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Digital transformation in the logistics industry

Digital transformation in the logistics industry

Saturday 19, 12 2020
Technology is the key to the effectiveness of the logistics industry and increased competitiveness of enterprises.

Technology application is the requirement for the logistics industry

According to experts, Vietnam's logistics industry is still backward. Logistics businesses have not applied modern technology and exploit each locality's geo-economic advantages and potentials. Also, the internal infrastructure and human resources are poor, leading to low efficiency.
 Technology application is the requirement for the logistics industry
The rapid growth of e-commerce and the automation industry has become the main driver of the world logistics market recently. The Industrial Revolution 4.0 with breakthroughs in AI (Artificial Intelligence), IoT (Internet of Things) network, and modernization tools is changing the entire outlook of the global warehouse and distribution services. It is estimated that 5.5 million new devices are connected every day.
 
For the logistics sector, this revolution will increasingly expand the connection of communication devices: pallets, crane trucks, and even trailers to the internet. All major international logistics companies are expected to use IoT technology, which will become popular in the logistics sector in the next three years.
 
According to Ms. Stefanie Stallmeister, Operations Manager for the World Bank in Vietnam, the two new trends in the logistics sector have emerged in Vietnam after the COVID-19 pandemic. The first trend is the acceleration of e-commerce and the use of digital platforms in Vietnam. The second one is the use of digital technology solutions to improve efficiency and provide new services to customers. In this way, businesses can provide visibility and traceability of goods and communicate with customers online. 
 
This requires logistics businesses to invest in technologies such as IoT, cloud computing, automation, and data analysis. Also, the key technologies including robots, drones, and autonomous vehicles can increase the efficiency of logistics services.
 
However, currently, the information technology applied by Vietnam's logistics service providers are still at a low level. They are mainly electronic customs declaration software, vehicle positioning technology, email, and basic internet tools. Moreover, we do not have a large smart logistics center yet.
 
The reason is that small- and medium-scale logistics enterprises have limited investment capital and human resources specialized in information technology. Meanwhile, according to 96% of enterprises participating in the survey of the Vietnam Logistics Business Association (VLA), technology is a different factor to create competitive advantages for businesses.
 Technology application is the requirement for the logistics industry 2
The Government sets a target that until 2025, the proportion of the logistics service industry's contribution to GDP will reach 8 - 10%, the logistics service growth rate will reach 15 - 20%, the rate of outsourcing logistics services will reach 50 - 60%, and the logistics costs will be reduced to 16 - 20% of GDP. 
 
To realize this goal, specific requirements for the logistics industry have been set out, including the requirements to reduce logistics costs to improve the efficiency and competitiveness of goods and the economy.
 

A breakthrough of Vietnam’s logistics industry

The ASEAN Smart Logistics Network has been launched with the first project "Vinh Phuc ICD Logistics Center - SuperPort", integrating Inland Container Depot (ICD) and multi-modal high-tech logistics center with leading technologies in the region.
 
This project is jointly invested by two leading corporations, T&T Group (Vietnam) and YCH Holdings (Singapore). The launching ceremony was held online in the framework of the 37th ASEAN Summit, with the attendance of Mr. Nguyen Xuan Phuc, Prime Minister of Vietnam, and Mr. Lee Hsien Loong, Prime Minister of Singapore.
 
The goal of the project is to establish the smartest and most modern logistics center ever in Vietnam, promising to change the face of Vietnam's logistics.
 A breakthrough of Vietnam’s logistics industry
This project will feature the world's leading advanced machinery and vehicles such as robots, drones, and autonomous vehicles. Also, it will use smart technologies such as the application of blockchain in supply chain management; 3D printing technology to minimize storage and production time; a transport management system combined with cloud computing and satellite navigation technology to track the location of goods and manage vehicles in remote areas or weather conditions; Virtual Reality (VR) and Augmented Reality (AR) technology to quickly identify shipment information and speed up order processing. This is considered a major digital transformation in the logistics industry in Vietnam to cut down costs of logistics services.
 
Currently, logistics costs in Vietnam are too expensive. Particularly, transport costs are often too high, equivalent to 30 - 40% of product costs, while this ratio is only about 15% in other countries. This significantly reduces the good competitiveness of Vietnamese enterprises. Vinh Phuc ICD Logistics Center - SuperPort is the first project of the ASEAN smart logistics network, towards the goal of logistics costs in Vietnam, cut down to 14% until 2025 and approximately 8 - 10% til 2035, equivalent to Singapore. 

Logistics cost in Vietnam remains high – why?

 

Compiled by VietnamCredit

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