TABLE OF CONTENTS I. INTRODUCTION 2 II. LITERATURE REVIEW 3 1. Research situation in the world 3 2. Research situation in Vietnam 4 3. Observations on research gaps 4 III. THEORETICAL FRAMEWORK 5 1. Definition 5 1.1. Digital transformation 5 1.2. E Logistics 5 2. The process of digital transformation in the logistics industry 6 IV. SITUATION OF DIGITAL TRANSFORMATION IN LOGISTICS INDUSTRY 7 1. In the world 7 2. In Viet Nam 7 V.THE ROLE OF DIGITAL TRANSFORMATION FOR LOGISTICS SERVICE PROVIDERS IN COVID19 PANDEMIC ............................................................................ 10 VI. DIGITAL TRANSFORMATION OPPORTUNITIES, CHALLENGES AND SOLUTIONS FOR LSPS IN VIETNAM. .............................................................................. 12 1. Opportunities: .......................................................................................................................... 12 1.1. Technological forces: ..................................................................................................................... 12 2.1. Labour forces: ............................................................................................................................... 12 1.2. Internationalization forces: .......................................................................................................... 12 1.3. Legal and Regulatory forces: ....................................................................................................... 13 2. Challenging .............................................................................................................................. 13 3. Solution ..................................................................................................................................... 14 3.1. Recommendations for Vietnamese logistics companies ............................................................. 14 3.2. Recommendations for the government ....................................................................................... 15 VII. CONCLUSION ............................................................................................................ 16 VIII. REFERENCES ........................................................................................................ 17 1 I.INTRODUCTION Logistics plays a critical role in the development of the social economy in the current era of international economic integration. The logistics service industry is a pioneering service industry with high added value that serves as a foundation for trade development and improves the economys competitiveness. In Vietnam, the logistics industry is considered to have a lot of potential, but its development has not been worthy, as evidenced by a variety of challenges throughout the supply chain. But in recent years, Vietnams logistics industry has made great strides, especially in the context of the Industrial Revolution 4.0, with the logistics ecosystem in Vietnam becoming increasingly modern and incorporating new applications. The use of digital transformation is becoming more widespread and popular. Since the advent of the Covid19 pandemic at the end of 2019, digital transformation has reasserted its importance. The epidemic has had a significant impact on the socioeconomic situation of most countries, suspended most production and business activities, and paralyzed many firms in specific economic sectors. Many traditional tools are no longer applicable in this setting, necessitating a stronger digital transformation than ever before. Recognizing the importance and urgency of digital transformation in logistics, our group of 7 decided to exploit this topic for research in the subject of International Economics: Digital Transformation in Logistic Industry in Vietnam: Adapting, Innovating and Accelerating Development during the Pandemic Storm.. Our research delves into the definition and process of digital transformation in logistics then examines the practice of implementing digital transformation in logistics, as well as the potential and challenges that it presents. Finally, recommendations are made to help Vietnams logistics service industry accelerate its digital transformation. Given the groups limited expertise and research abilities, we would like to receive your suggestions and guidance so that we can make more progress and gain a better understanding of the research topic. Our group sincerely thank you. 2 AI.LITERATURE REVIEW 1.Research situation in the world While digital transformation has been researched and developed for a long time around the world, digital transformation in the logistics field is still a relatively new subject that is receiving great attention from researchers and business enterprises. The World Economic Forum (2016) provided data on the value of digital transformation for the logistics industry, as well as five main subjects of digital transformation in logistics from which to derive essential questions to help executives and policymakers make the best decisions possible. According to the study, five themes that will be key to the logistics industrys digital transformation over the next decade are information services, logistics services, delivery capabilities, circular economy, and shared logistics capabilities. Author Sorkun (2019) investigated the practical application of technologies in the digital transformation process in logistics activities, assisting businesses in gaining a more holistic view of the digital transformation process and prioritizing technologies that are appropriate for their resources. Junge et al. (2019) and Cichosz et al. (2020) all evaluated the importance of digital transformation, as well as its hurdles and success factors for logistics future development. Cichosz, unlike Junges research, concentrated on LSP (Logistics Services Provider) enterprises rather than the overall logistics industry picture. According to the study of Cichosz et al., digital transformation at LSPs is an evolutionary process of change that uses an LSPs technologies and digital capabilities, as well as those of its employees, partners, and customers, to enable major improvements in operational efficiency (including ecoefficiency), customer experience, new services, and digitallyenabled business models to create value for its stakeholders. In addition, there are many studies focusing on criteria for assessing the status and effectiveness of digital transformation applications in enterprises. Matt et al. (2015) established evaluation criteria based