Future Trends and Advantages in Vietnam’s Logistics Sector

Vietnam is currently ranked 43rd in the world on the Logistics Performance Index, ranking among the top five ASEAN countries for logistics alongside Singapore, Malaysia and Thailand. Currently, there are about 30 global corporations and more than 34,000 Vietnamese companies offering logistics services in the country.

Melissa Cyrille, expert at Dezan Shira and Associates

As of the third quarter, sector profits increased 22 percent year-on-year, equivalent to VND8.1 trillion ($337.5 million). The sector is projected to generate profits of VND24.4 trillion (about US$1 billion) in the first nine months of this year, up 18 percent from the same period in 2023. The volume of cargo operations at seaports increased by 20 percent from the previous year.

The growth of the logistics sector is supported by Vietnam’s strong import and export activity, which grew by 16.7% to reach more than $511 billion in the first eight months of 2024. The export sector continues to be a key driver of this growth, with major trading partners such as the US, EU and China indicating stronger demand and increased orders.

Additionally, the exponential growth of e-commerce, expected to reach $52 billion by 2025, will further drive the need for advanced logistics solutions, especially in last-mile delivery and supply chain management.

The logistics sector in Vietnam is considered a specialized business, with foreign direct investment (FDI) limited to 100 percent ownership in only a few areas. Thus, FDI primarily focuses on warehousing and freight agency services projects.

Following the pandemic and supply chain disruptions, FDI in the logistics sector has shown signs of recovery, with the number of projects increasing markedly in 2022 and 2023 to 72 and 177 respectively. In terms of total authorized capital, the industry posted a robust annual growth rate of 1.27 percent to $463 million in 2023.

In the first nine months of 2024, the sector experienced a significant increase in total authorized capital, exceeding the 2023 figure and reaching US$558.6 million. This growth trajectory suggests that Vietnam’s logistics industry is becoming increasingly attractive to foreign investors, potentially leading to improved standards and professionalism in the sector.

Global trends impact logistics

Regarding the impact of global trade changes, we observed that the China+1 strategy and supply chain diversification have made Vietnam a favored manufacturing destination, providing the country with the opportunity to expand its logistics sector.

Photo: Le Toan

In addition, Vietnam’s bamboo diplomacy has fostered friendly relations regionally and globally, making the country a viable choice for investors amid global challenges.

As part of the diversification of the regional supply chain, Vietnam’s participation in key free trade agreements provides access to a vast network of trading partners and stimulates demand for optimized logistics services. The country’s strategic location in ASEAN gives it a competitive advantage as a regional logistics hub in Southeast Asia and major global markets such as the US, Europe and East Asia.

Meanwhile, the rise of e-commerce has transformed logistics around the world, requiring more adaptive warehouse solutions and more efficient delivery models.

Vietnam is home to various e-commerce giants, including Amazon, Alibaba, Tao Bao, Shopee and Lazada. This e-commerce boom provides an opportunity for logistics service providers to innovate their services while meeting the growing demands for specialized logistics services (same day delivery, returns management and automated fulfillment centers).

The integration of automation into logistics has had a significant impact on e-commerce, especially in terms of reducing delivery times. Automated systems have simplified sorting and packaging processes, minimizing errors and significantly improving delivery efficiency.

Digitalization is transforming Vietnam’s logistics sector by increasing efficiency, cost savings and improving service delivery. Technologies such as blockchain, artificial intelligence and the Internet of Things are transforming logistics operations, from inventory tracking to supply chain visibility.

Sustainability has become a key focus in the global logistics industry. Green logistics aims to implement environmentally friendly practices throughout the supply chain, from procurement to waste management. This approach helps minimize the sector’s environmental impact while promoting sustainable development.

In response, Vietnam is implementing green logistics trends. Major cities such as Ho Chi Minh City are testing environmentally friendly transport solutions such as electric vehicles for last-mile delivery to reduce carbon emissions.

In addition, modern logistics centers are implementing green designs, including solar-powered facilities and energy-efficient lighting and insulation systems. These green logistics practices align with global sustainability goals and help companies reduce operating costs.

The National Green Growth Strategy 2021-2030 aims to green economic sectors by promoting economic restructuring, innovative growth models and ensuring environmental sustainability and social justice. In support of this strategy, a national action plan for green growth has also been published, which identifies logistics services as one of its 18 key areas of action.

Policy recommendations

According to the Agility Emerging Market Index 2024, Vietnam is among the top 10 emerging logistics markets in the world. To ensure the sustainable development of the country’s logistics sector, sufficient efforts by the public and private sector are required to strengthen this position.

Encouraging public-private partnerships (PPP) in infrastructure development is a key priority. For infrastructure development, PPP is considered the optimal model for attracting investment from both domestic and foreign investors. This approach has proven successful in improving investment and operational management of dry ports, logistics parks and associated platforms.

In this context, the European Chamber of Commerce in Vietnam provides solutions for implementing effective PPP projects, including developing a portfolio of viable and visible projects, improving capacity and coordination among government agencies, and streamlining detailed implementation rules.

In addition, another priority is the creation of multimodal transport hubs to improve transport connectivity. These hubs will help meet the growing demand for high-volume transport, reduce costs, improve road safety and help protect the environment.

Connecting roads, inland waterways and sea routes through these transport hubs will significantly improve logistics efficiency, stimulate investment and support economic growth. Products from industrial parks can then be transported by road or rail to airports, inland ports and seaports, maximizing logistics benefits throughout the supply chain.

In recent years, enterprises in Vietnam’s logistics sector have been paying more attention to digital applications. However, the growth of e-logistics is yet to realize its full potential in the country.

Since most logistics companies in Vietnam are small or medium-sized, they often face financial and human resource constraints when attempting digital transformation. This requires appropriate policies and support programs from relevant authorities, such as developing policy frameworks and tools to manage digital transformation in logistics, improving the operational efficiency of electronic information portals and enhancing the capacity of digital transformation consultants in accordance with international standards.

In addition, other solutions connect experts with enterprises in need of digital transformation, organize digital transformation training courses for enterprises, and implement financial support packages and guidance on technology solutions for enterprises suitable for the enterprise’s size, area and industry.

As a key economic sector, Vietnam’s logistics sector needs to align with the global shift towards sustainable development by implementing green energy and environmentally friendly practices.

Targeted measures are needed to develop and sustain the green logistics sector. These include reducing carbon emissions during operations and administration, promoting multimodal transport, improving the legal framework for green logistics, implementing legislation to support green initiatives, encouraging green practices among small businesses and introducing a green logistics performance index.

Vietnam’s logistics sector is at an inflection point, with global trends such as trade diversification, the rise of e-commerce and sustainable development shaping its future, as well as massive investments in infrastructure improvements. By continuing to invest in green logistics practices and adopt advanced technologies, Vietnam can strengthen its position as a regional logistics hub and capitalize on the opportunities presented by changing global supply chains.

Vietnam’s logistics sector is growing rapidly, fueled by the country’s growth as a global manufacturing hub and its strategic location in Southeast Asia. It accounts for approximately 4.5 percent of total GDP and is expected to grow at a rate higher than the country’s GDP in 2025. The market is projected to reach $71.88 billion by 2030, with a compound annual growth rate of 6.75 percent from now until the end of the decade.

Momentum is created for a new path in Vietnam’s logistics sector Thanks to the government’s policy to attract investment, domestic and foreign private financing has contributed to the rapid development of our country’s logistics services industry.

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