Overview of Vietnam logistics

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General information about Vietnam

Vietnam Geography: Vietnam is located on the eastern margin of the Indochinese peninsula, It borders the Gulf of Thailand, Gulf of Tonkin, and Pacific Ocean, along with China, Laos, and Cambodia

• Official name: The Socialist Republic of Viet Nam.
• National Day: September 2 (on September 2, 1945, at Ba Dinh square, President Ho Chi Minh read the Declaration of Independence, proclaiming the birth of the Democratic Republic of Viet Nam). Geographical location: Located in Southeast Asia, bordering People’s Republic of China to the North; Laos and Cambodia to the West; and Eastern Sea to the East.
• Area: 331 000 km².
• Length of coast line: 3260 km.
• Climate: Tropical monsoon.
• Capital: Ha Noi.
• Official language: Vietnamese.
• Population:
• Population: Population: is 96.62 Million in 2019 (1.27% of the world)
• Literacy rate: 98% (in 2018).
• Currency: Viet Nam Dong (VND).
• GDP (nominal): US$ 241 billion (in 2018), projected US$ 266 billion in 2019, ranking 45 in the world
• GDP per capita (nominal): US$ 2,525 (in 2018). ), projected US$ 2,788  in 2019, ranking 138 in the world
• Administrative units: 58 provinces and cities

Overview of Vietnam Economy

According to the world bank:

As evaluated by The World Bank: “Over the past 30 years, Vietnam has had a remarkable development record. Economic and political reforms under Đổi Mới, launched in 1986, have spurred rapid economic growth and development and transformed Vietnam from one of the world’s poorest nations to a lower middle-income country”

Viet Nam has sustained economic growth at a relatively high level in many consecutive years.

GDP per capital increase from USD 1024 in 2010 to USD 2525 in 2018 and estimated USD 2788 in 2019

Vietnam and the world

Vietnam has integrated widely and deeply into the world economy.

At the year 2018 Vietnam has established its diplomatic relations with 188 countries out of 193 members of the UN. It has built a network of strategic partnerships with 16 countries and comprehensive partnerships with 11 countries, including 5 permanent members of the UN Security Council.

Vietnam’s admission to ASEAN in July 1995 was a milestone in Vietnam’s integration process. Vietnam joined the Asia-Europe Meeting (ASEM) one year later and the Asia-Pacific Economic Cooperation (APEC) in 1998. The country’s membership of the World Trade Organization (WTO) in January 2007 marked Vietnam’s full integration in international institutions. In 2015, Vietnam and other ASEAN members formed an ASEAN Community.  Currently, Vietnam is a active members of over 70 regional and international organizations

Vietnam and FTAs:

With the completion of 15 FTAs by 2020, Vietnam will become an important link in a chain of 56 economies, including 18 APEC members. Vietnam’s export markets have been expanded to 230 countries and territories.

Following is list of  status of FTAs that Vietnam have engaged:

Vietnam Import and Export

Import – Export turnover

In last years, Vietnam’s import – export turnover continuously increase, from 298 USD billion in 2014 to 480 billion USD in 2008 and is estimated to hit over 500 billion USD in 2019

Vietnam hit peak of trade surplus of 6.8 billons US dollars in 2018

Import – Export Market

According to the new information of the General Department of Vietnam Customs, in 2018, among 10 biggest trading partners of Vietnam (countries and territories) there are 8 markets located in Asia. Only two major trading partners are outside Asia and listed in the Top 10, which are the United States and Germany.

In particular, the import and export value between Vietnam and China is the largest, reaching $US 106.7 billion and accounting for 22.2% of the total import-export value of the country.

The next major partners are: South Korea reached $US 65.7 billion, accounting for 13.7%; the United States with $US 60.3 billion, accounting for 12.6%; Japan reached more than $US 37.8 billion, accounting for 7.9%; Thailand reached $US 17.3 billion, accounting for 3.6%; Taiwan, $US 16.379 billion, accounting for 3.4%; Malaysia reached $US 11.5 billion, accounting for 2.4%; Germany reached $US 10.7 billion, accounting for 2.2%; India reached $US 10.7 billion, accounting for 2.2%; Hong Kong reached nearly $US 9.5 billion, accounting for 2%.

Vietnam Export

Currently, Vietnam’s main export markets are the USA, the EU, China, the ASEAN and Japan

 

Vietnam’s top 10 exports accounted for about three-quarters (74.7%) of the overall value of its global shipments.

Vietnam Import

 

Vietnam’s top 10 imports approach two-thirds (62.9%) of the overall value of the country’s total product purchases from foreign suppliers.

