Digital transformation to boost logistics businesses in Vietnam

HANOI -- Logistics is among eight industries for which the Vietnamese government has vowed to increase support in digital transformation efforts, Vietnam News reported on Wednesday.

Logistics businesses in Vietnam are embedding Industry 4.0 technology to optimize their resources and results.

Phan Van Chinh, head of the Agency for Foreign Trade, under the Ministry of Industry and Trade viewed technological advancements as a game-changer for logistics firms in the time of rapid change.

The country's logistics services have grown between 14 percent and 16 percent to become a market worth around 42 billion U.S. dollars per year, said the Vietnam Logistics Business Association, adding that in the field of transportation, warehousing, postal services, and delivery, Vietnam has drawn in more than 30,000 enterprises, including international giants such as DHL, FedEx, and Maersk.

The logistics sector is aimed to contribute 5 to 10 percent of Vietnam's annual gross domestic product (GDP) growth by 2030, according to the Ministry of Transport.

However, when compared with foreign logistics companies, Vietnamese counterparts have been at cost disadvantage due to inefficient business practice.

According to the World Bank, 68 percent of local companies have truck fleets with the capability of transporting a cargo load under 5 tons. While the 2022 Logistics Report by the Trade Ministry found 13 percent of road transport companies are running an empty loading rate of up to 50 percent.

Hence, the industry is left with no choice but to leverage Industry 4.0 technology, such as robots and data-driven approaches like artificial intelligence to narrow the cost gap.

The Vietnam Logistics Business Association's vice chairman Le Quang Trung said 40 percent of logistics businesses have incorporated digital technologies into their daily operation, including transportation and warehousing management.

Saigon Newport, Vietnam's biggest port operator, said technology is creating unprecedented connectivity across its business processes, halving the waiting time at port and cutting customs clearance time by two minutes per container.

A real-time locating system is also rolled out by Vietnam Post Corporation to automatically identify and track the location of clients, significantly improving delivery efficiency.

Pham Anh Tuan, business manager of U&I Logistics Corporation, said digital technologies have enabled his firm to optimize its freight shipping transit time, reduce upkeep costs, and cut down on administrative expenses and billing errors.

Vietnam has been ranked 11th out of 50 emerging logistics markets globally, according to a report released by global integrated logistics provider Agility, which forecast Vietnam's logistics sector would grow at a compounded annual rate of 5.5 percent in 2022-2027.