Logistics industry faces green transition imperatives

The green transition trend presents both challenges and opportunities for logistics enterprises. Photo: Internet

Mounting competitive pressure

At the seminar "Adapting to Green Logistics - Solutions to Support Businesses," held virtually on September 9, 2024, Ms. Dang Hong Nhung, representing the Import-Export Department of the Ministry of Industry and Trade, highlighted that alongside international economic integration, import-export activities, investment, and the e-commerce boom, Vietnam's logistics sector has achieved significant progress. The industry boasts a growth rate of approximately 15% and a market size ranging from 40 to 42 billion USD annually.

Despite its pivotal role in the development of both the global and Vietnamese economies, the logistics industry is also a significant contributor to emissions and characterized by high energy consumption.

Research conducted by the Massachusetts Institute of Technology indicates that transportation activities alone account for up to 8% of global CO2 emissions. When warehousing is factored in, this figure could reach 11%. "Consequently, logistics is among the industries most susceptible to the impacts of the green transition trend. This trend presents both pressures and opportunities for businesses," analyzed the Import-Export Department representative.

Dr. Tran Thi Thu Huong, Head of the Logistics and Supply Chain Department at the University of Commerce, noted that Vietnam's participation in the global logistics chain remains limit ed. While Vietnam hosts around 30 major international logistics corporations and over 34,000 domestic logistics enterprises, the majority of Vietnamese firms primarily function as ancillary service providers to foreign logistics companies.

"This dynamic will exert pressure on Vietnamese businesses. As large corporations and leading logistics companies spearheading the global logistics chain embrace green transition, they will also demand that Vietnamese logistics partners participating in the chain comply with green requirements," assessed Ms. Tran Thi Thu Huong. She added that this also creates opportunities and incentivizes Vietnamese logistics enterprises to accelerate their transition. Major domestic logistics players are compelled to expedite their green initiatives to remain competitive and secure market share against foreign counterparts.

From a business standpoint, Mr. Mai Tran Thuat, General Director of Dong A Pharmaceutical Logistics Joint Stock Company, emphasized the long-term advantages of adopting green logistics practices. By reducing energy and transportation costs, input costs are lowered, the gap between revenue and expenses widens, and ultimately, profitability increases significantly.

However, Mr. Mai Tran Thuat also acknowledged that the initial hurdle in implementing green logistics is investment. Furthermore, the operational processes are inevitably impacted, raising questions about the adaptability of warehouse staff, truck drivers, and dispatchers to the new procedures. This necessitates investments in time and resources for personnel training, acquisition of new technologies, and operational integration.

The need for a defined green transition strategy

Ms. Tran Thi Thu Huong underscored that recent years have witnessed substantial volatility in the global market, both politically and economically. This has placed immense pressure on global supply chains and logistics businesses alike. To navigate these challenges effectively, logistics enterprises must undergo a transformation encompassing awareness, mindset, and actions.

"The first step for businesses is to formulate a strategy to mitigate global risks, which must incorporate a strategy for green development to meet market demands. Our research indicates that approximately 66% of Vietnamese logistics enterprises have integrated green objectives into their business development strategies. However, practical implementation remains limit ed," stated Ms. Tran Thi Thu Huong.

Furthermore, businesses should actively leverage government support policies. Concurrently, they should integrate green transition with digital transformation, utilizing the latter as a potent tool to facilitate the green transition process.

The Agency of Foreign Trade representative emphasized that green logistics is no longer a mere trend or an optional choice for businesses; it is becoming a mandatory requirement. Businesses seeking to thrive and endure must understand and incorporate green regulations into their business strategies.

Businesses that have already established green logistics strategies and are actively implementing them should conduct regular reviews to remain abreast of new regulations and government incentives. Crucially, actions must be taken. "Green transition activities encompass all efforts aimed at reducing environmental emissions and promoting environmental sustainability. Even optimizing processes to minimize paper waste contributes to a company's green transition," stated the Agency of Foreign Trade representative.