Vietnam Logistics industry

According to Vietnam Logistics Business Association, the increase rate of Vietnam Logistics in recent years are aroud 14 – 16% with value of 40 – 42 billion USD per year. There are around 3000 local companies and 25 biggest incorporation in the world join the market

The Logistics Performance Index (LPI)  is an interactive benchmarking tool created by the World Bank to help countries identify the challenges and opportunities they face in their performance on trade logistics and what they can do to improve their performance. It is the weighted average of the country scores on six key dimensions:

Customs: efficiency of the clearance process (i.e., speed, simplicity and predictability of formalities) by border control agencies, including Customs

Infrastructure: quality of trade and transport related infrastructure (e.g., ports, railroads, roads, information technology)

International transport: ease of arranging competitively priced shipments; competence and quality of logistics services (e.g., transport operators, customs brokers)

Logistics capacity: Ability to track and trace consignments

Tracking and retrieval: Timeliness of shipments in reaching destination within the scheduled or expected delivery time

The Logistics Performance Index is reported by the World Bank in every two years. The LPI is based on a worldwide survey of stakeholders on the ground providing feedback on the logistics “friendliness” of the countries in which they operate and those with which they trade. They combine in-depth knowledge of the countries in which they operate with informed qualitative assessments of other countries where they trade and have experience of global logistics environment.

Vietnam logistics legal infrastructure

Vietnam joint many international organizations, as the result Vietnam’s law and legal documents, including logistics ones also have been restructured to adapt to the international law.

Vietnam is building electronic Government, the customs field is one of the top administrative area that apply technology.

Viet Nam had launched her National Single Window since November 2014. Until July 2019, there are 13 governmental agencies which have implemented 174 administrative procedures, 2.3 millions documents of over 30.9 thousand companies through the Viet Nam National Single Window.

It is projected that: All administrative procedures related to import – export will be implemented via NSW in 2020 and Time for cargo clearance will be equal to 4 top countries in Asean

Viet Nam has joint live operation of ASEAN Single Window since 1 Jan 2018. At the time of July 2019, Vietnam official exchange C/O form D with 6 countries: Singapore, Malaysia, Indonesia, Thailand, Brunei and Campuchia. Until 10 July 2019, Vietnam has received 87,355 electronic C/O and sent 153.872 electronic C/O  worldwide.

Currently, time for export clearance is 105 hours and import is 132 hour. It is targeted by the Government that in 2020 the clearance time for export reduce to 70 hours and import to 90 hours.

Vietnam logistics infrastructure

Sea transport infrastructure

Currently, there are 45 active seaports nationwide, including: 2 seaports of type IA (international gateway port); 12 grade I seaports (regional hub general port); 18 ports of type II (local general ports) and 13 ports of type III (offshore oil ports). The total number of ports is 265 ports / 402 wharves with 87,550 m long wharf, total designed capacity of about 500-550 million tons of cargo / year (TDSI, 2018).

The two international gateway port:

Cai Mep – Thi Vai in the South can receive mother vessel of 160,000 – 194,000 DWT

Lach Huyen gateway port in the Hai Phong (the North) can receive mother vessel of 150,000 DWT.

Most general ports and regional hubs can accommodate vessels up to 30,000 – 50,000 DWT and larger

Volume of goods through the port system 2012-2018 period – Source: TDSI (2018), Vietnam Maritime Administration (2018)

Parameter	Unit	2012	2013	2014	2015		2016	2017	The 1st quarter (2018)
Total amount goods through the port	1000 tons	294.556	328.795	373.027		427.816	459.833	519.296	159.575
Container goods	1000 tons	91.068	101.113	118.394		126.348	148.018	165.700	54.592
	1000 TEUs	8.040	1.622	10.398		11.527	12.989	14.358	5.531
Liquid goods	1000 tons	49.566	49.729	52.078		59.233	62.559	62.652	22.643
Dry goods	1000 tons	112.853	136.472	154.582		185.904	205.797	213.166	82.703
Goods in transit	1000 tons	41.062	41.480	47.971		56.330	43.459	77.778	24.072

 

In 2017, cargo throughput through Vietnam’s ports was estimated at 536.4 million tons, up 17% compared to 2016, of which container cargo reached 14.3 million TEUs, up 13% compared to 2016.

Expected goods through the port in 2018 reached 574,336 million tons, an increase of 7% higher than in 2017, the volume of containers of 15,362 million TEU, up 7.4%.

According to the preliminary report of the Maritime Administration, in the first 6 months of 2018, the number of container ships carrying the Vietnamese national flag increased to 38 ships.

Inland sea transport: About 70% of goods on the North-South route are transported by sea, mainly by container ships of Vietnamese shipping lines. The remaining 30% is mainly frozen goods, seafood, fruits and high-value goods due to the need for fast transportation transport by road.

The proportion of Vietnam’s import and export goods shipped by sea still accounts for about 90%.

