Vietnam’s booming export-focused manufacturing sector has boosted demand for logistics services, resulting in a 2023 market size of USD 45.19 billion, expected to reach USD 65.34 billion by 2029 (CAGR 6.34%).
Despite the potential, challenges like poor infrastructure and high costs persist, making it crucial for logistics professionals to grasp Vietnam’s logistics landscape.
That’s why logistics professionals need to understand Vietnam’s logistics sector better – to leverage its opportunities and navigate its logistics challenges.
Let’s delve into an excerpt from our comprehensive industry report, “State of Logistics in Southeast Asia 2023,” which examines the strengths and challenges facing the country’s logistics industry.
Download the complete report from Luwjistik.com for free.
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Outlook of the Logistics Industry in Vietnam
Vietnam has an estimated population of around 97.468 million people, occupying a land area of approximately 313.429 square kilometres, with 38% of the population residing in urban regions and the remaining 62% living in rural areas.
According to the World Bank report, Vietnam has achieved a commendable ranking of 43rd globally in the Logistic Performance Index (LPI), surpassing Indonesia. The report shows Vietnam’s performance in logistics, particularly in tracking and tracing, where it scored at 1.60. Examining the detailed breakdown of the LPI scores, Vietnam’s overall LPI score of 1.90. Regarding these scores, Vietnam’s LPI performance experienced a decline in 2023.
(Source: Vietnam LPI Score by Worldbank, 2023)
The Challenges
Vietnam’s logistics industry faces numerous obstacles that impede its growth and efficiency, as reported by Vietnamnet. The deficiencies in Vietnam’s logistics industry further complicate its operations, as evidenced by high logistics costs, a lack of professionalism, and insufficient automation and productivity. These factors collectively contribute to its diminished competitiveness in the global market. As highlighted in recent updates, this situation has led to fragmentation within the country’s logistics industry, making it less cohesive and efficient.
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The Opportunities
In the Vietnam Business Forum Magazine report, Vietnam Deputy Minister of Industry and Trade, Nguyen Sinh Nhat Tan, quoted that Vietnam has entered multiple Free Trade Agreements (FTAs) to foster trade. These FTAs encompass various sectors, spanning both conventional and unconventional domains. They entail commitments beyond market access to contain services, investment, and intellectual property, resulting in a flourishing landscape of international trade activities in Vietnam. These agreements have led to a notable upswing in import and export turnover, expanded market opportunities, and an increased variety of goods involved in import and export, as discussed in the report.
It is proven by the country’s economic performance regarding these agreements based on UNCTAD‘s data. The statistics remark that Vietnam’s GDP stood at 284,734 million US dollars, with a growth rate of 1.95% in 2021. Regarding international merchandise trade, the data unveils that the country’s merchandise trade balance reached 4,348 million USD, with merchandise exports accounting for 335,929 million USD and merchandise imports comprising 331,582 million USD.
(Source: Vietnam Total Merchandise Trade by UNCTAD, 2021)
The report points out several countries supporting these growths as the top five export destinations, including the United States, China, Korea, Japan, and Hong Kong SAR.
(Source: Vietnam Top 5 Partners by UNCTAD, 2021)
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The country’s thriving eCommerce sector is the foundation for this impressive economic performance. According to the latest figures from Statista, the country’s eCommerce sector is projected to achieve remarkable results. It is estimated that the market revenue will reach an astounding US$13.36 billion in 2023, and this growth is expected to continue with a steady annual growth rate of 12.75% (CAGR 2023-2027). These projections indicate that the market volume will soar to US$21.59 billion by 2027. As a result, Vietnam presents an exceptionally favourable market for the logistics industry to capitalise on the flourishing eCommerce sector.
(Source: Vietnam E-Commerce Growth by Statista, 2023)
Read the Complete Industry Report
This was just an excerpt from the State of Logistics in Southeast Asia industry report. To explore these insights further and discover how logistics companies can prepare for the future, we invite you to download the complete industry report for free.
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