Logistics Competitiveness Index Project launched
Logistics Competitiveness Index Project launched

Logistics Competitiveness Index Project launched



HANOI – The Vietnam Logistics Business Association (VLA) has joined hands with the Vietnam Chamber of Commerce and Industry (VCCI) to launch the Logistics Competitiveness Index (LCI) project at the provincial level this year.


LCI is a benchmarking tool created to assess and give an overview of the country’s growth rate, quality, infrastructure, and provincial and municipal policies in the logistics sector, thereby cutting logistics costs, promoting production and export, and attracting foreign investment.


The LCI report is designed to highlight and explain the differences between provinces and cities in their performance on trade and import-export logistics and, as a result, help domestic and international businesses determine where to expand their businesses.


Along with the voice of the business community, LCI could be used to engage in policymaking with local authorities to improve and develop the sector.


Policymakers also use the index as a criterion for economic reform policy.


The project was carried out by VLA, in collaboration with VCCI, Dream Incubator, and the Vietnam Logistics Research and Development Institute, using survey data from enterprises, experts, and state management agencies.

Logistics Companies Are Reversing Their Hiring Binge
Logistics Companies Are Reversing Their Hiring Binge

Logistics Companies Are Reversing Their Hiring Binge




The hiring frenzy in logistics driven by pandemic-fueled shopping appears to be cooling off.


Operators of warehouses, trucking fleets and other freight businesses say they are paring their payroll growth as the supply-chain disruptions that led to tens of thousands of new jobs recede. Several freight executives say they expect to reduce staff by attrition, though some suggest layoffs could come as their companies cut costs. 


“We got ahead of ourselves in terms of head count,” said Bob Biesterfeld, chief executive ofC.H. Robinson Worldwide Inc., the largest freight broker in the U.S. by revenue. “We certainly did not expect that the market was going to come down as rapidly as it did.” 


“As supply chains ease, it’ll allow us and afford us the opportunity to make some difficult personnel decisions there in order to take cost out of the model,” Mr. Biesterfeld said, speaking on an earnings conference call Wednesday.


Warehousing and storage companies, which added more than 400,000 jobs in two years through the end of 2021, dropped 20,000 jobs from September to October, according to the Bureau of Labor Statistics seasonally-adjusted preliminary monthly employment report released Friday


It was the fourth straight monthly pullback in payrolls and the largest since the sector lost 75,000 jobs in April 2020 as pandemic lockdowns took hold. 


“We’ve had over two years of exceptional growth in supply chain and demand for goods,” said Cathy Roberson, president of research and consulting firm Logistics Trends & Insights LLC. “Companies had to scale up as best as they could by hiring workers to help with that increase in demand and such, and now that things are beginning to ease off, normalize, there’s not the need for as many workers.”


Employment in the warehousing and storage sector has fallen by nearly 50,000 jobs since June, according to the BLS data. 


Nick Bunker, economic research director for North America at job-search marketplace Indeed.com, said demand for warehouse workers has ebbed as consumers have turned from spending on goods to services. 


“This is part of a broader shift in the economy, which obviously has consequences for transportation and logistics as they are the sectors that are moving those goods to businesses and the ultimate end consumer,” Mr. Bunker said.


Amazon.com Inc., which had doubled the size of its fulfillment network over 24 months in the pandemic, is now scaling back plans for warehouse expansion this year, and last month froze hiring in its retail division. The e-commerce giant said it would pause corporate hiring for months amid signs of a broader economic slowdown. 


The hiring restraint goes beyond the U.S., with big international freight forwarders including Switzerland-based Kuehne + Nagel International AG and Denmark’s DSV A/S saying they are cutting staff in some markets through attrition. 


“We will not replace and hire new people,” said Kuehne + Nagel Chief Executive Stefan Paul on an Oct. 25 conference call, “in order to reduce manpower cost.”


Trucking companies defied the logistics job pullback in October, adding 13,200 positions, reversing a decline of 9,500 jobs the previous month. 


