Logistics companies are expanding in Vietnam as they eye profits from growing demand for transportation amid a boom in trade.
U.S. company SEKO Logistics, which opened its Vietnam office Wednesday, has over 300,000 square meters of warehousing space, 350 container tractors and 150 trucks.
The company sees potential for logistics growth in Vietnam where the supply of goods is abundant but transportation at competitive prices is a major challenge, Anthony Barnes, CEO of the company’s Asia-Pacific division, said.
This year several other logistics companies have also expanded their business or announced plans to invest further.
DHL Express last week said it would invest in a new gateway project near Noi Bai International Airport in Hanoi.
The new facility, expected to be fully operational by early 2023, will have a total utilization space of 4,500 sq.m, or twice as much as the company’s previous one.
It will be equipped with warehouse automation, smart building and energy-efficient solutions in line with the company’s commitment to bring all global logistics-related emissions to zero by 2050.
Imex Pan Pacific Group, which brought global brands like Burger King and Calvin Klein to Vietnam, has told the HCMC government that it wanted to develop a logistics center in Thu Duc City along with the launch of its airline, IPP Air Cargo.
MSC Vietnam wants to build a transshipment port in HCMC’s coastal Can Gio District.
Vietnam’s growing trade is the reason for these plans.
It jumped by 22.6 percent in 2021 to US$668.5 billion despite the supply chain disruptions caused by Covid-19.
More and more U.S. companies are setting up factories or sourcing offices in Vietnam amid expanding bilateral trade, Linh Le, CEO of Seko Logistics Vietnam, said.
The U.S. was Vietnam’s biggest market last year as bilateral trade reached $111 billion following a 23-percent rise from 2020.
“Vietnam is also seen as one of the countries that can be an alternative manufacturing hub to China,” he said, adding that the company expects strong growth in foreign investment in Vietnam.
Bernardo Bautista, DHL Express country manager for Vietnam, said the country is showing strong recovery with growing trade, which is why his company recently upgraded the cargo capacity of its Hanoi – Hong Kong and HCMC – U.S. routes.
However, the logistics industry is set to face difficulties like container shortages and rising costs as Vietnamese exporters dependent on foreign shipping firms.
Vo Quan Huy, CEO of agriculture firm Huy Long An, said the cost of shipping a container of bananas from Ecuador to China is the same as from Vietnam to China, $7,000.
The Vietnam Logistics Association has said the country needs to have its own shipping fleet to reduce the dependence on foreign companies.
Some Vietnamese companies are working to address the shortages.
Steelmaker Hoa Phat is building a container manufacturing plant in the southern, while Hai An Transport and Stevedoring has set up a company to purchase and operate ships to and from Southeast Asia and China.
Last year, the Vietnam National Shipping Lines established a cargo route connecting Vietnam with Malaysia and India.