US logistics giant Flexport moves into 'super important market' Vietnam

By Vien Thong   June 7, 2024 | 10:56 pm PT
US logistics giant Flexport moves into 'super important market' Vietnam
Sanne Manders, president of U.S. logistics giant Flexport. Photo courtesy of the company
U.S. logistics unicorn Flexport is investing in Vietnam, which it thinks is on its way to becoming a top destination for manufacturing and sourcing.

"This is the right time to invest in Vietnam, a super important market," Sanne Manders, president of Flexport, told VnExpress during a visit to HCMC.

Founded in 2013 by Ryan Peterson in San Francisco, Flexport is one of the most valuable U.S. logistics unicorns with a US$8 billion valuation and $2.3 billion in funding so far.

Last month its subsidiary opened an office in Vietnam with a team of 12 employees, who work with its local logistics partner ITL in HCMC.

Flexport had earlier been providing services to 1,300 factories in Vietnam, helping them transport goods to 500 importers worldwide.

It has for years deemed Vietnam an "important strategic market."

"Vietnam is our second largest maritime transport market [after China] and is poised for sustained growth," Manders said.

The country had two main advantages that make it a crucial market.

Firstly, it had consistently been one of the top destinations for global businesses as they gradually shifted away from China.

"Many of our clients are shifting their supply chains here. The domestic market is also experiencing robust growth. As more businesses shift [to Vietnam], there will be more demand for services."

Secondly, the economy was forecast to grow by 5-6% this year and the logistics industry had the potential to grow at twice this pace.

Vietnam’s exports are growing steadily, totaling $156.8 billion in the first five months of this year, up 15% year-on-year.

Vietnam would be a major production and logistics hub in the long term because its technology and consumer electronics industries were receiving massive investments while its e-commerce sector was booming.

"We want to capitalize on these advantages."

But there were also challenges for Flexport.

Freight rates on some of Vietnam's key export routes had nearly tripled in May due to the tensions in the Red Sea and were expected to remain high in the short term before gradually normalizing as shipping capacity improved by the end of this year.

Nonetheless, logistics costs in Vietnam were relatively high even without these unexpected occurrences.

Pressure from clients to reduce carbon footprint was also a challenge for logistics service providers.

In the near future Flexport would focus on developing its sea and air freight services in Vietnam, providing integrated domestic logistics services for global brands and introducing new products to help customers flexibly manage their supply chain with real-time data.

"We believe that Vietnam's logistics industry has very promising potential. There are great opportunities for development through infrastructure improvement and the adoption of digital technology and automation."

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