Reason for choosing the topic In the current global era, characterized by a rapid pace of globalization and increasing environmental awareness, the role of green logistics has become c
Reason for choosing the topic
In the current global era, characterized by a rapid pace of globalization and increasing environmental awareness, the role of green logistics has become crucial in shaping regional trade dynamics Focusing on logistics, a sector historically marked by high fuel consumption and significant environmental impacts (He et al., 2017; Rashidi
& Cullinane, 2019), the transformative role of green logistics is significant Green logistics involves the integration of sustainable practices across various logistics dimensions, including transportation, warehousing, packaging, and reverse logistics
The adoption of green logistics practices not only mitigates environmental impacts but also offers economic benefits through process optimization and operational cost reductions (Dekker et al., 2012) The critical role of green logistics is environmental protection, social advancement, and economic growth, highlighting its significance in promoting green economic activities and reducing emissions like carbon dioxide
(Karaman et al., 2020; Khan et al., 2020; Li et al., 2021)
Vietnam is a nation experiencing rapid economic growth in Southeast Asia, the significance of green logistics in Vietnam's context is accentuated by its strategic geographical location stands as a critical node in the intricate web of regional and global trade Its active participation in major Free Trade Agreements (FTAs) like the
Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and
Progressive Agreement for Trans-Pacific Partnership (CPTPP) not only positions it strategically on the global stage but also underscores the vital role of green logistics in its trade dynamics As evidenced by the robust growth in Vietnam's regional trade, with a notable increase in exports to ASEAN countries from 15 billion USD in 2010 to approximately 25 billion USD in 2019, the country's trade dynamics present a compelling case for studying the influence of green logistics The rising global demand for environmental standards in trade, coupled with commitments by trade regions towards sustainable development, has made green logistics a pivotal element for Vietnamese enterprises It not only helps in meeting international standards but also enhances the country's global reputation (Khan et al., 2020) Green logistics practices, by offering efficient and eco-friendly transportation solutions, improve competitive capabilities, expand export opportunities, and maximize the benefits of participating in international trade regions
However, the research landscape in Vietnam regarding the impact of logistics, especially green logistics, on international trade remains limited Previous studies have largely focused on theoretical and macro-practical aspects, with a scarcity of empirical research to measure the impacts For this reason, our research team chose the topic
"The impact of green logistics on Vietnam's regional trade” as the research topic.
Literature review
Many studies have been conducted to analyze the impact of overall logistics performance indicators on international trade For example, Saslavsky & Shepherd
(2014) investigated the impact of logistics activities on parts and components trade in international production networks and found that logistics activities have a larger impact on parts trade than on end product trade Ekici et al (2016) verified the positive impact of logistics on international trade with the help of the LPI index Gani (2017) estimated the impact of logistics on international trade using cross-country data from a large sample of countries and found that logistics has a statistically significant positive impact on trade flows trade flows, especially exports Siddiqui & Vita (2021) used panel data analysis to study the impact of logistics on trade of the garment industry in Cambodia, Bangladesh and India and concluded that logistics has a significant impact on trade Riadh (2020) believes that logistics promotes international trade because it first reduces transportation costs to improve trade, thus further expanding international trade Tửngỹr et al (2020) empirically analyzed the impact of Tỹrkiye's logistics activities on exports through a gravity model and found that logistics activities have a positive impact on export value Its impact on emerging markets is greater than on international markets (Ahmadi & Taghizadeh, 2019) Additionally, improved logistics in Türkiye have a more significant impact on exports than on their import counterparts Wang et al (2018) using Heckman's two-stage procedure to estimate the incremental gravity model to study the link between logistics and international trade, the research results show that the logistics performance index (LPI) of exporting countries exports and imports are positively correlated with trade volume, and the LPI of exporting countries positively affects the trade probability Song & Lee (2022) used the LPI index in the gravity equation model, the basic model for analyzing trade flows, to analyze the impact of logistics on international trade especially Korea, and determine Identifying the logistics index factors that affect each commodity from an industrial perspective, the results indicate that the components of the LPI index have a significant influence on international trade Yeo et al (2020) using generalized structural component analysis (GSCA) has been proposed as a component-based approach to structural equation modeling (SEM) to test several hypotheses about the effects of hidden variables, combined with regression analysis to evaluate the impact of infrastructure and logistics activities on economic efficiency, the results show that logistics activities enhance sustainable development and international trade in middle- income countries
Some studies analyze the specific impact of each sub-index of logistics activities on international trade For example, Martí & Puertas (2017) analyzed the impact of the different sub-indexes constituting the LPI on the trade of emerging countries The importance of LPI sub-indices has increased in the international trade of many emerging countries in Africa, South America and Eastern Europe Çelebi (2019) compared the impact of different sub-indicators of logistics performance on trade and found that good logistics is more beneficial for the exports of low- and middle-income countries, while the opposite is true for middle- and high-income countries Zaninović et al (2021) tested the homogeneity of logistics activities across EU countries and found that the greater the difference in each sub-index of the LPI, the lower the trade between trading partners In the case of EU-15 countries trading with other countries, the LPI sub-index on the ease of arranging transport of goods at competitive prices has the greatest negative impact on trade with trading partners Mendes dos Reis et al
(2020) used bilateral soybean export data from Argentina, Brazil, the United States, and their partners to verify indicators of different components of trade logistics Their research shows that logistics infrastructure can significantly positively promote the development of soybean trade Rashidi & Cullinane (2019) used data envelopment analysis to assess whether national logistics performance is sustainable in OECD countries
In recent times, the focus on green logistics has increased, but literature on its relationship with regional trade remains limited, mainly due to challenges in measuring the concept of green logistics, a multifaceted concept intertwining environmental sustainability with logistical efficiency To address this challenge, researchers have attempted to create composite indices that blend traditional logistics metrics with environmental considerations Kim & Min (2011) constructed the Green Logistics Performance Index (GLPI) by integrating the Logistics Performance Index (LPI) and the Environmental Performance Index (EPI) Building on this approach, Mariano et al (2017) introduced the Low-Carbon Logistics Performance Index This index aims to measure logistics performance alongside carbon emissions in the transport sector, providing a comprehensive view of a country's success in reducing CO2 emissions through efficient logistics In another study, Lu et al (2019) developed the Environmental Logistics Performance Index (ELPI), which combines LPI, CO2 emissions, and oil consumption data to assess the green logistics practices of 112 countries Fan et al (2022) took a different methodological approach by employing the entropy method to construct the GLPI, analyzing its impact on China’s export trade within the RCEP framework, and highlighting the growing importance of green logistics in shaping trade dynamics within regional trade agreements Additionally, Tan et al (2020) explored the integration of blockchain technology in green logistics, indicating a trend toward technological innovation in achieving sustainable logistics operations Policy aspects of green logistics have also been addressed, as seen in the work of Zhang et al (2020), who analyzed factors influencing Green Logistics Performance based on grounded theory Khan et al (2020) further expanded the scope by examining the influence of environmental, social, and economic indicators on GLPI in the South Asian Association for Regional Cooperation (SAARC) countries, illustrating the broader impacts of green logistics on the region
