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Express delivery race heats up when investors open the throttle

The rapid growth in Vietnam’s international trade has prompted investors to increase their investments postal services, express delivery and forwarding.

VietNamNet Bridge – The rapid growth in Vietnam’s international trade has prompted investors to increase their investments postal services, express delivery and forwarding.


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UPS, the US partner in VNPost Express, one of the four biggest express delivery joint ventures in Vietnam, has become a 100 percent foreign invested enterprise after it bought 49 percent of stakes from the Vietnamese partner.

Jeff McLean, General Director of UPS Vietnam, said the national export-oriented economy has helped the service provide prosper over the last many years. The joint venture has reported steady growth in Vietnam since 1994. In 2012, UPS Vietnam’s export yield increased by 20 percent.

Christopher Ong, General Director of DHL Vietnam, which is believed to hold the biggest market share in Vietnam, also said DHL has been witnessing steady growth since it made its presence in Vietnam in 1988.

DHL Vietnam’s loyal clients are garment, footwear and wooden furniture manufacturers. In recent years, electronics manufacturers have also become regular clients of DHL Vietnam.

Like many other international firms, UPS penetrated the Vietnamese market by cooperating with a subsidiary of the Vietnam Post and Telecommunication Corporation (VMPT), acting as an agent providing logistics solution to international groups and small and medium enterprises in Vietnam. In 2006, UPS began operating under the mode of joint venture, while it has recently become a 100 percent foreign invested enterprise.

Analysts have commented that it is a growing tendency of joint ventures to shift into wholly foreign invested enterprises which allows them to take initiative in doing business and connecting their global networks.

Another US firm, FedEx, has also asked for the permission to set up a 100 percent foreign owned enterprise.

At the same time, Kerry TTC was officially set up after Hong Kong’s Kerry Integrated Logistics bought Vietnamese Tin Thanh’s stakes.

Other smaller enterprises, including GeoPost Intercontinental SAS (France), Linehaul Express (Hong Kong), Express Systems (Singapore), OA Cargo (the US) have also been expanding their networks in Vietnam.

UPS now “covers” big economic centers which have high demand for logistics services, including the Ba Ria – Vung Tau, Binh Duong, Hai Duong and Bac Ninh. It has launched the service allowing to forward goods more quickly by 40 percent in comparison with the traditional LCL service, applied to the containers from HCM City to the US.

FedEx has been operating in Vietnam since 1994. It provides tens of flights a week to connect the Vietnamese market with other big markets such as the US, EU, China and Japan.

The face of the forwarding industry is believed to see big changes, when big firms have made heavier investments when seeing the increasingly high growth rate in Vietnam’s international trade. Joint ventures have shifted into 100 percent foreign owned companies. More and more new logistics companies have joined the market. Meanwhile, existing domestic companies have also geared up to grab the new opportunities.

According to Christopher Ong of DHL Vietnam, the investments in the exploitation center at the Noi Bai and Tan Son Nhat airports, the open flights on HCM City – Hong Kong route, the establishment of entrepot stations and customers’ centers nationwide are the parts of the model that connects Vietnam and the Asian biggest entrepot center in Shanghai.

He said the rapid trade growth between Vietnam and China, Japan and South Korea is the great opportunity for delivery firms to take full advantage of the North Asian entrepot center.

SGTT

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