Reducing the "burden" of logistics costs, enhancing businesses’ competitiveness

VCN - The high logistics costs are a significant burden for enterprises. However, it is expected that by 2030, these costs could be reduced to approximately 16 - 18% of GDP. This objective forms part of the draft Vietnam Logistics Service Development Strategy, which outlines goals up to 2030 and sets a vision towards 2050.
Logistics firms advised to improve competitiveness Logistics firms advised to improve competitiveness
Vietnam's trucking industry in the context of Asian logistics development Vietnam's trucking industry in the context of Asian logistics development
Reducing the
A train transporting the first export shipment from Binh Duong to China at Song Than station, Binh Duong province, on September 27, 2023. Photo: T.D

Regarding the noteworthy achievements in Vietnam's logistics sector in 2023, the Import-Export Department of the Ministry of Industry and Trade reports that Vietnam is presently ranked 43rd according to the World Bank (WB).

In the 2023 Logistics Performance Index (LPI) by the WB, Vietnam holds the 43rd position, securing its place among the top 5 ASEAN nations. The annual average growth rate of Vietnam's logistics market stands at 14 - 16%.

In the previous ranking published in 2018, Vietnam witnessed a remarkable ascent from the 64th to the 39th position. Consequently, over a span of 5 years, Vietnam has descended 4 positions, but its LPI score has increased from 3.27 (in 2018) to 3.3 (in 2023).

According to the Ministry of Industry and Trade, logistics plays a pivotal role throughout the entire process, encompassing production, import-export, distribution, and consumption, thereby creating added value. It contributes significantly to the socio-economic development of the country, particularly in the context of industrialization, modernization, and proactive involvement in international economic integration.

Furthermore, Vietnam possesses numerous potentials and advantages in developing its logistics services. It is strategically situated in a dynamically evolving global region, characterized by a growing economy and deep international integration. With a sizable consumer market, a robust e-commerce trend, and geographical advantages for international transportation, Vietnam is well-positioned.

In light of Vietnam's deepening integration into regional and global economies, active participation in free trade agreements, and its geo-economic advantages, Vietnam's logistics services are poised for further development and deeper integration into the global logistics supply chain.

Despite these achievements, the Vietnamese logistics service industry continues to face challenges such as low competitiveness and higher logistics costs compared to other nations worldwide. Its contribution to GDP remains at 4% - 5%.

The 10-year socio-economic development strategy for 2021 – 2030 clearly articulates the need to vigorously restructure service sectors, leveraging modern technology foundations and digital technology. This includes the development of new service types and the establishment of service ecosystems in various fields, including finance, banking, insurance, legal services, healthcare, education, telecommunications, information technology, logistics, and distribution transportation.

Currently, the Ministry of Industry and Trade is in the process of drafting the Vietnam Logistics Service Development Strategy until 2030, with a vision towards 2050. This comprehensive plan includes numerous figures and proposed solutions, with the overarching goal of achieving sustainable, efficient, high-quality, and value-added development of Vietnam's logistics services. The aim is to be competitive both regionally and globally, capitalizing on Vietnam's advantages in the global value chain.

By 2030, the logistics service sector aims to contribute 6%-8% to GDP, maintain an annual average growth rate of 15%-20%, and see 60%-70% of logistics services outsourced. Additionally, logistics costs are targeted to be reduced to the equivalent of 16%-18% of GDP, and global LPI ranking is expected to be 45th or higher.

Looking ahead to 2050, the logistics service sector's contribution to GDP is projected to reach 12%-15%, with an annual average growth rate of 10%-12%. Outsourced logistics services are anticipated to constitute 70%-90% of the sector, with logistics costs reduced to the equivalent of 10%-12% of GDP. The global LPI ranking is expected to be 30th or higher.

To attain these goals, the Ministry of Industry and Trade intends to improve legal institutions and the business investment environment, while promoting the active involvement of economic entities in logistics service development. This will include innovative planning and increased investment in infrastructure development, aimed at achieving synchronization and modernization in Vietnam's logistics services.

The strategy also involves fostering the growth of the logistics market, enhancing competitiveness for businesses, promoting regional economic connections and economic corridors, and facilitating the development of modern supply chains and diverse value-added logistics services, aligning with both domestic and international demands.

Many key projects on transport infrastructure have been commenced and completed

Recently, the Ministry of Transport has formulated and implemented specialized transport plans for the period 2021 - 2030, with a vision towards 2050. These plans encompass the development of the road network, railway network, seaport system, airport and airfield system, and inland waterway infrastructure. They aim to enhance commercial infrastructure for the circulation of goods.

Concerning roads, several sections of the North-South expressway have been completed and are now operational. In the realm of railways, various international transshipment stations such as Kep station (Bac Giang), Song Than station (Binh Duong), and research on Cao Xa international transshipment station (Hai Duong) have been introduced to facilitate connections with China. Inland waterways have seen the successful completion and operation of the project linking the Day River with the Ninh Co River. Additionally, crucial shipping channels have been dredged for maritime routes, and the construction of Long Thanh airport and the upgrade and renovation of airports like Con Dao and Dien Bien have been undertaken. These efforts contribute significantly to the growth of transport infrastructure in comparison to other countries in the region and globally.

By Ngoc Linh/Tran Minh

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