Breakthrough opportunities for the Vietnam Logistics market

• The compound growth rate of Vietnam’s logistics market along with the strong recovery of the economy

According to the Vietnam Logistics Report 2022, the compound annual growth rate (CAGR) in the period of 2022-2027 is forecasted to reach 5.5% due to the strong recovery of the whole economy after the COVID-19 pandemic. The total domestic budget (GDP) after the first nine months of 2022 has reached 8.83%, providing a favorable opportunity for the Vietnamese logistics market to advance.

Statistics indicate that there are 30,000 logistics enterprises operating across the country, including over 5,000 enterprises involved in international logistics and 69 large and medium-sized logistics centers attracting investment in various fields. Moreover, 89% of the enterprises are Vietnamese enterprises with small and medium scales, while 10% are joint ventures and 1% are 100% foreign-owned enterprises providing cross-border logistics services.

Furthermore, the emergence of new transport, logistics, and supply chain trends in the digital economy has contributed to making Vietnam a potential emerging market in the field.

The boom of e-commerce

According to the Southeast Asia E-Commerce Report 2020 by Google, Temasek, and Bain Company, the Vietnamese e-commerce market has experienced continuous double-digit growth in recent years and reached over 14 billion USD in 2020. The average growth rate of e-commerce from 2020 to 2025 is projected to be 29%, reaching 52 billion USD by 2025. This indicates that the logistics situation in Vietnam for 2022 and the years to come is promising and full of potential.

E-commerce is closely related to logistics services, as logistics services play a crucial role in the trade chain from the seller to the buyer, including order fulfillment processes such as packaging, transportation, and payment collection. Therefore, the growth of e-commerce in Vietnam is expected to drive the strong development of the logistics market in the future.

The explosive trend of e-commerce in Vietnam, with major players such as Shopee, Lazada, and Tiki, has created potential opportunities for Vietnamese logistics enterprises to invest in and develop warehouse infrastructure, leading to modern logistics development in supply chain management.

• The positive influence of e-Logistics on the Vietnam Logistics industry

E-Logistics has promoted Vietnam’s logistics industry to improve service quality more professionally and effectively. Modern logistics in the world today has developed into 4PL (Logistics Chain) and 5PL (E-logistics, logistics based on e-commerce).

The prospect of the Vietnam logistics market prediction

The growth rate of Vietnam’s logistics services is expected to reach 15-20% per year by 2025.

Based on the Vietnam logistics report for the third quarter of 2022, VIRAC predicts that the size of Vietnam’s logistics industry will reach approximately $53 billion in 2022, representing a 15% increase compared to 2021. It is also projected that the size of Vietnam’s logistics industry will reach $61 billion in 2023.

Some goals are set under Decision No. 221/QD-TTg amending and supplementing Decision No. 200/QD-TTg dated February 14, 2017, on approval of the Action Plan to improve competitiveness and develop logistics services in Vietnam by 2025.

• Growth rate: The Government has set a target of 15 – 20% growth in logistics services per year by 2025. Thus, according to the plan, by 2025, it is forecast that the scale of Vietnam’s logistics market will reach 80 billion USD.
• Logistics cost/GDP ratio: By 2025, logistics costs will be reduced to 16-20% of GDP.

Rate of outsourcing logistics services: By 2025, the rate of outsourcing logistics services will reach 50-60%.

• LPI Ranking: Ranked by LPI in the world to reach 50th or higher by 2025.

However, Vietnam’s logistics industry 2022, especially the shipping industry, will face many risks in 2023.

• China’s zero-covid policy continues to cause difficulties due to supply chain disruptions: China’s continued refusal to live with the coronavirus will aggravate the situation of supply chain disruptions. affecting the port industry.
• Risks of world economic recession: In the context of an unending Russia-Ukraine war, an increase in global inflation, the risk of recession, and the risk of slowing growth of many countries will lead the people and the government to tighten spending, especially in the major partner markets of Vietnam such as the EU and the US. The risk that global producers reduce output and reduce trade demand will harm the port industry.

The current situation of the logistics industry is quite similar to the 2008 economic crisis. Logistics enterprises need to grasp to avoid risks and devise appropriate strategies to cope with fluctuations in the economy in general and the industry. logistics in particular.