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Summit outlines way forward for logistics sector   2008-09-05 - TBKTSG

Trucks carrying goods from Binh Duong Province to HCMC.  
The logistics market in Vietnam has great potential but infrastructure must be upgraded for the potential to be realized, experts have said.



R. Gopal, director of Frost & Sullivan’s Asia Pacific Transportation and Logistics, last week told the Vietnam Logistics Summit 2008 that the country’s logistics sector had been given a boost by recent economic growth.

The volume of Vietnam’s exports rose by 21.5 percent and imports jumped by 35.5 percent compared to 2006, he said.

However, Vietnam’s logistics infrastructure was not as developed as Thailand, Singapore and Malaysia, he said.

For example, many warehouses in Vietnam had been in use for more than 30 years and less than 10 percent of the nation’s warehouses were well-equipped.

Airports did not have enough equipment to handle goods and were not located near warehouses, he said.

Meanwhile, seaports in Vietnam did not directly link to those in the US or Europe. Most of the cargo into and out of the country has to be loaded or offloaded at ports in Hong Kong, Singapore, Thailand or Taiwan because Vietnam does not have enough deep-water ports to service large container ships.

Gopal said the lack of infrastructure had hindered the development of Vietnam’s logistics industry and made logistics costs here twice that of industrialized countries.

Statistics from the Vietnam Freight Forwarders Association showed there were about 900 goods transport businesses in the country with an average registered capital of VND1.5 billion (US$90,500) each. About 80 percent of those businesses were private companies, some of which have limited capital of VND300 million to VND500 million ($18,100-30,166).

Most of the Vietnamese businesses in the logistics sector do not have representative offices in foreign countries and thus they cannot link into the worldwide logistics network. The services they are able to provide include completing customs paperwork or renting warehouses for international logistics providers.

According to Frost & Sullivan, the services of Vietnamese logistics companies can meet only 25 percent of domestic demand.

Jeffrey Bahar, director of Spire Research and Consulting, said more than 320 million tons of goods passed through Vietnamese seaports last year, an 18 percent increase on 2006.

APL Vietnam, a provider of container transport services, said it expected seaports to play a key role in the development of goods trading in Vietnam.

Barry Akbar, director of APL Vietnam, said the increasing amount of exports and imports made the task of upgrading local warehouses and seaports even more imperative.

More than $4.5 billion will be invested in new ports within the next five years to help improve the existing seaport system, he said.

Northern seaports have great potential with a 25 percent annual growth rate in the volume of goods passing through the ports, he said. However, the development of seaports in the south faces a number of obstacles, especially congestion.

Vietnam is currently cooperating with Singapore to construct modern port clusters as well as improve logistics facilities. The Vietnam Seaports Association said when new ports were completed in Ba Ria-Vung Tau in 2010, five million TEU (twenty-foot equivalent unit) would be transported between the province and Ho Chi Minh City that year.

As for the road traffic system, the Asian Development Bank has committed to providing Vietnam an $880 million loan to build highways and bridges in the south.

Mark van den Assem, general manager of TNT Express Vietnam, said the volume of freight transport by road in Asia only accounted for 22 percent of total freight, compared to the 78 percent rate in the US and Europe’s 79 percent. This meant Asia still had huge potential to develop its road transport system, he said.

Vietnam shares borders with Laos, Cambodia and China, making it easier to establish a multimodal logistics chain.

TNT Express Vietnam suggests freight can be carried from HCMC or Da Nang to Cambodia, then to Bangkok, Laos and China.

Klaus Uhl, Chief Executive Officer of Vienna Consult, said many customers choose rail to minimize transport costs.

He said Vietnam’s rail sector could play an important role in the transport chain and it should be developed to meet the demands of transport companies.

A railway system for transporting containers should also been built, he said.

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