The EU-Vietnam Free Trade Agreement (EVFTA) will boost the demand for logistics services and significantly impact on Vietnam's logistics industry.

A container is loaded at a PetroVietnam Technical Services Corporation port.
The trade relations between the EU and Vietnam within the EVFTA framework
will increase the transportation demand not only between the EU and Vietnam
but also between the EU and the Southeast Asia. — Photo vietnamplus.vn 

The statement was made by Ta Hoang Linh, head of the European-American Markets Department under the Ministry of Industry and Trade at a seminar held in Hanoi on December 24.

“The trade relations between the EU and Vietnam within the EVFTA framework will increase the transportation demand not only between the EU and Vietnam but also between the EU and Southeast Asia,” Linh said.

“Besides transportation, demand for warehousing services will also increase, thus we need to improve the quality of the transportation and warehousing, especially because Vietnam’s and the EU’s logistics industry is developing at a different rate,” Linh said.

Vietnam currently has almost 1,500 logistics services providers. According to World Bank’s 2018 Logistics Performance Index (LPI), Vietnam ranked 39/160 countries. This result increased 25 positions compared to the ranking of 64 in 2016.

Vietnam ranked 4th in ASEAN after Singapore, Malaysia and Thailand. In 2017, Vietnam announced a plan to transform the country into a regional logistics hub by 2025.

When the commitments take effect, EVFTA can bring a great opportunity for Vietnam’s logistics industry.

Linh told Viet Nam News: “A significant reduction of tariff barriers could increase the volume of imports and exports between Vietnam and the European Union, thereby increasing the demand for logistics activities and also an opportunity to increase the scale of Vietnam’s logistics industry.

“It would also be an opportunity to attract investment from Europe, utilise experience, management skills, capital, and available network of partners when entering into joint ventures with EU partners.”

Vietnam-EU trade relations have developed at a rapid speed. From 2000 to 2018, import-export turnover has increased by more than 13 fold, from US$4.1 billion in 2000 to $55.8 billion in 2018.

During the period, Vietnam’s exports to the EU soared from $2.8 billion to $41.8 billion, and imports from the EU to Vietnam jumped more than 10 times, from $1.3 billion to $13.89 billion.

Linh also said liberalisation would attract EU investors to take part in the provision of various logistics and maritime transport services in Vietnam, including general cargo handling, container cargo, bulk cargo, liquid cargo, passenger ships, logistics services, warehousing and multimodal transportation.

Vietnamese logistics businesses will have the opportunity to co-operate and learn from and call for capital from multinational companies, Linh said.

According to Nguyen Canh Cuong, Vietnam trade counsellor for the EU and Belgium, besides opportunities, Vietnamese businesses will also face many challenges brought by the EVFTA.

Under the plans for duty exemptions, with items such as food, pharmaceuticals, machinery and equipment imported from the EU, the European businesses will require a secure logistics and transportation system and stringent international standards and procedures need to be followed, he said.

Goods exported from Vietnam also need better assurance on the quality of preservation and transportation, especially agricultural products, rattan and wooden furniture as their quality can easily be affected by temperature and environment conditions, he added.

The differences in development levels between the logistics enterprises will create fierce competition. The EU firms had very strong financial capacity and large market share in the world logistics market, Cuong said.

In order to meet the needs and requirements of the European markets, Vietnam needs to seize development opportunities to soon become a logistics centre in Vietnam and in the region, creating breakthroughs in technology, resources, management skills, processes as well as making use of policy supports from the Government.