Several trucking executives have said they expect a muted peak season in the coming weeks and plan to adjust their operations as demand declines. 


Fort Smith, Ark.-based ArcBest Corp. , parent of less-than-truckload carrier ABF Freight System, hired more than 1,000 people over the past year. Chief Executive Judy McReynolds said the company would now look to get “greater efficiency” from the people it already employs.


Old Dominion Freight Line Inc.’s head count was down by about 300 employees, roughly 1% of the less-than-truckload carrier’s workforce, in the third quarter compared with the second as the company let attrition whittle back its payroll.


“We aren’t really hiring other than filling vacancies and whatnot,” Chief Executive Greg Gantt said on an Oct. 26 earnings call.


Write to Liz Young at liz.young@wsj.com

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Huế begins Chân Mây port’s breakwater
Huế begins Chân Mây port’s breakwater

Huế begins Chân Mây port’s breakwater


The central province has commenced construction on a 300m long breakwater at Chân Mây Port to increase its capacity.



THỪA THIÊN HUẾ — The central province has commenced construction on a 300m long breakwater at Chân Mây Port to increase its capacity.


The province said the project, which was built at a cost of VNĐ757 billion (US$33 million), is expected to be put into operation in the first quarter of 2026, allowing easy access to 70,000 DWT (deadweight tonnage) cargo ships; 4,000TEU (twenty-foot equivalent units) container ships, and 225,000GT (gross tonnage) cruise ships.


Currently, Chân May Port hosts from 4 million to 4.5 million tonnes of cargo annually, but it would increase to 5 million or 6 million tonnes of commodities by 2025.


In the first stage, the port completed construction of a 450m breakwater providing logistics for six industrial zones and two economic zones in the province.


A logistics company said the province, which connects to the East-West Economic Corridor linking Laos, Thailand, Myanmar and Việt Nam, would help businesses and investors save at least $70 from a road cargo trip at Chân Mây Port rather than travelling to Đà Nẵng’s Tiên Sa Port from Quảng Bình, Quảng Trị and Thừa Thiên Huế provinces.


The province has been calling for the construction of two more piers at the port to improve logistics capacity.


Thừa Thiên Huế said it has granted licences to 25 new investment projects worth a total VNĐ13.78 trillion (nearly $600 million), of which four FDI projects with $257 million, in the first nine months this year.


Earlier this year, Aeon Mall Việt Nam said it plans to build its first trading centre, Aeon Mall Huế, with an investment of $170 million in An Vân Dương new urban area.


The province and the American Chamber of Commerce (AMCHAM) also agreed to boost ties between businesses from the US in a meeting in May. — VNS

Hard choice for logistics hub dream
Hard choice for logistics hub dream

Hard choice for logistics hub dream



   Both the North Van Phong area in the coastal province of Khanh Hoa and the Chu Lai Airport in the centrak province of Quang Nam have ample opportunities to build world-class logistics hubs. However, questions remain as to whether regional development strategirs should be focused solely on short-term profit goals.


   Efforts to modify the Van Phong Economic Zone planning project by 2040 with a vision to 2050 have successfully laid out a prosperous outlook for the region. In addition to ensuring the development goals that were approved previously, the plan has sought to link economic growth with environmental sustainability aspects. It has increased the project’s attainability thanks to the participation of a renowned international consulting business, which may reduce skepticism regarding possible risks that could arise.

   However, it has been particularly questioned if North Van Phong could achieve projections on the country’s potential to become a prominent high-end tourism destination in the next 20-30 years. Moreover, doubts remain over whether Khanh Hoa Province or any other locality would serve as a preferred place for expensive sports and luxury yachts for individuals with deep pockets.

   Even though the planning project authorized by the Khanh Hoa People’s Council substantially addressed concerns over the pathway of the North Van Phong region, looming obstacles may turn out to be more challenging than expected. In its proposal, the consulting firm aimed to prioritize tourism development in the region, and the choice was well embraced due to its obvious short-term benefits. However, hurdles have been raised as the approach requires shifting the proposed international hub port to South Van Phong, which is at odds with the initial plan for the industrial zone development by 2030.

