Seizing the opportunity to develop air logistics services

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What do you think about Vietnam's aviation logistics market today?

Logistics is the backbone of international trade, in which air logistics plays a significant role. In Vietnam, transport accounts for about 2% of import and export goods, but it has a value of more than 25% of the total value due to transport objects being high-value goods such as fashion, mobile phones, electronics, and fresh goods samples, or serving just-in-time supply chains. At the right place - at the right time),...

Air logistics has many development opportunities but has not yet exploited its full potential. Usually, the growth of the aviation industry will be at 1.5 times the growth rate of GDP, and for Vietnam, the logistics market, including air logistics, has a growth rate of about 14-16% per year. However, Vietnamese enterprises have not yet grasped the opportunities brought by the market. As a result, foreign air logistics enterprises hold an advantage in this field.

The amount of imported and exported goods transported by air is increasing daily, while the market share of Vietnamese logistics enterprises is limited; what should Vietnamese businesses need to do to increase their market share?

With the volume of imported and exported goods increasing steadily by 12-16% per year for a long time, Vietnam's import-export turnover has exceeded US $ 600 billion in 2020 and, in 2021, will reach US $ 668.54 billion, up 22.6 % compared with the last year. Although in the first eight months of 2022, the total import and export turnover continued to increase by 15.5%, it is expected that Vietnam's import and export turnover in 2022 will reach a record of US $ 800 billion, which is the corresponding increase of the logistics market. Along with that, aviation logistics had strong growth. As a result, the total cargo volume in the first six months of 2022 reached 651 thousand tons, up 6.8% over the same period in 2021 and up 7% over the same period in 2019. However, The market share of Vietnamese logistics enterprises in this field is still relatively modest, accounting for only about 10-12%.

Vietnam's air logistics enterprises have also shown initiative during the pandemic period with the rapid transformation of business models and active and effective exploitation of means such as the conversion of functions such as the use of passengers fly to carry cargo, remove seats to transport cargo in the cabin (P2C). This initiative needs to continue to be promoted; with the pandemic over, trade in goods will be strongly created thanks to the implementation of new generation FTAs, especially EVFTA and RCEP, and the goods market will become more active and competitive. Vietnamese air logistics enterprises must boldly expand their activities in developing specialized air freight services by specialized aircraft (freighter) or developing specialized airlines (cargo).

Vietnamese businesses need to take advantage of the strategic gateway position of Southeast Asia in general and Vietnam in particular on maritime and air transport routes, as well as agreements on open skies in the ASEAN region to effectively exploit air transport and logistics services. Furthermore, Vietnamese enterprises must complete the service chain, link and enter into joint ventures with domestic and foreign airlines to improve service delivery capacity, expand the network, and promote and strengthen regional cooperation. ASEAN, Asia-Pacific and more.

Currently, many ocean carriers and logistics enterprises tend to participate in the air transport market, generating much profit. How do you evaluate this issue? Do Vietnamese businesses have the same trend?

We see leading transport enterprises such as Maersk, CMA, and CGM have all invested and expanded in the air transportation segment (through direct investment or M&A deals) with the enormous profits they obtained during the last pandemic. This is a trend of vertical service integration (vertical integration), an issue that FIATA (International Federation of Freight Forwarders, the organization representing the global logistics industry) has also mentioned many times, especially at the last 2022 Annual General Meeting in Busan, South Korea and raised concerns about fair competition.

No Vietnamese enterprise has enough capacity, experience and finance to do similar work. However, businesses can fully cooperate, taking advantage of each business to expand together, build a shared ecosystem and jointly build up competitive air logistics businesses in the region, for example, in the case of cooperation to establish Vietravel Airlines Cargo (VUAir Cargo) between Vietravel and ACG to the business development of air freight services on September 8, 2022.

Recently, ASEAN Cargo Gateway Company signed a cooperation agreement with Vietravel Airlines to establish Vietravel Airlines Cargo (VUAir Cargo) to develop an air cargo service business. Could you tell me more details about this cooperation?

This is a typical example of Vietnamese enterprises' cooperation and taking advantage of each other. Asean Cargo Gateway (ACG) is a model cooperation model between leading enterprises in the field of logistics of the Vietnam Association of Logistics Service Enterprises, with different strengths complementing each other in technology, network, and domestic and international shipper relations. ACG was established during the Covid-19 pandemic, following the direction of the Prime Minister under Official Letter No. 7709/VPCP-CN "we must have a Cargo Airlines airline with a separate cargo fleet" with the mission of improving the competitiveness of import and export goods, including Vietnamese agricultural products.

For the first time, VUAir Cargo will operate flights in the ASEAN region and Northeast Asia. In the next time, VUAir Cargo will expand its service with wide-body aircraft so that it can fly to serve Vietnam's main import-export markets, such as Europe and North America, creating new routes, and opening up new routes. new markets for Vietnam's import-export goods, especially agricultural products.

The Ministry of Planning and Investment is consulting ministries and branches on licensing the establishment of a specialized airline for transporting goods of Vietnamese enterprises, with the leadership role of the Vietnam Logistics Business Association, the opinion of the Ministry of Planning and Investment. What do you think about the need to have Vietnam's own airline to reduce air logistics costs?

Vietnam currently has six licensed airlines, but there is no airline has yet to operate a dedicated fleet for cargo. Airlines can fully cooperate with the leading logistics enterprises of the Vietnam Logistics Business Association to expand this service segment. Therefore, they can take advantage of both sides' potential and strengths, contributing to the expansion of this service and building Vietnamese air logistics enterprises strong enough to compete in the region and reach out to the world. We are integrating; the ASEAN Open Skies Agreement has come into effect, and the formation of the ASEAN Economic Community, the vision of 2025 is near; if we do not do it, we will give up the playing field to other ASEAN businesses. In addition to the proactive participation of businesses, the State must have policies to encourage Vietnamese businesses to boldly seize this opportunity to develop air logistics services and rise to world heights.

Thank you very much!