High logistics costs are hindering e-commerce development
The rapid development of Vietnamese e-commerce requires logistics capacity to increase accordingly. However, according to experts, the logistics industry is still weak and is a barrier to e-commerce development.
According to statistics of the Ministry of Industry and Trade, up to now, there are about 3,000 enterprises operating in the field of logistics. Notably, of which only more than 20 multinational enterprises invest in logistics activities in Vietnam but occupy nearly 80% market share.
In particular, from the beginning of 2019 to the present, with the strong integration of the economy through free trade agreements, Vietnam's logistics market has become more vibrant than ever and made significant changes. Great quality when a lot of foreign investors have rushed to pour capital.
However, according to economic experts, the growth rate of logistics in Vietnam has not kept up with the growth rate of import and export activities and the rapid development of e-commerce.
Vietnam's e-commerce has a high growth rate of nearly 30%, according to calculations, by 2025 it will reach a growth rate of 43% - the highest in Southeast Asia. That context requires a corresponding background of the whole supply chain, infrastructure, especially logistics. Although the development speed of the logistics industry in Vietnam in recent years has reached nearly 16%, it still has not met the actual requirements set out.
In this regard, one of the main obstacles to the development of e-commerce in Vietnam today is logistics, from domestic trade to export-import industry.
Even in the current domestic market, the number of orders traded through online channels has increased sharply. According to statistics, the number of orders through fast delivery companies grows an average of 40 - 45% and can reach 530 million orders by 2020. That makes the demand for transport and logistics soar. However, the logistics industry's capacity did not meet up with it.
In particular, statistics also show that Vietnam's logistics costs account for approximately 21% of GDP, the highest in ASEAN. Logistic costs are still high, which is a huge barrier that inhibits e-commerce development.
In addition, while e-commerce is widespread in all provinces and cities nationwide, logistics have uneven development, with huge differences between regions, regions, and localities throughout the country. In urban areas, localities develop well, good "coverage" of logistics, while most of the area is rural, remote and isolated, scattered logistic systems.
Promote the application of new technologies in logistics
To resolve the challenges and logistic barriers to expand the way for e-commerce with speedy steps in the coming time, according to economic experts, on the macro, our country needs to create favorable conditions for the logistics industry. There are many opportunities to develop and participate more deeply in the world trade centers.
The application of new technology is the key to the development of logistics in the 4.0 era. In Vietnam today, the information technology application environment of the whole economy is still low. Therefore, the Government should continue to take measures to raise the level of information technology application in the direction of connection with state management agencies, airports ...
One of the most important factors is that logistic enterprises themselves must improve themselves, improve their professionalism, connectivity, and management skills; Improving quality goes hand in hand with cost reduction, service cost.
The level of information technology application in Vietnamese logistics enterprises is still low. In the current context, businesses need to quickly invest in the application of new technologies, especially the comprehensive solution with analytic nature. integration of the system, application of artificial intelligence and raising the level of human resources, meeting the requirements of domestic and international activities.
Regarding the story of human resources, firstly, the leaders and executives of logistic enterprises need to update knowledge, information on technology application and understanding to choose solutions. Apply logistics technology for productivity, efficiency, and savings. In addition, businesses can learn from the experience and steps of other countries in the region and around the world.
On the other hand, experts said that e-commerce exchanges should also have a more proactive strategy on building and developing logistics systems, automating e-commerce warehouses to optimize performance and cost. The trend of application of information systems - automation - artificial intelligence in supply chain management from purchasing to distribution stage is happening strongly and this is also an effective solution for e-commerce businesses.
At Orgit, we are problem solvers, next-generation thinkers, and efficiency aficionados. Operating at both local and global scales, Orgit offers comprehensive solutions packages developed by in-house industry experts, tested against real-world scenarios, and designed for the changing supply chain. Learn more about Orgit’s solutions or get in touch with our experts today.
Do you want more tips & tricks for your Supply Chain activities?
Sign up for videos, blog posts, white papers, articles and more!