DEMAND OF WAREHOUSE AND LOGISTICS SPACE | P1. MARKET EVALUATION

PART 1: OVERVIEW OF GLOBAL LOGISTICS MARKET

In 2019, the global logistics and transportation market is affected by key factors including: major advances in technology, fluctuations in international trade, new trends in e-commerce and new requirements, environmental protection, climate change prevention in logistics.

Global trade has become more unpredictable, with the intertwining effects of new generation FTAs ​​and trade barriers, geopolitical disadvantages ... causing many shippers and logistics companies must constantly adjust the business plan. Trade tensions between China and the United States have even created a new logistics service that is "shifting" the entire factory system from China to other markets.

The growth of global e-payment and commerce platforms such as Alibaba, Amazon and e-Bay has allowed many micro, small and medium enterprises in emerging markets to reach consumers across the globe. by expanding their cross-border logistics, distribution and marketing channels. At the same time, many multinational companies are focusing their plans to invest in developing logistics networks in emerging markets to take advantage of consumer spending growth, local resources and meeting local tastes. The trend of automation is changing global production as well as logistics activities serving production and consumption. Digitalization of the economy, reform of government support mechanisms, consumer culture, the development of e-commerce and the sharing economy are helping to develop stronger cross-border and cross-border logistics strongly than ever.

Regarding the scale of the global logistics sector (including self-made logistics and logistics services - outsourcing), due to such complexity, the statistics and measurement of the size of the global logistics market are still inconsistent, especially in the context of a huge mix between types of logistics and integration of activities in the trans-boundary supply chain.

According to the report "Logistics Service Market Report - Forecast up to 2027" released by Market Research Future, global logistics service market revenue (3PL, 4PL) reached over one trillion USD in 2019 (up from 900 USD billion in 2018) and is expected to grow at a rate of 6.9% per annum during the 2019-2027 forecast period, reaching over USD 2 trillion by 2027.

PART 2: SITUATION OF LOGISTICS MARKET IN VIETNAM

Enterprises in Vietnam's transport and logistics industry highly appreciate the growth potential of the logistics market in the coming years. There are more than 73% of enterprises participating in the survey of Vietnam Report in December 2018 said that the entire transport and logistics industry in Vietnam will achieve double-digit growth in next years, only nearly 27% have forecasted that growth rate will be below 10%.

According to data from the Ministry of Industry and Trade of Vietnam, Vietnam's logistics industry grew about 12-14% compared to 2017. The number of transport and logistics enterprises is currently 3,000 entities including all enterprises by operating road, railway, sea, inland waterway or air logistics.

The potential and opportunities for Vietnam's transport and logistics industry to further develop in the coming time are really huge. According to the representative of the Ministry of Industry and Trade, the development of the transport and logistics industry will create conditions for Vietnam to quickly become a new manufacturing hub in the region, able to compete with China.

Vietnam has many advantages to develop the transport and logistics industry, such as:

First, the increase in global trade exchange along with the international economic integration and the successful signing of Free Trade Agreements, opens the door to ever greater trade for Vietnam.

Second, Vietnam's geographic location is suitable for building transshipment hubs of Southeast Asia.

Third, logistics infrastructure items such as warehouses, highways, seaports, airports, etc. are constantly being improved.

According to many experts, the logistics industry has many growth opportunities, but the challenges are also considered. The three biggest challenges of Vietnam's transport and logistics industry today are the limited and inadequate infrastructure such as the seaport system, warehouse, and connection; capital scale, managerial and professional qualifications are limited; taxes, tolls and high surcharges.

Many businesses in the industry also said that the infrastructure, although improved compared to the past, still has many shortcomings. The North - South transport axis is still heavily dependent on road, which is in need of more participation of the railway industry. The unbalanced development of Vietnam's seaport system when more than 92% of the southern container traffic is concentrated in Cat Lai port, leading to overload, jamming ... causing huge waste.

Furthermore, capital and human resources are the main reasons that make it difficult for domestic firms to compete with foreign ones. More than 70% of transport and logistics enterprises operating today have small and medium capital, only 7% of enterprises with capital over 1,000 billion VND, of which the large capital group is mainly multinational enterprises. (To be continued....)

Source: Vietnam Logistics Report