Local logistics investment moves at pace across Vietnam

US-based logistics unicorn Flexport is offering international freight forwarder and supply chain services to Vietnamese clients. The company has a plan to scale up and expand the local presence by partnering with ITL, a strong infrastructure player in Vietnam, to integrate assets, technology, and global networks, thus enhancing its capability to serve customers worldwide.

“The partnership with ITL provides Flexport with a competitive edge that sets us apart. This partnership is a significant opportunity to blend our technology with Vietnam’s infrastructure for significant automation potential in the logistics sector. We aim to revolutionise by aligning technology with Vietnam’s infrastructure for long-term success in the market,” Sanne Manders, president of Flexport told VIR.

In Vietnam, Flexport has supported over 1,300 factories to help them transport goods to more than 500 importers worldwide. The country has also become a key strategic market for Flexport over the past few years. Vietnam is the company’s second-largest ocean freight region after China, and is poised for continued growth.

It also focuses on driving trade growth with digital solutions and solid networks that are well-suited to capture the growing e-commerce and high-value/electronics industries and provide value-added services.

“We believe the future potential of the Vietnam logistics industry is very promising. There is still a huge opportunity for transformation in the logistics industry, both through infrastructure improvements and the adoption of digital technologies and automation in the logistics market,” Manders added.

Over the past five years, Danish logistics company DSV Air & Sea has also seen its business grow quickly with the market and has been accelerated by its merger and acquisition strategy.

Managing director Eric Herding said, “DSV Air & Sea remains dedicated to Vietnam, and we are looking to the future to understand the service requirements of our customers. One of our current priorities is building up our cross-border trucking capabilities, which create a trucking route between China, Vietnam, Thailand, Malaysia, and Singapore.”

It is also investing in bonded warehousing to allow greater flexibility for customers and facilitate more efficient consolidation and speed to market.

“In line with our asset light strategy, our business grows along with our customers, attracting new customers and through dealmaking activities where we have a proven track record and have expanded our capabilities tremendously,” Herding added.

Meanwhile, SCGJWD Logistics (SJWD), the logistics arm under Thailand’s SCG Group, is expanding its overseas operations, particularly in Vietnam. In May, it announced the purchase of SCG International Vietnam Co., Ltd. with an investment of approximately $5.3 million.

SCG International has been operating in logistics in Vietnam for more than 10 years and has built a vast network of skilled service providers, specialising in road transport and container transport covering all of Vietnam and cross-border transport to neighbouring countries including Thailand, Cambodia, Laos, and China. The company is also a logistics service provider for the Long Son Petrochemicals complex, Vietnam’s first integrated petrochemical project.

“As for Transimex, one of Vietnam’s major integrated logistics service providers in which SJWD has invested, the operating results are expected to be better than that of Q1 as a result of the gradual overall recovery of the economy,” he added

VinaCapital released a report in June indicating that by early 2024, Vietnam’s total trade flows were growing at a 15 per cent rate, and revenues derived from air and sea cargo handling were growing by over 30 per cent on-year, which is one reason logistics companies’ share prices have soared this year.

Investors are looking past the anomalous surge and collapse in shipping rates and are enthused about the prospects for further government-regulated port fee increases and capacity growth, which have raised hopes that Vietnam could eventually become an international transshipment hub akin to Singapore.

Instability in the Red Sea is affecting businesses in Vietnam, and demonstrating the prolonged weakness of the domestic logistics industry.

While logistics businesses in Vietnam are taking action to respond to Red Sea tensions, the situation may drag on for some time.

Applying technology in logistics and e-commerce will bring many benefits, thus optimising the efficiency of these two sectors, and contributing to reducing logistics costs for the entire economy, heard a workshop in Hanoi on May 16.

Lach Huyen International Port is the largest deepwater seaport in northern Vietnam, capable of receiving ships with a capacity of up to 14,000 twenty-foot equivalent units (TEUs).