Vietnam prepares for boom in next decade

Economy March 28, 2016 01:00

By The Nation

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Damco, one of the world’s leading third-party logistics providers, offers customised freight forwarding and supply-chain solutions. The company has expanded its southern logistics centre in Binh Duong province, lifting its warehouse capacity to an impress



Viet Nam News speaks with Marco Civardi, area managing director for Damco in Vietnam and Cambodia, about the company’s preparations to help customers make the most of the forthcoming economic opportunities.

WHAT ARE THE IMPLICATIONS OF INTERNATIONAL TRADE DEALS FOR VIETNAM?

The creation of the Asean Economic Community [AEC] and the signing of the Trans-Pacific Partnership [TPP] and free-trade agreements [FTAs] will expand access to key global markets and foster economic growth in the nations involved.

Vietnam’s developing economy, which relies chiefly on exports such as mobile phones, footwear, textiles, and agricultural products, is |likely to be one of the biggest winners.

Over the coming decade, the country’s GDP and exports could be boosted significantly and therefore there will be a constructive pressure to upgrade the quality of the products manufactured to keep up with more strict international standards and to rapidly improve the country’s infrastructure.

WHAT ARE THE OPPORTUNITIES FOR VIETNAM?

Many technology companies from China, Taiwan, and Japan are progressively investing to expand their production facilities in anticipation of the raft of FTAs that are soon coming into effect.

Vietnam has a young and energetic workforce eager to achieve fast-track careers both domestically and via employment opportunities overseas to upgrade their skills set.

The government is very pro-business and its macro-economic policy has the necessary dynamism to create strong partnerships with counterparts overseas.

Greater production and more and better-remunerated jobs will increase exports and stimulate local consumption of imported goods from the EU [European Union] and the US.

Over the longer period, supply chains will have to become more self-sufficient (ie sourcing in-country or from other countries within the relevant FTA areas).

From a macro-economic perspective, Intra-Asia trade already accounts for 55 per cent of the total airfreight market and 66 per cent of the total ocean freight market in Vietnam, and the TPP’s implementation can only further increase the such intra-regional trade.

In order to tap into such high-growth opportunities as intra-Asia trading, Damco has dedicated teams to focus on this specific corridor with special emphasis on China, Taiwan, Japan, and Korea as key commercial partners for Vietnam.

IS THE COUNTRY READY TO GRASP NEW OPPORTUNITIES?

If these growth and investment opportunities are to be taken, |the logistics industry serving Vietnam must meet a number of challenges.

At up to 25 per cent of GDP, logistics costs are quite high, disadvantaging the country relative to its neighbours in spite of the fact that Vietnam occupies a prime geographic position.

The country’s infrastructure can be problematic. Road connections are improving though not at the pace logistics stakeholders would desire.

There are major issues with air freight: although the capacity out of Hanoi has greatly improved, similar investment has yet to be made at Tan Son Nhat International Airport whereby it is expected that, if the current growth rate continues, by 2017 the airport will be operating at full capacity for both passengers and cargo.

To comply with new international standards demanded under the TPP and the FTAs, Vietnam can face issues related to product |quality, intellectual property, |and the need for a more decisive stance towards reducing corruption.

These challenges need to be addressed by local authorities soon for the satisfaction of overseas |buyers and international stakeholders.

HOW IS DAMCO VIETNAM SUPPORTING ITS CUSTOMERS?

In preparation for the upcoming years of strong economic growth, we at Damco Vietnam have invested substantially to upgrade our capacity in both the north and south.

We have expanded our warehouse capacity in Vietnam to 73,000sqm.

Most recently this has involved an expansion of our southern Vietnam logistics centre in Binh Duong province, and this C-TPAT certified warehouse comprises over 37,000sqm and 141 loading bays, and incorporates state-of-the-art technologies such as a High Jump CFS management system, RF scanning, quality control room, and an on-site customs office.

Besides growing our warehousing footprint, we are also able to offer more options to our customers by enabling them to perform value-added activities within our facilities such as metal detection and CNI (Certificate of No Impediment) checking.

In view of the increasingly strong sourcing growth in northern Vietnam, our bonded licence capability in Hai Phong is perfectly suited to support the ambitious growth plans of our clientele as we also managed to expand our warehousing footprint in northern Vietnam from 8,000sqm to 11,500sqm last year.

Damco Vietnam is one of the few international 3PLs with an own managed warehouse at Tan Son Nhat International Airport, where our customer’s shipments are palletised by our staff and directly supervised until physically loaded on to a plane.

Our current set-up allows customers to benefit from our direct end-to-end process control, allowing us to have greater visibility of and better control over our customers’ cargo.