Insiders appeal for tackling logistics bottlenecks

Despite achieving the impressive annual growth rates ranging from 13 – 15 per cent in recent years, the local logistics sector still falls short of expectations and confronts an array of challenges, largely high service costs and a lack of internal links among domestic entities.

According to the Vietnam Logistics Business Association (VLA), some 10 to 15 per cent of logistics firms operating on a global scale have provided services for the nation, but occupy a 60 per cent share of the local market.

Nguyen Tuong, VLA Deputy General Secretary, cited a logistics performance index (LPI) 2018 report by the World Bank as saying that Vietnam ranked 39th among the 160 surveyed countries, an increase of 25 places against the 2016 rankings.

The local sector plans to move up the LPI rankings by 5 to 10 places in order to keep pace with those of developed countries and this requires great efforts into modernizing the sector, Tuong said.

 Tran Thanh Hai, deputy head of the Import-Export Department under the Ministry of Industry and Trade, said that logistics are one of the key sectors that make significant contributions to the country’s overall economic growth.

 He noted that Prime Minister Nguyen Xuan Phuc and relevant ministries pay close attention to boosting logistics growth as an action plan has been issued to further increase the competitiveness and development of the logistics sector by 2025.

 Nguyen Thanh Phuong, General Director of the Sao Do Group – the investor of Dinh Vu Industrial Park in the northern city of Haiphong, said there is great potential to develop the country’s logistics sector as there remains a big gap in both logistics infrastructure and service quality.

 Indeed, local logistics firms possess a considerable advantage over their overseas rivals in running storage zones and meeting the requirements of customers in terms of market trends and geographic conditions.

 Emerging as a pioneer in applying logistics technologies, Hateco Group has managed to slash its logistics costs thanks to developing a 13 hectare logistics center in Hanoi which operates on Industry 4.0 platforms to categorize goods.

 Tran Thanh Hai called for greater efforts to ease bottlenecks facing the logistics sector with the aim of further accelerating its development.

 Top priority should be given to upgrading logistics infrastructure, particularly road and aviation items, as well as boosting linkages among transport formats and vehicle providers, he stressed.

 Most goods are transported via road, thus leading to increased logistics costs. Extreme difficulties remain over reducing these costs as the development of waterway and railway transportation remains limited.

 Meanwhile, the competitiveness of logistics firms remains low, largely due to a lack of capital and experience in providing overseas services.

 Hai added that another factor for the high costs is poor linkages among different service segments. In fact, local firms have been providing a range of services in storage, transport, and support, thus putting them at a disadvantage in comparison with foreign rivals.

 Nguyen Manh Ha, Director of the Nam Dinh Vu Port JSC, said current levels of high traffic flow pose a threat to the transport progress of logistics firms. Therefore, Ha called upon competent agencies to review the current road planning and seek ways to enhance the development of internal waterways and railway transportation links, in order to cut down logistics costs and improve the overall service quality.

 He asserted the average logistic costs will be halved if the development of waterways and railway transport is further boosted. He explained that internal waterways transport could help to reduce logistics costs by 30 per cent in comparison with road transport.