on four dimensions of digital transformation: use of technologies, changes in value creation, structural changes, and financial aspects. The research considered digital transformation as a constantly complex activity that can significantly shape a firm and its operations due to its broad scope. Deloitte (2020) established standards based on a fivefactor digital maturity model: improvements in efficiency, revenue growth, product and service quality, customer satisfaction, and employee engagement. In addition, the study categorized firms as higher, medium or lowermaturity based on distribution by the degree of business benefit they claimed their digital efforts had yielded. In the field of logistics, Junge et al (2019) examined the effectiveness of digital transformation by looking at four factors: technologies, datadriven services, leadership and organization, and open innovation. Logistics was believed to pass through different stages to move forward on the path of digital transformation: visibility, connectivity, semiautonomy, autonomy. 3 2. Research situation in Vietnam In Vietnam, Nguyen et al. (2016) studied the current situation of information technology application in Vietnamese LSP enterprises, thereby making recommendations for businesses and management agencies to develop an application of information technology in the field of logistics. According to the survey findings, the information technology development strategy has not been focused on building, and since most logistics firms are still wary of investing in information technology applications in the future. Le et al. (2018) uncovered opportunities and problems in Vietnams logistics business then proposed several solutions for logistics development in the context of the fourth industrial revolution, including improving human resource quality, expanding and diversifying types of logistics services, utilizing the full potential of the Internet of Things and Big Data, and logistic infrastructure innovation. Since then, the author has offered several suggestions to assist Vietnamese logistics in catching up with these trends. VCCI (2020) not only assessed the pandemics impact on businesses but also examined digital transformation application trends to assist businesses in overcoming challenges in the Covid19 pandemic. Cao (2020) examined the current state of digital transformation in the logistics service industry in Vietnam, as well as the potential and difficulties that digital transformation has presented. As a result, the report makes recommendations to accelerate the digital transformation process in Vietnams logistics service industry. 3. Observations on research gaps The majority of studies conducted around the world are of a broad scope which is highly general, looking at various areas of digital transformation in the logistics industry as a whole. Meanwhile, researches in Vietnam focus on the actual state of digital technology application and digital transformation of Vietnams logistics industry rather than the development of theoretical frameworks. However, the new studies only assess the overall situation and do not provide a detailed examination of the use of digital technology in LSP firms logistics service business activities in the context of the Covid19 pandemic. 4 BI.THEORETICAL FRAMEWORK 1. Definition 1.1. Digital transformation Digital Transformation (Rohit Prabhakar, 1950) is the transformation of activities, processes, products and business models to take full advantage of the opportunities of digital technology. The main objective is to improve efficiency, manage risk or discover new earning opportunities. According to Microsoft, digital transformation is the restructuring of thinking in the coordination between data, processes and people to create new values. For Vietnam, digital transformation is the process of changing old and traditional models into digital businesses, based on new technology applications, such as Big data, AI, cloud computing, etc. changing operating methods, working processes and labor culture in enterprises. For ordinary people, digital transformation changes our way of life. However, many people are still confused between digital transformation and digitization. “Digitization” is the conversion of real values into numbers. And “digital transformation” is one level higher, a complete phase of digitization. Specifically after the data has been digitized, we must use technologies to analyze the data, transform it and create another value. The use of Artificial Intelligence (AI) (Daniel Crevier, 1993) is a broad branch of computer science concerned with building intelligent machines capable of performing tasks that normally require human intelligence. Big Data (Roger Mougalas, 2005) is a large and complex data set that is capable of collecting, managing and processing data in a reasonable amount of time. Cloud Computing technology (IEEE, 2015) allows users to access computer resources via the internet, from servers, databases and remote computers such as: software, services, hardware,... Therefore, transferring Digital transformation is a more advanced form of digitization. 1.2. E Logistics ELogistics is a tool linking all activities of the global value chain, including: production, supply, circulation, distribution, market expansion. It plays a huge role in 5 optimizing the flow cycle from input to output in production of enterprises. Therefore, it will strongly boost the current economy. When Elogistics businesses rely on information technology applications, they can exploit the benefits of optimal scheduling algorithms, data mining, artificial intelligence and global networks to create advantages of scope. wide market, high traffic density, high frequency of purchase, diversified and abundant items, quick delivery time, and can collect money directly or electronically. 