For more information, you can see the article: Overview of Vietnam sea ports

Air transport infrastructure

There are currently 22 operating airports, including 9 international airports and 13 domestic airports. Of these 22 airports, Van Don International Airport was put into operation in 2018.

As of the first 6 months of 2018, the flotilla fleet of Vietnamese carriers operating air transport included 167 aircraft, an increase of 6 compared to the same period in 2017 with an average age of 5 years, owned 33.7% (56 aircraft owned). The number of flights taking off on time accounted for 86.1%. In the first 6 months of 2018, Vietnamese airlines carried out more than 150 thousand flights, an increase of 9% over the same period in 2017. Of which, the number of flights taking off on time was 129 thousand flights, accounting for 86.1%. %. Cancellation rates of airlines are 0.3%, down 0.2 percentage points from the same period in 2017.

Air cargo transportation accounts for about 25% of Vietnam’s export and import value. The main routes of international air cargo transport in Vietnam are Asia – Pacific, EU and North America. China is currently the import market for goods by road

Vietnam’s largest airline with 26% market share, the second is South Korea (20%) and the third is the United States (9%). According to IATA’s forecast, Vietnam is the fifth highest growth market in the world annual customers in the period of 2015-2035, with CAGR of 6.7% / year, higher than the world’s 3.9% / year and 4.6% / year of the Asia-Pacific region.

Along with the growth of the economy, the market of goods transport by air of Vietnam has a strong growth with an average rate of 15.6% / year in the period from 2011-2017. Aviation market in 2018 continues to have high growth passenger and cargo volume. The total cargo market in 2017 reached approximately 1.13 million tons, up 25.9% compared to 2016. Transport volume of Vietnamese airlines in 2017 reached 318 thousand tons of goods, up 11.3 % compared to 2016. First 8 months of 2018, air transport reached 235.4 thousand tons, up 22.1% and 620.8 million tons-kilometers, up 19.5%.

International cargo market: There are participation of 64 foreign airlines from 26 countries / territories, of which 24 major regional and international airlines operate flights. Freight. Foreign airlines and 3 Vietnamese airlines, namely Vietnam Airlines, VietJet Air and Jetstar Pacific, are operating more than 140 international routes from Hanoi, Ho Chi Minh City, Da Nang, Nha Trang, Hai Phong and Phu Quoc.

Road transport infrastructure

Vietnam’s road system currently has a total length of 570,448 km, including 24,136 km of national highways, 816 km of highways, 25,741 km of provincial roads, and the rest are rural roads (Ministry of Transport, 2018).

International land transportation of

Cross- border transportation:

On March 15, 2018, Greater Mekong Subregion (GMS) countries (Vietnam, Cambodia, Laos, Myanmar, Thailand and China) reached an agreement on the implementation of the cross-border transport facilitation agreement (CBTA)

CBTA is an agreement that seeks the elimination of border inspections within GMS. It promotes the eradication of intermediary stops (also known as transshipment), and seeks to boost commercial activity by reducing the amount of time spent crossing borders.

On April 25, 2018, Vietnam Road Administration organized a convoy connecting Vietnam with China (Shenzhen), thereby paving the way and facilitating the development of CBT of logistics enterprises.

Taking advantage of the opportunity provided by the GMS-CBTA, Vietnamese transport companies cooperating with China have opened the Chongqing route to the South, connecting with ASEAN countries by road. , in parallel with a railway service connecting Chongqing to Kunming (Yunnan) or Pingxiang (Guangxi) to Hanoi. Thanks to these routes, the transit time is reduced to 45 hours on the whole route, goods to and from Hanoi or Chongqing will be quickly transported to Ho Chi Minh City (108 hours) and then dispersed. ASEAN countries (such as Cambodia within 148 hours) or provinces and cities of China. This is an opportunity for Vietnam’s transport and logistics businesses to take advantage of cooperation, expansion and business development.

Rail:

Vietnam’s national railway system include 7 main routes with length around 3,160 km,  7.9 km/1000 km3, in which 2,646 km is main railway and 514 km is the sub-raiway, include three 84% is 1,000 mm gauge; 6% is 1,435 mm gauge and the mixed: 9%

 

Vietnam’s railway system currently is under-developed and have not have contribution much in international rail transportation, there is only few rail transportation from some South China province to Vietnam and vice versa.

Warehouse services

Warehouse service is targeted at customers from retail and import-export goods. Warehouse services, in addition to CFS and ICD, can be divided into four main categories, serving different customer groups, including common warehouses, bonded warehouses,

distribution center and cold storage. Distribution center services, order fulfillment centers, driven by demand from retail and e-commerce activities, are the future of warehousing services. According to StoxPlus, the total area of ​​distribution centers is about 3,000,000 m². For cold storage system, the total capacity is 450,000 pallets and 155 bonded warehouses.