In the current globalization trend, countries in the region and around the world are actively participating in the World Trade Organization (WTO) contributing to realizing the economic development strategy towards cross-border export As international trade is strongly promoted, the significance of logistics activities in the global supply chain attracts more attention than ever As a dynamic member of the WTO, Vietnam, with its commitments to facilitate activities in the field of Logistics, has been bringing positive results to the production and business process along with the entire industry domestic economy in recent years as well as the expectation of bringing sustainable profits in many fields, especially in the stages of industrialization and modernization of the country It can be seen that many research projects by domestic experts over the past two decades have been conducted on the impact of Logistics However, due to limitations in information and data bases as well as technological levels, research works in this field are mainly journals and articles with limited capacity, making it difficult to discuss generally, but only focusing on a few specific aspects and was only implemented in more depth until the last years of the first decade of the 20th century
Dang Dinh Dao et al (2011) states that Vietnam possesses many advantages in politics, economics, and natural conditions in developing Logistics activities compared to other countries in the region, which are natural available investment capital that businesses Logistics that are participating in business in Vietnam should learn and exploit Despite these advantages, the Logistics market in our country does not have many bright spots when compared to other countries in the same region, mainly due to difficulties in building infrastructure and transportation networks transportation, warehouse storage system to fully and promptly meet market needs Most of them are small-scale, have not taken advantage of the development of modern technology in the world, lack quality human resources In addition, businesses do not have abundant financial capital or understanding Knowing about the international legal system, most rely on existing capacity but do not have many links and mutual support in the supply chain to increase competitiveness Thereby, the authors identify the main role of logistics businesses in Vietnam as satellite service providers for foreign logistics companies without the ability to coordinate operational processes In terms of development plans and policies, the logistics industry has not been mentioned and spread at the national level in general, industry level and local level in particular Thanks to that, based on practical conditions, businesses need to be clearly aware of their weaknesses to promptly provide effective, practical and appropriate solutions to develop the domestic logistics sector in the near future, thereby contributing to the process of improving the economy In the current context of integration, businesses need to effectively combine the process of analyzing Vietnam's logistics services, providing lessons learned about successes and obstacles, causes of negative and negative impacts obstacles in the development process Not only that, the research works have mentioned basic fundamental issues and theories about logistics services; requirements and basic characteristics of logistics services, roles as well as a system of indicators to evaluate the development of logistics services in the market economy using comparative research methods and historical methods Historical and logical methods to analyze, evaluate and compare with investigative, statistical and modeling methods to draw highly scientific and general conclusions in assessing the current state of development However, the research scope of the works has not systematically and synchronously mentioned all the factors of the logistics system, especially the logistics system set in the specific and unique conditions of an area urban area
Dinh Le Hai Ha (2013) has explained the development of logistics activities from the perspective of theoretical and practical basis at a macro level such as: concept and nature of logistics, contents and factors affecting logistics development of the economy economy, criteria for evaluating the logistics level of the economy, the current state of development of the logistics system In addition, the topic also references some logistics development experiences of some countries in the world such as Germany, Singapore to suggest Vietnam This approach has helped the author clearly point out new opportunities and challenges in logistics activities that Vietnamese businesses are facing and propose some solutions However, the topic only stops analyzing from a macro perspective, not mentioning much about the logistics system in specific industries
Le Thi Bac (2015) focuses on analyzing and organizing basic theoretical and practical issues of environmental logistics and logistics development in the national economy from a large-scale perspective Therefore, in addition to mentioning the concepts, roles, characteristics and advantages of sustainable logistics, the author also presents the reasons why it is necessary to develop environmental logistics, making comments on the impact of sustainable logistics of the integration context on environmental logistics activities, thereby drawing out the necessary conditions and appropriate measures to develop environmental logistics in Vietnam The author has clarified the theoretical basis, international experience and lessons for Vietnam on environmental logistics development, analyzed and evaluated the situation of environmental logistics development in Vietnam in the context of international economic integration international integration, as well as propose some solutions to develop environmental logistics in Vietnam in the context of international integration
Vu Thi Minh Chau (2018) explains the basic issues of green logistics such as the concept, system, role of green logistics in the sustainable development of the country and conditions for businesses to implement green logistics The author mentioned the reasons why Vietnamese logistics businesses have not been able to carry out green activities in a synchronous manner In particular, the topic uses two analysis methods: case study method and SWOT analysis method The case study method helps to study the situation of implementing green logistics activities in businesses and the SWOT analysis method helps evaluate the current status of green logistics activities development Since then, the author has proposed solutions to help other businesses see opportunities to greenize logistics while overcoming limitations in green logistics activities
In general, studies have addressed issues such as the application of sustainable logistics to save fuel, improve management efficiency, reduce costs and the impact of sustainable logistics on the environment and operations of business However, the impact of sustainable logistics activities on Vietnam's trade activities is still limited.
Research gap
The existing literature on logistics research on the impact of international trade is extensive However, in research methods, domestic and foreign scholars mainly use the LPI index to measure logistics efficiency, ignoring the contemporary context, the influence of green low-carbon greenhouse gas emissions and consumption, fossil fuel consumption to logistics efficiency Domestic research related to the impact of logistics in general and green logistics in particular on Vietnam's international trade is still very limited, mainly research from the perspective of theoretical and practical basis
While the existing literature has made some progress in developing green logistics indices and exploring the impact of green logistics on international trade, there's a notable lack of specific focus on its relationship with regional trade, especially in the context of specific economic regions or trade agreements Given Vietnam's unique position in Southeast Asia and its active participation in various regional trade agreements, a detailed study on how green logistics impacts Vietnam's regional trade is needed This research aims to fill the gap in the literature by constructing a GLPI index and analyzing its impact on regional trade By doing so, this study not only contributes to the theoretical understanding of green logistics in a developing country context but also provides practical insights for policy-making and business strategy development It seeks to demonstrate how Vietnam can balance its rapid economic growth with environmental sustainability through effective green logistics practices
According to the research team's knowledge, there is currently no complete, systematic and highly reliable research on the impact of green logistics on Vietnam's regional trade This study aims to bridge this gap by proposing a methodology for calculating the GLPI using Principal Component Analysis (PCA) This index will be instrumental in assessing the impact of green logistics on Vietnam's trade with partners in regions such as CPTPP, RCEP, ASEAN, and APEC from 2007 to 2020, using an extended gravity model This approach not only enriches the academic discourse but also offers practical insights for policymakers and businesses in formulating and adjusting policies to foster the adoption of green logistics, illuminating the path toward aligning economic pursuits with sustainability goals.