2. The process of digital transformation in the logistics industry Most businesses implementing digital transformation go through 2 stages: Stage 1 Digitization: all documents of the enterprise that exist in physical form are encrypted into electronic information and stored in the online environment. Thanks to digitization, businesses save time in data entry and searching; printing costs; storage space and minimize loss of data. The digitization phase will create a premise for businesses to enter a higher stage of digital transformation. Stage 2 Digital transformation: businesses that have completed the digitization of data will begin to consider changing the entire working process from a place where everyone can do it to a place where the process is unified from top to bottom. closely linked processes. And of course, technologies must be applied to make the process easy. Sticking to the above two stages, the basic business digital transformation process consists of 5 steps Step 1 Making a plan: what is the goal of digital transformation, the tasks to be done, the time to do each job, the expected completion time, etc. Step 2 Formulating a strategy: the digital transformation strategy for businesses is a combination of guidelines and policies of the State with the unique characteristics of each business. Step 3 Digitizing documents and processes: transfer all documents of the enterprise from physical form to electronic form, stored in the online environment. Step 4 Preparing human resources: establish a dedicated human resources team in charge of digital transformation and train or recruit new personnel with appropriate skills. Step 5 Investing in technology: choose the right technology and apply it to work. 6 IV. SITUATION OF DIGITAL TRANSFORMATION IN LOGISTICS INDUSTRY 1. In the world A survey of 900 business leaders in Fujitsus report on Global Digital Transformation 2019 shows that Logistics is the field with the highest percentage of businesses implementing digital transformation projects, with more than 40 % of enterprises in this field having implemented successful projects with remarkable results. The process of digital transformation of the logistics industry (Source: Fujitsu 2019) 9% 2% 8% 47% 34% Implemented and got results Ongoing Testing Planning Unplanned 2. In Viet Nam The logistics industry has long been a spearhead service industry with high added value, serving as the foundation for trade development and enhancing the economys competitiveness. According to the Vietnam Association of Logistics Service Enterprises, the growth rate of the logistics industry in Vietnam in recent years has reached about 14%16%, with a scale of about 4042 billion USDyear. Logistics Logistics Performance Integrated Index for Postal Index Score (on a 5point 7 scale)1 () Development2 () Indonesia 3.15 35.92 Vietnam 3.23 48.00 Thailand 3.41 59.0 Malaysia 3.22 62.1 Cambodia 2.58 28.68 Laos 2.70 36.23 Singapore 4.00 77.1 Logistics indexes of some Southeast Asian countries (source:The World Bank; Universal Postal Union) ( Index updated for 2018; Index updated for 2021) In 2018’s Logistics Performance Index ranking, Vietnam ranked 39th out of 160 countries participating in the survey, up 25 places compared to 2016 (64160). In ASEAN, Vietnam is behind two countries, Singapore (ranked 7160) and Thailand (ranked 32160).3 In 2021s Integrated Index for Postal Development ranking, Vietnam reached 48.00 points, ranked 48th out of 168 countries, increased 1 place in ranking and decreased 2.47 points in score compared to 2020. In Southeast Asia, Vietnam ranks 4th after Singapore (ranked 10168), Malaysia (ranked 23168) and Thailand (ranked 30168).4 In the past two years, due to the influence of the Covid 19 pandemic, work and study were all connected via the internet. Accordingly, the mode of consumption, the 1Logistics Performance Index (LPI) is an index launched by The World Bank to rank the efficiency and capacity of logistics activities of countries. This index is determined every two years, in even years. 2 Integrated Index for Postal Development or 2IPD is the index provided by Universal Postal Union (UPU) to assess the efficiency and capacity of postal activities of countries. 3 The data was provided by The World Bank. Access to https:lpi.worldbank.orginternationalglobal2018 (last accessed on November 24th 2021) 4 The data was provided by UPU. Access to https:www.upu.intUPUmediaupupublicationsPostaldevelopmentreport2021.pdf (last accessed on November 24th 2021) 8 way of operation, and the exchange of trade have all changed significantly. According to statistics of the Vietnam Logistics Association (VLA), Covid19 is the main reason why 15% of logistics businesses have a 50% reduction in revenue, and more than 50% of businesses reduce the number of logistics services in the country. and international from 10 30% compared to 2019. Especially in the current logistics market, the ratio of logistics costs to Vietnams national GDP is 18% of GDP, while this figure in developed countries is only 914%. Vietnams logistics costs are still quite high compared to other countries in the region such as China, Thailand, etc. The reason may come from limitations in port infrastructure associated with postport services. The planning of logistics infrastructure, including seaports, inland ports, logistics centers, depots, parking lots for trucks and containers, has not been effective. Therefore, the application of digital technology is a necessary requirement to cut costs.
FOREIGN TRADE UNIVERSITY International Economics Digital Transformation in Logistic Industry in Vietnam: Adapting, Innovating and Accelerating Development during the Pandemic Storm TABLE OF CONTENTS I INTRODUCTION II LITERATURE REVIEW Research situation in the world Research situation in Vietnam Observations on research gaps III THEORETICAL FRAMEWORK Definition .5 1.1 1.2 IV Digital transformation E - Logistics .5 The process of digital transformation in the logistics industry SITUATION OF DIGITAL TRANSFORMATION IN LOGISTICS INDUSTRY In the world In Viet Nam V THE ROLE OF DIGITAL TRANSFORMATION FOR LOGISTICS SERVICE PROVIDERS IN COVID-19 PANDEMIC VI DIGITAL TRANSFORMATION OPPORTUNITIES, CHALLENGES AND SOLUTIONS FOR LSPS IN VIETNAM Opportunities: 12 1.1 2.1 1.2 1.3 Technological forces: 12 Labour forces: 12 Internationalization forces: 12 Legal and Regulatory forces: 13 Challenging 13 Solution 14 3.1 3.2 VII Recommendations for Vietnamese logistics companies 14 Recommendations for the government 15 CONCLUSION VIII REFERENCES I INTRODUCTION Logistics plays a critical role in the development of the social economy in the current era of international economic integration The logistics service industry is a pioneering service industry with high added value that serves as a foundation for trade development and improves the economy's competitiveness In Vietnam, the logistics industry is considered to have a lot of potential, but its development has not been worthy, as evidenced by a variety of challenges throughout the supply chain But in recent years, Vietnam's logistics industry has made great strides, especially in the context of the Industrial Revolution 4.0, with the logistics