem. The main effects of water quality encountered by fish during transport are low dissolved oxygen concentrations due to respiratory oxygen consumption; accumulation of carbon dioxide from respiration; decrease in pH due to carbon dioxide accumulation; and an increase in ammonia concentration due to ammonia excretion, in which an experiment examined different water quality and the results indicated that carbon dioxide accumulation was the main limiting factor affecting fish life during transport of alive fish. High levels of carbon dioxide cause hypercapnia and narcotize, and eventually kill fish. The study goes into this issue and finds solutions that help Australia overcome these problems. The greatest success of this study is to devise and evaluate Australian methods of transporting and preserving seafood products while implementing supply chains in the market.

Alastair Iles (2006) published the study named "Making the seafood industry more sustainable: creating production chain transparency and accountability". The seafood sector has been experimenting with market-based approaches in the US and Europe since the mid-1990s. These include consumer campaigns and Marine Stewardship Council’s certifications. Such consumption strategies have made progress but need to focus more on production and consumption. This article argues that seafood producers may be more responsible for their production impacts through a production chain perspective, making producers more transparent and creating chain pressure. manufacturing.

Lynda Haughney (2018) published the study named "Logistics Issues in Scotland's Aquaculture Industry" in HITRANS and HIE's FISH’N’TRIPS Science Project. The study explores ways to identify empirical evidence for the problems of transport and logistics faced by the Scottish aquaculture industry, and especially where these problems may hinder future growth. The author sought to take a holistic view of the entire industry, but also to identify those issues related to specific parts of aquaculture production, or is related to specific regions of Scotland. The purpose of the study’s interview is to delve into the current and future routes and flows of inputs and outputs in aquaculture production processes, and also to discover problems and limitations now and in the future.

3. Methodology

3.1. Data collection method

EFA factor analysis is applicable only when the size of the samples is at least 5 times the total number of observed variables (Hair et al, 2018). The study has 33 observed variables, so the minimum number of samples is 165.

For multivariate regression analysis, the minimum sample size is calculated by the formula of 50 + 8 x m (m: number of independent variables) (Tabachnick and Fidell, 1996). The study has 6 independent variables, so the minimum sample size is 98. Thus, in order to identify the factors affecting the development of logistics in the seafood industry, the study conducted in-depth interviews and structured questionnaire surveys for aquaculture businesses. The number of votes collected was 500, of which 483 were enough information to be used for analysis (96.6%).

The questionnaire is designed with closed-ended questions to ask businesses to evaluate the current status of logistics development in the seafood industry. Ratings using the Likert scale with 7 levels, from 1 = strongly disagree to 7 = strongly agree.

3.2. Model building basis

The author has built a set of criteria to evaluate the development of logistics in the seafood industry by using PEST Analysis, including: (1) Policy environment factors; (2) Market capacity factors; (3) Logistics human resources; (4) Information technology factors; (5) Infrastructures and equipment factors; (6) Integration factors; and (7) Future perspective of logistics in the seafood industry factors.

4. Results and discussion

4.1. Sample description statistics

From 500 questionnaire samples, the author collected 483 valid responses, in which 5 were invalid, 10 were incomplete, the remaining 2 rated at the same level. The results are classified according to the following criteria:

- Gender: Male 37.27%, Female: 62.73%

- Age: From 25 to 35: 24.63%, From 35 to 45: 38.71%, From 45 to 55: 32.72%, Others: 4.06%

- Area: North: 29.39%, Middle: 30.86%, South: 39.75%

- The type of cooperationg company: 1PL: 32.5%, 2PL: 45.34%, 3PL: 22.13%, 4PL & 5PL: 0%

4.1.1. Policy environment factors

The analysis of the policy environment factors shows that the observed variable has a low average value and not much difference, namely: the observed variable on "There are many preferential policies for investment and market access for logistics in the seafood industry - MTCS2” has the lowest value among the factors, which is 4.3424. Its minimum value is 1 and maximum value is 6. The average value of MTCS2 is neutral, showing that there are currently not many preferential policies for logistics in seafood businesses. Therefore, in the near future, the government should encourage investment in logistics in seafood market in order to promote the industry. In contrast, the observed variable "Simplifying the import and export paperwork and electronic customs procedures to develop better logistics services - MTCS5" has the highest average evaluation value (4.6617). However, this value is not really high, just passing the neutral threshold a little, which shows that despite great efforts in simplifying import and export paperwork, and customs procedures, the government still needs to complete the paperwork declaration policy.

4.1.2. Market capacity factors

The analysis of the factor "market capacity" shows that the observed variable of "The market is increasingly expanding due to international economic integration - DLTT2" has the highest average value (5.3424), with the minimum value is 2 and the maximum value is 7. Currently Vietnam is increasingly strengthening the country’s international cooperation, thereby expanding opportunities for domestic businesses to seek and expand. This leads to an expansion in logistics services in Vietnam's seafood industry. Therefore, the average value of this observed variable is also understandable. In fact, for the export market, the seafood industry has set an export target for 2019 of USD 3.5 billion, which is equivalent to an increase of 17%; export target to EU is USD 420 million, which is equivalent to an increase of 8%. Exports to other markets such as Japan, Korea, and the USA are forecast to increase sharply. Specifically, exports to Japan are expected to reach US$ 900 million, which is equivalent to an increase of 27%; South Korea market is expected to reach US$ 600 million, up 27% over the previous year; the US market reached US$ 480 million, which is equivalent to an increase of 10%; ASEAN is expected to reach US$ 480 million, which is equivalent to an increase of 18% ...