Research objectives
Overall goal
Green Logistics and the Impact of Green Logistics on Vietnam's Regional Trade will be the main research subjects of this research.
Detailed goals
The study aims to evaluate the impact of green logistics on Vietnam's regional trade, focusing on the development and application of the GLPI This index will be instrumental in quantifying the effects of sustainable logistics practices on trade within the frameworks of major trade agreements like the CPTPP, RCEP, ASEAN, and APEC In order to execute these objectives, the following detailed goals are proposed:
1 To develop a comprehensive methodology for calculating the GLPI using PCA, integrating both logistics and environmental performance indicators
2 To analyze the relationship between green logistics and trade performance in Vietnam from 2007 to 2020, employing an extended gravity model to assess the impacts across different regional trade agreements, thereby contributing to both academic research and practical policy-making
3 To propose policy recommendations based on the study’s findings that will help Vietnam and its trading partners in the CPTPP, RCEP, ASEAN, and APEC regions align economic growth with sustainability goals.
Research question
Question 1: How is the concept of Green Logistics defined and measured within the context of this study?
Question 2: What is the impact of Green Logistics on Vietnam's regional trade within the scope of CPTPP, RCEP, ASEAN, and APEC?
Question 3: Based on the findings, what policy recommendations can be made to develop green logistics and enhance Vietnam's regional trade?
5 Subject and scopes of research
Research subject
Impact of green logistics on Vietnam’s regional trade.
Research scope
- Geographical Scope: The study focuses on the impact of green logistics on Vietnam's regional trade, covering trade relations with key regions including CPTPP, RCEP, ASEAN, and APEC
- Time Scope: The analysis spans the period from 2007 to 2020, providing a comprehensive view of the evolution and effects of green logistics over this period.
Research methods
Methodological Approach
To accurately assess the impact of green logistics on regional trade, this study employs a mix of qualitative and quantitative research methods:
Qualitative Methods: Systematic review and synthesis of existing literature, including research articles, theses, and dissertations from both domestic and international sources This helps in understanding the broader context and defining the conceptual framework for green logistics and trade performance
Quantitative Methods: Utilization of PCA method to develop the GLPI and an extended gravity model for panel data analysis This approach allows for a detailed examination of the relationship between green logistics practices and trade outcomes across various regional trade agreements.
Data Collection and Analysis
The study utilizes secondary data spanning from 2007 to 2020, sourced from multiple reliable databases including the World Bank, World Integrated Trade Solution (WITS), and various official trade agreement portals such as ASEAN, APEC, CPTPP, and RCEP The comprehensive dataset covers Vietnam and its trade partners within these trade agreements, facilitating a robust longitudinal analysis Statistical analysis is conducted using Stata software, where the data is subjected to regression analysis, hypothesis testing, and estimation to determine the impact of the GLPI on trade flows and performance.
The novelty of the research
This study emerges from the increasing awareness of the importance of sustainable practices in the logistics sector It specifically investigates the impact of green logistics on Vietnam's trade relationships with regional partners, a relatively unexplored area in the existing literature The research has innovatively employed a novel GLPI, derived through PCA method, to measure the effects of sustainable logistics from 2007 to 2020 Findings indicate a robust positive correlation between the adoption of green logistics practices and Vietnam's export performance, highlighting the dual benefits of environmental protection and enhanced economic and operational efficiencies in the trade sector
The distinctiveness of this study lies in its contextual focus on Vietnam and the development of the GLPI, which provides fresh perspectives on the interplay between sustainable logistics practices and trade performance This novel approach not only fills a gap in the literature but also offers practical insights that can inform policy- making and business strategies, emphasizing the role of green logistics in advancing economic growth while fostering environmental sustainability Overall, this study marks a significant step in understanding and harnessing the potential of green logistics in developing economies, particularly within the context of regional trade, setting a foundation for future research and practical applications aimed at achieving sustainable economic growth.
Research structure of the topic
In addition to the introduction, conclusion and list of references, the research is structured into the following main chapters:
- Chapter 1: Theoretical framework on the impact of green logistics on regional trade
- Chapter 4: Policy implications on improving Vietnam’s regional trade through green logistics
THEORETICAL FRAMEWORK ON THE IMPACT OF GREEN
Overview of green logistics
Green logistics emerged in the 1990s, focusing on reducing the environmental impact of logistics activities, such as greenhouse gas emissions, noise pollution, and waste The aim was to achieve balanced development across economic, social, and environmental spheres (Srivastava, 2007) Green logistics integrates environmental considerations into supply chain management, involving strategies to reduce energy and ecological impacts associated with goods distribution, material handling, waste management, packaging, and transportation (De Souza et al., 2022; Rodrigue et al.,
Historically, logistics has been concerned primarily with cost minimization and maximizing profits, with a narrow focus on business outcomes However, modern approaches such as green logistics consider the environmental and social responsibilities of supply chain operations Green logistics not only encompasses business activities but also includes the standardization, control, and management of green practices within the supply chain (Mesjasz-Lech, 2017)
The term “green logistics” defines the integration of eco-efficient management of product and information flows from the point of origin to consumption, aiming to meet or exceed customer expectations It extends the scope of traditional logistics by incorporating environmental principles into the system, optimizing all logistics activities to minimize environmental damage, and efficiently using logistics resources (Sbihi & Eglese, 2007)
From a sustainable development perspective, green logistics is defined as producing and distributing goods in a way that considers environmental and social factors, enhancing the environmental profiles of suppliers and customers while maintaining operational effectiveness This includes measuring the environmental impact of various distribution strategies, reducing energy use, waste, and managing waste disposal (Sbihi & Eglese, 2007)
Unlike traditional logistics, which primarily aims at cost reduction, green logistics emphasizes waste minimization, energy efficiency, use of renewable energy, and optimization of transportation and distribution processes While initial costs may be higher, the long-term benefits include lower operational costs and sustainable business practices (Murphy & Poist, 2000; Carter & Rogers, 2008; Seuring & Müller,
2008) The adoption of green logistics is influenced by factors such as government relations, social factors, and competitive capabilities (Mangla et al., 2016; Sharma et al., 2023; Tseng & Chiu, 2013)
Green logistics involves all the resources and inputs needed to produce a product or provide a service in accordance with customer needs Resources not only include physical and human resources but also involve services, information and technology Green logistics exists at both levels: planning and organization At the first level, the question is where to get raw materials, finished products or services from? When? And how to transport them to where? Therefore, the issue of location becomes important The second level focuses on how to get resources and inputs from the beginning to the end of the supply chain and must address issues related to transportation and storage
