ITL expands ecosystem to enhance national coverage

ITL has just acquired 100 per cent of ITL Keppel Logistics. Keppel specialises in the management of logistics solutions for retail, high-tech, and e-commerce. This merger will help ITL expand and complete its logistics ecosystem, in which the company is actively making investments.

Alexander Olsen, vice president, Group Commercial at ITL Corporation

As a whole, ITL currently operates an ecosystem of over 300,000 square metres of international-standard warehouses and nearly 500 vehicles for road transport. ITL also manages more than 300 flights per week.

To effectively expand the ecosystem, ITL aims to increase its resources to create resonance with large enterprises in the industry. In 2020, ITL completed the acquisition of 97 per cent of Sotrans Group, a leading corporation in the fields of international and domestic freight forwarding, multi-functional warehouses, seaports, and port logistics.

Following the deal, ITL took over Sotrans’ ecosystem of 230,000sq.m of warehouses, inland container depots, domestic ports, and distribution warehouses as well as its agent system across 100 countries.

Vietnam’s logistics industry has since entered into an unprecedented boom period with an annual growth rate of around 14-17 per cent and sales of about $40-42 billion per year. However, experts point out that the current ecosystem is not on par with the development potential.

ITL expands ecosystem to enhance national coverage, illustration photo

The logistics market is mainly comprised of small- and medium-sized enterprises. Major logistics firms dominate the market with integrated and open logistics ecosystems. In fact, about 16 per cent of all businesses in the sector are engaged in offering integrated logistics services like third- and fourth-party logistics, which is still a limited number of businesses in Vietnam, according to ITL.

An ecosystem is not only a measure of scale but also an ultimate goal for all businesses in the logistics industry to build a sustainable foundation, bring added value to customers, and drive the industry forward. A solid foundation creates momentum for businesses to grow exponentially by optimising management and operation costs as well as increasing profits. At the same time, the more complete the ecosystem, the higher the logistics competitiveness index Vietnam will achieve in comparison with the region.

Alexander Olsen, vice president, Group Commercial at ITL Corporation, said that the scale of the ecosystem reflects the health and vision of enterprises in the logistics arena. “There are three factors to ensure the sustainability of the ecosystem – system connection, operation process, and the infrastructure,” Olsen said. “Among them, technology plays a crucial role in optimising these factors. Indeed, we put forward plans for these three factors many years ago. We continue to ramp up investment and expansion to increase the synergy of strength.”

As part of its strategy to develop an ecosystem for the central region, the group inaugurated the construction of the ITL Logistics Danang Centre in March to expand and complete its existing supply chain. The new centre will provide complex services, distribution warehouses, e-commerce warehouses, and cold storage warehouses to meet the growing demand for the supply chain in the central region. This is a big step for ITL to expand its operations strongly into tier-2 cities to better serve its customers.

Olsen also noted that ITL will set up a new company combining ITL Keppel and ITL Logistics, which is managing ITL Corporation’s warehouses across the country. The new company will specialise in warehousing and cold chain development with modern technology in Ho Chi Minh City and Hanoi. This company will provide 350,000sq.m of warehouse space, over 300 small trucks, and 50,000 pallets for cold storage.

In the short term, ITL has set the goal to become the leading cold storage supplier in the market.

“ITL and Keppel merged into one company on July 1. Following the merger, ITL will own six additional warehouses of 100,000sq.m across the country. This helps us fulfil the long-term goal of providing fully integrated services to customers nationwide,” Olsen added.

With an increasingly invested and expanded ecosystem, ITL is gradually creating a closely linked and strong supply chain. The corporation is on track to achieve its 5-year goal ahead of time and get closer to the title of national champion in Vietnam’s logistics sector.

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