Samsung SDS, a subsidiary of the Samsung Group, is to enter into Vietnam’s aviation sector through cooperating with the country’s largest airport terminal logistics business, Aviation Logistics Services (ALS).

The news was officially released on Samsung SDS’s website on August 19, explaining it will establish a joint venture in Vietnam and boost its presence in Southeast Asia’s logistics market.

This is the second joint venture in Southeast Asia for Samsung SDS, following its joint venture established last month with Thailand’s leading customs clearance company, ACUTECH.

Vietnam is considered to have significant potential in logistics. According to Samsung SDS the rapid growth of its logistics market, at 15 to 20 per cent per year, influenced its decision to establish the joint venture.

Thanks to recent changes in the international trade environment relating to the TPP and the ASEAN Economic Community (AEC), global companies are or are considering relocating their manufacturing facilities to Vietnam, which has led to increasing FDI and trade volumes. 

Mr. Kim Hyung Tae, Executive Vice President of Samsung SDS’s Smart Logistics Business Unit, said that considering ALS’s local network and diverse business capabilities it decided that Vietnam was its most optimized partner. “With this agreement we will continue to expand our business in the Southeast Asia market,” he added.

Samsung SDS plans to provide an integrated logistics service, including global and inland transportation, warehousing services, and customs brokerage, while utilizing ALS’s customer network along with attracting potential customers by strengthening its external sales force through the partnership.

Alongside the cooperation with ALS, Samsung SDS is also negotiating partnership opportunities in China and will continue its efforts to provide advanced logistics services to customers outside of the Samsung Group. 

Samsung SDS currently handles 40 per cent of all import and export logistics at Hanoi’s Noi Bai International Airport. Samsung Electronics, which is one of Samsung SDS’s largest customers, accounted for 20 per cent ($32 billion) of Vietnam’s exports ($162 billion) last year.

It provides global logistics services through an integrated logistics solution called “CelloSCLISTM” that covers the range of logistics, from supply chain management to logistics execution. Additionally, Samsung SDS launched a logistics platform called “Cello Square” in August 2015.

ALS was founded in July 2013 to invest and manage the ALS cargo terminal at Noi Bai, which has become a key link in supply chain services.

It has made significant contributions to improving the quality and capacity of air cargo at the airport and become the leading cargo handling operator of international standard in Vietnam.

The rapid growth of Vietnam’s export-oriented manufacturing sector has boosted demand for logistics services but the local logistics sector has largely failed to fully meet this demand. Many enterprises are therefore looking for opportunities to enter the sector.

According to the Vietnam Logistics Business Association, logistics costs in Vietnam represent 25 per cent of annual GDP, significantly higher than in countries such as the US, China and Thailand. When the TPP officially comes into being the tariffs on tens of thousands of goods will gradually come down to 0 per cent, boosting Vietnam’s imports and exports and requiring a logistics sector that can cope.

VN Economic Times