The process of transporting goods needs to apply many transportation methods, use green means of transport, and prioritize the use of clean fuel Shipping by water produces 4-5 times fewer emissions and shipping by rail 7-8 times less than shipping by road Plan a reasonable freight network and arrange distribution centers, choose appropriate traffic routes to avoid unnecessary travel, and convective freight transportation will help reduce costs and save fuel materials and reduce emissions into the environment
Optimize warehouse and inventory management strategies to reduce logistics costs and minimize environmental pollution Design warehouse systems that use energy effectively, exploit green energy, and design sustainable buildings It is necessary to carefully study the supply - demand ratio, calculate inventory costs to apply an appropriate inventory strategy, storing too much or too little creates waste Green logistics is a new method of modern logistics compared to traditional logistics Green logistics not only limits the harm caused by logistics to the environment during the logistics process but also cleans up the logistics environment and makes the best use of available resources logistics resources (Seroka-Stolka & Ociepa-Kubicka, 2019) The biggest difference between Green Logistics and Traditional Logistics is that green logistics focuses on reducing negative impacts on the environment and increasing energy efficiency focusing on cutting costs without considering sustainability Although initially, implementing green logistics may incur higher costs than traditional approaches, in the medium to long term, benefits accrue including lower costs and sustainability sustainability of the business model
Based on the relationship between green logistics and traditional logistics, it can be seen that green logistics is an extension of traditional logistics in the context of the green and low carbon era Green logistics is therefore not a competitor to traditional logistics, but an extension that adds new dimensions that add considerations of environmental costs and ecological limits
1.1.3 The role of green logistics
+) Minimize negative impacts on the ecosystem
In Logistics, transporting goods from one place to another is the main cause of carbon emissions and environmental pollution, implementing Green Logistics in companies can bring positive effects including increased efficiency Logistics, reduce pollution, reduce raw material consumption, increase compliance with environmental laws and reduce unsustainability through the regulation of natural resources to produce goods and provide services
Sustainable logistics helps cope with global climate change, maintain ecosystems, reduce impacts on the environment such as reducing CO2 emissions, reducing noise, etc Sustainable logistics also develops in a balanced relationship equality with culture and existing resources, access to clean water, clean energy and effective treatment of waste to create conditions for sustainable development
The process of transporting goods uses many modes of transport (multimodal transport) Apply fuel-efficient transportation logistics, prioritizing the use of clean fuel Planning the transportation network, arranging distribution centers, and choosing reasonable transportation routes so that vehicles run in both directions and in the opposite direction will help reduce costs
Going green and saving money often go hand in hand because sustainable business practices focus on increasing efficiency and reducing waste From the first delivery to the last mile, green logistics helps cut emissions, costs and carbon footprint Although creating the advantages of green logistics also requires investment
A recent research paper show evidences that highly sustainable companies significantly outperform their counterparts over the long term, both in terms of stock market as well as accounting performance The bottom line is that green business is synonymous with good business As a typical example, by switching to green energy supplies, companies like Google and Amazon have reduced energy costs by up to 10% Meanwhile, by removing unnecessary weight from aircraft, United Airlines reduced overall fuel consumption and saved $2 billion in fuel costs
Often, the most efficient method of completing a task is also the most environmentally friendly method - meaning that using an environmentally friendly method will help improve operations and supply chain management For example, along with saving Walmart $1 billion in fuel costs, the organization's fleet efficiency program also helped improve the company's overall energy efficiency Along with optimizing delivery routes, Walmart's program focuses on green logistics management Driven to find ways to reduce fossil fuel consumption, lower carbon emissions are one of the key goals behind Walmart's fleet efficiency program Ultimately, Walmart reduced carbon dioxide emissions by 650,000 tons through the use of sustainable logistics strategies such as automating delivery routes
+) Attract new and improved partnerships
Overview of regional trade
The concept of regional trade is not new and has been a part of global economics for centuries However, the structured approach to regional trade, through the formation of trade blocs and agreements, gained prominence after World War II Regional trade, defined as the exchange of goods and services within geographical and political boundaries, plays a pivotal role in economic integration and development (Jones & Kierzkowski, 2005) This type of trade is typically characterized by countries within close proximity engaging in import and export activities Such trade is often facilitated by regional trade agreements (RTAs) that aim to reduce barriers like tariffs and import quotas, thus fostering economic cooperation among member countries According to the World Trade Organization (WTO), RTAs are reciprocal trade agreements between two or more partners, which typically liberalize trade among the participating countries more than with the rest of the world (WTO, 2021) According to Baldwin and Taglioni (2006), such agreements enhance economic efficiency and promote a more inclusive global trade system They argue that RTAs can lead to trade creation among members and trade diversion from non- members, potentially reshaping global trade dynamics
The classification of Regional Trade Agreements (RTAs) varies based on the degree of economic integration and cooperation they entail Each of these types of
RTAs aims to increase economic cooperation and integration among its members, but they do so to varying extents, reflecting differing levels of commitment to economic integration and the surrendering of national sovereignty in economic policy-making
Free Trade Areas (FTA): In a Free Trade Area, member countries agree to remove tariffs, import quotas, and other barriers to trade on goods moving among them However, each country retains its own trade policies with respect to non- members This means that the countries within an FTA can have different tariffs and other trade measures when dealing with countries outside the FTA A well-known example of an FTA is the North American Free Trade Agreement (NAFTA), which was succeeded by the United States-Mexico-Canada Agreement (USMCA)
Customs Unions: A customs union represents a deeper level of integration compared to an FTA In addition to eliminating internal barriers to trade (like tariffs and quotas among the member countries), it requires member states to adopt a unified set of trade policies toward non-member countries, including a common external tariff This means that all members of a customs union charge the same tariffs on goods coming from outside the union The European Union (EU) began as a customs union and is a prominent example of such an arrangement
Common Markets: Extending further than a customs union, a common market allows not only for the free movement of goods and services but also the free movement of capital and labor across borders within the market This level of integration aims to create a single market, making it easier for workers and investments to move freely across member states, thereby fostering more integrated and robust economic ties The European Economic Area (EEA) is an example, encompassing the EU countries plus Iceland, Liechtenstein, and Norway, permitting the free movement of persons, goods, services, and capital within the internal market
Economic Unions: This is the most integrated type of regional trade agreement Economic unions incorporate all the features of a common market and additionally require the harmonization of economic policies, including monetary and fiscal policies, among member countries This might involve coordinating government spending and tax policies, as well as adopting a common currency The Eurozone, where countries use the euro as their common currency and coordinate broader economic policies through the European Central Bank and other EU institutions, is a prime example of an economic union
