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Growth potential of the transport and logistics industries
Vietnam's transport and logistics industry has a lot of growth potential, and deeper participation in world transport transaction centers comes from the fact that the Government has many policies to create favorable conditions for the industry to develop, along with the trend. global economic integration, many trade agreements are signed, the strong development of the e-commerce market and the automation industry, the infrastructure is increasingly improved.
In addition, the transport and logistics industry also has more opportunities opened up from the US-China trade war, when many Chinese companies move factories to Vietnam and Southeast Asia. Accordingly, up to 91% of enterprises in the survey of Vietnam Report said that the growth rate of the industry in 2020 will be over 10%, many experts say the growth rate will reach 14% - 16%, according to average index of recent years.
4 main development trends
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Apply technology 4.0 in the transport and logistics industries
With the explosive development of the 4.0 revolution, there have been many applications of science and technology in logistics activities. Currently, developed countries are gradually implementing E-Logistics, green logistics, E-Documents ... and applying cloud computing technology, Blockchain technology, artificial intelligence or robotics. services, such as container loading or unloading services, loading and unloading goods in warehouses, yards ...
Although currently, Vietnam's logistics service providers in applying technology to their business activities are still at a low level, mainly using electronic customs declaration software, vehicle navigation technology, and email. and basic internet ..., but according to the judgment of nearly 80% of experts in the survey of Vietnam Report, before the digital trend, businesses in the transport and logistics industry in Vietnam will gradually adapt and promote research and application of technology in logistics activities, to standardize operating processes, optimize costs and resources of businesses, monitor and strengthen management capabilities, evaluate service quality, and increase customer loyalty.
Online shopping trends open opportunities for transport and logistics businesses
With the rate of 70% of Vietnam's population using the Internet, the average access per person is about 28 hours / week, creating favorable conditions for the e-commerce industry to thrive. In 2018, according to a report by the Vietnam E-Commerce and Digital Economy, the e-commerce market reached $ 8 billion, with a growth rate of 30% compared to 2017 and is forecast to continue to grow in many ways. next year, reaching 10 billion USD by 2020. The growth of e-commerce has led many consumers to turn to online shopping and the development of new business models for courier service companies with high frequency. large and small delivery and service coverage throughout the provinces. Many e-commerce sites also invest in building technology platforms and logistics systems, expanding the scale of warehouses, and increasing goods distribution points to meet the needs of users.
Mergers and acquisitions (M&A) continue to be active with transport and logistics
Experts in a survey of Vietnam Report have predicted that in the next 2-3 years, the M&A wave will continue to be active in the transport and logistics sectors due to fierce competition pressure in the context of economic integration. with the advancement of science and technology and the impact of the 4.0 revolution.
Along with the high growth potential of the transport and logistics industry in Vietnam and the poor competitiveness of domestic enterprises, creating great opportunities for many foreign enterprises to participate in Vietnam's logistics market through the form of M&A to take advantage of existing network, same source of customers and experience in domestic operation. In 2019, there were many million-dollar M&A deals, such as Symphony International Holdings (Singapore), a stake in Indo Tran Logistics and Shipping JSC (ITL Corp) from Singapore Post for 42.6. million USD, SSJ Consulting spent nearly 40 million USD to buy 10% total outstanding voting shares of Gemadept.
M&A activities also create challenges for domestic enterprises to improve and innovate to optimize their businesses, but also a good opportunity for businesses and other businesses to learn from management experience. technology transfer, optimization of logistics costs of experienced businesses in many continents.
Invest in warehouses, logistics centers and cold chains
With the sharp increase in the number of e-commerce businesses, along with the need to rent space for storage, classification of goods, fulfillment of orders ..., many businesses have grasped the trend, built and started. from warehouse systems, logistics centers with the function of providing transportation services, completing orders, distributing ... in a professional way in a modern direction with high quality. As of early 2019, nationwide there are 6 major logistics centers that have been started construction and put into operation.
In recent times, the cold chain has seen a high growth due to the increase in the number of cold storage, growth in the processed food industry, and the pharmaceutical and technology industries. According to market research firm Allied Market Research (2019), the size of the global cold chain logistics market is worth $ 159.9 billion in 2018 and is expected to reach around $ 590 billion by 2026. The cold chain market in general and the cold storage market in particular in Vietnam is considered to be small and fragmented, but the market is expanding and is expected to have new developments in 2020.
Policies to be implemented to improve the efficiency of transportation and logistics services in 2020
Survey results of Vietnam Report recorded 5 biggest challenges of the transport and logistics industry in Vietnam today, including: (1) Poor infrastructure; (2) Lack of highly trained labor force in the transport and logistics industries; (3) Institutions and policies for the sector still have many shortcomings; (4) Complicated administrative procedures; (5) High logistics costs.
