Logistics, considered a backbone of Vietnam’s economy, is among eight sectors prioritised by the national programme for digital transformation until 2025. 

At the Hai Phong port in the northern city of the same name (Photo: VNA)

According to the Vietnam Logistics Business Association (VLA), the sector has grown 14-16 % annually over recent years. It now gathers together some 3,000 domestic firms and 30 others offering transnational services.  Of those, 89 % are domestic businesses and 10 % are joint ventures while the number of foreign-funded companies represents just 1 % of the total.

The VLA said the cost of logistics in Vietnam as a proportion of GDP is 18 %, compared to 9-14 % in developed countries. The high cost is attributable to limited sea port infrastructure and weak cost reduction efforts. Together with fierce competition, the digital economic boom, and pressure from the COVID-19 pandemic, these have made digitisation in the sector a must.

Vietnamese logistics companies offer between 2 and 17 services, mostly in transport, warehousing, and fast delivery. About half apply technology in their operations.

Nguyen Tuong, VLA Deputy General Secretary, said investment shortages from the very beginning, difficulties in choosing suitable technological applications, a sense of distrust in technology, and a fear of change are hindering the sector from pressing ahead with digital transformation.

Tran Thanh Hai, Deputy Director of the Agency of Foreign Trade at the Ministry of Industry and Trade, said transformation in this core sector would trigger a similar process in other parts of the supply chain.

Experts have said that smart logistics involve master plans and strategies with the involvement of cloud computing technology, adding that it will be conducive to improving customer services, information flows, and automation.

To reduce logistics costs, Nguyen Hoang Long, Deputy General Director of the Viettel Post Joint Stock Corporation, said the engagement of both the Government and enterprises is needed. While the Government should offer planning and assistance for the building of national logistics centres, as well as preferential land and port taxes, enterprises need to invest in better management and boosting connectivity within the sector, he said.

Administration reform and capital support are also necessary for logistics firms undertaking digital transformation, insiders have said.