ecosystem in Vietnam becoming increasingly modern and incorporating new applications The use of digital transformation is becoming more widespread and popular Since the advent of the Covid-19 pandemic at the end of 2019, digital transformation has reasserted its importance The epidemic has had a significant impact on the socio-economic situation of most countries, suspended most production and business activities, and paralyzed many firms in specific economic sectors Many traditional tools are no longer applicable in this setting, necessitating a stronger digital transformation than ever before Recognizing the importance and urgency of digital transformation in logistics, our group of decided to exploit this topic for research in the subject of International Economics: " Digital Transformation in Logistic Industry in Vietnam: Adapting, Innovating and Accelerating Development during the Pandemic Storm." Our research delves into the definition and process of digital transformation in logistics then examines the practice of implementing digital transformation in logistics, as well as the potential and challenges that it presents Finally, recommendations are made to help Vietnam's logistics service industry accelerate its digital transformation Given the group's limited expertise and research abilities, we would like to receive your suggestions and guidance so that we can make more progress and gain a better understanding of the research topic Our group sincerely thank you II LITERATURE REVIEW Research situation in the world While digital transformation has been researched and developed for a long time around the world, digital transformation in the logistics field is still a relatively new subject that is receiving great attention from researchers and business enterprises The World Economic Forum (2016) provided data on the value of digital transformation for the logistics industry, as well as five main subjects of digital transformation in logistics from which to derive essential questions to help executives and policymakers make the best decisions possible According to the study, five themes that will be key to the logistics industry's digital transformation over the next decade are information services, logistics services, delivery capabilities, circular economy, and shared logistics capabilities Author Sorkun (2019) investigated the practical application of technologies in the digital transformation process in logistics activities, assisting businesses in gaining a more holistic view of the digital transformation process and prioritizing technologies that are appropriate for their resources Junge et al (2019) and Cichosz et al (2020) all evaluated the importance of digital transformation, as well as its hurdles and success factors for logistics' future development Cichosz, unlike Junge's research, concentrated on LSP (Logistics Services Provider) enterprises rather than the overall logistics industry picture According to the study of Cichosz et al., digital transformation at LSPs is an evolutionary process of change that uses an LSP's technologies and digital capabilities, as well as those of its employees, partners, and customers, to enable major improvements in operational efficiency (including ecoefficiency), customer experience, new services, and digitally-enabled business models to create value for its stakeholders In addition, there are many studies focusing on criteria for assessing the status and effectiveness of digital transformation applications in enterprises Matt et al (2015) established evaluation criteria based on four dimensions of digital transformation: use of technologies, changes in value creation, structural changes, and financial aspects The research considered digital transformation as a constantly complex activity that can significantly shape a firm and its operations due to its broad scope Deloitte (2020) established standards based on a five-factor digital maturity model: improvements in efficiency, revenue growth, product and service quality, customer satisfaction, and employee engagement In addition, the study categorized firms as higher-, medium- or lower-maturity based on distribution by the degree of business benefit they claimed their digital efforts had yielded In the field of logistics, Junge et al (2019) examined the effectiveness of digital transformation by looking at four factors: technologies, datadriven services, leadership and organization, and open innovation Logistics was believed to pass through different stages to move forward on the path of digital transformation: visibility, connectivity, semi-autonomy, autonomy Research situation in Vietnam In Vietnam, Nguyen et al (2016) studied the current situation of information technology application in Vietnamese LSP enterprises, thereby making recommendations for businesses and management agencies to develop an application of information technology in the field of logistics According to the survey findings, the information technology development strategy has not been focused on building, and since most logistics firms are still wary of investing in information technology applications in the future Le et al (2018) uncovered opportunities and problems in Vietnam's logistics business then proposed several solutions for logistics development in the context of the fourth industrial revolution, including improving human resource quality, expanding and diversifying types of logistics services, utilizing the full potential of the "Internet of Things" and Big Data, and logistic infrastructure innovation Since then, the author has offered several suggestions to assist Vietnamese logistics in catching up with these trends VCCI (2020) not only assessed the pandemic's impact on businesses but also examined digital transformation application trends to assist businesses in overcoming challenges in the Covid-19 pandemic Cao (2020) examined the current state of digital transformation in the logistics service industry in Vietnam, as well as the potential and difficulties that digital transformation has presented As a result, the report makes recommendations to accelerate the digital transformation process in Vietnam's logistics service industry Observations on research gaps The majority of studies conducted around the world are of a broad scope which is highly general, looking at various areas of digital transformation in the logistics industry as a whole Meanwhile, researches in Vietnam focus on the actual state of digital technology application and digital transformation of