1.2.3 The role of regional trade
Regional trade is crucial as it allows countries to capitalize on their geographical proximity and shared economic interests, enhancing mutual economic growth Countries engaged in regional trade can access larger markets, achieve economies of scale, and strengthen their positions in the global market According to Krugman (1991), regional economic integration fosters a more efficient allocation of resources, aligning with the principles of comparative advantage A key advantage of regional trade is the reduction of transaction costs and tariffs among member nations, significantly decreasing the cost of goods and services This economic integration not only bolsters political relationships but also leads to more stable and cooperative interactions between countries (Baldwin and Venables, 1995) Additionally, regional trade agreements (RTAs) often attract foreign direct investment, perceived by investors as safer and more lucrative due to stable economic policies and fewer trade barriers
RTAs aim to ease various trade barriers, including tariffs, import quotas, and regulatory constraints, with the following primary benefits:
Economic Integration: Economic integration through RTAs involves countries within a specific region forming a trade bloc, which is an agreement to reduce or eliminate trade barriers such as tariffs and quotas among member nations This integration allows for the creation of larger markets for goods and services, enhancing the potential consumer base and business opportunities for each member country Moreover, economic integration facilitates the freer movement of labor and capital across borders within the bloc (Baldwin & Venables, 1995) This mobility helps optimize the distribution of resources, matching skills and investments with the areas where they are most needed and effective For instance, labor-intensive industries can benefit from easier access to labor markets in neighboring countries, while capital- intensive industries can attract investments from across the region Such fluidity helps in harnessing regional strengths, leading to overall economic growth and development
Economies of Scale: By participating in RTAs, firms can expand their operations beyond domestic markets into those of neighboring countries This expansion is not just geographical but also in terms of production and distribution capacities Economies of scale are achieved when the cost per unit of production decreases as the volume of production increases For companies, larger markets mean the ability to produce goods in larger quantities, which reduces costs through more efficient use of production processes and technologies Additionally, firms can leverage regional supply chains, reducing logistical costs and enhancing operational efficiency, further driving down costs
Increased Competition: RTAs often reduce trade barriers like tariffs, import quotas, and certain regulatory constraints, which can otherwise act as significant hurdles to entering new markets When these barriers are lowered or removed, it encourages more firms to enter the market This increase in market participants boosts competition Heightened competition pressures firms to innovate, reduce prices, and improve the quality of their products and services to attract and retain customers For consumers, increased competition can mean more choices and better prices, enhancing consumer welfare across the region
Political Stability: The economic interdependence created by RTAs can lead to greater political stability among the member countries When countries engage deeply in trade relationships and their economies become increasingly interconnected, they have greater incentives to maintain peaceful and cooperative diplomatic relations The rationale is straightforward: political tensions or conflicts could disrupt the economic benefits derived from the trade agreements As noted by Mansfield and Pevehouse
(2000), economically integrated regions are likely to experience fewer conflicts and more collaborative political interactions This stability not only benefits the involved countries politically but also enhances the region's attractiveness to investors, further boosting economic prospects.
Impact of Green Logistics on Regional Trade
Green logistics, a strategy that integrates environmentally friendly practices into the management of supply chain operations, has increasingly become a focal point in regional trade discussions The adoption of green logistics practices can significantly alter trade dynamics, improve sustainability, and influence economic relationships among countries The impact of green logistics on regional trade is multifaceted, offering environmental, economic, and strategic advantages As the world moves towards more sustainable practices, regions that embrace green logistics are not only contributing to environmental conservation but are also enhancing their economic and competitive stature in the global economy
Environmental Benefits: The primary goal of green logistics is to minimize the environmental impact of the logistics and supply chain operations This involves reducing carbon emissions, enhancing energy efficiency, and promoting the use of renewable resources By adopting such practices, countries within a regional trade bloc can significantly lessen their environmental footprint This not only contributes to global efforts against climate change but also enhances the environmental quality within the region, fostering a healthier living environment for its inhabitants Carter and Rogers (2008) propose a framework where green logistics practices contribute to sustainable development by lowering greenhouse gas emissions, reducing waste, and improving energy efficiency McKinnon (2010) discusses the direct impact of green logistics on trade efficiency, noting that environmentally friendly logistics solutions can mitigate the environmental impact of transporting goods across borders, thus enhancing the appeal of regional trade
Economic Advantages: Green logistics can lead to economic benefits for participating countries Efficient logistics systems reduce waste and energy consumption, leading to cost savings Additionally, adopting green technologies and practices can spur technological innovation and development within the region This can open up new markets and create job opportunities in emerging sectors such as renewable energy, waste management, and eco-friendly materials Furthermore, as global demand increases for sustainable products and services, regions that lead in green logistics are better positioned to capitalize on these market trends Carter and Rogers (2008) argue that integrating sustainability into logistics and supply chain management is crucial for achieving economic, environmental, and social objectives
Regulatory Compliance and Standards: Many regions are implementing stricter environmental regulations and standards that impact trade policies Green logistics helps countries comply with these regulations and avoid penalties or trade barriers that might arise due to non-compliance Moreover, standardized green practices across a trade bloc can simplify regulatory processes, reduce administrative burdens, and ensure a level playing field for all member countries
Enhanced Trade Partnerships: Green logistics can strengthen trade partnerships by aligning the environmental goals of different countries This alignment can lead to more cohesive and cooperative relationships within a trade bloc, as member countries work together towards common environmental and sustainability targets It also enhances the region’s reputation on the global stage, making it an attractive partner for international trade and investment
Competitive Edge in Global Markets: Regions that integrate green logistics into their trade operations can gain a competitive edge in global markets Consumers and businesses are increasingly making decisions based on environmental impact Regions known for their commitment to sustainability are likely to attract environmentally conscious consumers and businesses looking for green supply chain partners This shift can lead to an increased market share and higher profitability for businesses within the region Lin and Ho (2011) explore how green logistics practices can lead to enhanced competitive advantages for companies and regions by improving environmental performance and reducing costs They suggest that sustainability in logistics operations can attract environmentally conscious consumers and trade partners, fostering a green supply chain that benefits all stakeholders.
