Logistics industry must improve to take full advantage of EVFTA
September 23, 2022
VIETNAM, September 23 -
HÀ NỘI — As well as opportunities and potential, Vietnamese logistics enterprises face many new challenges as the EU – Việt Nam Free Trade Agreement (EVFTA) has taken into effect.
Trần Thanh Hải, deputy director of the Import-Export Department, Ministry of Industry and Trade (MoIT), told the seminar "Solutions to promote the logistics industry to take advantage of opportunities from EVFTA" on Thursday that the agreement has given firms providing logistics services stronger commitments compared to the World Trade Organization (WTO).
Hải added that the difference in capacity has made local enterprises fiercely compete with their EU counterparts, who occupy a significant market share worldwide.
He said that many EU logistics enterprises have operations in Việt Nam, including DHL Group, Kuehne + Nagel, DB Schenker of Germany, and Maersk group of Denmark.
Most domestic enterprises are small- and medium-sized with low professionalism and insufficient facilities that does not meet the development needs, leading to higher logistics service costs.
In addition, the logistics and transportation system must meet the strict requirements of EU standards and control processes. For exports from Việt Nam, traditional or new products also need better assurance of the quality of preservation and transportation, especially agricultural products, bamboo and rattan products, and wooden furniture, as these are susceptible to changes in quality due to temperature and environmental conditions.
For items with a tax removal schedule after five to ten years, the increase in transportation demand may be later, but logistic companies still have to make thorough preparation in terms of vehicles and equipment to meet standardised processes.
From a business perspective, Lê Hoàng Khánh Nhựt, general director of Đà Nẵng Rubber Joint Stock Company, said that by taking advantage of opportunities in the EVFTA, businesses have increased exports. In 2021, Đà Nẵng's rubber export growth was more than 36 per cent, and the market share rose in kind.
Nhựt said: "Logistics makes up a large proportion in firms' cost for products. Even in difficult periods, like 2021, logistics costs increased dozens of times. It is difficult for businesses to balance costs in production."
He said: "It is worth mentioning that we do not have a shipping company, so we are dominated by many foreign shipping lines. Therefore, Việt Nam must develop logistics centres at major ports to ensure the appropriate number of ships in and out and to master this game. If we don't keep up, we will face great competition now."
Mai Trần Thuật, director of Supply Chain Solutions, Bee Logistics Group, said that the EVFTA created a lot of opportunities for logistics businesses in Việt Nam.
"However, it is very difficult to compete directly with foreign enterprises, big companies like Maersk or DHL. We are ahead of the curve, temporarily acting as agents, cooperating with big firms and subcontracting them, but it's still difficult," he said.
To support and promote the development of the logistics industry, from a management perspective, MoIT official Hải said that in the past, the Government, ministries, branches and localities have also paid great attention to supporting the development of industry.
Hải said the PM issued a decision, mentioning the action plan to develop and improve the competitiveness of logistics services by 2025, and on that basis, the MoIT, other ministries, sectors and localities also have specific plans to deploy and support logistics businesses. — VNS