Upgrade your membership plan for the full website experience.
View Membership Plans
June 12, 2024

Ambitious Goals to Foster Growth in Vietnam's Logistics Industry

customs and trade
June 12, 2024

Vietnam’s logistics industry is set for significant improvements through infrastructure enhancement and digital transformation initiatives. The Ministry of Industry and Trade (MOIT) is accelerating the development of a strategy aimed at creating a modern, sustainable, and efficient logistical service sector for the 2025-2035 period, with a vision to 2045. This strategy aims to create a breakthrough in building the legal framework, enhancing the investment and business environment, and encouraging the participation of various economic sectors in logistics development. Vietnam aims to rank among the top 40 of the World Bank’s Logistics Performance Index (LPI) during this period.

The latest draft strategy outlines several ambitious goals for the logistics industry. By 2035, logistics services are expected to contribute 5% to 7% of GDP, with an annual growth rate of 12% to 15%. Logistics costs are to be reduced to 12% to 15% of GDP. Currently, Vietnam ranks 43rd out of 154 countries on the LPI 2023, with a score of 3.3 points, placing it fifth among ASEAN countries, behind Singapore, Malaysia, Thailand, and the Philippines.

Major challenges persist for Vietnam's logistics industry, particularly high logistics costs, which are around 18% of GDP—significantly higher than in other countries. The domestic logistics sector is largely uncompetitive, with 89% of logistics enterprises being domestic and 95% of these being SMEs. Additionally, poor transport infrastructure and connectivity between seaports, airports, warehouses, and industrial parks hinder growth. Pressure to reduce carbon footprints also poses a challenge for logistics service providers.

Despite these challenges, the potential for growth in the logistics industry is substantial. Vietnam’s rapid economic advancements have set the industry on a path to significant expansion, with an estimated market size of US$48.57 billion by 2024 and US$71.88 billion by 2028.The industry continues to attract foreign investment, with U.S. logistics unicorn Flexport recently entering Vietnam. Flexport sees Vietnam as a crucial strategic market and production hub, given its appeal to businesses moving away from China. Flexport's President, Sanne Manders, highlighted Vietnam's promising logistics potential, emphasizing infrastructure enhancement and digital technology adoption. Meanwhile, Samsung Welstory recently inaugurated a new logistics center with a cold chain system in Bac Ninh, northern Vietnam, aiming to accelerate its expansion in the Vietnamese market. Since establishing its Vietnamese subsidiary in 2014, the company has achieved an impressive average annual sales growth rate of 21.4% over the past eight years.

Join the Council to continue reading this article
Enhance your business impact in Southeast Asia: Become a member of the US-ASEAN Business Council and tap into a network of possibilities.
Free Related Articles

Membership Plans

Corporate Council

Corporate membership provides general advocacy support, access to all country- and industry-specific updates, and access to most Council events.

  • Business missions to all 10 ASEAN markets which engage governments at the highest levels.
  • Off-the-record roundtables and policy briefings with senior government leaders in ASEAN and the U.S.
  • On-the-ground support for promoting your positions/policy priorities with policy makers.
  • Industry-specific, country-specific, cross-sector and regional advocacy through committees that target their engagement based on member priorities.
  • Advocacy on your behalf in situations where your company should not be directly identified or is unable to be present.

Chairman’s Council

Corporate membership provides general advocacy support, access to all country- and industry-specific updates, and access to most Council events.

  • All Corporate benefits.
  • Assistance with resolving company-specific trade or investment issues through our six regional offices and U.S.-based staff.
  • Develop effective advocacy strategies to impact policy concerns.
  • Identification of, and engagement with appropriate policy influencers to impact policy concerns.
  • Assistance in conducting follow-up after engaging government leaders (can include providing officials with additional materials, setting up meetings with their staff, getting a readout of the government’s reaction to the discussion).
  • Support for developing arguments that will resonate with target stakeholders.
  • Leading and setting the agenda and policy priorities of the Country and Industry Committees.