   Unsurprisingly, economist Bui Kien Thanh expressed worries about what would happen if the plan gets the nod. The Van Phong international port development was one of his key suggestions some 20 years ago. In 2002, there was even a discussion on the likelihood of the project’s cooperation between officials from a U.S. delegation, Khanh Hoa’s provincial government and the Vietnam Maritime Administration under the Ministry of Transport. At the time, the Hon Gom peninsula to the north of Van Phong was chosen for the port’s location, given its favorable conditions.

   The peninsula serves as a 20-kilometer-long natural dyke, creating some 43,544 hectares of water surface, three times larger than Cam Ranh Bay. The water depth ranges from 20 to 40 meters, which is also way deeper than that of many major international ports.

   Once operational, the Van Phong port will be capable of receiving ships of all types, including huge container ships and ultra-large crude carriers with 500,000DWT, or deadweight tonnage, and above. However, instead of the north peninsula, the recent revision has recommended building the port at the current location in South Van Phong due to financial benefits.

   As a result, the port will only handle ships of 100,000DWT or less, as the deepest part is just 12 meters deep.

   Whether the project is in the South or North Van Phong, the Government’s decision will have a significant impact on Vietnam’s goal of improving its position in the global logistics market, as well as the country’s chance to become a focal point of the Indo-Pacific region, the most dynamic growth arena in the next decades.

   Currently, some 40% of the cargo volume from the Indian Ocean to the Pacific Ocean may have to transit via Vietnam en route to China, Japan, and the U.S. Meanwhile, the upcoming Kra Canal project in Thailand, which connects Southeast Asia and South Asia, will further expand the prospects of the country’s role in global shipping services. By linking the Gulf of Thailand in the Pacific Ocean to the Andaman Sea in the Indian Ocean, the project will help increase the number of ships through the regional routes, enabling tankers and other commercial vessels to bypass the Straits of Malacca and Singapore.

   In addition, the Chu Lai Airport in Quang Nam Province is situated in the center of an air transport system with a three-hour destination network throughout Asia, namely Japan, South Korea, and China in the northeast, Thailand, Indonesia, Myanmar, and Singapore in the southeast, and India in the south. The area comprises two-thirds of the world’s population and is home to an economy that accounts for more than half of the global gross domestic product. As a result, the Chu Lai Airport development outlook should be incorporated with the direction of national growth, which might make it more attractive in terms of private business investment.

   Simply put, developing the Chu Lai Airport project with a focus on logistics service would echo the building of the Van Phong international hub port in the region. Together, both endeavors might potentially fuel the expansion of Vietnam’s logistics sector in the years to come.


   Furthermore, Vietnam may see an increasing demand for ship maintenance and technical support, both civilian and military, as it aims to become a major international shipping hub. In this scenario, a service center may be built as an important supplement facility to the overall development plan, with the Hon Gam peninsula functioning as a natural dyke to ward off approaching vessels.


   As Thanh stated, “We may have to weigh the pros and cons of focusing on a short-term advantage with tourism profits belonging to a group of minorities versus prioritizing substantial prospects in the long run given Van Phong’s potential to become a key international hub port like Singapore, Melbourne or Rotterdam.” In this regard, “what would be the better option for the goal of a strong and independent Vietnamese economy?” Thanh asked.

By Khanh Nguyen

Delivery companies struggle amid fierce competition and high fuel costs
Delivery companies struggle amid fierce competition and high fuel costs

Delivery companies struggle amid fierce competition and high fuel costs


   With consumers switching heavily to online purchases, the express delivery service market is expected to see many positive developments. However, fierce competition and high fuel costs have significantly affected the profit margins of delivery businesses.



   HÀ NỘI — With consumers switching heavily to online purchases, the express delivery market is expected to see many positive developments. However, fierce competition and high fuel costs have significantly affected the profit margins of delivery businesses.

