AEC integrates logistics network

Logistics firms have been expanding their networks to capitalise on the AEC-Photo: Le Toan

Clement Blanc, managing director of DHL Global Forwarding Vietnam, told VIR that one key aspect of achieving the AEC is to create an integrated transport market to increase connectivity and help spur ASEAN’s goals of economic integration.

Logistics is a priority sector for ASEAN integration, and the Roadmap for the Integration of Logistics Services under the AEC makes firm commitments to liberalise ASEAN’s logistics sector including everything from cargo handling, storage, and warehousing, to courier services, customs clearance, and international freight.

As road freight is more cost-effective than air freight, and faster than ocean freight, DHL Global Forwarding has expanded its road freight network in ASEAN in anticipation of a boom in trade in the AEC in the years to come.

The firm first launched its road freight network in 2011 connecting Singapore, Malaysia, and Thailand, which now links to the existing Vietnam-China connection. Its latest integrated road freight network links all five countries and caters for the further expansion of trade and production networks across the region.

According to Blanc, Vietnam is an exciting country to be in right now – booming with investment especially in the hi-tech sector. It has a young workforce, and a reform-minded government. From a logistics provider’s perspective, the firm is particularly satisfied with the consistent alignment with international best practices.

“Vietnam is the only ASEAN country which has a truly paperless customs environment. All this has been done within a relatively short time frame. DHL will continue to work with the government on all aspects of customs and trade facilitation reforms,” he said.

Another foreign logistics firm, DB Schenker, has also witnessed an increasing volume following the establishment of the AEC. The last few months have been especially exciting for the firm, as it has received many enquiries from its international customer base about trade opportunities in the region, DB Schenker claims.

Christoph Matthes, managing director of DB Schenker in Vietnam, told VIR that the AEC is a critical enabler for the entire region because of the enormous market of over 600 million consumers. The ten member states have diverse economic profiles, and it will be interesting to see how the journey to full economic integration develops.

Indeed, the AEC is a great opportunity for Vietnam to expand its international trade prospects. Vietnam is located at the heart of the ASEAN region and is well positioned to enjoy the benefits of the single market and production base.

“To prepare ourselves, we will focus more and more on developing cross border logistics solutions. A good example is our Landbridge Asia road transport service where we take freight by truck to cross the borders of our neighboring countries,” he said, adding that, “We expect that the demand for this type of service will grow significantly in light of ASEAN’s substantial tariff reductions.”

DHL-VNPT Express is also uniquely set up for ASEAN with its newly expanded South Asia Hub in Singapore and another hub in Bangkok. Currently, the firm’s intra-regional Asia Air Network is one of its key strengths. DHL-VNPT Express says it benefits from having the fastest network intra Asia-Pacific, as the firm is the only service provider that can provide same-day uplift on its own aircraft for a next day delivery across most of the region.

According to George Berczely, the firm’s general director, participation in the AEC will give Vietnam more opportunities to attract foreign direct investment, expand its export markets, and help boost the capabilities of its logistics service providers through physical connectivity, such as hard infrastructure for transport within the regional network. However, it should also be noted that the AEC will undoubtedly intensify competition within the region.

“For us, the AEC brings about more opportunities than competitive challenges, and we are continuously investing to capitalise on these opportunities. We are seeing strong growth within ASEAN, which has been the trend for a few years now,” he said, adding that, “Our primary focus is the expansion our air network and ground network.”

DHL-VNPT Express has recently expanded its Saigon gateway by 50 per cent, and plans to open more facilities across the country over the next few years to further its reach and improve services across the region.