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"WHAT'S UP! SUPPLY CHAINS IN VIETNAM" Forum
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STRENGTHENING VIETNAM'S TRUCKING SECTOR

2019-08-29 17:14:18

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STRENGTHENING VIETNAM'S TRUCKING SECTOR

Towards Lower Logistics Costs and Greenhouse Gas Emissions

 

 

Over the past decades, Vietnam has experienced one of the highest sustained GDP growth rates in the world, between 5 and 8 percent annually. Through this strong economic growth, Vietnam has lifted millions from poverty: while in 1993 half the population still lived on less than US$1.90/day, by 2016 this was down to less than three percent. However, the road leading Vietnam out of poverty stretches ahead, with approximately 9 million Vietnamese still living in extreme poverty.

 

Vietnam’s strong trade growth underpins the country’s economic development. Indeed, Vietnam has earned the reputation as one of the key manufacturing locations in Southeast Asia. However, increased competition for manufacturing locations has sparked debates over global supply chains, free-trade agreements, and on-shoring. Just as many other countries have, Vietnam has depended on lower manufacturing costs to provide a competitive advantage; now, in order to compete in the global market, Vietnam must seek growth opportunities in supply-chain efficiencies. All trade depends on the supply chains linking production and consumption locations within Vietnam and beyond. Bolstering those supply chains—by improving logistics efficiency, a backbone of trade—can help Vietnam secure a competitive position in the global marketplace and ensure continued economic development.

 

Trucking carries important implications for logistics costs and greenhouse gas (GHG) emissions. As the dominant mode of goods transport in Vietnam, trucking accounts for 77 percent of domestic tons transported. Vietnam's logistics costs totaled an estimated 21 percent of GDP, a relatively high figure. In addition, the transport sector contributes 10 percent of Vietnam's national GHG emissions. Consequently, before Vietnam can lower logistics costs and reduce GHG emissions, the country must better understand and strengthen its trucking sector.

 

Trucking is an understudied sector, both in Vietnam and worldwide. This first-ever trucking-focused study in Vietnam hopes to shed light on this often-opaque sector. Based on extensive primary interviews with trucking-related public and private stakeholders, companies, and drivers, this study has built models to provide insights into key intercity freight flows, as well as drivers of costs and GHG emissions. The study conducted a comprehensive operational assessment of Vietnam’s trucking sector, along the dimensions of infrastructure, processes, and supply and demand.

 

With policy-oriented analysis, the report recommends policies that could be embraced by the public sector to promote positive actions by the private sector, the main source of investments in trucking. The report proposes policies that could encourage increased and better-quality investments by the private sector—at the levels of trucking and logistics companies, fleets, and drivers. The report also makes the case for public infrastructure and processes that could improve trucking as a transport mode. Shifting Vietnam to a multimodal transport system that takes advantage of inland waterways and coastal shipping options represents a holistic solution; in recognition of this, the report promotes intermodal as well as consolidated infrastructure and processes. Furthermore, to leverage technology, the report encourages the sector to use digitization and apps to help transform the landscape of trucking cargo demand-supply matching.

 

We hope this report prepared by the World Bank lays the foundation for a national trucking strategy for Vietnam, which would, in turn, contribute to enhanced trade competitiveness and development for Vietnam's citizens.

 

Read the full report: CLICK HERE TO DOWNLOAD