Logistics: A promising avenue for startups in Vietnam

13:00 | 27/07/2020 Science - Technology

(VEN) - As Vietnam integrates more deeply and widely into the global economy, the logistics industry plays an increasingly important role and provides promise for startups seeking business opportunities.

a promising avenue for startups in vietnam
The logistics industry has many development opportunities in Vietnam

Technology is the answer

Domestic logistics enterprises need to enhance the application of modern science and technology to improve service quality and competitiveness on various platforms such as navigation, monitoring, and barcode scanning in warehouse management. It also optimizes inventories based on cloud computing technology, and integrates order management services with online sales.

IT application is essential for efficient logistical operations. Whereas a worker handles a maximum of about 100-200 orders per hour, IT application will help increase the handling capacity to hundreds of thousands of orders per hour. IT, automation and artificial intelligence will help control goods, divide and select them better based on encoded data, and minimize manual work.

In Vietnam, a number of logistics start-ups have emerged in recent years to address logistics issues, such as Abivin (building route optimization software, warehouse and transport management for enterprises), Logivan (connecting truck networks with orders), FastGo (connecting drivers with customers), Xeca (selling tickets and transport management for coaches), and more.

Le Manh Cuong, Chair of the Lokaloop Company, said that the government is supporting IT application in logistics supply chains in accordance with global trends. Many businesses are now providing logistics services and startups are applying new technology in order to produce a convenient and effective logistics supply chain at lower costs.

Fear of failure

According to Associate Professor, Dr. Tran Dinh Thien, former Director of the Vietnam Economics Institute, Vietnam’s logistics costs now account for about 20 percent of the country’s GDP, while the world’s average rate is about 11 percent. This is the opportunity for startups to address logistics issues to promote development of this field in Vietnam, and narrow the GDP’s logistics cost gap, which is equivalent to about US$30 billion.

However, the biggest barrier to Vietnamese start-ups stems not only from lack of capital and ideas, but also from young people’s fear of failure. “In foreign countries, they see failure as a normal thing while in Vietnam failed businessmen could easily give up. This is a huge cultural obstacle,” Dr. Thien said.

Tran Thanh Hai, Deputy Director of the Ministry of Industry and Trade’s Foreign Trade Agency, said 98 percent of startups fail but their failure is the foundation for later success. With the right skills and training, young people can further develop the logistics industry, set up big logistics enterprises, and continue the success of businesses and entrepreneurs today.

Most startups focus on a handful of stages while logistics services have 17 sub-sectors that include warehousing, loading and unloading, bills of lading, e-commerce, collection of payment, and labeling.

Quynh Nga