Mr. Do Xuan Quang, VLA Deputy Chairman said the logistics sector has enjoyed annual growth rate of 24 percent in recent years.
Recently, the Government has added several institutions to promote logistics development, more investment in ports, highways and airports as well as electronic customs. Therefore, the administrative procedures, costs and time to facilitate cross-border trade is being reduced. These policies also aim to establish a national single window procedure toward an ASEAN single window.
For Vietnamese logistics firms side, many logisitics enterprises have made investments in human resource, technology and management skills. As a result, their competitiveness has significantly improved compared to five to 10 years ago, Mr. Do Xuan Quang said. Howerver, the preparations for the ASEAN Economic Community and ASEAN+6 which includes ASEAN and six countries, the Republic of Korea, Japan, China, Australia, New Zealand and India of Vietnamese logistics providers have been insufficient compared to Thai logistics providers, according to Mr. Do Xuan Quang.
In lat 2015, the Word Bank forecasted Vietnam’s economic growth of 12 percent by 2020 with export and import turnover standing at $623 billion, boosting demand for logistics services. However, the local logistics sector has largely failed to fully meet demand. According to the VLA, there are about 1,300 logistics companies in the country. Most are small and medium size and short on capital and infrastructure such as warehousing, IT, and even vehicles.
Figures from the VLA also show that the average charter capital of logistics companies is about VND4-6 billion ($180,000 - $270,000). The number of small and medium-sized enterprises account for 72 percent, while the remainder are large enterprises with charter capital of more than VND20 billion ($890,000).
There are only 10 percent of Vietnamese logistics enterprises being equipped with Enterprise Resource Planning systems, 17 percent using Electronic Data Interchange, and most using customs and accounting software. In transport, 19 percent of enterprises use transportation management systems and 29 percent use GPS. Meanwhile, in warehousing, nearly 17 percent use bar code systems and warehouse management software, according to the VLA.
Mr. Do Xuan Quang aid that only 5 to 7 percent of workers are well trained and educated while 85 percent of enterprises must train their workers after they are employed. About 40 percent of logistics companies said their workers satisfy their requirements while 23 percent complained about low skills. According to the VLA, logistics costs in Vietnam represent 25 percent of annual GDP, significantly higher than in countries such as the US, China and Thailand.
Vietnam will need more sophisticated logistics infrastructure and services, strong global transportation networks and, especially, value-added logistics solutions in order to increase Vietnam logistics industry’s competitiveness.
Mr. Nguyen Cam Tu, Deputy Minister of Industry and Trade, said, logistics trading has not had adequate conditions for development in Vietnam though it is considered a cash-cow sector. He said that Vietnam should create favorable conditions for trade activities as well as build an effective logistics sector for better exports. In addition, the country should have high value products in the world market while increasing integration in the seaport sector.
He added that the regulations on border gate trade, especially transport infrastructure and logistics services, had not been given attention. He suggested that Vietnam should improve service quality, infrastructure and trade to promote key export sectors.
According to experts, most Vietnamese enterprises signed import contracts under Cost, Insurance and Freight (CIF) and export contracts under Free on Board (FOB) method, thereby transporting a majority of goods through foreign shipping companies. This was the reason that a relatively big amount of transport fees of $17 billion a year for imported and exported goods were paid to foreign firms.
Logistics included warehouse services, transport and loading. In some countries such as Singapore, the logistics costs accounted for only 12 percent to 15 percent. However, the cost in Vietnam was as high as 20 percent of the total for each export item. In addition, the lack of human resources for logistics services has also affected the competitiveness of exporters.
Experts proposed that Vietnam should have reforms at the macro level, focusing on facilitation of trade activities.