Vietnam's logistics industry rather than the development of theoretical frameworks However, the new studies only assess the overall situation and not provide a detailed examination of the use of digital technology in LSP firms' logistics service business activities in the context of the Covid-19 pandemic III THEORETICAL FRAMEWORK Definition 1.1 Digital transformation Digital Transformation (Rohit Prabhakar, 1950) is the transformation of activities, processes, products and business models to take full advantage of the opportunities of digital technology The main objective is to improve efficiency, manage risk or discover new earning opportunities According to Microsoft, digital transformation is the restructuring of thinking in the coordination between data, processes and people to create new values For Vietnam, digital transformation is the process of changing old and traditional models into digital businesses, based on new technology applications, such as Big data, AI, cloud computing, etc changing operating methods, working processes and labor culture in enterprises For ordinary people, digital transformation changes our way of life However, many people are still confused between "digital transformation" and "digitization" “Digitization” is the conversion of real values into numbers And “digital transformation” is one level higher, a complete phase of digitization Specifically after the data has been digitized, we must use technologies to analyze the data, transform it and create another value The use of Artificial Intelligence (AI) (Daniel Crevier, 1993) is a broad branch of computer science concerned with building intelligent machines capable of performing tasks that normally require human intelligence Big Data (Roger Mougalas, 2005) is a large and complex data set that is capable of collecting, managing and processing data in a reasonable amount of time Cloud Computing technology (IEEE, 2015) allows users to access computer resources via the internet, from servers, databases and remote computers such as: software, services, hardware, Therefore, transferring Digital transformation is a more advanced form of digitization 1.2 E - Logistics E-Logistics is a tool linking all activities of the global value chain, including: production, supply, circulation, distribution, market expansion It plays a huge role in optimizing the flow cycle from input to output in production of enterprises Therefore, it will strongly boost the current economy When E-logistics businesses rely on information technology applications, they can exploit the benefits of optimal scheduling algorithms, data mining, artificial intelligence and global networks to create advantages of scope wide market, high traffic density, high frequency of purchase, diversified and abundant items, quick delivery time, and can collect money directly or electronically The process of digital transformation in the logistics industry Most businesses implementing digital transformation go through stages: Stage - Digitization: all documents of the enterprise that exist in physical form are encrypted into electronic information and stored in the online environment Thanks to digitization, businesses save time in data entry and searching; printing costs; storage space and minimize loss of data The digitization phase will create a premise for businesses to enter a higher stage of digital transformation Stage - Digital transformation: businesses that have completed the digitization of data will begin to consider changing the entire working process from a place where everyone can it to a place where the process is unified from top to bottom closely linked processes And of course, technologies must be applied to make the process easy Sticking to the above two stages, the basic business digital transformation process consists of steps Step - Making a plan: what is the goal of digital transformation, the tasks to be done, the time to each job, the expected completion time, etc Step - Formulating a strategy: the digital transformation strategy for businesses is a combination of guidelines and policies of the State with the unique characteristics of each business Step - Digitizing documents and processes: transfer all documents of the enterprise from physical form to electronic form, stored in the online environment Step - Preparing human resources: establish a dedicated human resources team in charge of digital transformation and train or recruit new personnel with appropriate skills Step - Investing in technology: choose the right technology and apply it to work SITUATION OF DIGITAL TRANSFORMATION IN LOGISTICS INDUSTRY In the world A survey of 900 business leaders in Fujitsu's report on "Global Digital Transformation 2019" shows that Logistics is the field with the highest percentage of businesses implementing digital transformation projects, with more than 40 % of enterprises in this field having implemented successful projects with remarkable results The process of digital transformation of the logistics industry (Source: Fujitsu 2019) 9% 2% 8% 47% 34% Implemented and got results Ongoing Testing Planning Unplanned In Viet Nam The logistics industry has long been a spearhead service industry with high added value, serving as the foundation for trade development and enhancing the economy's competitiveness According to the Vietnam Association of Logistics Service Enterprises, the growth rate of the logistics industry in Vietnam in recent years has reached about 14%-16%, with a scale of about 40-42 billion USD/year Logistics Logistics Performance Integrated Index for Postal Index Score (on a 5-point scale)1 (*) Development2 (**) Indonesia 3.15 35.92 Vietnam 3.23 48.00 Thailand 3.41 59.0 Malaysia 3.22 62.1 Cambodia 2.58 28.68 Laos 2.70 36.23 Singapore 4.00 77.1 Logistics indexes of some Southeast Asian countries (source:The World Bank; Universal Postal Union) (* Index updated for 2018; ** Index updated for 2021) In 2018’s Logistics Performance Index ranking, Vietnam ranked 39th out of 160 countries participating in the survey, up 25 places compared to 2016 (64/160) In ASEAN, Vietnam is behind two countries, Singapore (ranked 7/160) and Thailand (ranked 32/160).3 In 2021's Integrated Index for Postal Development ranking, Vietnam reached 48.00 points, ranked 48th out of 168 countries, increased place in ranking and decreased 2.47 points in score compared to 2020 In Southeast Asia, Vietnam ranks 4th after Singapore (ranked 10/168), Malaysia (ranked 23/168) and Thailand (ranked 30/168).4 In the past two years, due