As 2024 approaches, the transportation industry is preparing for a year of mixed expectations, with some businesses anticipating potential cost hikes and others foreseeing stability.
According to The World Bank, Vietnam’s Logistics Performance Index (LPI) ranking dipped by four places to 43rd in 2023. Despite this decline, Vietnam’s LPI score increased to 3.3 points from 3.27 points in 2018, indicating gradual improvements, especially in customs efficiency and infrastructure quality.
This ranking reflects the repercussions of the pandemic on the logistics sector, introducing disruptions in the supply chain and transportation. In Vietnam, trucking holds a pivotal role in the national economy, accounting for 77 percent of the country’s freight movement, totaling over 1.5 billion metric tons.
Nevertheless, the sector faces challenges such as elevated logistics costs (21 percent of GDP) and environmental concerns stemming from older, smaller trucks contributing to greenhouse gas emissions and traffic congestion.
In mid-December, CEL Consulting published a survey of 143 trucking businesses in Vietnam, shedding light on critical operational issues like inefficiencies in route optimization, high vehicle maintenance expenses, and challenges in driver recruitment amid wage increases.
Challenges such as rising fuel prices, driver shortages with associated wage hikes, and inefficiencies in route optimization are primary factors impacting operational costs. Additionally, expenses related to vehicle maintenance and regulatory compliance contribute to the financial strain.
Despite these challenges, Vietnam’s freight and logistics market is projected to reach $45.19 billion in 2023, with a compound annual growth rate (CAGR) of 6.34 percent, aiming to reach $65.34 billion by 2029. The trucking sector in Vietnam witnessed significant growth in early 2023, with a 16 percent increase in freight transport volume and an almost 22 percent increase in turnover year-on-year.
Looking ahead, the sector is focusing on diversifying transportation methods, reducing dependence on road transport, and exploring alternatives such as water, air, and sea. This shift aligns with the broader trends in the Asia-Pacific logistics market known for its diverse range of services.
