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Removing the “bottle neck” to develop logistics services in Hai Phong

On April 23rd, the People’s Committee of Hai Phong, together with the Vietnam Logistics Business Association (VLA), Vietnam’s Chamber of Commerce and Industry (VCCI) and other related units, held the Conference on Promoting Linkages to Develop Logistics Services in Hai Phong. At the conference, experts and enterprises contributed many practical ideas on developing logistics services in potentialdeserved Hai Phong.

Experts and enterprises contributed many practical ideas on developing logistics services in potentialdeserved Hai Phong

Hai Phong to adjust logistics planning of regional and international levels

In the conference, Nguyen Duc Tho - Vice Chairman of the People’s Committee of Hai Phong City- frankly admitted: “Although logistics services has an average growth of 23% pa, contributing greatly in production business activities and import-export of the city and of the country, logistics activities have not made good use of the city’s potential advantages: no logistics center, no large receiving and distributing center, high service costs and non-synchronous service quality and professionality”.

To promote logistics, Tho suggested Hai Phong adjust logistics planning at regional and international levels instead of national planning previously, which is also consistent with the spirit of the Resolution no.45-NQTW on Hai Phong City’s developments to 2030, vision to 2045.

Currently, enterprises in Hai Phong are mostly small and medium-sized ones, representative offices or branches of enterprises having their HQs in Hanoi and HCMC

Meanwhile, VCCI President Vu Tien Loc analyzed Hai Phong was once considered “the cradle of Vietnam’s logistics”. Despite its favorable location and potentials, Hai Phong has not yet bring into full play its existing advantages, has not been a leading locality in developing logistics services, and has not made good use of its advantages to support Vietnam’s import-exporters. Currently, enterprises in Hai Phong are mostly small and medium-sized ones, representative offices or branches of enterprises having their HQs in Hanoi and HCMC.

Loc also said hundreds of enterprises operating on their own have not formed the supply chain of logistics service sector, leading to unfair competitions. Enterprises are “crowded but not strong”. Their scatter developments reduce their competition abilities, especially in the situation of integration.

For further developments in logistics services in Hai Phong, Bui Quang Hai - Directors of the Department of Industry Trade of Hai Phong highlighted specific solutions: the city will give priority in developing infrastructures, especially traffic infrastructures, seaport system, and information infrastructure- to make them modern and synchronous; have good management and implementation of the City’s Planning of Developing Logistics- in term of 2021- 2025 will develop 6 logistics center in 261ha.

Hai Phong is also accelerating developing infrastructure of economic zones, industrial parks and clusters to attract FDI and domestic enterprises, creating conditions to develop industry, producing exported goods to create on-site cargo sources, linking inputs and outputs, repairing and manufacturing equipment for logistics service activities.

“The Department will advise the city to study the establishment of a free trade zone to call for shifting global supply chains to the city to exploit advantages of Hai Phong International Port”, emphasized Hai.

Hai Phong’s association of logistics enterprises should be soon formed

From the State’s management viewpoint, Tran Thanh Hai - Deputy Director of the Import- Export Department, the Ministry of Industry and Trade- said as the topic of the forum, enterprises in Hai Phong are finding way to have linkage by establishing a logistics association- this is a good solution for enterprises to have a common home to exchange information and to support each other in each activities.

The factor of human resource needs to be counted for other factors as technology, capital and infrastructure… can be gradually overcome. We cannot make good use of all these factor with the lack of qualified human resource.

Cargo throughput through Hai Phong port by 2025 is estimated at over 300 million tons

“Therefore, it is necessary to clearly define the position of logistics in the socio-economic master plan of the city and drastically to implement it to create a breakthrough: by focusing on improving value added to logistics services, deploying quickly the free trade zone and supporting Hai Phong’s logistics providers to grow faster”, the representative of the Ministry of Industry and Trade suggested.

At the conference, Dao Trong Khoa - Deputy President of Vietnam Logistics Business Association (VLA) said the pandemic of COVID-19 affected around 75%- 85% its member enterprises both in terms of business activities and revenues. Thanks to the Government’s drastic measures in fighting against the pandemic and restoring the economy, around 70% - 80% of VLA member enterprises has restored their activities so far. One of the reasons that made the logistics service sector recovered is resilience from enterprises and new-generation FTA promotions.

Khoa also pointed out services enterprises have been providing not only in Hai Phong but also in Vietnam are popular ones as customs brokerage, forwarding, local and international transport services and warehousing. The rate of providing those with high value added remains low.

There are many ports in the process of containerization. They are able to receive small vessels and they are not equipped with modern container stevedoring equipment and lack experience in container stevedoring management.

Therefore, a solution that is considered necessary and in hand is to establish an association of Hai Phong’s logistics services providers to improve capacity and scale of them by being logistics 3PL service providers by linking domestic enterprises to one another (transport, sea ports…) and to international logistics service providers as well.

With the viewpoint Hai Phong is eligible to become a logistics service center, to attract investments in developing the sector, according to VLA leaders, the city should ask the Government for a flexible mechanism in offering investment incentives, especially in infrastructure construction (land lease term, site clearance, taxes, concessional loans, and government guarantees…). In addition, the city should have innovations on administration procedures, especially customs procedures, seaport entry and exit procedures of vessels and cargo.

Many enterprise pointed out in the multi-direction linkage among enterprises and managerial agencies, Hai Phong should remove 3 bottlenecks for further logistics developments: (1) multi-modal transport, (2) logistics infrastructures and (3) human resource if possible.

Enterprises’ representatives said due to non-synchronous planning of seaports and logistics infrastructures as warehousing and hundreds of enterprises operating on their own, not creating a logistics supply chain led to unfair competitions, fragmented developments that reduce their competition abilities in the progress of integration.

Sometimes, prices obtained from foreign shipping lines or competitive services is low, thus affecting port operators and logistics service providers.

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