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Logistics firms fight for 3PL market share

Large investments promise big profits

In the logistics value chain, analysts say, freight & forwarding via airports and seaports and inland and international transport are full of opportunities for Vietnamese logistics firms. 

Supply chain management and storage are also listed as profitable services.

A report showed that 90 percent of imports/exports to and from Vietnam, about 500-600 million tons a year, are carried by sea. 

It is expected that the volume of goods to be carried by sea would reach 1.1 billion tons by 2020.

Nguyen Thanh Binh, deputy general director of Gemadept, said the revenue from port exploitation was expected to make up 60 percent of its total revenue in 2015.

The corporation has put four out of six ports it has developed into operation. Nam Hai Dinh Vu Port, for example, which opened in May 2014, ran at 60 percent of capacity in the first year of operation.

The reported satisfactory business performance by Gemadept was a surprise to many analysts. 

In general, enterprises are willing to accept losses in the first two to three years of operation and can only recoup the investment capital after at least 10 years.

Gemadept has exploited the Nam Hai and Nam Hai Dinh Vu, the key ports of its national port system, at 100 percent of designed capacity in 2015.

Both Nam Hai and Nam Hai Dinh Vu are located within the Hai Phong Port area. 

A report from BIDV Securities shows that this is an area which sees a high volume of imports/exports, with annual growth rate of 14.6 percent in 2009-2014.

Big money needed 

Port development is a profitable business field. However, as an analyst said, it is a ‘game of money’. 

Nam Hai Dinh Vu Port, for example, needs huge investment capital of VND1.3 trillion, of which 84.66 percent is contributed by Gemadept. 

Transimex has teamed up with Hai An Transport and Handling Company to set up a joint venture. It has also joined forces with Nippon Express and Vinafreight. The joint ventures now bring 50 percent of post-tax profits to Transimex every year.

Most logistics firms have given priority to expand distribution centers, as this is the model that large clients like Samsung, Unilever, P&G and Vinamilk want, because it allows them to track down information quickly and accurately. 

Gemadept said it would make investments this year in warehouses and logistics centers in Hai Phong, Bac Ninh and Hai Duong.

NCDT