Vietnam’s logistics market has great opportunities to improve as the EVFTA has been inked and the country is receiving investment inflow from Europe.
Aeon in recent years has become a channel through which Vietnam’s farm produce penetrates the Japanese market.
However, Shiotani Yuichiro, CEO of Aeon Vietnam, said Vietnam’s mangoes are not selling well in Japan because they are 20 percent more expensive than Thailand’s and the Philippines’, though the quality is high.
The higher logistics fee in Vietnam is one of the factors driving up costs for Vietnam’s mangoes.
This is also why the expenditure on logistics services by Vietnam’s textile and garment companies is 6 percent higher than in Thailand and 7 percent more than in China.
High logistics costs not only weaken the competitiveness of Vietnam’s goods, but also hinder businesses to penetrate new markets.
With EVFTA, Vietnam’s logistics market now has the opportunity for renovation.
This will encourage EU investors to provide logistics and goods transportation services in Vietnam, including shipping firms, cargo/container handling, storage and warehousing services.
|A report showed that 15 percent of businesses said their revenue has decreased by 50 percent, while 50 percent of businesses saw the number of logistics services decreasing by 10-30 percent. Many companies have had to cut their workforce, and they still need a lot of money to maintain operations.|
Nguyen Canh Cuong, Trade Counsellor to the UK, commented that this will serve as a great opportunity for Vietnam’s logistics firms to call for capital from multi-national corporations and modern big fleets.
According to VLA, the logistics industry in Vietnam has been witnessing a high growth rate of 14-16 percent in recent years, worth $40-42 billion a year. Around 3,000 domestic firms and 25 leading freight and forwarding groups in the world are operating in Vietnam.
The logistics market has value equal to 21-25 percent of GDP. However, 80 percent of the market share is in foreign hands. About 30 firms providing transnational logistics services are operational in Vietnam, including big names such as DHL, FedEx, Maersk Logistics, APL Logistics, CJ Logistics and KMTC Logistics.
With EVFTA, which serves as the leverage, analysts believe that M&A activities will be more bustling in the time to come.
Many big deals worth millions of dollars, were made in 2019. Symphony International Holdings (Singapore) bought into ITL Corp in a deal worth $42.6 million.
SSJ Consulting spent $40 million to acquire 10 percent of voting Gemadept shres. CRE, a Japanese large group, through its subsidiary CRE Asia, invested $6.2 million in Sembcorp Infra Services (SIS).
According to Vietnam Logistics Association (VLA), logistics firms are bearing big impact from Covid-19.
A report showed that 15 percent of businesses said their revenue has decreased by 50 percent, while 50 percent of businesses saw the number of logistics services decreasing by 10-30 percent. Many companies have had to cut their workforce, and they still need a lot of money to maintain operations.
As the pandemic brings opportunities to the e-commerce sector, the local logistics industry also has a chance to grow.
The State should develop solutions to reduce high logistics costs in trading agricultural products to improve the competitiveness of Vietnamese farm produce on the market, according to experts.