Green logistics remain a taxing endeavour

March 16, 2023 | 16:00

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Vietnam’s logistics businesses are advancing on a green path connected with digital transformation, but are also in a highly energy-intensive and polluting industry, raising concerns about the long-term sustainability and financial viability of the sector, experts have said.

On the last day of February, five Vietnamese firms – Ratraco, Vietnam Airlines, T&Y SuperPort, the Vietnam Shippers’ Council, and the Vietnam Coffee Cocoa Association – joined the World Logistics Passport initiative, which aims to facilitate global trade access by reducing fees and providing support to overcome related barriers (see quotes).

Green logistics remain a taxing endeavour, illustration photo/ Le Toan

The scheme, established by the United Arab Emirates, now accounts for 47 per cent of global trade with 121 partners, covering 48 countries and 15 major trade routes.

The WLP may go some way to facing head-on sustainability in this country’s logistics firms. According to the Vietnam Logistics Report 2022 from the Ministry of Industry and Trade, only 31 per cent of surveyed businesses use sustainable power in warehouse operations; 26.8 per cent of logistics enterprises lack a green strategy; and 35.2 per cent of enterprises lack environmental controls.

Being a key sector in the growth of international commerce and global supply chains, logistics has never seen such significant transformation. The government released Decision No.876/QD-TTg last year on action to restructure the green energy industry and cut carbon and methane emissions from the transportation system. Particular emphasis was placed on the transition to green energy.

Several green policies in the logistics chain are also being adopted, and certain businesses are developing innovative and more ecologically friendly transportation techniques.

Saigon Newport Corporation fulfils its environmental conservation goals by implementing fuel-saving techniques and using clean fuel that conforms to international standards. Currently, 80 per cent of freight transportation from Cai Mep-Thi Vai port and the surrounding region to Saigon Newport is conducted by barges rather than vehicles.

In the northern border ports and the Mekong Delta, the increased use of barges as opposed to vehicles has led to a decrease in carbon emissions. Along with the e-customs application, the implementation of e-port and e-office technologies decreases the time required for cargo trucks to access the port from six minutes to two minutes per container.

However, a few standouts do not alter the reality that Vietnam’s green logistics growth remains in its infancy. Setting higher standards incurs more expenses, and change will not happen overnight.

Bee Logistics has a plan to reduce paper use by 80 per cent using iCloud-stored software. Yet Dinh Huu Thanh, chairman of the company, said it would require “a pretty lengthy period of time” to do it.

Trinh Thi Thu Huong, deputy dean of the School of Economics and International Business at the Foreign Trade University, said Vietnam needs a forerunner for the initial stage of green logistics growth, while the majority of enterprises are still contemplating investing in a green logistics development plan.

“The process of building green logistics can only be carried out if the state espouses supportive laws and firms execute them intelligently,” she added. “Vietnam combines the top-down and bottom-up green logistics concepts, two of the most prevalent around the globe.”

Dr. Bader Abdulla Al Matrooshi - UAE Ambassador to Vietnam

The UAE is Vietnam’s biggest economic partner in the Middle East, with 2-way commerce reaching $8 billion in 2022. With more projects similar to the World Logistics Passport (WLP), the future trade volume could exceed $1 trillion.

Today, a number of ports in the UAE are excluding charges and taxes for products with WLP access. As a result, items transiting via the Dubai Silk Path will save money on storage costs and may be transported efficiently from their point of origin to their point of destination.

Dao Trong Khoa - Permanent vice chairman Vietnam Logistics Business Association

The WLP has added Vietnam to its list of regional logistics and commerce centres. When Vietnamese businesses are approved for WLP by the UAE, customs checks and aviation tax exemption will be aided; audit and loading times will be reduced rapidly and for free; storage times will be shortened by up to 48 hours; and goods can be cleared before arrival.

In addition to the nine businesses that have recently inked strategic partnerships, there are already 22 Vietnamese logistics service suppliers that have applied to become WLP members.

Tran Thanh Hai - Deputy director Agency of Foreign Trade

Vietnamese exports have the possibility of accessing numerous nations in the area through the UAE. Vietnam’s commerce with the Middle East and Africa would be bolstered by its successful logistical collaboration with the country.

The key aspect of the WLP is the functioning of the hub model in each member nation, including Vietnam. WLP can assist firms in reducing logistics costs by up to 40 per cent and transit time by up to 80 per cent.

Abdulla Alsuwaidin - Lead, Partnerships and Hubs World Logistics Passport

Vietnam is a part of this network today because of its strategic location and ability to grow. We look at total trade value and we work with different entities such as customs to see the current status and market. For them to move forward in their tier, they need to have a 5 per cent increase in total trade value on-year.

The main objective and the main activity that we need in Vietnam is to create value opposition. We need to work with our partners here to create tailored benefits that will help traders and freight forwarders join. In order for that to happen, we must work with partners, and we must understand what members need as well.

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By Hai Van

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