However, the observed variable “The logistics capacity of your business has met the market demand_DLTT5” has the lowest value, which indicates that logistics enterprises' capacity has not yet met the needs. This is a matter of concern when Vietnam integrates internationally and participates in the global market. If Vietnam's logistics enterprises do not have good strategies to improve their service capacity, they will lose their domestic market and cannot participate in the international market.

4.1.3. Logistics human resources factors

The analysis of the "logistics human resources" factors shows that the observed variable of "Whether the employee's professional qualifications or skills meet the customers' needs - NNL1" has the lowest average value (4.2129), with minimum value is 1 and maximum value is 6. The fact shows that the current human resources working in logistics services in the seafood industry are mainly vocational trained or only be trained through working process. The rate of staff with professional skills is limited. Therefore, training human resources should be a special priority in the strategies of developing logistics services. On the other hand, the factor "Employees always show a warm and enthusiastic professional working attitude - NNL2" is rated quite good (at 5.3796), which shows the enthusiasm and love for the job of logistics staff in the seafood industry.

4.1.4. Information technology factors

The analysis of the Information technology factors shows that the observed variable "Enterprises’ information about customers who use logistics services is accurate and updated - CNTT5" has the lowest average value at 3.6842. This shows that the application of technology in searching for customers’ information has not been developed. In fact, logistics enterprises do not have a list of potential customers, as well as technology to find new customers. This explains why they cannot optimize the means of transportation, leading to the phenomenon that many cars only carry one-way goods, which create high costs.

In contrast, the observed variable "With the support of information technology software, your work is solved more quickly and more effectively - CNTT3" has the highest average value, at 4.4753. This shows that when logistics businesses in the seafood industry apply software, it will help to solve the job more conveniently and quickly. For example, enterprises can process, check and track their orders easier. However, the number of enterprises applying software to monitor the process of circulation and cold storage is not much. In fact, the application of information technology in business activities of Vietnamese enterprises is still far behind the international level. Website construction is an instance, most of the websites of Vietnamese enterprises only introduce themselves, but do not provide utilities and interactions that customers really need, such as tools to track orders, shipping schedules, or documents ... Therefore, websites of Vietnamese logistics companies are not highly appreciated by shippers when choosing their logistics service provider.

4.1.5. Infrastructures and equipment factors

The analysis of the infrastructures and equipment factors shows that the observed variable "The synchronization of infrastructures in seafood product shipping - HTTB3" has the lowest average value at 3.9867, with the minimum value 1 and the maximum value is 7. The fact shows that the lack of uniformity is most noticeable between the seaport and the road, railway and after-service support system. Besides, there is a lack of logistics centers with convenient locations in each key economic region. In contrast, the observed variable “The company's transport means is equipped with suitable equipment to seafood products such as: refrigeration container, cold storage - HTTB1” has the highest average value at 4.3183. This value, however, is not high, which shows that although the means of transport are equipped fully, the quality of equipment and the level of conformity with the characteristics of seafood products is not high. A survey by the Marine Research Institute shows that there is a lack of deep-freezing warehouses to store seafood, and commercial cold storage with large capacity is mostly concentrated in the Southeast region (Ho Chi Minh City and Binh Duong). In areas where there is a need for key aquatic product reserves such as An Giang, Dong Thap, Ca Mau, Kien Giang and Ben Tre Provinces, there is not enough warehouse. Areas such as Saigon Port and Hai Phong Port do not have a bonded cold storage for import and export of seafood and vegetables. A system of standard cold storage systems has not yet been established to serve distribution in large commercial and urban centers throughout the country. There is no system of bonded cold storage located in big consumer markets such as the EU, the US, and Japan. Regarding technology, there are many cold storages with old equipment and management method, and unqualified temperatures affecting the products of businesses.

4.1.6. Integration factors

The results of the integration factor analysis show that the observed variable of "Participation in Trade Agreements and International Organizations has impacted on the development of logistics in the seafood industry - HN3" has the highest average value among the factors, at 5.7295, with the minimum value is 1 and the maximum value is 7. The fact shows that, when participating in the international agreements and organizations, Vietnamese seafood products have more opportunities to enter the international market deeply and widely, which in turn push logistics in the seafood industry. For example, the WTO Agreement is gradually removing restrictions on FDI in Vietnamese logistics. This leads to more international logistics enterprises to enter Vietnamese market, more joint venture between international and domestic companies, and more consolidation service providers. Therefore, Vietnamese logistics in the seafood industry begins to mature and can offer complex services.

