Vietnam’s logistics firms face surging opportunities but limited capacity

06:00 | 28/07/2021 Economy

(VEN) - Logistics companies need to be ready to serve as a bridge for import and export enterprises given the global trade recovery.

Logistics support export growth

The world economy made clear progress in the first six months of 2021 compared to the same period last year, with the commodity market increasing activity and raw material and fuel prices rising to new heights.

vietnams logistics firms face surging opportunities but limited capacity

International trade is continuing to swarm busy shipping routes around the globe. Growing exports of Asian goods to the US are causing greater seaport congestion. Southern Chinese ports are trying to stabilize operations, but it will take a long time to clear the backlog and process new orders.

Increased transactions lead to high demand for transportation, warehousing and other logistics services. Despite the resurgence of Covid-19, the logistics market is booming in many countries.

Vietnam’s total import-export turnover reached US$316.73 billion in the first six months of 2021, an increase of 32.2 percent compared to a year ago, including US$157.63 billion in exports (up 28.4 percent) and US$159.1 billion in imports (up 36.1 percent). As a result, Vietnam posted a trade deficit of US$1.47 billion. Free trade agreements to which Vietnam is a signatory are opening up major opportunities for the country’s imports and exports, which have also contributed favorably to the logistics sector.

However, since June 2021, many industrial zones and logistics activities in the southern region have been affected by the Covid-19 pandemic, including Vietnam’s largest import-export and production centers, such as Ho Chi Minh City, Binh Duong, Dong Nai and Ba Ria-Vung Tau.

Expectations for growth

According to a Research and Markets report, the size of the global logistics market was estimated at US$3.215 trillion in 2021, an increase of 17.6 percent compared to 2020 indicating the sector still boasts substantial development potential.

vietnams logistics firms face surging opportunities but limited capacity

According to the Vietnam Industry and Trade Information Center under the Ministry of Industry and Trade, logistics are one of the sectors with the greatest potential for breakthrough in Vietnam in 2021. Logistics companies have developed strongly and captured market share thanks to their quick and flexible adaptation to the new normal.

Nguyen Duy Minh, secretary-general of the Vietnam Logistics Business Association (VLA), said most logistics companies in Vietnam are small- and medium-sized with limitations in terms of scale and capital. The difficulties posed by the Covid-19 pandemic have prompted logistics companies to propose transportation solutions and develop connections. Warehousing, cold storage, last-mile delivery, online customer care and technology application in operational management are among the most potentially lucrative segments for Vietnamese logistics companies.

However, logistics companies related to road and air transport, especially small firms, are still heavily affected by the pandemic due to limited infrastructure, high costs and shortage of container space.

Ngoc Thao