SUMMARY
Chapter 1 provides a comprehensive exploration of green logistics and its interrelation with regional trade, underpinning the necessity for environmentally sustainable practices within supply chain management The chapter discusses how green logistics plays a crucial role in modernizing traditional logistics by integrating environmental principles, thereby not replacing but extending traditional logistics with a focus on reducing ecological limits and costs Moreover, the chapter delves into the significance of regional trade, characterized by the exchange of goods and services within specific geographical and political boundaries facilitating easier movement of goods, services, capital, and labor, enhancing economic efficiency and fostering political stability among member countries In essence, Chapter 1 establishes a foundational understanding of green logistics' role in promoting environmentally and economically sustainable practices within regional trade frameworks It sets the stage for exploring the multifaceted impacts of these practices on regional economic dynamics, trade partnerships, and competitive advantages in global markets.
RESEARCH METHODOLOGY
Research design
This study employs a quantitative research approach utilizing the extended gravity model and PCA method to investigate the impact of green logistics on Vietnam's regional and international trade The research design integrates both cross- sectional and time-series data to provide a comprehensive analysis of trade dynamics over 840 observations across 60 countries, spanning from 2007 to 2020 This rich dataset is sourced from authoritative sources such as the World Integrated Trade Solution (WITS), World Bank (WB) and the official websites of significant regional trade agreements, including APEC, CPTPP, ASEAN, and RCEP.
Research model
The gravity model has emerged as a ubiquitous tool for quantifying the impact of various factors on the scope of international trade Pửyhửnen (1964) and Tinbergen
(1962) first employed this model in their analyses, and since the latter half of the 1970s, extensive research has been devoted to affording the model with a solid theoretical and experimental foundation Despite its youth, the gravity of the model has proven to be a potent analytical instrument, aiding researchers to better understand the intricate forces governing international trade According to this law, the force of gravity is directly proportional to the magnitude of the economies and inversely proportional to the square of the distance This implies that an increase in the magnitude of an entity results in a commensurate rise in the force of gravity while widening the distance between them leads to a decrease in the gravitational force between them The general gravity model applied in export has the following form:
𝐷𝐼𝑆𝑖𝑗 ) 𝛽 Where EXPij is the volume of export trade between countries i and j; GDPit and GDPjt are GDP of country i and j; DISij reflects the distance between country i and j (measured in kilometers or miles); A is a constant
This research explores how green logistics impacts Vietnam's regional trade To systematically approach this, the study is guided by the core research question: What is the impact of green logistics on Vietnam’s regional trade? To cater to the specifics of this research, the gravity model was extended, thereby incorporating variables pertinent to the research objective
In order to analyze the impact of green logistics on Vietnam's regional trade, the authors focus on the trade relationship of Vietnam with countries in regions including CPTPP, RCEP, APEC, and ASEAN The main dependent variables are the volumes of independent variable is the green logistics performance index (GLPI), alongside GDP, distance, population, and economic openness According to Anderson & van Wincoop
(2003), GDP is considered one of the most important factors affecting international trade, as it reflects the size of the economy and its ability to produce goods and services Population (POP), according to Frankel & Rose (2002), is also an important factor, as it is related to market size and overall consumer demand Finally, economic openness (OPEN) is included in the model based on modern international trade theory and studies such as Sachs & Warner (1995), demonstrating the close relationship between trade and economic growth Including these variables in the regression model aims to provide a more comprehensive approach in assessing the impact of green logistics performance on trade outcomes Regional trade agreements are controlled using dummy variables for ASEAN, APEC, CPTPP, and RCEP Each dummy variable assumes a value of 1 if the trade partner country is a member of the respective region and 0 otherwise The gravity model equation is as follows:
LnTRADE ijt = β0 + β1LnGLPI jt + β2GDP jt + β3LnDIS ij + β4LnPOP jt + β5
LnOPEN jt + β6ASEAN jt + β7APEC jt + β8CPTPP jt + β9RCEP jt + u ijt (1)
Table 1: Variable Definitions and Data Sources
EXPijt Vietnam’s export to other countries
IMPijt Vietnam’s import to other countries
Vietnam’s GDP, other countries’ GDP
DISij Distance between Vietnam and other countries
OPENjt Trade (%GDP) - World Bank (WB)
POPjt Population + World Bank (WB)
ASEANjt ASEAN member countries + ASEAN main portal
APECjt APEC member countries + Asia-Pacific Economic
CPTPPjt CPTPP member countries + Australian Government,
Department of Foreign Affairs and Trade
RCEP member countries + ASEAN main portal
Principal Component Analysis (PCA)
The principal components method (PCA) is a widely used tool for constructing a unified value to represent a variable that can be measured by many different component factors (Jolliffe & Cadima, 2016) GLPI is built based on the six factors that make up the traditional Logistics Performance Index (LPI), adding environmental factors such as CO2 emission intensity, N2O emission intensity, gas emission intensity methane (CH4), and fluorine greenhouse gas (Fgas) emission intensity (Fan et al 2022) (Table 2) These factors were selected because they play an important role in assessing the environmental impact of logistics activities The GLPI index calculation process includes the following main steps:
Data is collected from reliable and highly representative sources, specifically LPI factors (Custom, Infra, Ship, Service, Tracing, Timeliness) collected from Worldbank, environmental factors (including CO2, N2O, CH4, and FGAS emissions) collected from ClimateWatch Emission values are taken as the inverse value to reflect the negative impact on green logistics efficiency The larger the emission values, the smaller the contribution to the GLPI index
Table 2: Constituent variables of GLPI
Element Constitutive variables Data sources
Infra Ship Service Tracing Timeliness https://data.worldbank.org/
N2O CH4 Fgas https://www.climatewatchdata.org/
The component factors were then normalized through benchmark calculations to ensure the data were comparable across different scales before being subjected to PCA analysis using statistical software
This step is used to reduce the number of variables in the data but still retain the majority of information The results of the PCA analysis in Table 3 provide eigenvalues and cumulative variance values that can be used to identify principal components from the results The first five principal components were selected to describe the data Specifically, the Eigenvalue value is the individual value corresponding to each main component, indicating the "importance" level of that component The higher this value, the more variance in the data that principal component explains Comp1 has the highest eigenvalue of 5.50, indicating that it explains most of the variance The variance ratio (%) indicates the percentage of the total variance of the data explained by each component Comp1 explains 55.0% of the total variance of the data, becoming the most important component Cumulative variance (%) is the total percentage of variance explained by the current component and all previous components The cumulative variance to Comp2 is 90.7%, meaning that the first two components explain almost 91% of the total variance of the data
Table 3: Results of PCA analysis
Ingredient Eigenvalue Variance ratio (%) Cumulative variance (%)
The PCA results show that the two main components Comp1 and Comp2 explain nearly 91% of the total variance of the data selected to calculate the GLPI value, with each component contributing to the index based on its level of importance This step simplifies multidimensional data into a single index representing green logistics performance, GLPI This index is then adjusted through a linear transformation, normalizing the GLPI scores onto a scale of 1 to 5 to be consistent with the LPI scale where the closer the index is to 5 the better the performance higher logistics.
