Forwarding industry competition heats up

Forwarding firms have been expanding their networks through franchise contracts.

The strong rise of e-commerce has brought great opportunities to the logistics industry. According to the Department of Posts under the Ministry of Information and Communications (MIC), the total revenue of post services in 2019 hit VND30 trillion, or $1.3 billion, an increase of 27 percent compared with 2018.

Forwarding industry competition heats up



EMS reported revenue of VND3.5 trillion for 2019, up by 19 percent over the year before. Meanwhile, Vietnam Post reported revenue of over $1 billion, up by 22 percent.

EMS, Viettel Post and Vietnam Post all have haf big changes in their services. EMS joined forces with Lalamove to provide express delivery service (within two hours to addresses in inner city). Vo So and MyGo of Viettel Post joined forces to increase the number of orders and shorten delivery time in inner cities.

Chu Quang Hao, CEO of Vietnam Post, commented that the post market has never been so competitive. Private delivery firms slashed fees while private firms have made heavy investments to scale up their business.

Analysts say that the weak point of e-commerce lies in delivery service. They cited an MOIT survey as saying that 40 percent of online shoppers were unsatisfied about transportation and delivery. The forwarding market needs new names to develop.

Analysts say that the weak point of e-commerce lies in delivery service. They cited an MOIT survey as saying that 40 percent of online shoppers were unsatisfied about transportation and delivery. The forwarding market needs new names to develop.

 


This explains why so many freight and forwarding firms have come to Vietnam. In the second half of 2019, the market saw the arrival of Best Inc from the US, InExpress from the UK and ZTO Express.

Through franchising, Best Express now has seven centers with more than 320 post offices in 63 cities/provinces nationwide, delivering 150,000 parcels a day and increase capacity by twofold in the next three years.

Vietnamese investors also saw the great potential of the market. FPT Retail decided to engage in post and delivery by taking full advantage of its existing large network with 540 shops in 63 cities/provinces.

SuperShip decided to expand its business through franchise contracts like ZJC Express, SF Exress and STO Express. beGroup also has jumped into the forwarding market by launching two delivery services – beExpress and beDelivery that serve e-commerce firms.

Analysts note that developing networks through franchising is the choice of many forwarding firms because it saves costs and time. This method helped STO Express open 50 forwarding centers in 2009-2010 alone.

Kim Chi 

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