Trends shaping the logistics market in 2024 include supply chain flexibility; Embracing automation; Digital freight marketplace; Implement ecosystem integration;…
A recent survey by Vietnam Report shows that the majority of logistics enterprises recorded a decrease in business results. Notably, among 67.8% of enterprises that decreased profits, up to 40.0% of enterprises reported a significant decline.
Challenges for businesses
Facing the slowdown of the global economy, export turnover and import of goods in the first 11 months decreased by 5.9% and 10.7%, respectively, Vietnam Report analyzed, domestic logistics enterprises are facing many challenges.
Specifically, first, the challenge of reducing the number of orders. Accordingly, the Logistics industry is associated with production, distribution and consumption of goods domestically and internationally. When unfavorable factors for the economy exist, such as political instability and high inflation after stimulus policies in many countries during the COVID-19 period, it has marked the end of the period of hot growth. , it is difficult for the economy to avoid growth slowing down. This is the negative factor that has the fastest impact on logistics businesses, especially those serving international logistics activities.
Second, related to competition between businesses in the industry. Competition in price and service is fierce as more and more foreign businesses enter the market with the goal of dominating the market, willing to lose 3-5 years to gain market share. In addition, with the development of e-commerce platforms – where today’s increasingly large logistics output is generated, these businesses are expanding their ecosystems, participating in the logistics market, and autonomously operating delivery activities. enterprise’s goods. To enter and maintain the game, businesses need to ensure vehicles reach maximum load capacity, optimize costs and take advantage of scale. In addition, the above challenge also poses requirements for businesses to optimize operations, promote the application of automation technology and digital transformation – this is even more difficult for small logistics businesses without resources. enough financial and human resources.
Third, about the group of factors affecting business costs. The factors of energy price fluctuations, exchange rate pressure, high inflation and difficulties in accessing capital for investment activities, although well controlled and supported by the Government, still affect logistics businesses. The most negative impact from the economic downturn, the large decline in revenue makes businesses more sensitive to factors that increase business costs.
Besides, the cost factor is also related to infrastructure serving the logistics industry. Logistics infrastructure is largely related to space and area, with interference with transportation and public infrastructure. The Government has drastically promoted public investment, especially in transport infrastructure such as the North-South expressway, Long Thanh airport, high-speed railway… However, more convenient transport infrastructure has not been able to promote the industry. short-term logistics. Regarding warehousing infrastructure to process and store goods, according to the results of interviews with logistics industry experts of Vietnam Report, warehouse investment associated with economic region development planning is not really synchronized. Vietnam does not have a centralized area for logistics businesses, leading to a lack of uniformity and concentration in logistics infrastructure, which is the biggest cause of high logistics costs.
Finally, there is the challenge of human resources. With the characteristics of the industry being formed and growing strongly in the world, the constraints in an implementation process have been established, the professional element of logistics industry human resources is increasingly focused. Meanwhile, logistics human resources in Vietnam are lacking in both quantity and quality.
Six trends shaping the market
Facing expectations of economic recovery and Vietnam’s growth target of 6.0% in 2024, many businesses also gave optimistic signals. 34.5% of businesses participating in the survey believe that the logistics industry will grow better. Furthermore, the draft replacing Circular 54/2018/TT-BGTVT on increasing container loading and unloading service prices by 10% from 2024 in some areas also brings a more positive outlook for businesses in the industry, especially the port exploitation industry group.
Summary of Vietnam Report’s research results combined with interviews with industry experts shows that the trends shaping the logistics market in 2024 and the following years include: Supply chain flexibility; Embrace automation, meet the need for real-time data and visibility; Demand is less than truckload (LTL); Digital freight marketplace; Implement ecosystem integration; Promoting inland shipping in Vietnam: saving costs, reducing emissions.
In the trend of implementing ecosystem integration, Vietnam Report believes that ecosystem integration is a solution to help logistics businesses add more applications and platforms to their digital ecosystem. tool that integrates all the different internal and external systems. Instead of having to use multiple solutions to integrate different platforms and trading partners, companies can use one comprehensive integration platform. This not only reduces integration complexity, but also helps minimize errors by simplifying processes and connections.
Therefore, in the short term, to achieve outstanding growth, help businesses thrive in the current difficult period, grasp the industry’s development trend, the top 5 short-term strategies chosen by logistics businesses are: Priority applications according to Vietnam Report’s business survey include: Simplifying operating processes to cut costs; Training and improving the quality of human resources; Expand supply chain and seek new markets; Enhance after-sales activities to engage customers; Increase capital for technology equipment to serve digital transformation.
Notably, in the trend of promoting inland shipping in Vietnam, Vietnam Report believes that inland shipping will be the key to go hand in hand with developing the road network.
At the same time, note that the prerequisite when developing inland shipping is connecting seaports with inland waterport systems, highways, railways… The connection makes shipping a better choice for customers. transporting goods of businesses, contributing to reducing Logistics costs and promoting economic development in localities. More importantly, maritime transport cannot ensure the highest flexibility and efficiency on its own. That is why the combination with at least one other mode of transport is emphasized.
In addition, balancing the “trade balance” of economic regions is a long-term solution for reducing Logistics costs that needs attention. This is understood as economic development in localities and economic regions in the direction of ensuring balance between the amount of “exported” and “imported” goods of that locality or economic region. Along with applying technology, the above solution thoroughly optimizes the situation of empty containers, which increases current Logistics costs. Because technology that helps optimize Logistics costs cannot overcome physical barriers – here is the “trade balance” imbalance in many localities and economic regions.