Digital transformation as a growth driver for the logistics industry

This was stated by Mr. Pham Tan Cong, President of the Vietnam Chamber of Commerce and Industry (VCCI), at the Fifth Regional Logistics Forum 2024: "Digital Transformation - New Growth Driver in the Red River Delta," which was co-hosted by the Hai Phong Department of Commerce and Industry, Business Forum Magazine, Vietnam Logistics Business Association (VLA), and Hai Phong Logistics Association on May 28, 2020, under the direction of VCCI and the Hai Phong People’s Committee.

According to VCCI President Pham Tan Cong, the documents of the Party's XIII Congress defined digital transformation as a major priority with three primary pillars: digital government, digital economy, and digital society.

Currently, all ministries, sectors, and localities have established a Digital Transformation Board, with 17/22 ministries and sectors and 57/63 localities issuing a five-year digital transformation program/plan/scheme.

Specifically, with the goal of promoting national digital transformation and creating momentum for rapid and sustainable economic and social development, Prime Minister Pham Minh Chinh, Chairman of the National Committee for Digital Transformation, signed Decision 58/QD-UBQGCS to issue the Operation Plan in 2024 for developing the digital economy with four pillars: IT, digitization of economic sectors, digital governance, and digital data...

According to the VCCI President, while the benefits of digital transformation are evident, the digital transformation of the Vietnam logistics industry has several challenges at both the macro and micro levels, both in state agencies and companies.

The Ministry of Industry and Commerce's Logistics Report 2023 showed that 90.5% of logistics firms are still in the digitization phase, which includes computerization and networking at levels one and two. The bulk of them, or 73.5 percent, are at level two.

Only 5% of logistics companies have advanced to level 3 (visualization), with 2.2% reaching level 4 (transparency). Only 1.9% of logistics businesses have evolved to level 5 (predictable), and 0.4% have reached the greatest level, level 6 (adaptability).

"Generally speaking, at the moment, logistics firms conduct very few digital transformations from level 3 and beyond, with the majority concentrated in large enterprises. Meanwhile, 90% of Vietnam's logistics firms are still in the process of digitalizing. This demonstrates that the digital transformation of the Vietnam logistics sector is still in its early stages and has not been adequately invested," said VCCI President.

In particular, the Master Plan for the Red River Delta for the period 2021-2030, with a vision to 2050, identified the Red River Delta as an important strategic region, playing a leading role in restructuring the economy and transforming the country's growth model to achieve rapid, sustainable development breakthroughs. The objective for 2050 is to establish significant regional and global service hubs for business, tourism, finance, and logistics in Hanoi, Hai Phong, and Quang Ninh.

Mr. Pham Tan Cong stated that in 2022, VCCI signed the Eastern Expressway Economic Connection Agreement (VEHEC) with four provinces (Hai Phong, Quang Ninh, Hung Yen, and Hai Duong). As a result, these provinces and cities came together to build economic connections based on the potential and advantages of each locality; boost the rate of growth; form the growth pole in the Red River Delta; and improve the efficiency of infrastructure exploitation in the region with highways, a seaport system, international airports...

Currently, the Vietnamese logistics market is attended by approximately 43,000 domestic enterprises, the majority of which are small and medium-sized, as well as approximately 30 enterprises that provide transnational logistics services, including big names such as DHL, FedEx, Maersk Logistics, APL Logistic, CJ Logistics, KMTC Logistics... This demonstrates the intense competition in the logistics sector.

"This reality calls for faster digital transformation in the logistics sector so that we may overcome the challenges of the past pandemic and capitalize on the present benefits of Industrial Revolution 4.0. Logistics companies will alter their attitudes, develop breakthroughs to boost competitiveness, cut logistical costs, gain more clients, and maximize profits through digital transformation”, stated VCCI President.

Mr. Nguyen Đuc Thọ, Vice Chairman of Hai Phong People's Committee, stated that through the Fifth Regional Logistics Forum, Hai Phong City is willing to listen to shared viewpoints and identify solutions to encourage effective growth in the logistics industry.

Deputy Minister of Trade and Industry Nguyen Sinh Nhat Tan believed that the Fifth Regional Logistics Forum would succeed under the close supervision of the Party and the State, with the support of ministries, sectors, and localities, as well as the suggestions of business associations, enterprises, and experts. At the same time, following this Forum, all authorities and sectors will be more determined to develop, improve, and implement more effectively policies and solutions to promote logistics development and digital transformation for the Red River Delta, thereby promoting each locality's potential and advantages in making an important contribution to the region's socioeconomic development in the future.