Costs and competition head logistics advancement issues

Cao Hong Phong, deputy CEO, Gemalink

The integration of technology into port operations and logistics has evolved from being an industry trend to a critical necessity for sustainable business development. Digitalisation and automation not only optimise operational processes and reduce costs but also significantly enhance service quality.

For instance, Gemalink Port has successfully handled a 24,000 TEU container vessel, an achievement that would have been impossible without advanced IT systems and modern equipment.

The adoption of technology and digital transformation for smart ports involves multiple stakeholders, including not only port operators but also import-export businesses, shipping lines, regulatory authorities, and customs.

At Gemalink Port, in collaboration with Gemadept Group, we have implemented several key technologies to advance smart port operations. These include SmartPort software, which facilitates online transactions for all import-export activities at the port, and RiverGate, an application designed for booking and tracking cargo shipments.

Additionally, an autogate system streamlines customs gate registration and online cargo declaration. These innovations allow Gemalink’s partners to optimise costs, reduce processing times, and enhance competitiveness.

Digital transformation and the pursuit of a green port model is a long-term strategic journey. Rather than focusing solely on ambitious targets, we prioritise impactful projects that build trust with both businesses and customers.

Gemadept established an environmental, social, and governance committee several years ago, focusing on practical initiatives such as annual greenhouse gas inventories, emission reduction strategies, and investment in solar-powered infrastructure in preparation for green port operations. Recently, we signed a green credit agreement with HSBC, reinforcing our commitment to sustainable development. In addition, Gemalink undertakes reforestation projects to earn green credits.

Hardy Diec, COO, KCN Vietnam

To build a circular and environmentally friendly supply chain, each component in that supply chain must ensure sustainable development criteria, from raw material suppliers, manufacturers, and transport vehicles to developers of warehouse infrastructure.

In July, KCN Vietnam Group announced our green building development strategy, with a firm commitment that all future factory and warehouse projects of the Group will strictly comply with international standards on environmental protection and using sustainable resources.

The ready-built warehouse project in Nhon Trach 6D Industrial Park, which broke ground in late October, will be the first project in the southern region, and the second project in the country, that we deploy based on green building orientation, thanks to the application of sustainable standards and methods in construction.

We strongly encourage the presence of green, zero-emission vehicles on warehouse premises, as well as natural electricity systems in future periods. KCN Vietnam’s projects prioritise the use of environmentally friendly materials and recycled materials. Specifically, the entire lighting system uses LED lights, and motion sensors are installed in the toilet and stair areas to enhance energy efficiency. At the same time, at least 75 per cent of all construction materials are committed to recycling and reuse.

In addition, planning and design elements are integrated to reduce energy consumption. This includes maintaining an optimal green space ratio, using high-reflectance roofing materials, and increasingly incorporating concrete roads and grass pavers to mitigate the “heat-island” effect.

KCN Vietnam is proactively looking for opportunities to cooperate with international logistics partners who have experience in operating warehouses that meet green building standards, setting up comprehensive cooperation plans with partners on green financial packages and joint projects in installing renewable energy systems to reduce costs and emissions.

Bui Thien Thu, director Inland Waterways Administration Ministry of Transport

Vietnam has a diverse logistics infrastructure system. Logistics costs in Vietnam have decreased from 20 per cent around seven years ago to around 17 per cent now. Although this figure has not yet reached the global average of about 10.8 per cent, it indicates significant progress, partly attributed to the development of the transportation sector.

Regarding inland waterway infrastructure, Vietnam has a substantial advantage, especially in the southern region, with approximately 3,000km in the Mekong Delta and southeast region, allowing for efficient transportation of goods to seaports. Currently, inland waterway transport contributes about 20 per cent of the total cargo transport volume in the country.

However, investment costs for inland waterway infrastructure account for only 2 per cent of the total budget, while road transport takes up 50-60 per cent. Therefore, to enhance transportation efficiency, it is essential to reduce investment costs for road transport and redirect funding towards waterways, while also facilitating private investment through supportive policies.

Furthermore, there needs to be better connectivity between seaports and the inland waterway system to improve cargo collection efficiency. Tax and fee policies also require enhancement; for instance, Ho Chi Minh City has implemented reduced port infrastructure fees for goods transported by water, aiding the shift in the transport structure from road to waterway, thereby minimising environmental impact and reducing road traffic accident risks.

Tran Thanh Hai, deputy general director Agency of Foreign Trade Ministry of Industry and Trade

Logistics centres are a crucial part of logistics infrastructure, serving as a connecting hub linked to transport infrastructure and acting as a driver for the distribution of goods to both domestic and international markets.

The development of logistics centres in Vietnam in recent years has been somewhat fragmented, reflected in the limited number, the lack of large-scale, modern centres with market impact, and inadequate support for local business links.

Vietnam aspires to have logistics zones that gather multiple centres capable of handling various functions. Additionally, the concept of free trade zones is often mentioned. While they are not solely focused on logistics, they provide significant support by allowing manufacturing enterprises to establish facilities and bring in goods without being immediately subject to customs duties and certain administrative controls.

These zones also permit certain operations, including logistics services such as sorting and packaging. This is an attractive feature as it promotes the transit of goods from other countries for logistics operations.

