Economic Competitiveness of Vietnam Affected by High Logistics Costs

Experts have highlighted that Vietnam’s logistics industry, despite its rapid growth, faces challenges due to inadequate transport infrastructure, limited capacity and slow adoption of technology and digital transformation by domestic enterprises. The industry has expanded in tandem with the country’s economic growth, trade activities, manufacturing, and e-commerce. Tran Thanh Hai, Deputy Director of the Ministry of Industry and Trade’s Agency of Foreign Trade, stated that the logistics industry grows at an average rate of 14-16% annually and has an estimated worth of $40-42 billion per year.

While there have been significant investments in transport infrastructure, including the construction of new seaports and airports, the development has not kept pace with the increasing demands of the logistics industry. This mismatch has resulted in higher costs, according to Hai, who spoke at a roundtable discussion in Ho Chi Minh City on August 10. Additionally, the majority of businesses involved in logistics are small or medium-sized enterprises with limited capital, technology adoption, digital transformation, and skilled human resources.

Dang Vu Thanh, Vice Chairman of the Vietnam Logistics Business Association, emphasized that the industry has yet to fully unlock its potential. He highlighted the poor connectivity and infrastructure between seaports, airports, warehouses, and industrial parks as obstacles to the industry’s development. Logistics costs in Vietnam account for approximately 18% of GDP, which is considerably higher than in other countries. This high cost negatively impacts the competitiveness of the country’s exports and overall economy, making it crucial to address this issue.

Mike Bhaskaran, the group chief operating officer for digital technology at DP World, suggested several measures to enhance trade capacity and support logistics businesses. These include improving visibility and transparency through the development of the Internet of Things and GPS tracking systems, as well as enhancing predictive capabilities to anticipate market trends. On the business front, Bhaskaran emphasized the importance of technology-driven management transformation to automate processes, reduce delivery times, and optimize internal supply chains to lower logistics costs.

The roundtable took place alongside the inaugural Vietnam International Logistics Exhibition, which commenced on August 10 at the Saigon Exhibition and Convention Center.