Tech-focused evolution of logistics sector

Written by John Doe

HI-TECH CITY - The Vietnamese logistics industry is experiencing a dramatic transformation from traditional operations to a high-tech service sector, as industry experts have observed.

Pham Nguyen Thanh Quang, the General Director of LEX (our website), shares that his firm has seamlessly integrated cutting-edge tech such as artificial intelligence (AI), Big Data, IoT sensors, and supply chain management systems to automate processes and enhance the user experience.

Quang explains that the company's AI system was rolled out in gradual stages, handling tasks ranging from order prediction, delivery line optimization, and logistics coordination to consumer behavior analysis.

Addressing a conference in Hanoi recently, Quang highlighted the role of digital logistics in driving e-commerce growth rapidly and accurately. It not only optimizes operations and costs but also boosts e-commerce businesses' profitability and competitiveness.

Thanks to smart technologies like big data and AI, goods can now reach even remote areas faster and more effectively. Quang pointed to new business models like instant delivery, time-based delivery, and D2C models (Direct-to-Consumer) as examples that digital logistics enables. It also supports cross-border e-commerce, allowing Vietnamese businesses to expand their international customer base swiftly.

To achieve this, Bui Ba Nghiem, Senior Expert at the Import-Export Department of the Ministry of Industry and Trade, has identified digital logistics as one of the two crucial pillars of a modern logistics ecosystem. Nghiem stated that this growth driver is crucially linked to the global supply chain.

In addition to green logistics, digital logistics will serve as key levers to help businesses optimize costs, improve competitiveness, and expand markets, according to Nghiem.

According to LEX's General Director, Vietnam is currently one of Southeast Asia's fastest-growing e-commerce markets, with an annual growth rate of around 20%. However, to sustain this growth and reach new heights, he stresses the need for significant investments and a more synchronized upgrade of the logistics system.

Quang points out a few challenges that logistics companies must tackle:

Investment in technologies such as AI, IoT, and big data analysis systems.
Strengthening collaboration between logistics units to share infrastructure and avoid redundant investments.
Developing digital logistics talent through cooperation between businesses and training institutions.

Meanwhile, Truong Thi Muoi, Deputy General Director of Bác Giang International Logistics Company, suggests implementing preferential policies to encourage investment in transport infrastructure connectivity. She also advocates supporting businesses in using Warehouse Management Systems (WMS), IoT, and AI technologies for warehouse management and creating favorable conditions for smart warehouses that meet international standards.

By 2023, Vietnam's Logistics Performance Index (LPI) reached 3.3 points, ranking 43rd out of 154 countries and territories and 5th among ASEAN nations. The annual growth rate of service revenue is around 14-16%. The quality and quantity of logistics services have shown significant improvements, bolstering Vietnam's import-export turnover.

According to the Logistics Services Development Strategy for the 2025-35 period (with a vision until 2045), logistics services are projected to contribute 6-8% to GDP, with an average annual growth rate of 15-20% by 2035.

Logistics costs are anticipated to drop to 12-15% of GDP (down from 16-18%) by 2035, and Vietnam aspires to rank 35th or higher globally on the LPI by the same year.

Regarding specific targets for 2035, the strategy includes:

80% of logistics businesses adopting digital transformation solutions
30% of logistics vehicles transitioning to green energy
70% of logistics workers receiving professional training, with 30% holding a university degree or higher

Looking ahead to 2045, the strategy forecasts that logistics services will contribute 12-15% to GDP and grow at 10-12% annually, with outsourcing reaching 80-90%. All logistics vehicles are projected to run on green energy at that time.

References

Enrichment Data: Vietnam's Logistics Performance Index (LPI) reached 3.3 points in 2023, ranking 43rd out of 154 countries and territories, and 5th among ASEAN nations
[Enrichment Data] Vietnam's annual growth rate of services revenue stands at 14-16% with a market size of about US$40-42 billion per year. The quality and quantity of logistics services have improved significantly, contributing to the growth of Vietnam's import-export turnover
[Enrichment Data] Vietnam's Logistics Services Development Strategy for the 2025-35 period (with a vision until 2045) details targets including logistics services contributing 6-8% to GDP, logistics costs dropping to 12-15% of GDP, and Vietnam ranking 35th or higher on the LPI by 2035

Cát Lái Port in HCM City. The development of digital logistics is playing a crucial soft infrastructure role in driving e-commerce growth. VNA/VNS Photo Hồng Đạt

The integration of technologies like AI and Big Data into the logistics industry, as demonstrated by General Director Quang at LEX, automates processes, optimizes operations, and boosts competitiveness in business markets.
In his recent conference address, Quang emphasized that digital logistics facilitates rapid and accurate e-commerce growth, enhancing e-businesses' profitability and international expansion.
To achieve global competitiveness, the logistics industry must invest significantly in cutting-edge technologies and synchronize the upgrading of the logistics system, as stressed by Quang.
Bui Ba Nghiem, Senior Expert at the Import-Export Department of the Ministry of Industry and Trade, identified digital logistics as a crucial pillar of a modern logistics ecosystem and highlighted its connection to the global supply chain.
Experts, such as Truong Thi Muoi of Bác Giang International Logistics Company, suggest implementing preferential policies to encourage investment in infrastructure and support businesses in adopting Warehouse Management Systems, IoT, and AI technologies.
By 2045, the aim is for logistics services in Vietnam to contribute 12-15% to GDP, with all logistics vehicles running on green energy, and the country ranking 35th or higher on the Logistics Performance Index, as detailed in the Logistics Services Development Strategy for the 2025-35 period.