to the influence of the Covid 19 pandemic, work and study were all connected via the internet Accordingly, the mode of consumption, the Logistics Performance Index (LPI) is an index launched by The World Bank to rank the efficiency and capacity of logistics activities of countries This index is determined every two years, in even years Integrated Index for Postal Development or 2IPD is the index provided by Universal Postal Union (UPU) to assess the efficiency and capacity of postal activities of countries The data was provided by The World Bank Access to https://lpi.worldbank.org/international/global/2018 (last accessed on November 24th 2021) The data was provided by UPU Access to https://www.upu.int/UPU/media/upu/publications/Postal-developmentreport-2021.pdf (last accessed on November 24th 2021) way of operation, and the exchange of trade have all changed significantly According to statistics of the Vietnam Logistics Association (VLA), Covid-19 is the main reason why 15% of logistics businesses have a 50% reduction in revenue, and more than 50% of businesses reduce the number of logistics services in the country and international from 10 - 30% compared to 2019 Especially in the current logistics market, the ratio of logistics costs to Vietnam's national GDP is 18% of GDP, while this figure in developed countries is only 9-14% Vietnam's logistics costs are still quite high compared to other countries in the region such as China, Thailand, etc The reason may come from limitations in port infrastructure associated with post-port services The planning of logistics infrastructure, including seaports, inland ports, logistics centers, depots, parking lots for trucks and containers, has not been effective Therefore, the application of digital technology is a necessary requirement to cut costs V THE ROLE OF DIGITAL TRANSFORMATION FOR LOGISTICS SERVICE PROVIDERS IN COVID-19 PANDEMIC In the severe situation of the widespread Covid-19 pandemic, Logistics Service Providers (LSP) in Vietnam are facing a host of problems related to Process, Human Resources, Financial Performance, Organization, etc, which means they need a proper solution for this reality Therefore, they may choose pursuing the business model transformation with the support of digital technologies, or in other words, Digital Transformation (DT) To be specific, initially, DT can make the operation simpler and less labourintensive for LSPs in several aspects Initially, DT should assist LSPs in Vietnam to retort additionally as they adapt to new society's demands, using organizational resilience, knowledge, a data-driven culture, and customer-centric vision Therefore, LSPs would create an efficient strategic plan for operation during the Covid-19 Moreover, the pandemic has already accelerated the race for DT, also referred to as “Industrie 4.0” or “Society 5.0”, which changes the structures of how organizations can create value by digitally obtaining insights from their customers' behavior and restructuring supply chains DT was already an ongoing paradigm shift in our society before the pandemic, where organizations began to migrate from analog-based processes of production to a digital-based process of import creation, supporting an information culture and C2B data stream Secondly, during this scenario in Vietnam, a change in organizational culture is important to constantly incorporate enabling digital technologies and their prerequisite knowledge DT can be a conditional process, which highly depends on organizational learning DT happens as long as the specified knowledge is continuously incorporated 10 and applied for innovation Therefore, DT's instrumentals are the power to manage knowledge to unlock digital technologies' full potential; the leadership and business expertise to come up with new business models and culture; and acquiring knowledge about customers' new demands, to be continually internalized, socialized, externalized, and combined to form new knowledge Thirdly, within a data-driven culture, this may assist the virtuous cycle of organizational learning, monitoring, anticipating, and responding to new demands, supporting the incorporated knowledge In others words, DT requires company leaders to reinforce organizational learning and resilient behavior to alter organizational culture, process, and technologies, under both a data-driven culture and a customercentric vision DT, which confirms that in an economy where uncertainty is that the only certainty, the sole sure source of lasting competitive advantage is knowledge Eventually, DT will help LSPs have experience with short-term strategy, which can lead to the fact that they will respond quickly to new opportunities and short-term government lines of credit Furthermore, since internationalization matters entrepreneur behavior, LSPs can aim to achieve global value chains through a dynamic DT process The potential of LSPs for internationalization can grow with use of their information systems, social capital, and dynamic capabilities to seize international opportunities To sum up, DT will help LSPs in Vietnam have a well-oriented operation with creative, dynamic leaderships and human resources; strategic plans; adaptive financial performance as well as strong, internationalized organization value in the severe Covid-19 scenario 11 VI DIGITAL TRANSFORMATION OPPORTUNITIES, CHALLENGES AND SOLUTIONS FOR LSPS IN VIETNAM Opportunities: Although Covid-19 pandemic has brought numerous demerits for LSPs in Vietnam, it still creates some development opportunities in Digital Transformation for this industry 1.1 Technological forces: First of all, owing to the innovation of technology and the latest adaptation of the revolution named “5G” in Vietnam, LSPs have seized this chance to develop their digital system, update cutting-edge tools to ease the managing as well as processing burden In other words, 5G with high-speed Internet can help Logistics firms in both internal communication (among employees, departments, etc) and external connection to customers or partners efficiently It was proven that the current situation due to COVID -19 lockdown has facilitated the establishment of electronic and digital works because the organization has performed its business from home using ICT equipment and Digital Transformation This can also guarantee the stability of the Logistics Industry in Personnel and Operation aspects 2.1 Labour forces: Furthermore, in this contemporary era, Vietnam owns an ever-increasing number of high-quality labour forces