"The logistics industry of the city in particular and Viet Nam in general were still small-scale and could not meet the demands of the economy."— Photo chothuekho

HA NOI (Biz Hub) — The capital city has a high demand for logistics services but is currently facing a shortage of professional purveyors.

At a conference of the City's Department of Industry and Trade on Wednesday, Tran Nguyen Nam, Deputy Head of the Ministry of Industry and Trade's Domestic Market Department, admitted this and said majority of logistics centres here could only cover an area measuring less than 10 hectares, meaning they could only cater to the needs of local businesses.

Nam said the logistics industry of the city in particular and Viet Nam in general were still small-scale and could not meet the demands of the economy.

In addition, shortcomings in employee qualifications, management methods and the legal framework, as well as the general course for development, are hampering the sector's growth, he added.

Domestic businesses are finding it difficult to compete with multinational groups or companies backed by international investors. These businesses currently dominate the logistics market and set themselves apart from domestic logistics services through professional organisational structures and effective operations.

Official data estimated the number of logistics purveyors in the capital city, including State-invested, joint venture and private companies, to be about 800.

Foreign logistics companies accounting for a mere two per cent of the total number but have an 80 per cent market share. Private companies account for a majority but are mostly small-scale, with an investment capital of less than VND8 billion (US$377,500).

Nguyen Tuong, a representative of the Viet Nam Logistics Business Association, pointed out that the cost of logistics services in Viet Nam were currently high, accounting for nearly 21 per cent of gross domestic product. Transportation costs alone make up for up to 60 per cent of total logistics costs.

Accoring to Nguyen Thi Thu Ha of Dragon Logistic Company Ltd, infrastructure shortage is a major factor behind the price of logistics services in Viet Nam, which are higher than that of other countries in the region.

In addition, changing customs procedures, coupled with informal charges, have reduced the competitiveness of logistics firms, a participant said at the conference.

In response, the city department is urging concerned agencies to develop policies that will speed up the growth of logistics, promote effective workforce training opportunities and build a comprehensive development strategy for the sector.

Logistics firms were also urged to expand their operations, provide improved services at lower prices and enhance cooperation with each other to expand market share

Tuong said that in the short term, Ha Noi should initiate a logistics development project with a vision to 2030, including concrete targets and points of action to turn the city into a logistics hub for Viet Nam.

Sea transport in trouble

Meanwhile, Giao Thong Van Tai (Transport newspaper), a unit under the Ministry of Transport, cited figures from the Viet Nam Register showing that the number of companies currently operating in maritime transport have declined from 260 to 140 in the past two years. .

During the same period, the number of ships operating on international routes with a loading capacity of 500 GT (gross tonnage) were also reduced by 73 per cent to 372.

This showed that maritime shipping was in difficulty in recent years, according to Pham Thanh Truong of the Viet Nam Register quoted by the newspaper.

The difficulty was also reflected in the 22 per cent decline in the number of ships undergoing annual quality inspection, at 797. — VNS