The National Assembly has permitted Danang to pilot this, and Haiphong and Ba Ria-Vung Tau are expected to make similar proposals. In addition to localities with seaports, those with high cargo flows through airports and land border gates, such as Long Thanh International Airport and Lang Son Border Gate, are also ideal locations for implementing such zones.

Ashish Kapur, regional head, Cargo for Southeast Asia, Cathay Cargo

We take pride in our end-to-end shipment tracking, ensuring full visibility from acceptance to delivery. Cathay Cargo’s track-and-trace service provides near-real-time updates on the airport-to-airport journey using Bluetooth data loggers, allowing us to monitor shipments and offer 24/7 proactive support.

Thanks to our vendor Unilode, nearly 90 per cent of our unit load devices fleet is equipped with Bluetooth tags.

We’ve also adopted the Cargo IQ Master Operating Plan, an IATA-recommended industry practice, with milestones that allow us to track the full air cargo journey from shipper to consignee. As the pilot airline for IATA’s One Record rollout, Cathay is leading digital transformation in cargo operations. One Record facilitates seamless data exchange across the supply chain, ensuring a single unified data source.

Meanwhile, our dangerous goods digitalisation project enhances safety, efficiency, and traceability by centralising data and documents. We’re extending these advancements to our suppliers and ground handling partners for ecosystem-wide consistency.

We also take our environmental responsibilities seriously and are committed to building a future of more sustainable operations.

Dinh Thanh Son, deputy CEO Viettel Post

Viettel Post has strategically invested in key provinces such as Danang, Ho Chi Minh City, Can Tho, and Dong Nai, establishing these locations as our centralised sorting centres. In addition, we have implemented advanced conveyor systems and sorting tech at our distributed warehouses across all localities.

Since the introduction of smart infrastructure, we have seen a remarkable 40 per cent increase in productivity. Our centralised sorting centres now have capacity to process up to four million parcels per day, meeting half of the current demand in Vietnam’s e-commerce. This investment is part of our proactive strategy to prepare for the anticipated growth of global e-commerce.

Our primary objective is to reduce costs for consumers; therefore, we are continually exploring ways to make our services more affordable. Through our recent initiatives, we have successfully provided customers with competitive pricing and significantly improved delivery times.

Previously, the average sorting time was 72 hours; now, we have reduced this to just 36 hours. This substantial decrease in processing time has accelerated delivery, tailored to the needs of our customers based on their service selections.

Le Tuan Anh, director, Department of Industrial and Service Economy Ministry of Planning and Investment

In the future, there will be major changes in logistics infrastructure. The government is focusing on building the road system and submitting investment proposals for the North-South high-speed railway project.

Another highlight is a smart border gate model being piloted in Lang Son. The model offers very fast customs clearance, 24/7 operation, and a low cost.

In addition, the government is considering piloting duty-free zones and cross-border trade zones with countries sharing the same border. However, there are some legal obstacles to implementing such zones.

For example, the zone would be developed on the land of both Vietnam and neighbouring countries. Thus, it is difficult to manage the zone according to the regulations in the case of smuggling or other violations. We are working with the Ministry of Industry and Trade and the Ministry of Transport to gradually remove obstacles to this model.

In general, these projects are expected to unlock resources to drive drastic changes in the economy. There is some positive news about Vietnam’s efforts to remove legal barriers. This will be the foundation to bolster the development of infrastructure and logistics infrastructure specifically.

Yap Kwong Weng, CEO, Vietnam SuperPort

We should mobilise more resources in the logistics sector and quickly clear barriers as soon as possible. Southeast Asia is developing robustly, but we should not forget India and Middle Eastern countries, which are vibrant economic development centres.

What should be done to compete with these markets? Vietnam’s logistics costs remain quite high, at about 18 per cent of GDP. If we can reduce logistics costs to 10 or even 5 per cent, we can become more competitive than other markets. Thus, more companies will come to Vietnam to do business.

We need to foster collaborative efforts among ministries, state agencies, and the private sector. Given that Vietnam has a good growth trajectory, the country should take into consideration this factor.

We need to consider whether we create volatility or are impacted. In any situation, we need to be prepared for future volatility, including political instability, trade crises, and climate change.

We have a long-term vision of 50 years, leveraging the partnership between Vietnam and Singapore and between governments. By promoting public and private partnerships, together we can increase the competitiveness of Vietnam’s logistics sector.

Ryohei Oda, managing director ABeam Consulting Vietnam

To maintain an optimal supply chain, it is essential to conduct periodic assessments and, where necessary, consider restructuring. By first simulating potential changes in a digital environment, we can validate the improvements before implementation, ensuring a more effective and efficient supply chain.

For continuous oversight, it is critical that executives and leadership teams monitor dynamic KPIs through dashboards, enabling automatic review actions if thresholds are exceeded. Relying on staff-generated reports can cause delays; instead, real-time data visibility on a digital dashboard allows proactive decision-making.

Implementing such systems does not always require the latest tech. In many cases, existing tools like Office 365 or Google Workspace provide ample functionality to support these capabilities.

At our firm, we are dedicated to helping clients maximize their current assets. With extensive experience and insights, we provide consulting services and support digital solution implementation to meet your supply chain needs. We invite you to leverage our expertise in this area.