Logistics industry experiences growth but faces major hurdles

14:49 | 16/01/2022 Trade

(VEN) - Vietnam’s logistics industry has helped place the country among the top 20 leading world economies in terms of international trade, but faces an uphill battle against pandemic recovery, rising costs, stiff competition and shortage of qualified labor, according to participants of the Vietnam Logistics Forum organized by the Ministry of Industry and Trade (MoIT).

Supply chain recovery

Permanent Member of the National Assembly Economic Committee Phan Duc Hieu told participants at the December 14 event that Covid-19 had slowed socioeconomic development over the past two years, especially in the transportation service sector. However, viewed in a positive way, the logistics industry has made great efforts to contribute to the country’s economic development. “The logistics industry plays a dual role, both creating its own values ​​of the economic sector and supporting production and business activities in the unpredictable context of the pandemic,” Hieu said.

Le Quang Trung, Deputy General Director of the Vietnam Maritime Corporation, said that according to statistics of the Vietnam Logistics Association (VLA), about 15 percent of enterprises had a 50 percent drop in revenue compared to 2020 and more than 50 percent of enterprises registered a decline of 10-30 percent in domestic and international logistics services compared with 2020. The biggest difficulty of logistics enterprises was disruptions in the service supply chain, the surge in ocean freight prices as well as the shortage and imbalance of containers worldwide. In addition, providing human resources for production and logistics while still ensuring safety and regulations on Covid-19 prevention have also posed significant obstacles for enterprises.

Minister of Industry and Trade Nguyen Hong Dien addresses the forum

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), most shipping lines have increased container freight rates from 2 to 10 times (depending on the route) since November 2020 and the surcharges they applied are an additional burden for Vietnamese businesses.

Double-digit growth

According to the Vietnam Logistics Report 2021, more than 4,000 logistics enterprises provide international logistics services with increasingly high quality services thanks to digital transformation, especially those providing services to the European, US and Chinese markets.

However, Vietnamese logistics enterprises continue to face stiff competition with foreign contenders, and most are small and micro enterprises providing services without high added value.

Chair of OPL Logistics Dam Dinh Vinh said that despite the impacts of Covid-19, Vietnam's import and export turnover in the first 11 months of 2021 still reached about US$600 billion. The milestone of US$1 trillion in the import-export turnover is not far, providing a great opportunity for many industries, especially for businesses operating in the logistics industry, Vinh said. “Although we are a young company, we have set a goal to become a large and strong enterprise in the logistics industry, not only in Vietnam but also the international market,” Vinh added.

Addressing the Vietnam Logistics Forum 2021 themed “Developing human resources of the logistics industry”, Minister of Industry and Trade Nguyen Hong Dien emphasized that the logistics service industry is considered a major artery of the national economy and plays an important role in connecting, supporting and promoting socioeconomic development.

Under government direction, support from sectors and localities, and especially efforts of the business community, Vietnam's logistics service industry has advanced rapidly, averaging annual growth of 10 to 15 percent. It has met requirements of both domestic and international customers and thereby contributing significantly to the two-digit growth rate in the country's total trade turnover in the first 11 months of 2021, putting Vietnam in the group of 20 leading economies in terms of international trade. “This is an encouraging result in the difficult context of global and domestic trade and shrinking of regional and world economies due to the impacts from Covid-19 pandemic,” Minister Nguyen Hong Dien said.

Quynh Nga & Thu Trang