1. Overview of the Global Logistics Market
In 2019, the global transportation and logistics market was impacted by key factors including significant technological advancements, international trade fluctuations, new trends in e-commerce, and new requirements for environmental protection and climate change prevention in logistics.
Global trade has become more unpredictable, with new trade barriers and adverse political factors. Trade tensions between the US and China have also led to a shift of manufacturing systems from China to other more potential markets. In addition, the development of global e-commerce and electronic payment platforms allows micro, small, and medium enterprises to emerge and reach customers in many markets. Multinational companies are also focusing their investment plans on developing logistics networks in emerging markets to maximize resources there.
Simultaneously, the trend of automation is changing global production as well as logistics activities serving production and consumption. The digitization of the economy, government support mechanism innovations, consumer culture, the development of e-commerce, and the sharing economy are helping inter-industry and cross-border logistics develop more robustly than ever.
Changes in the global supply chain, especially amidst major fluctuations in international trade, are the strong influencing factors on the global logistics sector in 2019 and the upcoming period. Industries such as food production, cosmetics, retail, etc., are expected to experience significant changes with the rapid development of logistics services. 3PL and 4PL services are predicted to be the driving force of the global logistics market. Major services include freight forwarding, freight management, route optimization consulting, project management, warehousing, and storage, and supply chain consulting among other logistics services. Activities related to the application of high-tech logistics services such as tracking and monitoring, analysis, forecasting, and real-time planning are expected to bring many profitable opportunities for the logistics service market in the near future.
According to the forecast of the International Transport Forum (ITF) in 2019, global transport demand is expected to continue to increase sharply in the next three decades, projected to triple by 2050. New trade routes may affect global trade volumes, logistics chains, and transportation infrastructure. The introduction of new technologies aimed at improving logistics efficiency is forecasted to significantly impact freight transport in the near future.
2. Logistics Situation in Vietnam
Businesses in the transportation and logistics sector in Vietnam highly appreciate the growth potential of the logistics market in the coming years. Data from the Ministry of Industry and Trade shows that in 2018, the logistics industry in Vietnam grew by about 12-14% compared to 2017. The number of transportation and logistics enterprises operating via road, rail, sea, inland waterways, and air is approximately 3,000 enterprises.
According to representatives of the Ministry of Industry and Trade, the development of the transportation and logistics sector will facilitate Vietnam to quickly become a new production hub in the region, capable of competing with China. Vietnam can currently leverage many inherent advantages. Firstly, increasing global trade exchange along with international economic integration and the successful signing of free trade agreements have opened up increasingly wide trading doors for Vietnam. With infrastructure gradually improving and a favorable geographical location, Vietnam can build large transshipment hubs for Southeast Asia.
However, besides opportunities, the growth challenges are also significant. The three biggest challenges for Vietnam's transportation and logistics sector today are limited infrastructure, limited capital scale and management skills, and high costs of taxes and surcharges. In reality, infrastructure improvements are still insufficient for the sector's development. The road transport sector urgently needs greater participation from the rail sector. The port system is still imbalanced with more than 92% of container traffic in the South concentrated at Cat Lai port, leading to overload and waste. Additionally, capital issues also hinder businesses from expanding operations. Only about 7% of businesses have capital over VND 1,000 billion, mainly in the group of multinational companies, while more than 70% of currently operating transport and logistics businesses are small and medium-sized.
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Summary of Vietnam Logistics Report 2019