Vietnam's pharmaceutical industry is entering a historic growth phase, aiming for a market size of USD 20 billion by 2026, yet it has attracted only a modest USD 1.8 billion in foreign direct investment (FDI) so far. This significant gap highlights a massive, untapped potential for pharmaceutical manufacturing. Global pharmaceutical giants like AstraZeneca, Sanofi, Roche, […]
Overview of the Logistics Industry in Vietnam
The current situation
Competitive status in service provision
Due to Vietnam's trade deficit, this is an appealing market for Vietnamese logistics businesses. However, because many international corporations invest directly in Vietnam and are also the major importers, a substantial portion of this market remains in the hands of foreign logistics firms. Furthermore, most Vietnamese businesses are still not fully aware of the need to invest in good supply chain management. This makes it difficult for Vietnamese logistics firms to provide value-added logistics services.
Infrastructure deficiencies
Among Southeast Asia's essential economies, Vietnam has the poorest freight infrastructure. Most of Vietnam's seaports are not suited for loading and unloading specialist ships. Domestic airports, on the other hand, lack adequate equipment for loading and unloading products. The country's present warehouse infrastructure is unsuitable for the quick loading and unloading of products, not to mention a lack of energy and information transmission support services (telecommunications).
High cost of logistics services
Vietnam's logistics costs are estimated to be over 25% of GDP, far more than in wealthy nations. This affected Vietnam's ambitions to the high-value chain and increase exports. The fundamental reason for this predicament is that Vietnam's transportation infrastructure is too old and overburdened, the administrative system is difficult, and Vietnamese manufacturers do not actively employ international leasing services 3 PL (third party logistics).
According to the General Statistics Office, Vietnam has more than 98.1% of SMEs, with 99% of these businesses experiencing capital constraints. Financial resources to engage in digital conversion and IT infrastructure development are also significant barriers for logistics organizations. With 90% of firms having less than 10 billion VND in capital and 5% having between 10 and 20 billion VND in the capital, it is difficult to implement expensive technological solutions.
State policies in applying technology in logistics
The Prime Minister issued Decision No. 221/QD-TTg on February 22, 2021, revising and supplementing Decision No. 200/QD-TTg dated February 14, 2017, authorizing the Action Plan to promote energy efficiency, competitiveness, and growth of Vietnam's logistics services by 2025. As a result, the Ministry of Industry and Trade has released an action plan to boost competitiveness and grow logistics services in Vietnam by 2025. In this regard, the Ministry identifies scientific research and technology transfer as forerunners in the integration trend.
The Department of Science and Technology designed and implemented the Project "Research, assess, and propose national standards for logistics" to enhance the standardization of the logistics industry in the context of Vietnam's international integration.
Benefits of Digital Transformation for the Logistics Industry
Automation conserves both money and time.
Automation simplifies overall goods transportation, ensuring that commodities are traceable and arrive on schedule while reducing other financial risks. When there is an issue that creates delays in the transportation process, technology applications are employed to maximize resources and develop backup alternatives.
The palletizing robot, for example, will verify that all items are packaged and ready to export. As a result, the time spent loading and unloading items is reduced, saving firms money on labor costs.
Improve the abilities to assure order progress.
Businesses can use technology apps to track the real travel time of commodities. Because parameters and data are shown in detail from start to end, firms may completely foresee any risks associated with order progress.
Furthermore, digital transformation in logistics assists logistics organizations in optimizing the time spent loading and unloading items, hence reducing the transit route. With this technology, the order progress is also optimized to the greatest extent possible.
Increase the transparency of shipping operations.
Transparency in the delivery process is a fundamental aim that business managers want to accomplish by incorporating IoT logistics solutions. The ability to trace items from the warehouse to the customer's door gives management assurance that all steps of the supply chain are running properly. It also increases client faith in the brand and saves support personnel a lot of time.
Key Trends in Applying Technology in Logistics in Vietnam
Blockchain technology is being used in logistics.
With the advent of Blockchain technology, logistics businesses can now complete digital contracts in the most secure manner possible. Using forthcoming technology will enable all logistics players to establish the most transparent and efficient system for documenting all transactions, tracking assets, and maintaining all papers relevant to the transport sector's activities.
The supply chain's digitalized logistics trend
Digitalization will touch practically all businesses internationally, including the logistics industry. Increasing consumer understanding of digital technology and use of all online channels will assist policymakers in making the best business decisions possible. The use of digitalization in the logistics sector is always anticipated to assist lower the cost of acquiring machinery as well as the cost of the whole supply chain in order to promote revenue development.
The door-to-door delivery of products is a logistics trend.
The field of distribution via information technology has grown in popularity, particularly in large cities. Customers may place orders anytime, anywhere, thanks to this easy application, which requires just smart devices such as phones or PCs with an Internet connection. Delivery work has become more flexible and speedier as a result of advances in information technology.
The trend of safe logistics has risen to the top of the priority list.
With the growth of the internet, there have been increasing worries regarding improved security in logistics firms. All assaults always target business websites such as Amazon, Walmart, and others, exposing cyber security problems. As a result, logistics service providers have been encouraged to focus even more on delivering safe transportation and freight solutions.
Trends in drone and robot delivery
This technology is now available in many nations worldwide. Delivery by delivery plane robots will overcome problems that traditional delivery frequently confronts, such as geography, weather, and so on. Delivery has gotten much easier and more convenient as a result of this technology.
In Vietnam, using technology in Logistics is still a relatively young industry. Viettonkin, as a prominent specialist in this industry, is willing to give consumers up-to-date information and sound financial recommendations. Contact us right away to improve your chances of success!
