To enhance competitiveness of domestic logistics enterprises

	Water transport - an effective solution to reduce logistics costs
	Equipping human resources with digital skills drives the development of the logistics industry
	Remove the "bottlenecks" hindering the development of the logistics industry

Foreign enterprises dominate a large portion of the market share in the logistics sector.

Domestic enterprises still face challenges

According to the Ministry of Industry and Trade (MoIT), during 2022 and the first six months of 2023, Vietnam's logistics service sector has played a crucial role in driving production, business, contributing to the implementation of new-generation FTAs. According to the World Bank's 2023 report, Vietnam ranks 43rd in the Logistics Performance Index (LPI) rankings, among the top five ASEAN countries, following Singapore, Malaysia, Thailand, and sharing the position with the Philippines. The average annual growth rate of the Vietnamese logistics market is around 14-16%, significantly contributing to the increase in Vietnam's total import-export turnover to more than US$730 billion in 2022, a 9.1% increase compared to the same period in 2021.

Agility's 2022 ranking also placed Vietnam's logistics market at 11th among the top 50 emerging logistics markets worldwide. Notably, the compound annual growth rate (CAGR) from 2022 to 2027 for Vietnam's logistics market was projected to reach 5.5%.

Despite consistent growth throughout the years, the market share of Vietnamese logistics enterprises remains relatively modest compared to its potential. According to the Vietnam Logistics Business Association (VLA), there are more than 5,000 service providers in the logistics 3PL sector, with 89% being domestic companies, 10% joint ventures, and 1% wholly foreign-owned enterprises providing cross-country logistics services. Well-known global names like DHL, Kuehne + Nagel, DSV, and DB Schenker are part of the list of 50 largest logistics companies in the world.

Even though domestic enterprises constitute a large proportion, they only hold about 30% of the market share, while the rest belongs to foreign entities. This is due to the fact that Vietnamese businesses are primarily small, with limited capital, workforce, international operating experience, and lack of integration within the logistics supply chain and between logistics service providers and import-export companies.

Vietnamese logistics companies mainly offer domestic services such as domestic transportation, warehousing, customs declaration, cargo inspection, and container leasing. In comparison to foreign units, Vietnamese enterprises possess numerous infrastructure assets supporting logistics operations (logistics centers, warehouses, ports, airports, railways, and trucks), alongside a deep understanding of domestic business practices and clientele. However, their operations remain isolated, their financial capacity and management are limited, and they often serve specific segments, lacking integrated logistics services.

More than 80% of the VLA members are small and medium-sized enterprises. Only a few members like Transimex, Gemadept, Sotrans, and Tan Cang Saigon are major units providing 3PL services, capable of competing with foreign logistics companies operating in Vietnam with branches or representatives in foreign markets.

Besides facing weak competition, the initial months of the year have shown significant declines in the participation of businesses in warehousing and transportation sectors. According to statistics from the General Statistics Office, in the transportation and warehousing sector, the number of newly registered businesses in the first six months of 2023 decreased by 7.6%, registered capital decreased by 63.6%, and the labor force decreased by 26.4% compared to the same period in 2022. Moreover, during the first six months, 349 businesses completed the dissolution process, a 10.1% increase compared to the same period last year, accounting for 3.95% of the total dissolved businesses nationwide

Add support to enhance competition

According to the MoIT, the unfavorable market conditions have affected the operations of logistics service enterprises. The competition for securing orders has become more intense. This is also a time of strong filtering among companies with professional services, capital scale, and strong networks, compared to those with weak foundations and no advantageous market segments.

In addition to competitive pressure in services, new international and domestic standards for environmental and traffic safety, labor safety is also demanding innovation from logistics service enterprises. Many global logistics companies now require third-party logistics companies to account for emissions. In this context, logistics companies need to proactively invest and transition to "greening" their production and business models. Excelling in green logistics not only fulfills responsibilities but also enhances their competitive edge, ensuring sustainable development.

According to the MoIT, the weaknesses of Vietnamese enterprises lie in high service costs, relatively low quality of some provided services, and fierce competition in the current Vietnamese service market. The main reasons are limitations in business scale and capital, experience and management expertise, ability to apply information technology, as well as the workforce's level not meeting international requirements. Another significant factor is the limitations in logistics infrastructure and road transport costs, as well as port charges imposed by foreign shipowners.

Moreover, the level of IT application and digital transformation in logistics enterprises is still restricted. Furthermore, the implementation and coordination of national logistics development tasks encounter difficulties due to the specific nature of the industry, which encompasses various sectors under the management of different ministries and agencies.

To give a boost to the logistics sector in the coming time, according to the MoIT, it is necessary to improve the State management apparatus for logistics services at both the central and local levels, perfect the coordination mechanism among Committee 1899, ministries, and agencies. This should be coupled with a flexible hierarchical mechanism between the central and local levels to further enhance the role of guiding and directing logistics activities. Urgent research is needed to establish a Development Strategy for Vietnam's logistics services until 2035, with a vision towards 2045. Continuous innovation is required in investing in transportation infrastructure, commercial infrastructure, and relevant technological infrastructure according to practical needs. Particularly, policies are needed to attract and build efficient logistics centers that effectively connect with seaport systems, domestic transportation networks, and regions, creating advantageous and highly efficient cargo transportation routes.