4 Breakthrough Strategies for Vietnam’s Logistics Sector: Expert Insights

Vietnam’s logistics sector is on a path of rapid expansion and has become a vital driver of the country’s economic growth. Contributing to 4-5% of Vietnam’s GDP and providing direct employment for over one million people, the logistics sector supports Vietnam’s manufacturing and export-oriented economy. As of 2023, the market is valued at around USD 40 billion, with projections of 14-15% annual growth reaching USD 40-42 billion by 2025.

However, as the sector grows, it faces significant challenges that could impede its full potential. At the Vietnam Logistics Summit 2024, industry experts and policymakers presented four essential strategies to address these challenges and enable the sector to achieve new efficiency, competitiveness, and sustainability levels.

Capitalizing on Growth Opportunities in a Dynamic Market

Vietnam’s logistics sector is well-positioned for continued growth, supported by a stable foundation and favorable market conditions. Some key indicators of this potential include:

- Market Value: With an estimated value of USD 40 billion in 2023, the sector is projected to grow consistently, reaching USD 40-42 billion by 2025.

- Economic Contribution: Currently, logistics contributes 4-5% of the national GDP and directly employs over one million people, underscoring its critical role in Vietnam’s economy.

- Industry Expansion: The sector includes over 3,000 domestic logistics firms, including PCS, alongside around 25 global logistics leaders, reflecting rapid growth and increased market diversity.

At the Vietnam Logistics Summit 2024, Đầu Tư newspaper’s Editor-in-Chief, Lê Trọng Minh, stated that logistics is among Vietnam's fastest-growing sectors.

Driven by foreign investment, favorable trade agreements, and a strategic ASEAN location, the logistics sector has a solid foundation for further expansion. However, high operational costs, insufficient infrastructure, and a lack of globally competitive local companies are challenges that must be addressed. To fully capitalize on growth opportunities, experts at the Vietnam Logistics Summit 2024 proposed four critical strategies for fostering sustainable and competitive development in Vietnam’s logistics sector.

Learn More: Vietnam Logistics: A Billion-Dollar Investment Opportunity

Critical Strategies for Logistics Sectoral Transformation

Vietnam’s logistics sector needs strategies to improve efficiency and competitiveness, enhance its growth, and address current challenges. Experts at the summit identified four critical areas for enhancement, each essential for driving the sector’s future success.

1. Policy and Regulatory Enhancement

An efficient logistics sector depends on a supportive policy and regulatory environment. Experts emphasize the need for streamlined administrative processes and refined policies to eliminate operational barriers and reduce costs for logistics providers.

Simplifying regulatory frameworks—such as accelerating customs clearance processes and reducing bureaucratic delays—would enable goods to move more efficiently and at lower costs. These improvements would also attract foreign investment, further solidifying Vietnam’s position as a competitive logistics hub within ASEAN. Establishing a cohesive and business-friendly regulatory framework is critical to creating an environment where logistics providers can operate more flexibly and agilely.

2. Infrastructure Development

A robust infrastructure is essential to supporting the logistics sector’s growth. Much of Vietnam’s logistics infrastructure is concentrated in major urban areas like Ho Chi Minh City and Ba Ria-Vung Tau, which limits the sector’s capacity to meet growing demand. Significant investments in transportation networks—including roads, railways, and ports—are crucial for developing a more efficient logistics system.

Expanding and upgrading infrastructure across the country, particularly in high-demand export regions like the Mekong Delta, would reduce congestion and lower transportation costs. Improved infrastructure would facilitate the seamless movement of goods within Vietnam and across international trade routes, positioning the country as a strategic logistics hub in Southeast Asia.

Deputy Minister of Planning and Investment Đỗ Thành Trung noted that inadequate policies and a fragmented legal framework are holding back the logistics sector.

3. Workforce Training and Development

As the logistics sector grows in complexity, a skilled workforce is essential to meet rising industry demands. Developing talent through specialized training programs collaborating with government agencies, educational institutions, and logistics companies is critical to building a competitive labor pool.

Training programs focused on logistics management, digital proficiency, and customer service will ensure that Vietnam’s logistics professionals can meet domestic and international standards. By fostering a skilled and knowledgeable workforce, Vietnam can increase service quality, enhance operational efficiency, and establish itself as a reliable logistics provider on the global stage.

4. Digital Transformation and Technological Investment

In today’s logistics landscape, digital transformation is essential for modernizing operations. Digital tools enable logistics providers to optimize processes, reduce costs, and improve transparency across the supply chain. By adopting real-time tracking and automated inventory management, logistics companies can streamline operations and respond more effectively to market changes.

Vietnam’s logistics companies are encouraged to prioritize digitalization, with support from both public and private sectors. Investment in digital systems will allow companies to operate more efficiently, strengthen their competitive positioning, and meet the demands of a rapidly evolving global market.

Experts also shared successful examples of companies fully integrating new technologies into their logistics through digital transformation strategies.

The Green Logistics Imperative

Beyond these core strategies, green logistics is becoming an increasingly important focus for Vietnam. The country’s National Strategy for Green Growth (2021-2030) emphasizes the need for sustainable practices, particularly in high-impact sectors like logistics. Key initiatives include creating eco-friendly logistics hubs and ports, promoting energy-efficient transportation, and reducing emissions.

Embracing green logistics allows Vietnam to align with global environmental standards, appeal to environmentally conscious clients, and contribute to long-term cost savings. Sustainable logistics practices also position Vietnam’s logistics sector as a responsible player in the global market, strengthening its international reputation and appeal.

Conclusion

Vietnam’s logistics sector is at a pivotal moment, with tremendous opportunities for growth and transformation. By enhancing policies, developing infrastructure, investing in workforce training, and embracing digital transformation, the sector can overcome its current challenges and capitalize on its potential. Additionally, the focus on green logistics aligns Vietnam’s logistics industry with global sustainability standards, ensuring its competitiveness and environmental responsibility.

As a strategic partner, PCS is helping businesses in Vietnam’s logistics sector capitalize on these opportunities, optimize efficiency, and drive sustainable growth in a rapidly evolving landscape. With these expert-backed strategies, Vietnam’s logistics industry is well-positioned to become a regional leader and a sustainable force in the global market.