More than 70% of warehouse area is located in the South. Companies providing warehouse services mainly include:

Southern region: Saigon New Port, Mapletree, Sotrans, Gemadept, Vinafco, DHL, Thang Long, Phuc Long Port, YCH-Protrade, Damco, Transimex, IndoTrans, Draco, …

Northern region: Vinafco, Saigon New Port, Mapletree, Draco, IndoTrans, …

Saigon Newport with a total area of ​​675,000 m² of warehouse, including CFS warehouse, bonded warehouse, department store and distribution center, is the largest warehousing service provider in the country, including the Song Than center with a warehouse area of ​​205,000 m² Tan Cang Long Binh has a warehouse area of ​​156,000 m².

Bonded warehouse services

Bonded warehouse means an area where warehouses and / or temporary yards are kept, preserved or provided with a number of services for domestic goods which have gone through customs procedures and sent for export; goods temporarily imported for re-export or imported into Vietnam.

In Vietnam, most of the large logistics enterprises operate bonded warehouses on a large scale, including the bonded warehouses of Transimex, Sotrans, Vietrans and U&I Logistics.

Cold storage services

Demand for cold storage is expected to increase as Vietnam’s agricultural, forestry, fishery and food trade sectors grow. This type of service has only recently been developed, attracting a lot of attention from foreign investors from Japan and China. There are about 20 systems cold storage systems are professionally managed in the South, 40-50 in the North and many small and retail warehouses owned by manufacturing companies. Warehouse services have a fast growth rate, high profit rates in the logistics service chain.

At present, large-scale commercial cold storage suppliers are mainly located in the southern region due to the greater demand in this market thanks to the advantages of producing exported agricultural and aquatic products. Leading enterprises in this field include Hoang Lai and Hung Vuong, SATRA and Phan Duy. Some other big enterprises also invest in cold storage such as Transimex, Vinafreight (cold storage of 1,500 m2, capacity of 1,800 tons in Ho Chi Minh City), Gemadept (investing in Mekong cold storage, in cooperation with Minh Phu Group. , capacity 50,000 tons of cargo in Hau Giang), Saigon New Port, …

Foreign enterprises also take advantage of modern equipment and professional manpower to invest in cold storage in the Vietnamese market, such as Swire – one of the first cold storage suppliers in Vietnam from 1998. In addition, there is a cold storage of Lotte Sea, Preferred Freezer Service. Currently, foreign enterprises still lead the cold storage market thanks to the professional warehouse management system and superior technology.

Delivery service

The main service being provided by Vietnamese logistics service providers, accounting for more than 80% of the companies surveyed. In 2018, forwarding service continues to thrive and is one of the main logistics services provided by service providers Vietnam logistics, bringing profits to companies.

In the Vietnamese market, the overall picture is not much changed in the correlation between domestic companies and FDI enterprises. FDI enterprises still hold an overwhelming share of international freight forwarding, due to the relationship with foreign shippers and import-export turnover Imports of FDI are significant (accounting for 72.45% of export turnover).

The year 2018 also witnessed a transformation in the digitization of forwarding and transport services, initially researching and applying high technology in logistics services, such as Block chain technology in e-Delivery Order and e -Bill of Ladings, CargowiseOne on activities logistics activities … Thereby has facilitated the development and improvement of service quality, reducing logistics costs.

Other services

– Customs agent service

Customs clearance service is one of the basic services of logistics companies. VLA survey showed that 87.8% of logistics companies provide customs declaration services.

Accordingly, the service “customs clearance” is to use digital signatures and on behalf of goods owners to complete customs procedures. The reason for the “hire-in” business continues to exist is that the benefits of registering as a customs agent have not been clarified, and there is not a realistic business priority regime for agents. Customs management, the inspection and supervision of the activity “declaration” has not been effective and coherent.

In 2018, the General Department of Customs and Vietnam Logistics Association increased its cooperation in promoting training activities and improving agent quality.

The Global Alliance for Trade Facilitation is working with the General Department of Vietnam Customs and relevant agencies in promoting customs bond guarantees in Vietnam, which is expected to be conducted. points in 2019. The application of customs guarantee testing for specialized inspection from 2019 is expected to promote trade facilitation, if expanded to the customs agent will gradually improve. role of customs agents, towards the professionalization of customs agency services according to international standards.

HP Global Company Limited

Freight forwarder and customs brokerage

Address: Room 2308, CT2 Van Khe, La Khe, Ha Dong, Ha Noi, Viet Nam

Website: hpgloballtd.com or hptoancau.com

Email: info@hpgloballtd.com

Phone: ++84 24 73008608/ Hotline: ++84 8 8611 5726