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Logistics firms must keep their edge
Logistics services businesses need to have well-trained human resources and modern information technology systems to increase the competitiveness of the local industry, experts have said.
According to the World Bank, Viet Nam has a positive outlook for performance in the logistics industry.
Domestic logistic businesses want to gain market share, which currently accounts for only 5 per cent of the country's market.
Around 1,000 businesses are involved in logistics services in Viet Nam.
Dang Tan Phong, Head of the planning and business department of Tan Cang-Song Than ICD Ltd Company said his company's modern logistics centre would help local companies compete with their foreign counterparts.
The centre, covering an area of 24,000 square metres, was built in September last year, with total investment capital of VND70 billion (US$3.5 million). It uses a modern cargo load and unloading system, as well as bar-code readers.
Phong said professionally qualified staff were needed to operate the centre.
For example, the multinational company, Kimberly Clark, used the world's latest software on sales management, and if the centre's software was not compatible with business software, the centre would end up being a warehouse only, according to Phong.
He said the IT system used by the domestic logistics industry was outdated and ineffective, and a major capital investment would be needed to overhaul it.
Some foreign logistics businesses such as DHL and Logitem have strong global information management systems, he noted.
Phong's company, Tan Cang-Song Than ICD, is considering using computer chips to manage the transport of cargo.
This has never been done in Viet Nam, he said, adding that it would raise the competitiveness of domestic logistic industry.
Although the industry is in its nascent stages, some Vietnamese businesses have invested in logistic services, including the Thai Binh Shoe Production and Investment Joint Stock Company, Vinamilk Company, Kinh Do Company and Trung Nguyen Company.
Phong said that logistic services in developed countries, however, were usually outsourced to other companies to reduce costs for human resources and warehouse, as well as to decrease risks.
"Companies that invest in the service themselves are doing it as a temporary solution. This is being done because domestic logistic businesses have not yet met the service demands," he said.
Logistic services, mainly third-party logistics (3PL) services, will maintain an annual growth rate of 20-25 per cent within the next five years, he said. It is expected to reach about $3.2 billion this year.
The revenue derived from 3PL services originates from industries such as consumer goods, retail sales, hi-tech products, auto spare parts and medicine.
Businesses' total expenses for 3PL were estimated at $2.5 billion last year. Logistic expenses in Viet Nam accounted for 18-21 per cent of GDP.
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