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The small-scale logistics enterprises of Vietnam

Vietnam Logistics Review magazine (VLR) reported that Logistics companies in Vietnam are considered as “The Elves” in the global logistics industry, with 90% of enterprises having registered capital less than 10 billion dong which is lower than the average registered capital of other enterprises in whole country. This figure is provided by the Ministry of Industry and Trade of Vietnam.

The big problem is that human resource is short of in quantity, weak in quality, foreign language and management ability. In the period of 2015-2030, Vietnam requires up to 200,000 logistics human resources. However, there are only 3,500 – 5,000 people graduating from universities, colleges and mostly from vocational colleges. Besides, there are 10,000 – 15,000 labors trained at the primary and short-term training levels of less than 1 month.

 

This is the first report of providing important data in logistics industry of Vietnam by the Ministry of Industry and Trade which is required to implement by Deputy Prime Minister Vuong Dinh Hue. This report plays an important part for Government to have an overview of logistics field in Vietnam. Since, they can propose the solution to develop this industry, contributing to promote domestic trade as well as exporting commodity.

 

According to the Ministry of Industry and Trade, currently there is no word in Vietnamese that can fully explain the meaning of logistics. However, it can be understood as “the circle” of activities in storage, package, warehouse, cargo transfer, custom clearance and others in order that commodities are delivered from the suppliers to consumers in the best way.

 

Along with the growing rate of GDP, industrial production value, import-export turnover, retails, services and transport infrastructure during the past time in Vietnam, the growing rate of logistics services speeds up to 12-14 per cent. The proportion of enterprises outsourcing logistics services hits about 60-70%, contributing approximately 4-5% to GDP of Vietnam.

 

Vietnam have about 4.000 enterprises operating in logistics. About 70% of them locate in Ho Chi Minh city and neighboring provinces. Vietnamese logistics enterprises are mainly operating on a small scale, with up to 90 per cent of enterprises having capital of less than VNĐ10 billion (lower than the average registered capital of the enterprises), 1 per cent of them have capital of over VNĐ100 billion, 1 per cent have capital from VNĐ50 billion to VNĐ100 billion, 3 per cent have capital of VNĐ20 billion to VNĐ50 billion, and 5 per cent have capital of VNĐ10 billion to VNĐ20 billion. Up to 2,000 logistics businesses are one-member limited liability companies which also operate on a small scale.

 

Although there are 4,000 enterprises, only 400 enterprises join Vietnam Logistics Business Association (VLA). According to VLA statistics, member enterprises represent over 60 per cent of the national market share, including many leading enterprises in the industry. This figure shows that big enterprises with good market share tend to focus on networking more than small-scale enterprises.

 

The leading logistics enterprises currently include SNP, Gemadept, Transimex, IndoTrans, TBS Logistics, Sai Gon New Port, Delta, U&I Logistics, Sotrans and Minh Phuong Logistics, which are all members of VLA, providing services to all strategic markets of Vietnam.

 

Vietnam has about 30 enterprises providing transnational logistics services. Some enterprises strengthen joint venture and associate with logistics companies in Vietnam and all over the world in order to expand their scale.

 

More remarkably, although we are living in the industry 4.0, the application of information technology in logistics ill still at the low rate. They are mainly used in customs declarations, vehicle monitoring and supervision

 

Notably, there are 45 logistics centers in 9 provinces and cities of Vietnam, but most of them are second class logistics centers (regional level), and are not yet developed in accordance with the orientation of developing first class centers (national level) as Decision No 1012/QĐ-TTg issued in 2015.

 

The ministry of Industry and Trade recognize that logistics enterprises and centers are making their effort to innovate the operation. In addition to main functions such as preservation, labeling, package, splitting, handling and order preparation; logistics centers are step by step turning to apply information technology in goods management, tracking and location access. 

 

Some specialized logistics centers are almost automated such as logistics centers of Samsung, Unilever, P&G, Vinamilk, and Masan. Major logistics centers are currently located in Hai Phong, Dong Nai and Binh Duong province. Some enterprises are applying modern management systems such as Gemadept, TBS, Sài Gòn New Port, Transimex, Mapletree, Damco, DHL, Kerry Express and Viettel Post.

 

With the World Bank's report in 2018, logistics performance index (LPI) of Vietnam is ranked 39 out of 160, up 25 places compared to 2016 and ranked third place in ASEAN countries. Vietnam is also ranked at the top group of emerging market. This is the best result of Vietnam since WB implemented to rank LPI from 2007 up to now. 

According to VnEconomy

 

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