DEVELOPMENT OF QUALITY AND QUANTITY

There are about 1,200 enterprises in Vietnam providing logistics services (compared to the number of 700 by 2005) as transport freight forwarding, warehousing, loading-unloading service, transport agencies, freight forwarding agencies and logistics services… They are mainly operating in HCMC and Hanoi.

Vietnam logistics services can be classified as follows: Transport service enterprises providing transport services (road transport, sea freight and air freight…); enterprises exploiting infrastructure at transport nodal points (seaports, airports, stations…); enterprises exploiting warehouses, doing loading-unloading services and logistics services; enterprises of freight forwarding, 3PL and others as logistics software solutions, consultant, inspection, finance… Except equitized state-owned companies, most of enterprises are small and medium sized with average charter capital of VND 4-6 billion (compared to VND 1- 1.5 billion by 2005) and qualified human resources for logistics sectors is low (5-7%).

Vietnam logistics service enterprises mainly are agencies or those responsible for parts of the process as sub-contractors in logistics chain of international logistics service providers. There are over 25 multinational logistics service enterprises operating in Vietnam, but they account for 70-80% Vietnam market in providing logistics services.

Thanks to the interest and enthusiastic support from the Ministries and sectors, Vietnam logistics has developed both in quality and quantity, ranking 54/155 in LPI by WB and ranking 5th in ASEAN (2012). The growing rate of logistics services reaches 16-20% year. However, the competitive ability of the sector is still rather low, and logistics cost is still high, accounting for 20-25% of Vietnam GDP (compared to 17.8% of China and 9% of Singapore- in 2011). The connection between enterprises of import-export and logistics has been limited, and has not been fully reliable – a reason making Vietnam logistics slowly developed as expected. The rate of outsourcing is still low, 25-30% (compared to 63.3% of China (2010), over 40% of Japan, European and American countries).

THE LACK OF RELIABILITY IN CONNECTING SUPPLY CHAINS

According to WB’s report on April 2013, logistics performance in Vietnam is not as effective as those in other countries due to the lack of reliability throughout the process of connecting Vietnam supply chains to those of the world’s due to the ineffectiveness in technology and logistics performance arrangement including ambiguous logistics law, “sweetener” in transport, non-synchronous transport infrastructure planning lacking multi modal transport, road transport unable to satisfy shippers’ requirements, sea ports unable to be fully exploited while 90% of import-export cargo of Vietnam carried out by sea freight.

Besides transport infrastructure and relevant issues as road loading capacity and regulations of safety traffic, the biggest limitation to the development of logistics services in Vietnam is administrative procedures, especially customs ones.

Law adjustment for logistics performance in Vietnam is considered sufficient. Besides regulations on logistics services (8 articles) in the Trade Code 2005, there are other law as Maritime Law, Civil Aviation Law, Road Transport Law, Railway Law…, and legal document on orientation purposes as plannings, development strategies related to logistics services for the period of 2020, vision 2030… However, in the process of regional and international integration, some of regulations and laws on logistics has not been appropriate, and thus, not creating a transpartent logistics service environment with healthy competitions and stable development.

Although logistics has been considered the “key factor” to encourage production and the developments of other sector (QĐ 175/QĐ-TT dated January 27th, 2011, there has not been a unified management source and appropriate position in the organization mechanism in the Ministry of Transport and the Ministry of Industry and Commerce as well… one of difficulties that greatly affects the development of the sector. There are also gaps in regulations of management authorities concerning to logistics performance. For example, in the Decree 87/2009/ NĐ-CP and in the Decree 89/2011/ NĐ-CP (adjusted from the Decree 87/ 2009/ NĐ-CP), the Ministry of Transport is regulated an authority to issue license for doing multi modal transport business – an important activity of logistics services. Meanwhile, in Trade Code 2005, the Ministry of Industry and Commerce is the authority carrying out logistics management and the Ministry of Planning and Investment carries out the registration of doing logistics services. There is also inconsistency in registration of doing logistics and multi modal transport business, and there is also lose control after operation license issued…

VIETNAM LOGISTICS PROFESSIONALISM ON THE INCREASE

A no less important aspect is the quality of services provided by logistics enterprises? It depends on each enterprise’s competency, professionalism, training and their investment on equipments, facilities, and IT… There have been a few universities nationwide having logistics major in combination with syllabus of transport.

From a recent in-house survey by Vietnam Logistics Association –VLA (2012), it can be seen that most enterprises have average charter capital which are 5-6 times higher than that of previous periods, the number of staff are also on the increase and they have mostly had operations in international transport, transport freight forwarding, warehousing, and ports. Enterprises carrying out logistics package services, 3PL and multi modal transport account for 10% of the total. Also from the survey, trained employee (self-taught) is 72% (!). Around 60-70% of equipments, means of transport, warehousing facilities have to be hired or leased to serve customers. In term of IT, most of enterprises have been equipped with computers, emails, fax and had their own websites; 27% has professional management software and 9% have had EDI, used bar code technology and RFID.

Therefore, it can be seen that professionalism and competence of Vietnam logistics service enterprises has been improved in the past few years. Some local enterprises have been carrying out 3PL integrated services – taking part in every process of shippers’ logistics supply chain – and have gained trust from their partners and both foreign and local customers.

( Source : Vietnam Logistics Review )