Estimation method
The study utilizes a comprehensive panel dataset with 840 observations from 60 different countries over the period from 2007 to 2020 This dataset provides a longitudinal view, enabling the analysis of changes and trends in regional trade relations concerning green logistics over time To address the skewness and heteroscedasticity often found in economic data, all key variables such as trade volumes, GDP, population figures, and logistics performance indices have been transformed using their natural logarithms This transformation stabilizes variance and makes the data more suitable for regression analysis
Panel data from multiple countries over time, autocorrelation may appear between consecutive temporal observations or between data from different countries Therefore, the Generalized Least Squares (GLS) method is a suitable estimation method to solve this problem by applying different weights to observations based on the structure of the data covariance matrix (Greene, 2000; Kennedy, 2008) Besides, GLS is also considered to increase estimation efficiency compared to the ordinary least squares (OLS) method in cases where panel data has heterogeneity or correlation between observations (Wooldridge, 2010).
SUMMARY
Chapter 2 outlines the methodologies used to assess the impact of green logistics on regional trade, specifically focusing on Vietnam and its trade regions including APEC, CPTPP, ASEAN, and RCEP The chapter introduces the Principal Component Analysis (PCA) to develop the Green Logistics Performance Index (GLPI), incorporating environmental factors alongside traditional logistics performance metrics The chapter also details the use of the Gravity Model, expanded to include variables that capture the essence of green logistics, thereby analyzing its influence on trade dynamics A comprehensive dataset spanning multiple years and countries supports this analysis, ensuring robust and representative findings This methodological framework is crucial for understanding how green logistics practices can shape regional trade landscapes.
EMPIRICAL RESULTS
Descriptive statistics
This study uses Stata 17, software to conduct statistical data regression analysis from 60 countries, spanning 5 regions: Asia, Europe, Africa, Australia, America, covering the period from 2007 to 2020 Descriptive statistics for all variables are illustrated in Table 4 The notable variability in the standard deviations of critical environmental metrics such as log_N2O, log_FGAS, log_CO2, and log_CH4 indicates a wide range of environmental impacts attributed to these greenhouse gases Logistics variables like log_TRAC, log_TIME, and log_LOGS, log_ITRN, log_INFR, log_CUST have average values that point to a moderate level of logistics performance, with minimal fluctuation, suggesting consistency in logistics processes Trade values, depicted through log_vnexp and log_vnimp, show substantial averages, indicating high trade activities, while exhibiting moderate variability across the dataset Key economic indicators include log_GDP and log_POP, both displaying high mean values, with log_GDP particularly showing a consistent trend, signaling stable economic conditions in the observed countries The log_DIS variable captures the diverse geographical distances involved in Vietnam’s trade relationships Its broad range and significant variability highlight the varied distances across Vietnam's trading network
Variables Observations (N) Mean Std dev Min Max log_N2O 840 7.041 1.450 3.497 10.919 log_FGAS 840 5.720 1.670 2.639 10.222 log_CO2 840 9.251 1.830 2.303 13.845 log_CH4 840 7.838 1.640 4.205 11.684 log_TRAC 840 1.200 0.169 0.711 1.531 log_TIME 840 1.302 0.138 0.747 1.588 log_LOGS 840 1.165 0.181 0.560 1.573 log_ITRN 840 1.151 0.141 0.683 1.486 log_INFR 840 1.143 0.213 0.405 1.491 log_CUST 840 1.099 0.201 0.391 1.445 log_EXP 840 12.784 2.067 6.848 18.159 log_IMP 840 12.435 2.158 6.980 18.246 log_GDP 840 26.445 1.657 22.009 30.694 log_DIS 840 2.229 0.984 0.259 6.695 log_POP 840 16.877 1.566 13.887 21.068 log_OPEN 840 4.310 0.526 2.794 6.080
The correlation matrix presented in Table 5 provides a comprehensive overview of the relationships used in this research Each entry in the matrix represents a Pearson correlation coefficient, quantifying the linear association between two variables Notably, there is a strong positive correlation between log_GDP and te log_vnexp, with a coefficient of 0.737, suggesting that an increase in GDP is typically associated with an increase in export volumes Similarly, log_POP shows substantial positive correlations with both log_GDP and log_vnexp, indicating that larger populations may correlate with higher GDP and export levels
Conversely, log_OPEN exhibits negative correlations with several variables, including log_GDP and log_POP, implying that greater openness could be linked to lower GDP and population figures in this specific context Such a pattern suggests a complex interaction between openness and other economic factors that warrants further investigation Additionally, the correlation coefficients between GLPI and other variables like log_vnexp and log_vnimp are modest but positive, hinting at a potential relationship between green logistics performance and the export and import values This relationship, while not overwhelmingly strong, is sufficient to merit a deeper exploration through more detailed statistical analysis
All the correlation coefficients are below 0.8, which suggests that multicollinearity may not pose a significant issue in the subsequent regression analysis planned for this research The absence of very high correlations between the independent variables indicates that each provides unique information that could contribute to understanding the dynamics explored in this study.
