Foreign firms hold biggest piece of logistics cake
According to the Vietnam Freight Forwarders Association (VIFFA), 70pct of the current 800 freight forwarding companies are small-sized private companies which could provide simple logistics services such as customs declaration, cargo transport by trucks and container vehicles. Yet, almost none of them have offered full-package services as yet.
Vietnam’s logistics performance index (LPI) presently claims 53rd place in the world rankings and ranks 5th among Asean nations, according to Head of Transport Planning and Management Department, University of Transport and Communications Dr Khuat Viet Hung adding the domestic logistics average growth rate of 20pct per annum.
However, it is mostly foreign firms that stir up the market since the market’s opening. Local logistics companies have actually faced up to plentiful obstacles due to improper legal frame and poor infrastructure.
What domestic logistics firms who are mere representatives of shipping firms could currently provide are only limited to advising exporters of shipping situation from departure ports to destination ports; issuing orders for goods delivery to exporters and importers and collecting related fees on behalf of carriers on goods arrival.
Assumingly, cargo transport depends largely on small transport companies of low competitiveness, primitive and slow means of communications and the lack of efficient and transparent data storage method, said Dr Hoang Thanh Minh, an IT consultant from Germany.
Consequently, ineffective cargo transport together with high costs and soaring prices would make these local freight forwarders much less competitive than overseas rivals.
Local logistics service providers would commonly be known as companies that freight and forward goods in mainland by truck. Other services such as logistics network design, inventory management, demand and supply planning and the like, meanwhile, have yet been popular.
In addition to poor infrastructure, the majority of logistics firms have faced up to the lack of quality human resource as mere 3 percent of the workforce is professionally trained.
