75% market share of logistics service enterprises falls into the hands of foreign enterprises

Integration is a great opportunity for our country's logistics industry to develop, however the market share of this industry mainly falls on foreign enterprises.

Logistics services enterprises play an important role in global trade activities in general and import-export activities of enterprises in particular. When joining free trade agreements, our country's logistics industry not only has the opportunity to develop strongly but also participate more deeply in the world's transportation trading centers. However, along with the opportunities, the logistics industry is facing many difficulties and challenges.

According to statistics from the Logistics Association, there are currently about 1,300 logistics enterprises operating nationwide, including foreign-invested enterprises. This is a young economic sector and has only really developed vigorously since our country joined the World Trade Organization (WTO). The scale of the logistics industry is estimated at about 20 - 22 billion USD with an average growth rate of 16-20%/year.

Although the logistics industry has grown rapidly in recent times, it is still in the early stages of development, strong in quantity but weak in market share. Most logistics service enterprises are small, with little capital and lack of facilities such as warehouses, yards, information technology, and means of transport, so they only operate in a small segment of the industry such as transportation services, freight forwarding, warehouse leasing, customs clearance, etc. The unplanned development and lack of connectivity of ports and post-port services such as warehouses, yards, logistics centers, etc. have somewhat hindered the development of the entire industry.

The logistics industry is currently growing at a rate of about 20% per year.

Mr. Nguyen Le Chung, marketing specialist of Aviation Logistics Joint Stock Company, said that currently the scale and activities of Vietnamese logistics enterprises are still very small compared to other enterprises.

“This comes from the way of operation and the organizational model, the organizational apparatus is still a bit cumbersome in terms of procedures. If we want to increase the level of competition with other logistics companies in the world, we need to optimize our operations. Second, we can expand our products and services, and supply chains in the logistics sector,” said Mr. Chung.

Many economic experts say that integration is a great opportunity for the logistics industry in our country to develop, however the market share mainly falls on foreign enterprises, with about 75%. In addition, low efficiency along with lengthy customs procedures and underdeveloped infrastructure lead to transportation costs accounting for nearly 25% of the country's GDP, much higher than in countries like the US, China or Thailand.

One of the factors that hinder the development of the logistics industry and reduce the competitiveness of enterprises is the unreasonable operation of the port system in Vietnam, leading to many times higher transportation costs. Along with that is the inadequacy of infrastructure, international transportation, and international transportation surcharges during peak season are often increased by shipping lines.

Mr. Bui Hong Minh, Import-Export Department (Ministry of Industry and Trade) shared that the lack of synchronization of transportation methods is creating congestion in logistics flows, increasing costs and limiting the development of the comprehensive logistics industry nationwide. This reduces the competitiveness of services and goods of transportation enterprises.

Mr. Minh said that in order for the transport industry to develop strongly in the coming time, it is necessary to reform institutions at the macro level, focusing on facilitating trade activities and creating competition with other countries.

“There needs to be some leading enterprises to drive the development of logistics enterprises, which can compete with enterprises in the world, which we are currently lacking. First of all, enterprises need to have an operating model that is suitable for the current development trend of the world. Second, they need to have strong financial potential to be able to compete with foreign enterprises in the future,” said Mr. Minh.

According to the latest report on the logistics industry by Ban Viet Securities Joint Stock Company, the logistics industry is currently growing at a rate of about 20%/year and is forecast to maintain double-digit growth in the next 5-10 years. In particular, when the Trans-Pacific Partnership Agreement is officially signed with many tax lines at 0%, import-export activities will develop vigorously, which will be a great opportunity for the logistics industry to explode. Vietnam promises to be an attractive destination for investors.

In order to take advantage of the opportunities brought about by the Free Trade Agreements, Mr. Nguyen Tuong, Head of the Vietnam Logistics Association Representative Office in Hanoi, said that it is necessary to closely link import-export enterprises and logistics providers. At the same time, improve the quality of services provided, increase competitiveness, increase service quality and reduce transportation costs.

“Logistics is a very important industry in life, economy and especially important for import and export because it is the industry that increases added value, enhances the competitiveness of the import and export industry. From here, the logistics service industry itself must improve its capacity in all aspects, first of all, it must expand the scale of enterprises, secondly, improve service quality, thirdly, promptly meet the requirements of import and export and at the same time, the logistics industry must combine with the industry and trade sectors, closely cooperate with importers and exporters”, Mr. Tuong clearly stated.

To be able to deeply integrate with the world, logistics enterprises need to proactively link with businesses in the same industry, promote cooperation with import-export enterprises to increase efficiency and service quality, and form strong enough chains to compete with foreign companies./.

According to VOV