Along with that, the factor "The trend of using outsourced logistics services of seafood processing enterprises is increasing - HN1" is rated at the lowest level of 5.243, but this value compared to other factor groups is quite high. This shows that the demand for logistics services of seafood processing enterprises is increasing. This is also consistent with the fact that when integrating, seafood products are not only sold in the domestic market, but the international market is also increasingly expanding. Therefore, Vietnamese logistics is requiring more complex logistics processes, and highly specialized businesses in logistics in the seafood industry in order to meet the needs of seafood businesses and consumers in the world market.

4.1.7. Future perspective of logistics in the seafood industry factors

The analysis of the future perspective of logistics in the seafood industry factors shows that the observed variable of "The prices of logistics services in the seafood industry are suitable - PT1" has the lowest average value at 3.2473, with the minimum value is 1 and the maximum value is 5. In fact, Vietnam's logistics costs in the seafood industry are at a very high level. According to the leaders of the Ministry of Industry and Trade, the cost of transporting a shrimp from the Mekong Delta to the northern border of Vietnam is higher than from Ecuador to Vietnam. Deputy Minister of Industry and Trade Tran Quoc Khanh said that in developed countries, logistics costs only account for 10 - 20% of GDP while in Vietnam, these costs can reach over 20% of GDP. According to the leaders of the Ministry of Industry and Trade, the reason is that the logistics system has not been developed equally in all localities and only concentrated in big cities such as Hanoi, Da Nang and Ho Chi Minh City while in many places such as the Mekong Delta, which is considered the largest granary and seafood in the country, this service is underdeveloped.

However, the “Logistics supplying services in the seafood industry will thrive - PT6" is highly appreciated with its average value is 5.0271. This shows that businesses highly appreciate the opportunity for the development of Vietnam's logistics in the seafood industry. In fact, Vietnamese logistics in the seafood industry has opportunities to develop due to an increase in domestic supply as well as domestic and international demand.

5. Conclusions

- Policy environment factors: Not many policies affect the development of logistics in the seafood industry, and the paperwork processes need to be improved;

- Market capacity factors: The market is increasingly expanding but our business’ capacity has not met the demand yet;

- Logistics human resources factors: Lack of professional staff but the enthusiasm and love for the job is quite high;

- Information technology factors: The application of technology in searching for customers’ information has not been developed but the appliance of software helps to solve the job more conveniently and quickly;

- Infrastructures and equipment factors: the lack of uniformity is most noticeable between the seaport and the road, railway and after-service support system;

- Integration factors: when participating in the international agreements and organizations, Vietnamese seafood products have more opportunities to enter the international market deeply and widely.

REFERENCES:

  1. Alastair Iles. (2006). Making the seafood industry more sustainable: creating production chain transparency and accountability. Journal of Cleaner Production, 15(6), 577-589.
  2. Bạch Huệ (2019), 3,5 tỷ USD xuất khẩu hải sản và chiếc 'thẻ vàng' của EU, <https://vneconomy.vn/35-ty-usd-xuat-khau-hai-san-va-chiec-the-vang-cua-eu.htm>, accessed 10 December 2020.
  3. Joseph F. Hair JR., William C. Black, Barry J. Babin et al. (2018). Multivariate data analysis. Boston, Massachusetts: Cengage.
  4. Lynda Haughney. (2018). The logistics issues faced by the Scottish aquaculture industry. FISH’N’TRIPS Science Project.
  5. A. Rimmer and B. Franklin. (1997). Development of Live Fish Transport Techniques. FRDC Projects, 93, 184 - 185.
  6. Minh Trí (2016), Cơ sở hạ tầng - cản ngại cho phát triển logistics, Doanh nhân Sài Gòn online, <https://doanhnhansaigon.vn/di-nghi-viet/co-so-ha-tang-can-ngai-cho-phat-trien-logistics-1075062.html>.

Xây dựng mô hình các nhân tố ảnh hưởng đến phát triển logistics ngành Hải sản tại Việt Nam bằng phương pháp phân tích PEST

ThS. Đào Hồng Vân

Giảng viên Trường Đại học Đông Á

TÓM TẮT:

Nghiên cứu này nhằm xây dựng mô hình các nhân tố ảnh hưởng đến sự phát triển của hoạt động logistics trong ngành Hải sản tại Việt Nam bằng việc sử dụng phương pháp phân tích P.E.S.T (chính trị, kinh tế, xã hội và công nghệ). Nghiên cứu phân tích sự ảnh hưởng của các nhân tố, gồm môi trường chính sách, dung lượng thị trường, nguồn nhân lực logistics, công nghệ thông tin, cơ sở hạ tầng và thiết bị, hội nhập, và viễn cảnh tương lai của logistics trong ngành Hải sản đến sự phát triển của hoạt động logistics trong ngành Hải sản tại Việt Nam. Các kết luận được đưa ra trong nghiên cứu này sẽ là nền tảng cho việc hoạch định chính sách cải thiện hoạt động logistics trong ngành Hải sản tại Việt Nam.

Từ khóa: phát triển logistics, ngành Hải sản, phân tích PEST.

[Tạp chí Công Thương - Các kết quả nghiên cứu khoa học và ứng dụng công nghệ, Số 17, tháng 7 năm 2021]