The sector's progress
could be derailed unless staff and infrastructure are upgraded.
Vietnam’s logistics
industry has seen strong growth over the past few years but problems arising
from the lack of infrastructure and the limited capacity of local businesses have put the brakes on its
development.
Data from the
Vietnam Logistics Business Association said that the sector is expected to
record average growth of 20 to 24 percent over the next five to 10 years. In
2014 and 2015, 80 percent of logistics enterprises reached or exceeded their
annual targets.
Despite recording
significant progress, Vietnam’s logistics industry still
lags behind other Southeast Asian countries. The country ranks 64th on the Work
Bank’s Logistics Performance Index in 2016, much lower than Singapore (5th),
Malaysia (32nd) and Thailand (45th).
Annual logistics
expenses in Vietnam account for approximately 21-25 percent of the country's
gross domestic product (GDP) per year, as opposed to 10 percent in developed
countries and 18 percent in other developing nations.
Do Xuan Quang, vice
chairman of the Vietnam Logistics Business Association, said that the country
spends $37-40 billion on logistics each year, of which $30-35 billion flow into
the pockets of foreign firms.
Domestic companies,
mostly small and medium-sized, account for 80 percent of the country'slogistics firms but
make up only 25 percent of the market share.
Companies are also
struggling to find qualified workers, with 54.7 percent saying they lack staff
with management and language skills.
Aside from these
problems, infrastructure for logistics services in Vietnam is underdeveloped,
said Tran Bao Ngoc, head of the Logistics Department under the Transport
Ministry.
Being a long, narrow country with key economic zones
located evenly from north to south, the country’s railway sector should act as
the major means of freight transportation. However, in reality, the railway
sector only accounts for one percent of the market share. Only 6.7 percent of
Vietnam's 2,653 kilometers of railways meets international standards.
There is also a lack of
connectivity between road, sea and railway transport due
to the lack of dry ports and storage facilities, which play an important role
in transiting and distributing commodities, Ngoc said.
To increase the
competitiveness of Vietnam’s logistics sector, economic experts said the
government should form a national logistics committee to boost cooperation
between different means of transportation. Small and medium enterprises should
be granted preferential policies to access investment capital and
support to train logistics staff.
Vietnam is aiming to
climb to 4th on the Logistics Performance Index in Southeast Asia and 50th in
the world by 2020.
