Hanoi (VNS/VNA) - The logistics sector has been the bottleneck forVietnam’s economic development, but offers plentiful opportunities for localstartup companies with the application of technologies.

In a report on the Vietnamese logistics market released by the business dataand information provider StoxPlus, the percentage of logistics cost over thenation’s total gross domestic product (GDP) is 20.8 percent, much higher thanthe world’s average rate of 10-11 percent.

Also in the report, the number of vehicles in Vietnam increases by 10 percenteach year while the development of transport infrastructure and facilitiesgrows by just 3-4 percent per year. The area of land used for transportation risesonly 1 percent, while the total area for parking lots meets just a small partof demand.

According to Chief Executive Officer of Abivin Joint Stock Company, Pham NamLong, inappropriate urban planning and underdeveloped transportationinfrastructure are among the reasons causing the logistics sector to be thebottleneck of the Vietnamese economy.

Local companies are not aware of logistics activities and they have not met therequirement of corporate governance and human resource management, Long said.

Vietnam’s trade activities have improved recently and the number of foreignpartners doing business in Vietnam keeps increasing, thus raising demand forhigh-quality logistics, he added.

Despite the limitations, the logistics sector offers a wide range ofopportunities for startup companies that can operate in different sectors ofthe rising industry.

Startup companies have the latest technologies and software to optimise theirlogistics procedures. Some of them have developed programmes that help customsagencies automate their procedures.

As a developing economy, Vietnam’s logistics sector has lured the attention offoreign companies, however, local firms have their own advantages, Pham Khanh Linh,CEO of Logivan Technologies Pte, said.

“Local logistic companies understand the market, people and local culture.Besides, the Vietnamese working style is quite different from that of foreignfirms,” she said.

“The Vietnamese Government also gives more incentives to Vietnamese startups intax, policies and other issues.”

Vietnamese startups are often small, so “our sole advantages are being able tomake mistakes, quickly resolving issues and realising our new ideas,” Longsaid.

In logistics, operation management is key and technology helps smooth theoperation procedures for many logistics firms.

Long said technology helps companies simplify repetitive tasks, and in the caseof logistics firms, they are able to operate more efficiently.

Goods transportation requires the calculation of different variables such asthe size, volume and weight of the package, packaging method, the type of truckand hours of service, and those variables have a big impact on the price oftransport, Linh said.

“Technology helps optimise the connection between truck drivers, sellers andconsumers. And global positioning system (GPS) helps us locate the trucks anddrivers,” Linh said.

But technological advancements cannot remove people from the work flow as peopleare still needed to resolve unexpected issues on the trip, Linh added.

In the near future, Logivan will study the Internet of Things (IoT) to scantrucks and maximise the trucks’ loading capacity, and use artificialintelligence (AI) to solve customers’ problems, she said. — VNS/VNA