Dezan Shira & Associates, in a Vietnam Briefing by Edward Barbour-Lacey, dated 21 May 2015, reports that Vietnam to continue building logistics expertise in face of growing demand.

An edited extract of the original article appears below.

HCMC – Logistics are a key part of any business chain and, as Vietnam’s economy continues on its growth track, demand for logistics services has grown exponentially. Despite some problems, the country is working hard to keep up with the ever-growing logistical needs of businesses operating within the country.

In particular, the high level of foreign direct investment (FDI) into Vietnam’s manufacturing sector has been a strong driver for international transport and logistics services.

With its long coastline, Vietnam naturally leans heavily on sea freight transportation for its export trade. However, airfreight is now also seeing significant growth. All of these logistical options are facing their own challenges as they struggle to modernize and expand quickly enough to handle the growing customer demand.

Logistics problems

Currently, there are around 300,000 businesses providing logistics services in Vietnam. These businesses employ an estimated 1.5 million people, 40 percent of whom are located in HCMC.

As mentioned above, the logistics industry is experiencing strong growth, however, it has been difficult for companies to hire enough qualified people to handle the increased business. In fact, according to some estimates, 60 percent of the logistics demand in Vietnam is currently going unmet – representing a significant opportunity for foreign logistics firms looking for their next growth market…

Ports

Much of Vietnam’s commercial and manufacturing activity is still located in the south of the country, which has made the ports along the Mekong River Delta and in HCMC key transport and logistics locations.

According to Alphaliner, a leading shipping industry analytical firm, its 2014 list of the top 30 container ports revealed that Vietnamese ports saw the strongest growth rate out of all the ports. HCMC’s deep-water port Cai Mep saw its volume handled increase by 16.7 percent year on year. Additionally, the northern port of Hai Phong saw a 14.3 percent growth in volume. The average volume growth for the other ports on the list was just 5.3 percent…

Analysts expect the region’s seaports to handle around 200 million tons of cargo in 2015, growing to 305 million by 2020, and to a staggering 650 million tons by 2030…

Airfreight

…Since 2001, more than 50 airlines, from 25 nations and territories, have begun operations in Vietnam. Airfreight has grown at a blistering annual rate of 15.3 percent.

Part of Vietnam’s airfreight logistical problems stem from the lack of coordination between the different logistics sectors, as well as from a need to update technology and better train employees…

According to Tom Hoang, Regional Director for Cargo Marketing at Boeing, Vietnam’s air cargo market will grow at an annual rate of 11.5 percent for the next ten years.

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