Foreign shipping lines still dominant

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Foreign shipping lines still dominant

Saigon Times - 8/7/2015 11:00:00 AM

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Domestic logistics companies are losing on the home market as a majority of local enterprises will choose foreign shipping lines when it comes to importing or exporting goods, according to the Vietnam Logistics Business Association (VLA).

Do Xuan Quang, president of VLA, told a press conference in HCMC on Monday that there are over 40 foreign shipping firms active in Vietnam and accounts for 3-4% of the number of players in this sector. But they transport more than 80% of the total volume of import and export cargo in this market and have an edge over rivals in the vital sea lanes connecting Vietnam with the United States and Europe.

Meanwhile, over 1,300 local logistics companies focus on the domestic market and sea lanes linking Vietnam and other regional markets, Quang said at the “Logistic roads to ASEAN + 6 after AEC” press conference held to introduce an exhibition of logistics services in Bangkok early next month.

Almost all local logistics firms are small and medium with capital averaging out at VND6-7 billion each while developing a warehouse costs millions of U.S. dollars. Financial constrains have prevented them from having offshore offices, and they have ended up serving as agents of global logistics companies.

Vietnamese logistics enterprises are unable to compete with foreign rivals as they are weak in manpower, governance and technology, Quang said. Therefore, Vietnamese logistics firms usually handle imports under the CIF (cost, insurance and freight) format and exports in accordance with FOB (free on board) terms.

Confidence of domestic importers and exporters in the vessel fleets and services of Vietnamese logistics companies is not high.

Experts at the press conference agreed that the logistics industry still holds much potential for local firms to expand market share, particularly after the ASEAN Economic Community (AEC) takes shape at the end of this year. Moreover, Vietnam is expected to sign more bilateral and multilateral free trade agreements.

Experts called for local logistics firms to draw up strategies, invest more in facilities and services, and strengthen cooperation with partners to improve competitiveness.

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