The 3rd Logistics Forum has been recently held in Ho Chi Minh City. At the forum, experts and business managers assessed activities of goods’ transportation, warehouse, and distribution (logistics) of domestic enterprises in recent years. To Binh Duong province, there were still some logistics problems that need to be adjusted, because the province is one of the three strongest localities in logistics of the country.
Domestic logistics enterprises are still weak
Speaking at the forum, Tran Tuan Anh, Deputy Minister of Industry and Trade, said domestic logistics industry still had many limitations. In recent years, logistics costs of Vietnam still have accounted for 20-25% of GDP, wasting many resources of the country. Therefore, the reduction of logistics costs will help our economy to increase competitiveness in the integration process.
Logistics activities at ICD TBS- Tan Van warehouse
According to Mr. Anh, the price competition, fragmented activities, working for foreign companies right at the home market is the general state of domestic logistics providers. Vietnam now has about 1,300 logistics companies specializing in transportation, warehousing, loading, distribution, customs procedures... Among these, there are 25 foreign logistics companies but making up 80% market share; the remaining are domestic logistics companies making up only about 20% market share. Notably, 72% domestic logistics companies are SMEs (capitalized at VND4-6 billion); only 5-7% of the workforce is well trained, professional, others receive self-training by businesses.
Binh Duong is one of the three strongest localities in logistics of the country, and owned many large facilities, like: Gemadept Schenker logistics center, Gemadept Song Than center, DAMCO multipurpose logistics center. However, large and prosperous warehouses, ports located in Thuan An town, Di An town are FDI companies.
According to experts, Binh Duong province should make rational adjustments, because this is a big industrial and distribution center of the country. Besides, logistics businesses need to be more proactive in changing operation modes to integrate into the new playground when free trade agreements become valid.
Binh Duong makes well preparations
Implementing commitments to World Trade Organization (WTO), Binh Duong province has been completely open to the logistics industry. Do Thanh Su, Vice Chairman of Thuan An Town People’s Committee, said the town had attracted investments of 36 enterprises in logistics, including full logistics service package with huge scales and investments, like: Mapletree Company (Singapore), Southern Logistics Company…
PPC also draw up plans and constructed warehouse system to serve the integration needs. Currently, Binh Duong is constructing Tan Van logistics center, and expanding An Son port in Thuan An town. In addition, ICD Song Than 2, ICD TBS - Tan Van port… are also operating efficiently. The preparation was done carefully by the province; the rest is the determination and efforts of each enterprise.
Le Phuoc Vu, Chairman of Hoa Sen Group, said there were many factors that hinder the development of logistics industry. Those are the irrational operation of port system in Vietnam in general, leading to transport cost increase; shortcomings in infrastructure, international shipping; and the increase in international shipping surcharge during peak seasons.
Logistics companies in Binh Duong province usually receive one-way transportation, causing huge wastes of time fuel costs, port fees, weakening the competitiveness of companies. Additionally, the link between logistics companies is fragmented and unprofessional.
Experts assessed that Binh Duong province had potentialities to become a logistics center of the country, because of synchronous traffic, warehouse, port infrastructure. The essential task of the province is to adjust, shorten clearance time, simplify administrative procedures. Each business also needs to be aware of the international integration, thus changes are vital to adapt to the new context, especially when FDI inflows into provincial logistics industry would spike in the future.
Reported by Xuan Vi – Translated by Ngoc Huynh
