Navigating the Complexities: Vietnam’s Logistics Industry Faces Key Challenges Amidst Global Shifts

The forum “Logistics in the global context” organized by the Ho Chi Minh City Logistics Association on November 15 is where experts, businesses and managers gather to discuss the opportunities and challenges of the industry in the context of economic fluctuations.

The “bottlenecks” that need to be removed

Speaking at the forum, Mr. Vo Van Hoan – Vice Chairman of Ho Chi Minh City People’s Committee – emphasized that logistics is currently a “trendy” field, playing a key role in improving the competitiveness of Vietnamese goods in the international market.

As the largest economic center in the country, with many advantages in terms of seaports, roads and aviation, Ho Chi Minh City still faces a series of challenges, including unsynchronized infrastructure, high logistics costs and limited regional connectivity.

Mr. Pham Thanh Son – Director of Tan Cang Hiep Phuoc Port Joint Stock Company – said that the role of logistics infrastructure in the supply chain is extremely important because it facilitates traffic and money.

Ho Chi Minh City currently has about 6,900 logistics enterprises, accounting for nearly 37% of the total number of logistics enterprises nationwide. However, the industry’s performance is still not commensurate with its potential.

According to Mr. Son, seaport systems such as Cat Lai and Nha Be… although achieving large output, are still limited by the lack of seamless connection between key economic regions such as Long An and Tay Ninh.

Furthermore, although the project to develop eight logistics centers in Ho Chi Minh City has been approved, implementation has yet to make a breakthrough. Railway connections to seaports are still fragmented, Tan Son Nhat airport is overloaded and the shipping channel has not reached the required depth.

These problems increase transportation costs and reduce the competitiveness of Vietnamese goods.

Coping with the “tornado” of fluctuations in shipping rates

One of the “hot” issues for logistics businesses is the fluctuation of sea freight rates .

For example, in 2020, the shipping price of containers to North America fluctuated at $2,000/container. By 2021, this number skyrocketed to $10,000, even peaking at $20,000/container.

By 2023, freight rates will drop sharply but increase again to $7,000-10,000 by mid-2024. Import-export businesses are in a difficult position. 

Transport contracts are often signed for long periods, while freight rates fluctuate rapidly, making cost forecasting and planning impossible. With large shipping alliances dominating the market, Vietnamese businesses are increasingly disadvantaged.

This is not only an economic issue but also a strategic problem of how to reduce external dependence and build a more autonomous logistics ecosystem.

According to Ms. Vo Thi Phuong Lan – Chairwoman of the Board of Directors and General Director of ASL Logistics, the instability of freight rates makes it difficult for businesses to predict operating costs, reducing profits and competitiveness. In particular, the dominance of large shipping alliances makes the market even more difficult to control.

To respond to current challenges, experts and businesses propose strategic solutions.

For example, building long-term partnerships with major shipping lines, ensuring stable freight rates and maintaining shipping capacity in volatile environments. Digitalization and smart technology application. 

Investing heavily in railways connecting seaports, upgrading highways and beltways, developing modern logistics centers…

At the same time, it is necessary to diversify transportation providers, reduce dependence on one source of supply, thereby increasing flexibility when the market fluctuates.

Source: Vietnam Insider