Big potential in logisitics industry

Increasing competition among private and foreign enterprises shows the market’s attractiveness towards suppliers and the potential for development in the growing Vietnamese consumer market.

As e-commerce forwarding services become more and more active in Viet Nam, especially in the final delivery stage towards the end consumers, market participants now range from large delivery companies to smaller start-ups with a variety of enhanced and expanded services.

The high growth rate of the e-commerce industry provides many opportunities for foreign logistics companies, specifically express delivery services and logistics services for e-commerce that find the country to be a fertile ground for investment.

Nonetheless, domestic enterprises with a large market share of the domestic delivery market, such as VNPost Express Joint Stock Company (EMS) or Viettel Post Joint Stock Corporation (ViettelPost), still maintain massive service solutions dedicated to e-commerce.

With more than 18,000 postmen and local staff, VNPost has launched its own solutions for online stores from advertising and delivery to customer care. Similarly, Viettel has its own network covering all 713 districts in the country with a ready delivery team of up to thousands.

In July 2017, German’s Deutsche Post DHL (DHL) launched a domestic delivery service in Viet Nam. Thomas Harris, managing director of DHL e-commerce Viet Nam, said on the company’s website that DHL’s service would be managed and supported by centres and warehouses located throughout the country.

Another big name, FedEx Trade Networks, after more than eight years in Viet Nam, set up a subsidiary in May 2017 to boost its services in the domestic market.

Meanwhile, the US United Parcel Service (UPS) made a move to boost service coverage in provinces across the country.

Daryl Tay, managing director of UPS Viet Nam, also made a statement on the company’s website that in addition to UPS’ existing advantage of having global platforms and networks, the company has conjured up solutions to connect domestic customers with other countries, integrating a technology platform where customers everywhere can have similar experiences.

He commented that a recent UPS study found that online shoppers value the smooth flow of a purchase, from start to finish.

Still, one cannot fail to notice how the e-commerce forwarding market has been transformed with the participation of thousands of freelance couriers through transport companies using shared platforms such as Grab or Uber.

From July 2017, Uber tested the UberShip (now UberDeliver) delivery service in HCM City and Ha Noi to great success. UberDeliver’s current rates are VND15,000 (US$0.66) for the first two kilometres and VND5,000 ($0.22) for the next kilometre, almost equal to the price of Grab’s GrabExpress delivery service.

One notable feature of the UberDeliver delivery service is that customers can change their shipping location.

The fast-growing domestic delivery market had only five or six companies involved in 2013, which has now expanded to more than 50 enterprises.

Strong participation in the market also includes other smaller emerging start-ups, considered to be fast-growing and versatile in business, which include Affordable, Fast Delivery, AhaMove and Tochanh.com, as well as Proship.vn, Shipchung, Giaohangtietkiem.

By making supply chains more predictable, improving transport and logistics, manufacturers, transportation carriers, logistics service providers and trade regulators can minimise avoidable delays, thereby increasing the output per unit of time, while reducing business costs.

Transportation and logistics are critical to the everyday functioning of investment and export-led economic models such as that of Viet Nam.

Currently, many delivery companies in major Vietnamese cities and provinces such as Mobile World, Co.opmart and BigC can deliver goods in just 30 minutes to areas close to the points of sale, which sets an even more competitive requirement for delivery time amongst different companies.

Efficient transport and logistics play a significant role in increasing productivity. According to a 2016 report by the Viet Nam Association of Logistics Service Enterprises (VLA), the logistics industry accounts for 20 to 25 per cent of national GDP and is expected to grow at a rate of around 12 per cent annually in the near future.

Domestic businesses and start-ups have quite a number of flexible solutions, which are considered as advantages in business. Considered as a decisive factor for the success of e-commerce, delivery services also attracted retailers themselves to invest in their own delivery system to strengthen the brand image and contribute to reducing costs, said the VLA.

 

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Big potential in logisitics industry

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