   Viettel Post Joint Stock Corporation (VTP), an affiliate of military-run telecom giant Viettel, reported total revenue in the second quarter of VNĐ5.46 trillion (US$230.8 million), up 5.2 per cent year-on-year.

   Of the estimate, service sales including delivery, e-fulfillment and other logistics services, reached VNĐ2.33 trillion, up 30.8 per cent year-on-year. However, the gross profit margin of this segment narrowed significantly from 9.7 per cent in the same period last year to 8.1 per cent. This makes Viettel Post's gross profit margin almost flat at 3.8 per cent.

   During the period, incurred costs also increased, pulling Viettel Post's profit after tax down 8.5 per cent over the same period last year to nearly VNĐ97 billion. Cumulative post-tax profit in 6 months reached VNĐ200 billion, down 7 per cent while revenue still increased 9 per cent year-on-year to total over VNĐ11.2 trillion. The reason was that the number of e-commerce products originating from China plummeted due to the zero-COVID policy and the cost of fuels such as petrol and oil rose sharply.

   Viettel Post currently owns 2,200 post offices - ranked second in the industry, just behind VN Post - and has a delivery system spanning most provinces. Along with its outstanding network, Viettel Post benefits largely from the boom in post-pandemic e-commerce.

   Express Mail Service (EMS) recorded Q2 net revenue down 6.5 per cent year-on-year to VNĐ531 billion. Gross profit margin continued to decline sharply to 14.1 per cent from 22.2 per cent in the second quarter of last year. After deducting expenses, EMS saw a net loss of VNĐ3 billion in the second quarter while in the same period last year it still made a profit of VNĐ30 billion.

   In the first 6 months, EMS recorded net revenue of VNĐ1.15 trillion, a slight increase of 3.9 per cent over the same period last year, but gross profit margin shrank significantly from 19.7 per cent in the same period to 15.6 per cent. Post-tax profit also decreased by nearly 59 per cent year-on-year to VNĐ22.3 billion.

   EMS is a subsidiary of the Vietnam Post Corporation (VNPOST), the largest enterprise in the delivery industry with a system of more than 13,000 points spread across the country including post offices, post offices, kiosks and public mailboxes. In 2021, VNPost recorded total revenue of VNĐ26 trillion and profit after tax of VNĐ526 billion, up 7.9 per cent and 39 per cent, respectively over the previous year.

   Having a smaller scale, Giaohangtietkiem (GHTK) delivery company recorded revenue of nearly VNĐ6.9 trillion. However, increasingly fierce competition caused the profit after tax of this enterprise to decrease significantly compared to the 2019-20 period (over VNĐ500 billion) to more than VNĐ300 billion. Meanwhile, competitors such as Fast Delivery (GHN), J&T Express, Lazada Express or Ninja Van all experienced years of losses.

   Basically, international companies like BEST Express or J&T are still maintaining a strategy of spending money to provide low-cost services in order to gain market share faster. On the other hand, domestic enterprises such as VN Post, Viettel Post, GHTK and GHN also try to maintain the customer file and position by discounting prices to compete.

   In a recent report, SSI Research said the expansion of door-to-door delivery companies will continue to drag on, making profit margins low and market share difficult to determine.

   According to VCBS Securities, large market share will belong to a few large enterprises with a relatively stable market share, competing mainly in terms of quality, technology and network instead of price competition. This may help reduce pressure on the gross profit margin of delivery businesses in the future.

   Despite many difficulties in the short term, the express delivery sector is still lucrative thanks to the boom of e-commerce.

   According to estimates, Việt Nam's e-commerce market can continue to grow at a rate of 25 per cent per year, thereby reaching $21.5 billion and $25.8 billion respectively in the 2022-23 period. The express delivery services segment is expected to reach a value of $4.88 billion by 2030, representing a compound annual growth rate of 24.1 per cent for the 2022-30 period. — VNS