Digital transformation is a weakness in the logistics industry

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A bonded warehouse of U&I Logistics. Photo: S.T

Full of weakness

Mr. Tran Thanh Hai, Deputy Director of the Import-Export Department (Ministry of Industry and Trade), said that logistics is identified as an important service industry in the overall structure of the national economy, playing a supporting and connecting role and promote socio-economic development of the whole country as well as each locality, contributing to improving the competitiveness of the economy.

Vietnam's logistics industry has made significant progress with an average rate of 14 - 16% a year, with a scale of USD 40 - 42 billion/year. The number of enterprises and the quality of logistics service business is increasing, making a significant contribution to bringing the result of import and export of goods to the highest level ever of USD 732.5 billion, up 9.5% compared to 2021.

According to Agility's assessment in 2022, Vietnam ranked 11th in the group of 50 global emerging logistics markets.

“However, Vietnam's logistics industry still has many weaknesses such as high logistics costs; lack of linkage between logistics service enterprises with each other and with production, trading and import-export enterprises; The scale and financial potential of Vietnamese logistics enterprises are still weak, and the going to foreign markets is still insignificant,” Mr. Tran Thanh Hai said.

In logistics, new technology is rapidly changing the way of business operates. In particular, in the face of a growing wave of online shopping, investment and application of logistics technology is considered a solution to help businesses meet the increasing demand for transportation and bring more convenience to customers in the near future.

According to Nguyen Trieu Quang, Northern Operations Manager, Lazada Vietnam, in the context of the global trend towards sustainable development, logistics enterprises also need to build a sustainable and comprehensive ecosystem to seize the opportunity of e-commerce while enhancing the delivery experience from every touch point; technology application and process standardization to optimize operational efficiency; sustainable green logistics development.

Big changes along with e-commerce

Mr. Dinh Hoai Nam, Business Development Manager, SLP Vietnam Company, said that in the digital age, modern warehouses are replacing traditional warehouses, which is indispensable for the development of the logistics industry for this change due to the increasing demands of customers, requiring shorter transit times and better service quality. Modern warehouses are equipped with advanced technologies such as comprehensive monitoring and automation systems which improve the speed and efficiency of the transportation process. This is an essential factor in helping the logistics industry develop and meet the increasing needs of customers.

Robbin Hou, Vice President of the Guangdong Import and Export Chamber of Commerce, said that, unlike the freight cycle of commerce in general, logistics is essential for developing the e-commerce industry.

“E-commerce is mainly a consumer-oriented business, and buyers have high requirements for the timeliness of logistics in other words, waiting after shopping is a process that makes people who shop online feel nervous and anxious. Therefore, fast and efficient shipping can make consumers more and more satisfied with the shopping on e-commerce platforms,” said Robbin Hou and added that some data shows that the return rate of international stores is three times higher than that of domestic stores.

The delivery speed of international shipping is so long that consumers lose the joy of buying and that is what causes buyers to return.

The goods in the field of e-commerce are mainly consumer goods, in which food accounts for a considerable proportion. For food, transportation will undoubtedly be more difficult, which further demonstrates the importance of logistics in e-commerce. Therefore, e-commerce only solves the transaction process of goods while logistics completes the delivery of goods, eventually forming a closed transaction loop. Therefore, logistics guarantee transactions and is an integral part of e-commerce.

According to Mr. Robbin Hou, to better serve the e-commerce industry, the logistics industry needs to improve service quality and modernize management constantly, and the constant change of e-commerce will also affect and promote the logistics industry. The traditional logistics industry requires centralized and large-scale warehouse management.

But under the rapid development of e-commerce, distributed warehouses become more flexible. The development of e-commerce has also improved the quality of modernized management of the logistics industry. The only management and operation mode of traditional logistics can no longer meet the needs of e-commerce.

Therefore, the software management system and corresponding hardware support facilities of the logistics industry also need to be upgraded, improved and developed.

Upcoming, the Vietnam International Logistics Exhibition 2023 (VILOG) is the first specialized organization for the logistics service industry; the exhibition is expected to promote trade, helping to promote the service industry. Vietnam's logistics service development is commensurate with its inherent potential, at the same time creating a buzz to attract foreign investment, transfer operating technology, train human resources, and establish a green ecosystem in the logistics industry.