Vietnam logistics firms increase cross-border transport
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Amid a growing interest in Vietnam from global garment and technology companies, foreign logistics firms are expanding cross-border transport services between Vietnam, China, and other countries in the region to meet the growing demand.
Dao Trong Khoa, head of the Vietnam Logistics Business Association’s (VLA) transport division, said at last week’s international seminar on cross-border transport (CBT) between Vietnam and China that CBT has great opportunities to develop.
Khoa said these opportunities will be driven by the development of regional cross-border e-commerce and transport networks.
Attention is focused on the development of Shenzhen-Hanoi-Bangkok, and Kunming-Lao Cai-Haiphong networks, which have promising full truckload (FTL) and less truckload (LTL) potential.
So far, the Chinese-invested ZhenYang Logistics Group (ZYL), which focuses on the ZhenYang-Nanning-Hanoi route and routes between southern China and northern Vietnam, has opened offices in Hanoi and Lang Son province.
ZYL is the first Chinese logistics firm that has been permitted to cross the border directly without any trans-load at the border.
“We focus on electronics and high-tech products. Our customers are mainly foreign-invested firms such as Samsung, Foxconn, and global forwarders. We have witnessed the volume of containers grow from 70-80 containers a month in 2013 to 400 containers currently,” Nguyen Quang Tung, branch manager of ZhenYang Logistics Group, said.
“As the demand continues to increase, ZhenYang is planning to develop LTL services to Vietnam in the third quarter of 2017, while also developing additional multimodal transportation hubs that link Vietnam, China and Europe,” Tung said.
In another significant move to develop regional CBT routes, Malaysian-invested Overland Total Logistics Services Vietnam JSC (OTL)-which focuses on the Singapore-Malaysia-Thailand-Laos-Vietnam-China route-has partnered with Japan’s Yamato Transport to strengthen its market position.
“Khoa said these opportunities will be driven by the development of regional cross-border e-commerce and transport networks.”
Trinh Manh Cuong, general manager at OTL, said “our volume of CBT goods has grown significantly, reaching 700-800 containers per month. We will invest in more facilities, open more hubs, and develop multi-model sea, rail, and cross-border road services in the future.”
CBT between Vietnam and China is becoming increasingly more popular among international groups and Vietnamese firms alike. The popularity of this market is being driven by the expensive cost of air transport, and the huge risks inherent in sea-based routes.
According to VLA’s statistics, in 2016, cargo shipped by land transit in Vietnam totalled 19,475 vehicle loads. Cargo shipments between China and Vietnam reached 107,600 loads. The shipping amount between China and Laos, China and Thailand, and China and others is estimated at 2,020, 128,000, and 1,076 loads respectively.
Notably, cargo throughput at PingXiang and Huu Nghi rose from 1.1 million tonnes in 2013, to 1.5 million tonnes in 2015. At the same time, throughput at HeKou and Lao Cai rose from 650,000 tonnes in 2013, to 1.1 million in 2015.
As Vietnam is now considered the destination for technology and garments by many multinationals, developing new transport routes has become a lucrative endeavour for CBT firms.
Multinationals that are currently heavy users of CBT services are the electronics manufacturers Samsung Electronics, LG Electronics and its subsidiaries, Foxconn, Canon, and Foster and its subsidiaries.
Heavy CBT players in the garment sector include Lear, Adidas, Nike, and Levis, while in the automotive sector Honda, Toyota, Yamaha, and GMV are the primary users of CBT.
These groups have been expanding their investment in Vietnam, which has led to an exponential increase in their CBT usage.
Questions & Answers
Q.Which specific companies are driving the increased demand for cross-border transport services in Vietnam?
Which specific companies are driving the increased demand for cross-border transport services in Vietnam?
Multinationals like Samsung Electronics, LG Electronics, Foxconn, Canon, and Foster are heavy users in electronics. In garments, Lear, Adidas, Nike, and Levis use CBT, while Honda, Toyota, Yamaha, and GMV are primary users in the automotive sector.
Q.What factors are making cross-border transport more popular than air or sea options?
What factors are making cross-border transport more popular than air or sea options?
The growing popularity of cross-border transport between Vietnam and China is driven by the high cost of air transport. Also, the significant risks inherent in sea-based routes make land-based options more appealing to firms.
Q.How are logistics firms expanding their services to meet the rising demand?
How are logistics firms expanding their services to meet the rising demand?
ZhenYang Logistics Group plans to develop LTL services and additional multimodal transportation hubs linking Vietnam, China, and Europe. Overland Total Logistics Services Vietnam will invest in more facilities, hubs, and develop multi-model sea, rail, and cross-border road services.
Q.What is unique about ZhenYang Logistics Group's cross-border operations?
What is unique about ZhenYang Logistics Group's cross-border operations?
ZhenYang Logistics Group is the first Chinese logistics firm that has received permission to cross the border directly. This allows them to transport goods without needing any trans-load process at the border crossing.
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