Samsung to heat up Vietnamese logistics market

Manufacturing activities in Samsung Display in the northern province of Bac Ninh

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From electronics to logistics

On July 14, 2017, Samsung SDS Co., Ltd., a subsidiary of Samsung Group, established a joint venture with MP Logistics with the aim of expanding its logistics business in Vietnam. The cooperation with MP Logistics is expected to help Samsung’s information and technology (IT) and logistics services access to the Vietnamese cargo transportation industry.

“The logistics market in Vietnam has an annual growth rate of about 15-20 per cent due to the promotion of free trade agreements with South Korea, China, Japan, and the European Union (EU),” a leader of Samsung SDS said.

Samsung SDS expected that this cooperation would expand its business in the Vietnamese IT-based logistics market, as well as other transportation services for consumer goods and food.

“This new joint venture will give us the motivation to expand our business in the Vietnamese logistics market,” Kim Hyung-tae, vice chairman of Samsung SDS's Smart Logistics Business Unit, said.

The cooperation with MP Logistics is considered Samsung’s next step in the Vietnamese logistics market, because previously in 2016, Samsung SDS had established another joint venture with Aviation Logistics Corporation (ALS), one of the leading aviation logistics service providers in Vietnam. With this new joint venture, Samsung now has the right to manage the cargo terminals in Noi Bai International Airport.

Thanks to the right to manage activities in this big airport, Samsung can ensure its delivery deadlines, gradually complete its supply chain, and cut down on expenses. Noi Bai is an important gateway to deliver Samsung exports from Samsung’s two Vietnamese complexes in the northern provinces of Bac Ninh and Thai Nguyen.

Regarding MP Logistics, it is now one of the biggest providers of logistics services in air and ocean freight, warehousing, distribution, project cargo, and inland transportation in Vietnam. Its founder cum CEO, Dang Thi Minh Phuong, was highly complimented by Bloomberg as the “Queen of Logistics” in Vietnam. Thus, teaming up with MP Logistics may be the best way for Samsung to join the domestic logistics market.

Competition heating up

In any economy, logistics always plays an important role. In Vietnam, the economic development has led to the expansion of the logistics market. According to statistics from Vietnam Logistics Association (VLA), there are over 1,300 logistics enterprises operating in the country, including foreign-invested enterprises. Logistics services in Vietnam currently have a value of $20-22 billion per year, accounting for about 20.9 per cent of the country’s GDP.

As reported by newswire Enternews, due to the expansion of the logistics market, many foreign-invested enterprises have expanded their businesses in Vietnam, such as DHL Global, Maersk Logistics (Denmark), APL Logistics (Japan), Nippon Express (Japan), and Kerry Logistics (Hong Kong). Foreign-invested enterprises may dominate the segment of international deliveries, but Vietnamese enterprises still hold most of the domestic deliveries market share.

“Currently, most domestic logistics services, including trucking transportation, cargo terminals, and seaports, are provided mainly by domestic enterprises,” Nguyen Tuong, deputy chairman of VLA said.

However, the situation may change and many overseas logistics enterprises have entered Vietnam to gain more market share in this sector. Besides Samsung, previously, DHL Global and Kerry Logistics also established logistics joint ventures in Vietnam to develop their businesses. In addition, some Japanese enterprises, such as Yusen Logistics and Logitem, have also been present for a long time.

In May 2017, Korea Economic Daily of South Korea reported that TaeKwang Industrial Co., Ltd., a South Korean enterprise in the textile and petrochemical industries, had expressed interest in holding a stake in Gemadept Corporation, one of the leading Vietnamese companies in its core business sectors, including port operation and logistics.

If domestic logistics enterprises keep their old strategies without providing any new services, they may lose significant market share to foreign investors when the logistics industry in Vietnam sees a boom in the coming period.