Logistics hurdles must be overcome to welcome supply chain shifts: experts

At the “Shifting Supply Chains: Prospects and Challenges” forum. — VNA/VNS Photo

HCM CITY — The development of logistics infrastructure, improvement of loading and storage capacity, and formation of a regional level logistics service centre will help Việt Nam better embrace the upcoming global supply chain shifts, experts said at a logistics forum held by the Hồ Chí Minh City Logistics Association (HLA) in the city on Wednesday.

At the event, themed “Shifting Supply Chains: Prospects and Challenges”, Nguyễn Công Luân from the municipal Department of Industry and Trade, described overloaded and degraded roads – the main means of transportation in Việt Nam – as a challenge for the country’s logistics activities.

Only 20 per cent of roads in Việt Nam meet the requirements of the logistics sector, while more than 50 per cent of them are in bad conditions, posing high risk for the transportation of goods, he said.

Although HCM City is a leading logistics hub in the country and the region, with 2,700 enterprises providing professional logistics services, accounting for 54 per cent of the country’s total logistics firms, there is no large-scale logistics centre with advanced technologies built in the city.

Statistics from the HCM City University of Transport indicate the city is now home to only 1,500 warehouses with 30 standard cold storage facilities, failing to meet the market demand.

Luân said it is necessary to branch out transport and logistics infrastructure in the southern economic hub through calling for investment in six logistics centres in Thủ Đức City and Bình Chánh, Củ Chi and Nhà Bè districts.

He also suggested that national- and international-level logistics systems be developed in tandem with seaports, airports, international border gates, key economic corridors and inter-regional trade routes in HCM City and Bình Dương, Đồng Nai, Bà Rịa – Vũng Tàu and Tây Ninh provinces.

Việt Nam has been ranked in the top 10 places in the 2023 Agility Emerging Markets Logistics Index compiled by Agility, one of the world’s top freight forwarding and contract logistics providers. The country is at 10th place, up one spot compared to the previous year. Among Southeast Asian countries, Việt Nam is in fourth place, behind Malaysia, Indonesia and Thailand.

According to the World Bank, Việt Nam ranks 43rd in the logistics performance index, and is in top five in ASEAN in 2023.

Giang Vũ, Co-Chair of the American Chamber of Commerce in Vietnam’s Manufacturing Committee, highlighted that free trade agreements have created numerous opportunities for Việt Nam to engage in global supply chains.

Improvement in working conditions and environmental protection, as well as promotion of the circular economy, are among the bold steps that Việt Nam has taken to create its competitive edge, she added.

However, Việt Nam is not the only destination for supply chain shifts, she said, elaborating that the country is facing formidable challenges in the logistics facilities which need further improvements in the future.

Meanwhile, Đinh Thị Quỳnh Vân, chairwoman of PwC Vietnam, pointed out that high logistics costs and poor linkages between means of transportation leave Việt Nam in choppy waters when joining the global value chain. — VNS