Alignment with EU can address logistics issues of Vietnam

Despite the growth in trade turnover so far this year, import and export activities between Vietnam and the EU continue to face unpredictability, a fragile recovery of consumer demand, and knock-on effects of geopolitical strife.

Nguyen Thao Hien, deputy director of the European-American Market Department under the Ministry of Industry and Trade, told a Ho Chi Minh City logistics event in mid-September that the EU-Vietnam Free Trade Agreement (EVFTA) has played a major role to help both sides maintain growth momentum in bilateral trade cooperation.

In the first eight months of this year, the bilateral trade turnover between Vietnam and the EU reached nearly $45 billion, an increase of 15.8 per cent over the same period last year. Of those, exports from Vietnam to the EU reached $34.1 billion, an increase of 17.4 per cent on-year.

“These figures reflect the economic recovery in the EU and the adaptability of Vietnamese enterprises in taking advantage of opportunities brought by the EVFTA in which, there are positive contributions from the Vietnamese logistics industry and partners in the EU,” Hien said.

However, Hien noted that the market and consumer demand is still quite fragile, while political turbulence is another challenge for Vietnam’s logistics sector.

“In addition, target export markets, especially the EU, are increasingly demanding greening of the value chain including production and transportation of goods,” Hien said. “In that context, to increase export efficiency, along with the efforts of manufacturing enterprises, the Vietnamese logistics industry needs to continue to improve infrastructure, enhance operational capacity and reduce costs to compete.”

Carlos Zepeda, a senior maritime economist from the Port of Rotterdam, also said that Vietnam is emerging as a major supplier of consumer goods and fashion to Europe, after China and Turkey. “Vietnam has also positioned itself as a major supplier of other value-added products, becoming the third-largest supplier of high-tech goods to the EU market after China and the United States. With the current growth rate of manufacturing, the volume of container trade between Vietnam and Europe is forecast to double by 2050,” Zepeda said at the seminar.

“The factors affecting Vietnam’s production and export activities are raw materials, energy, market size, labour and expertise, business environment, supply chain integration, and infrastructure. Vietnam needs to make efforts to improve infrastructure, integrate large-scale port operations, and combine with industrial parks and clusters to maximise efficiency and cut logistics costs,” he added. In addition, experts said that in the context of global greening, logistics is also an industry assessed to have considerable emissions and very high energy consumption.

Juergen Weber, chairman of the European Chamber of Commerce in Vietnam’s Transport and Logistics Sector Committee, explained, “Developing green logistics is an urgent issue that needs to be addressed by businesses. For the logistics industry, greening has become a mandatory requirement for businesses to be able to participate in the supply chain of global manufacturers and suppliers.”

Weber believes that cutting emissions from logistics activities is urgent to slow down the process of global warming.

“For Vietnam’s logistics, reducing carbon from transportation activities can be applied by optimising freight routes, switching to low-carbon transport modes, and reducing the carbon content of energy used for logistics,” he added.

“Logistics plays an important role in the climate crisis, and addressing its impact requires a comprehensive approach that includes technology, policy and behavioural change.”

According to statistics, there are currently over 40,000 businesses participating in the logistics market in Vietnam operating in transportation and warehousing, including names such as DHL, CJ Logistics, Maersk, and many others.

Vietnamese businesses also have strong businesses such as Transimex, Sotran, and Tan Cang Saigon, which are capable of competing with foreign businesses operating in this country, the seminar heard.