who have been qualified in several majors such as Information Technology, International Business, Data Analysis, etc To be more specific, they will be accustomed to Digital Technology and quickly adapt to new tactics at work, which can make Digital Transformation more easily implemented in LSPs of Vietnam Although lockdown led to stay-at-home, users have remained connected for work and business has continued in a different way compared to the normal situation The IT support team are also working from home to support the organization team in how to use new forms, download policies, and perform other Digital Transformation processes In terms of leadership, with the bunch of dynamic managers who can come up with suitable business models and data-driven culture; detect customers' new demands, LSPs will have the creative way to provide services and stabilize the revenue during the pandemic 1.2 Internationalization forces: Besides, the discovery of new market niches and development in global value chains have encouraged Vietnamese Logistics companies to accelerate their potential market and customers Therefore, to reach those new market niches and take advantage of the internationalized value chains, firms will have the motivation to innovate and adapt state- of-the- art technology, which also encourages Digital Transformation in Vietnamese LSPs 12 1.3 Legal and Regulatory forces: Last but not least, during Covid-19 pandemic, the government has enforced several short-term policies to help companies overcome the difficulties of this situation To exemplify, due to the new short-term Lines of Credit policy, which instruct credit institutions to meet capital needs for production and accelerate administrative procedures such as shortening processing time for loan applications and reducing fees, interest rates, etc for customers who are in difficulties (a package worth approximately VND 250 trillion), Vietnamese firms in general and LSPs in specific have implemented business models which express better finance performance Also, they have enforced the Reduction of 10% in the retail price of electricity for the manufacturing and business sectors,Tax and rent support and Advice for businesses Challenging Besides the opportunities, digital transformation efforts in the logistics sector nowadays show some basic difficulties and challenges as follows: Firstly, about financial resources: Enterprises providing logistics services in Vietnam are small-scale enterprises with weak financial resources A result from a survey shows that 80% of established enterprises have registered capital of 1.5-2 billion VND However, on average, the digital transformation process of the entire enterprise costs from about 200 million VND to billions VND, which is not suitable for small and medium enterprises If businesses decide to invest in automation like a foreign model, it will incur initial investment costs, but if they follow the internal model, it will cost information technology human resources and take a long time Basically, it will be extremely difficult for logistics providers to conduct digital transformation without the support of the State or financial and credit institutions Secondly, about human resources: the capacity of Vietnamese logistics enterprises is also limited by the quality of human resources that cannot meet the demand Among domestic enterprises, up to 93-95% of employees are not trained in logistics, mainly providing services in small supply chains such as forwarding, warehousing, bill of lading processing The scale of logistics enterprises in Vietnam is quite small, with less than 50 employees accounting for about 32.4% and large-scale enterprises (over 1,000 employees) account for a small proportion of only about 10.8% About technology potential: Thirdly, about technology potential: the lack of a strong enough IT platform to enable digital transformation, the lack of digital thinking and above all, the limitation of financial investment in the IT sector are also limitations of the logistics industry Logistics is considered a key industry in international trade, so the digital transformation of logistics needs to be carefully invested to quickly adapt to the general context of the current market However, the level of application of science and technology in Vietnam is still not high, businesses only apply it alone without synchronization International standard software has not been widely applied in Vietnam Basically, businesses just stop at digitizing and storing electronic data but have not really connected the ability to look up data or process orders on online platforms 13 Fourthly, about competitiveness potential: In addition to capital problems, Vietnam's logistics is still inexperienced and has limited competitiveness, so it has not had the opportunity to reach out to the market with great demand The current weakness of the logistics industry is that the infrastructure is incomplete and complete, the road system has many degraded and overloaded roads, and the railway has not been upgraded because of high investment costs Moreover, the seaport infrastructure is poor and there is no direct maritime service with seaports in Europe and the US Besides, with the old customs and methods of import and export business, customers often hire vehicles by foreign partners, instead of choosing domestic fleets for transportation In addition, there is a lack of synchronous linkage between businesses and between different stages of logistics activities Logistics services in the direction of outsourcing of manufacturing companies (3PL, 4PL services) have appeared with great potential for development in Vietnam Therefore, if only providing simple, pure logistics services without integrating them into processes, service chains, service providers, it is difficult to satisfy customers in terms of costs as well as the quick response of import and export demand Therefore, the cost of logistics services in Vietnam is quite high Specifically, logistics costs account for 12% of the cost of seafood products, 23% of the cost of furniture, 29% of the cost of vegetables, 30% of the cost of rice At this level, logistics costs in Vietnam are usually 6% taller than Thailand, 12% higher than Malaysia and 300% higher than Singapore In the context that Vietnam has been participating in many free trade agreements with major powers and economic regions in the world, the pressure on the logistics service industry will increase over time, especially for the EU-Vietnam Free Trade Agreement (EVFTA), which was signed and took effect from August 1, 2020 Accordingly, in the EVFTA Agreement, Vietnam commits to open the market for air transport, road transport, railway, sea transport, inland waterway transport and a number of services to support all modes of transport Economic experts believe that the EVFTA will open up many business opportunities and meaningful protection for logistics and investment service providers of the European Union (EU) when entering the EU enter the Vietnamese market However, that means that it will create more pressure on domestic logistics enterprises because competitors from the EU are already very developed and have great potential Furthermore, the complicated developments of the Covid-19 pandemic have been causing many difficulties and challenges for logistics service businesses, when supply-demand is disrupted and supply chains are turned upside down Therefore, to take advantage of this opportunity and get rid of the disadvantages, Vietnamese logistics enterprises are forced to innovate, promote administrative reform and improve their own competitiveness Solution 3.1 Recommendations for Vietnamese logistics companies - Raising awareness about the role of IT: Companies need to recognize the role of IT as one of the factors that create customer satisfaction and contribute to 14 - - improving the quality of logistics services In addition, companies also need to focus on building an IT strategy as an important part of their business strategy Invest in necessary IT applications: IT infrastructure needs to be improved and built, especially the application of the EDI system to gradually improve data transfer and data digitization, increase security and data transfer speed A part of the budget for business activities should be used to invest in IT to effectively apply new software necessary for logistics activities such as RFID, Barcode, logistics cloud Especially, logistics companies have may aim to cooperate with software companies to order specialized applications with the company, thereby making the most of each application IT human resources: Companies need to attach importance to recruiting, training and coaching IT professionals Combine with human resource training centers or universities to train IT staff with logistics knowledge Tailor-made on-the-job training courses can be used to ensure that IT staff are trained according to the specifics of the job 3.2 Recommendations for the government - - - - IT development policy: The State should focus on investing in IT infrastructure and have policies to encourage as well as provide financial support so that small and medium logistics companies can invest in IT applications Customs procedures: Promote the implementation of the VNACCS/VCIS electronic customs declaration process (Vietnam Automated Cargo and Port Consolidated System/ Vietnam Customs Intelligent System), thereby creating motivation for logistics companies to proactively upgrade appropriate IT infrastructure and applications IT development strategy: Formulate and implement a long-term IT development strategy for the whole industry in parallel with the development strategy of the logistics sector until 2020, with a vision to 2030 The policy of AEC leaders is towards "The ASEAN Single Window" to ensure the compatibility of each country's IT network with common international standards, thereby connecting and integrating all "ASEAN Single Window" (National Single Window)” for the purpose of safe and reliable electronic data transfer, shortening goods processing time and creating special transparency with customs procedures Therefore, it is extremely urgent to build a comprehensive and smooth IT network connecting from state management agencies, customs, to logistics enterprises and shippers Investment in research and development of IT applications: The State should issue policies to support and encourage software companies to invest in research and development of IT applications according to international standards, thereby creating favorable conditions It is beneficial for domestic logistics companies to access applications that are suitable for their financial ability International cooperation: Strengthening international cooperation in the field of scientific research and transfer of IT applications in accordance with the actual operation of logistics enterprises, especially SMEs 15 VII CONCLUSION Logistics is the foundation for goods trade, contributing to improving the competitiveness of the economy With the explosion of digital technology and the Industrial Revolution 4.0, the logistics industry has many breakthrough opportunities to contribute more to the economy if digital transformation is applied and accelerated Before the Covid-19 pandemic, the reality of applying technology in logistics activities of Vietnamese LSP enterprises was still on a modest scale, therefore the efficiency gained was insignificant However, it is the onset of the Covid-19 pandemic that emphasizes the importance of digital technology and helps to accelerate the digital transformation process at LSP organizations in particular, as well as in all sectors of the economy and social life in general The context of pandemic creates advantageous conditions for businesses to improve their digital systems, update cutting-edge solutions to lessen the management and processing strain, as well as approach new market niches, and develop in global value chains To promote the digital transformation process at LSP enterprises and overcome obstacles in terms of financial and human resources, competitiveness, businesses need to raise awareness about digital transformation; develop a strategy and roadmap for digital transformation in accordance with the conditions, capabilities, and goals of the business; improve and enhance human resources; standardize and synchronize business operations Furthermore, the government and state management play a critical role in providing national IT infrastructure, information technology centers, and transportation systems; strengthening the role of associations, business association organizations, and international cooperation organizations in the fields of information technology and logistics; and developing a comprehensive legal framework, as well as a smart, modern, and transparent management mechanism With a reasonable investment, focus on development as well as perfection, the digital transformation in Vietnam's logistics industry will expand in 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