Vietnam can expect rapid growth in its already fast-expanding logistics industry, buoyed by an anticipated imports-exports boom from new multilateral trade pacts and a surge in domestic retail and e-commerce spending.
Its logistics sector might grow 20-24 percent this year, with 70 percent of 1,300 firms expected to rake in profits, according to industry data.
That expected growth comes on the heels of a free-trade agreement with the EU and the US-led Trans-Pacific Partnership (TPP), which is fueling record foreign investment into factories.
Two weeks after the October conclusion of the TPP, a 12-nation bloc covering 40 percent of the global economy, logistics equities soared in Vietnam.
Shares of shipping firms Gemadept Corp gained 28 percent, and Viconship was up 20 percent. Surging trade is to be a boon for shipping, rail freight and haulage firms, which are already benefiting from Vietnam’s booming e-commerce.
Container volumes in and out of the country have increased by about 36 percent since 2011, including about 1,700 containers per day to the US.
DHL Express, the first international logistics company to set up shop in Vietnam, said the country is one of its fastest growing markets in the Asia-Pacific.
That is helped by e-commerce and the increased output of electronics, mainly smartphones and TVs, for companies like Samsung Electronics Co, LG Electronics Co, Intel Corp, Panasonic Corp, Toshiba Corp and Sony Corp, which represent major opportunities for the logistics market in Vietnam, a spokesperson for package delivery giant UPS said.
However, domestic outfits have a lot to do to step up, with supply chains notably weak and logistics costs equivalent to a fifth of GDP, greater than the global average. They also face competition from foreign players, which dominate the sector.
“Local firms have to invest more in facilities and human capital to raise their capacity,” Association of Vietnam Logistics vice president Do Xuan Quang said. “Otherwise they cannot compete with foreign players.”
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