Blockages remain on Vietnam's path to full logistics potential

By Vien Thong   November 28, 2022 | 03:27 am PT
Blockages remain on Vietnam's path to full logistics potential
Containers are seen at Cai Lai Terminal in Ho Chi Minh City. Photo by VnExpress/Quynh Tran
Vietnam has the potential to be a regional logistics hub, but issues in policy, infrastructure and human resources remain to be solved, industry insiders said.

"Vietnam is becoming a new manufacturing hub outside of China. It will gradually gain a bigger share in air cargo transport," said Tran Tuan Anh, CEO of logistics firm ITL Corp, at a recent forum.

The country’s logistics industry is estimated at $40-42 billion and recording double-digit growth, according to the Ministry of Industry and Trade.

It ranked 11th out of 50 markets in the Agility Emerging Markets Logistics Index 2022, but fourth in international logistics opportunities, behind China, India and Mexico.

By the end of September, Vietnam had 30 foreign and four domestic airlines operating 68 routes to 16 countries and territories.

As of this month, the ratio of passenger and cargo aircraft are being split 60:40 in Ho Chi Minh City and 30-70 in Hanoi, which is a good sign, said Anh.

Vietnamese airports in Hanoi and HCMC are now being used as hubs with cargo from India, Myanmar, Japan and China being delivered here on their way to the U.S. and Europe.

"Air cargo brands are interested in Vietnam and third-party logistics firm could start building consolidation hubs in Vietnam instead of Hong Kong and Singapore," he said, forecasting for the next three years.

Cargos are also exchanged between Hanoi and HCMC with Incheon, Shanghai and Hong Kong, he added.

But still the overloaded airports and lack of parking space are problems that need to be resolved.

J. Michael Carson, regional sales director of Boeing Commercial Airplanes for Southeast Asia and India, said Vietnam cannot depend on the passenger flight network to serve cargo transport. It needs policies to attract cargo-only airlines.

Vietnam is the best developing Southeast Asian aviation market among members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), but it has challenges in capacity, he said, adding that it will need 2,800 cargo aircraft by 2041.

Another area of attention is seaport transport.

The amount of cargo passing through Vietnamese ports by 2030 are set to double to 1.1-1.4 billion tons a year, offering a great opportunity for both domestic and foreign transportation companies, said Vo Duy Thang, head of the transportation and maritime services department under the Maritime Administration.

The country now has 500 ship operators but most not capable of transporting overseas. Popular routes are to nearby locations like Singapore and China.

A government report titled Vietnam Logistics 2022 pointed out that roads remain the dominant transporting channel in Vietnam, and investment in key ports and railway stations is necessary.

Human resources is another issue. Over 53% of logistics businesses in HCMC have a shortage of staff who are trained in the subject. A total 30% have to re-train their staff upon recruitment, according to a survey by the Ho Chi Minh City Institute for Development Studies.

"There is a big gap between the requirement and ability to achieve those requirements," said Tran Tuan Anh, head of the Central Economic Committee.

Becoming greener is another criterion that Vietnamese businesses need to pay attention to.

A survey by the Vietnam Association for Logistics Manpower Developer found that over 50% of trucks return empty, which is inefficient and increases negative environmental impacts, said Deputy President of the association Trinh Thi Thu Huong.

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