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Infrastructure is the challenge that many businesses choose the most with 81.82%. Currently, the commercial infrastructure, transport infrastructure as well as the information technology infrastructure are still weak and asynchronous, leading to many difficulties in multimodal transport services, and costs. Vietnam's logistics is much higher than that of other countries. improving, meeting the demand for import and export, the warehouse system has not yet met the domestic demand, especially the E-Logistics demand.
Vietnam's logistics human resources are not only insufficient in quantity but also weak in quality, especially highly qualified human resources at the managerial level, good logistics specialists, and knowledgeable in international law. capable of application and deployment in businesses. Among domestic enterprises, up to 93-95% of workers are not trained in logistics, mainly doing services in small supply chains such as forwarding, warehousing, handling bill of lading ... This has a great impact on the quality of service as well as increasing the company's profit, according to which 63.64% of enterprises surveyed choosing to lack quality human resources is a development challenge for the transport industry. and logistics.
Although the Government has had many breakthrough policies to support and facilitate the development of the transport and logistics industry, but still up to 54.55% of enterprises rated that there were many shortcomings, such as policies. on import and export, the customs clearance is still quite tight, causing many difficulties, the unclear guidance Decree makes new businesses to get acquainted with many confusion, which slows down the pace of development. logistics industry.
5 factors affecting the business of transport and logistics enterprises
There are many factors that affect the business performance of the transport and logistics enterprises, including the factors inside and outside the business, creating both positive and negative effects. In which, the two factors that are considered to have the greatest impact on the enterprise's operations reached 4.09 points (on a 5-point scale), which are the quality of human resources, corporate governance and oil prices. in the world of uncertainty and heightening
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The limitations on the size of the business, capital, experience and management skills, the ability to apply information technology as well as the level of human resources do not meet the requirements of international logistics activities, which makes Service costs of transport and logistics enterprises in Vietnam are high, the quality of some services and professionalism are not equal. In the context of economic integration, the development of technology applications in the service industry, which enterprises take advantage of the trend, and solve the management and human resource problem will improve their competitiveness and quality. service delivery, labor productivity and lower logistics costs.
According to the VATA Association report, in October 2018, fuel prices are the main factor in logistics service costs, which directly affects the increase in logistics costs, the cost of raw materials accounts for about 40% of road transportation costs. When the price of fuel will increase, it will increase transportation costs, affecting the profitability of the industry.
Third in terms of influence are the Trade Agreements that Vietnam has signed with 3.82 points, followed by the general macroeconomic situation and the development of import and export activities reaching 3, 73 pts. Enterprises expect the signed trade agreements will have a positive impact on logistics demand and costs, stable economic growth accompanied by an increase in Vietnam's exports. the market in the agreement will contribute to improving the revenue of the logistics industry.
8 factors that need to be improved for businesses to improve the quality of the transport and logistics industries
The survey results of Vietnam Report also pointed out factors that need to be improved for transport and logistics enterprises, of which 72.73% of businesses think that it is necessary to give priority to improving the quality of logistics services, increasing response to apply information technology in business activities, to formulate competitive pricing policies. In addition, businesses need to improve reliability (accounting for 63.63%), the timeliness of goods to the destination (45.45%), responsiveness (45.45%), and policy. customer support and branding (36.36%) and improving the quality of human resources (18.18%).
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Recommend solutions for the development of the transport and logistics industry in Vietnam
Industry experts and enterprises in the survey of Vietnam Report gave a number of recommended solutions to develop the industry, in which priority is given to three aspects: (1) Completing policies and laws related to the industry. logistics operations, simplifying administrative procedures, reforming customs procedures, cutting infrastructure use fees and charges; (2) Improving infrastructure: transportation, telecommunications and information technology; (3) Expand the training of human resources training network in the logistics industry.
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Vietnam's economy is increasingly integrated with the global economy, the scale of the logistics service market is expanding day by day, bringing many development opportunities for logistics businesses, while also creating Challenges are not small for the development of business logistics enterprises in Vietnam. The business has more competitors, the business environment is always changing, the consumer demand is increasing from the desire for quality, price ... to the desire to be guaranteed and committed by brand, reputation. Accordingly, transport and logistics enterprises need to have solutions to modernize their operation modes, upgrade service quality, human resources, financial capacity ... The development of businesses will contribute to building and enhancing brand reputation, which is assessed as a bridge to help businesses get closer to domestic and foreign partners and customers.
Also on this occasion, Vietnam Report announced the Top 10 prestigious transportation and logistics companies in 2019. Top 10 reputable companies in the transport and logistics industry are built on scientific and objective principles. Companies are assessed and ranked based on 3 main criteria: (1) Financial capacity shown on the most recent financial report; (2) Media reputation is assessed by Media Coding - encoding the company's articles on influential media channels; (3) Survey of industry experts and Enterprise Survey conducted in November 2019 on capital size, market, labor, growth rate of revenue, profit, plan of activities in the year 2019 ...
The official announcement ceremony of the Top 10 prestigious transport and logistics companies in 2019 was held on January 9, 2020 at InterContinental Hanoi Landmark72 Hotel, HCMC. Hanoi.
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