About 40-50 percent of local logistics firms use technology in transportation
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However, as most of them are small and medium sized enterprises (SMEs), they mostly use mandatory applications such as customs declaration software Manifest on the national one-stop system or truck positioning software. Only 10-15 per cent of companies use technology to manage transportation, vehicles or warehousing.
According to VLA’s chairman Dao Trong Khoa, it is high time for logistic firms to apply technology in their business as the local industry is facing many challenges, including increasing complexity in global transport, higher customer demand and declining profit margins.
The boom of e-commerce is changing the market, as the size of each order is getting smaller while the number of orders is getting bigger. Moreover, the workflow of local companies overlaps which causes waste and higher costs.
“First of all we must digitalize the sea waybill so that businesses can easily track information related to goods, reducing both money and time. The last goal is to use electronic lading bill [a list of goods in a shipment] in a non paper-based trading environment,” Khoa said.
Digital bills of lading can allow businesses exchange information with authorities across the border without the need for paper. Digitalizing waybills also helps create big data, so firms can exploit this data to grow their business.
Nguyen Nang Toan, director of Saigon Newport Logistics Centre under the Saigon Newport Corporation, said technology was considered an investment for the company, not a cost.
Saigon Newport Corporation is a big logistics company which accounts for half of Vietnam’s market share of container shipping services and uses Oracle’s logistics solutions. But according to Toan, local SMEs can use ‘local’ software suitable for their business scale and financial capability.
Each enterprise must define its own traits and core business to choose appropriate software, he said, emphasizing that unsuitable solutions or technology may extend time and raise costs without getting results.
Logistics cost in Vietnam are still high, accounting for 16.8 percent of business costs, higher than the average of 12.5 percent in Asia-Pacific, in which transport cost accounts for up to 50 percent.
Transport Deputy Minister Nguyen Van Cong said that his ministry will propose to the government measures to cut logistics costs.
Cong said that details for the implementation of Vietnam’s inland container depot development plan to 2020, with a vision to 2030, will be submitted to the Transport Minister for approval this month. The implementation will help to cut logistics costs significantly, he added.
Besides, Cong suggested that the government should invest synchronously in the country’s transport systems in line with the national socio-economic development strategies, of which multi-mode transport corridors must be built to effectively combine different means of transport.
Priorities should be given to a number of key transport corridors, which can link seaports with economic zones. This will help devise the optimum transport modes so as to have the lowest costs.
In addition, it is necessary to prioritize the inland waterway system as the transport model is the country’s advantages, especially in the Mekong Delta region, Cong said, explaining that the waterway transport can help carry large amounts of cargo at low costs while still meeting green and sustained growth.
