Sumitomo invests in logistics as production shifts to Vietnam

Jul 8, 2019. Japanese trading company Sumitomo has invested in a major Vietnamese port operator, Gemadept, aiming to seize growing demand for logistics services as manufacturers shift production to Vietnam amid the yearlong U.S.-China trade war.

Sumitomo teamed up with compatriot logistics company Suzuyo and a Japanese public-private fund specializing in infrastructure investment to take a 10% interest in Ho Chi Minh-based Gemadept. The trading house provided more than half of the roughly 4 billion yen ($37 million) the team paid to a local fund for the stake.

With demand for container shipments growing 7% annually in Vietnam, Sumitomo plans to build a logistics network connecting plants to ports for seamless export of Vietnam-made goods. Sumitomo is among the growing ranks of companies eager to cash in on the production shift away from China triggered by the trade war.

Gemadept owns six ports in Vietnam, handling 1.7 million containers for an over 10% market share. Sumitomo, meanwhile, operates three industrial parks in the Hanoi suburbs and owns a logistics unit in the country.

The tie-up will bring factories, logistics facilities and ports under Sumitomo’s management, allowing for greater efficiency and cost reduction. To that end, Sumitomo will develop a smartphone app that will enable truck drivers to reserve loading processes at ports and electronically handle other paperwork.

Tracking the movements of trucks will allow cargo to be loaded both ways. If all trucks carry cargo on both ways for the 150 km trip between Hanoi and Hai Phong, it would result in annual savings of $18 million, Sumitomo estimates.

At Hai Phong port, drivers generally have to wait one to two hours for cargo to be loaded onto ships. Such wait times average 12 minutes in Japan.


Posted: Jul 8, 2019 (Herb Cochran)

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