The year 2020 was especially difficult for the economy in general and logistics in particular due to many adverse factors such as the Covid-19 pandemic, natural disasters, trade tensions, and geopolitical issues.
Let's review the highlights of logistics over the past year with the Vietnam Logistics Report 2020 của Bộ Công Thương.
1. Economic Situation in Vietnam and the World in 2020
The widespread pandemic severely affected the global economy, forcing governments to simultaneously implement strict control measures on travel, close non-essential factories and service providers. By the third quarter of 2020, when restrictions were gradually eased, many economic sectors began to resume operations. However, the global economy still needed more time to return to pre-pandemic levels.
In Vietnam, by September 2020, most key economic indicators were less favorable compared to the same period in 2019 and the general trend over the past five years (according to the General Statistics Office). The supply chain of imported raw materials for industrial production in 2020 was also affected, especially in the processing and manufacturing industries. Conversely, some sectors saw increased product consumption during the pandemic, such as pharmaceuticals, chemicals, paper and paper products, chemicals, and electronic products, computers, etc.
Retail, tourism, food and beverage services, accommodation, and both passenger and freight transport were severely affected by Covid-19 in 2020. Retail revenue, however, slightly increased as most supermarket systems, food stores, and essential goods stores were allowed to maintain operations during the social distancing period to prevent the pandemic.
2. Global Logistics Activities in 2020 and Trends
Global Logistics Activities in 2020
In 2020, the global logistics sector was severely impacted by the pandemic. Disease control measures and labor shortages during the pandemic caused most logistics activities to come to a halt at times. Meanwhile, some other segments, such as e-commerce logistics, became overwhelmed due to the surge in buyers and home delivery orders.
Compared to passenger transport, the impact of Covid-19 on freight transport was relatively mild due to less stringent regulatory restrictions. During the pandemic, road transport continued to be the preferred mode of transport for essential goods, supporting the distribution of food, medicine, and other essential products.
According to the Vietnam Logistics Market Report, road transport was less affected by Covid-19 compared to air and water transport. The difficulties for these two transport sectors were not only due to reduced trade volumes but also due to labor shortages and the restrictions and quarantine regulations for importers in different countries.
Prospects and Key Trends
According to a forecast by ResearchAndMarket.com, the global logistics market size was estimated at USD 2,734 billion in 2020, then expected to increase by 17.6% to USD 3,215 billion in 2021. According to market research by Technavio, the global 3PL logistics services market is expected to increase by about USD 76.28 billion during the period 2020-2024, with an average annual growth rate of 6%. The multimodal transport market is also expected to grow by an average of 7% annually during the period 2020-2024, reaching a scale of about USD 49.84 billion.
To maxize opportunities, logistics service providers should focus more on fast-growing segments such as multimodal transport, e-commerce logistics, cold chain logistics, etc., and cooperate more closely to ensure "greening" goals according to international regulations and commitments for their sustainable development.
According to a World Bank report, Vietnam's logistics costs are equivalent to 20.9% of GDP, with transport costs accounting for about 60%, which is high compared to developed countries. The ratio of logistics costs to GDP in Vietnam is also higher than in China (14.5%) and developed countries such as the United States and Singapore (7.5-8.5%).
Some reasons include the high informal costs of Vietnam's logistics in total road transport costs, the lack of synchrony in transportation infrastructure, limited connectivity between sea, rail, and road transport, ineffective development of multimodal transport in Vietnam, and lack of coordinated efforts between regulatory agencies.
Moreover, the capacity of Vietnamese logistics enterprises is still weak, limited in business scale and capital, experience, and management skills, as well as the ability to apply information technology and the quality of human resources not meeting international operational requirements.
Summary of Vietnam Logistics Report 2020