Green logistics performance
Figure 1 Average GLPI index fluctuations from 2007 to 2020
During the period from 2007 to 2014, GLPI showed a gradual growth, from 1.77 to 1.92 (Figure 1) This may reflect the growing awareness and implementation of green logistics practices, including reducing carbon footprints, improving supply chain sustainability and the adoption of eco-friendly means of transportation environment However, after 2014, the GLPI index has stabilized, fluctuating slightly between 1.88 and 1.92 This trend may indicate that the adoption of green logistics practices has begun to plateau and that further improvements require larger investments or technological breakthroughs
However, in the 14-year period from 2007 to 2020, the world average green logistics index was 1.87/5, showing that, despite efforts to improve green logistics, the effectiveness of green logistics was limited The results of these efforts are still quite limited This may reflect that current strategies and technologies are not strong enough to create a significant environmental change in the logistics sector This relatively low average also indicates that there is plenty of space and opportunity for improvement This requires continuous innovation in technology, supply chain management strategies, and more active engagement from stakeholders, including governments and businesses
Figure 2 Top 5 countries with the highest GLPI index in the world
The top 5 countries with the highest GLPI index include Singapore (2.88), Germany (2.87), Netherlands (2.87), Sweden (2.86) and Belgium (2.82) (Figure 2) Singapore has a service-oriented infrastructure and favorable business environment, helping the country streamline its transportation systems to reduce wasted time while improving the accuracy and efficiency of travel delivery In addition, Singapore boasts outstanding connections with regional hubs thanks to its efficient air and sea trade links, including over 200 services to over 600 ports worldwide, helping Singapore to important role in the global Logistics industry With a geographical location right on the equator, almost no threat of natural disasters has created conditions for the Lion Island's airport and port to operate smoothly throughout the year In addition, the Singapore government strongly supports subsidies and tax incentives to encourage businesses to apply green practices Singapore is the first country in the world to set a goal of reducing carbon emissions for the civil service To reduce emissions, Singapore is preparing to "abandon" its position as the world's oil and gas center with a roadmap to cut the output of oil refineries here Singapore is making great efforts and has favorable conditions to become a clean energy center of the region, becoming a supplier of LNG (and hydrogen) to Southeast Asia Germany and the Netherlands are strong economies in Europe, famous for their efficient transport and logistics systems Both countries have a long history of adopting sustainable solutions and advanced technology in supply chain management, along with policies that support the environment Sweden is known for its strong commitment to the environment and sustainable development Investment in clean technology, as well as advanced environmental policies, have helped Sweden achieve high efficiency in the field of green logistics Belgium, with its strategic geographical location in the heart of Europe, has developed strongly in the field of logistics Investment in modern infrastructure and smart logistics solutions also contributes to improving the country's GLPI index
Figure 3 Comparison of average GLPI index between developed and developing countries
Figure 3 shows that there is a significant difference between developed and developing countries in terms of GLPI scores Developed countries have higher GLPI scores thanks to their economic resources and advanced technology, as well as strict environmental policies and demand for green logistics from consumers and businesses
In contrast, developing countries face financial, technological and regulatory constraints that hinder the adoption of sustainable logistics practices This gap partly reflects global economic and technological inequality, and global cooperation and support is needed to help developing countries improve their GLPI scores and ensure a sustainable climate We need a more balanced and sustainable world
Figure 4 Comparison of average GLPI index between continents over the years
Figure 4 shows significant differences in green logistics performance across continents This reflects the influence of many factors such as the level of economic development, infrastructure quality, legal framework and environmental policies in different regions Specifically, Europe (2.27) and Australia (2.12) have higher green logistics performance than other regions This can be explained through the adoption of stricter environmental policies, as well as stronger investment in green technology and infrastructure Previous studies have shown that the application of strict emissions standards, as well as the use of renewable energy, play an important role in improving green logistics performance Asia (1.81) and Americas (1.65) reflect average levels of green logistics performance representing a trade-off between economic growth and environmental protection in these regions Asian countries, such as China and India, are gradually transitioning to greener business models, but many infrastructure and waste management challenges remain Africa (1.38) shows that it is having difficulty implementing green logistics strategies This may be due to limited resources, outdated infrastructure, and the absence of strong environmental policies At the same time, Africa is also facing other problems such as rapid population growth and poverty, reducing its ability to focus on environmental issues
This section presents an empirical analysis of the GLPI trends from 2007 to
2020, providing insights into the evolution of green logistics practices across various regional trade agreements
Table 6 GLPI from 2007 to 2020 of regional areas
Table 6 indicates varying degrees of progress in green logistics across ASEAN, RCEP, CPTPP, and APEC regions ASEAN shows a gradual increase in GLPI scores from 1.90 in 2007 to a peak of 2.05 in 2020, with a slight dip to 1.91 in 2016 The mean GLPI over this period is 1.98, reflecting steady progress with minor setbacks RCEP started with a GLPI of 2.03 in 2007 and exhibits a general upward trend, reaching 2.14 in 2020 Its mean GLPI is 2.07, which is higher than that of ASEAN, indicating a relatively stronger and consistent emphasis on green logistics practices CPTPP maintains the highest GLPI scores across all regions, starting at 2.29 in 2007 and consistently remaining around this value, with a peak at 2.31 in 2014 The mean GLPI for CPTPP is 2.24, signifying a high and stable commitment to green logistics, with less variability compared to the other regions APEC had the lowest starting GLPI score of 2.04 in 2007 but demonstrates incremental growth, achieving 2.06 by 2020 With a mean GLPI of 2.06, APEC shows a modest yet consistent improvement
Figure 5 GLPI Trends from 2007 to 2020
Comparing the regions, CPTPP shows the most robust performance in green logistics, while RCEP indicates a strong and steady improvement ASEAN progresses at a slightly slower pace, with some fluctuations, but maintains an upward trajectory APEC has the most modest improvement, which may be due to the group's larger and more diverse membership, reflecting varying levels of green logistics integration Overall, all regions have made progress over the years, highlighting a collective shift towards more sustainable logistics practices (Figure 5)
Figure 6 GLPI in different trade regions
Australia, Canada, Chile, New Zealand, and Singapore show high GLPI scores across the board for the trade blocs in which they participate, indicating strong and consistent performance in green logistics (Figure 6) Australia and Singapore, in particular, have some of the highest scores, suggesting they may be leaders in implementing sustainable logistics practices The data indicates that higher-income countries tend to have higher GLPI scores, which may correlate with more resources dedicated to sustainable practices in logistics Emerging economies exhibit lower scores, which may be improved with increased investment and focus on sustainable logistics practices Economic development, policy implementation, technological adoption, and investment in infrastructure likely play significant roles in these disparities
Ranking Category Rank of Vietnam Total Countries in Group
Vietnam's positioning within the GLPI rankings across various economic groupings sheds light on its commitment to sustainable logistics practices in different contexts (Table 7) Globally, Vietnam stands at a commendable 38th place out of 98, which places it well within the upper half of the index This demonstrates that Vietnam's efforts in green logistics are being recognized on the world stage, outpacing more than half of the countries in the global comparison Regionally, within ASEAN, Vietnam is ranked 4th out of 7 countries, indicating a robust standing in Southeast Asian green logistics, trailing just behind the top performers This suggests that within its immediate economic vicinity, Vietnam is a significant proponent of sustainable logistics initiatives In the broader contexts of RCEP and CPTPP, Vietnam holds the 8th position out of 12 and 10 countries, respectively These mid-range rankings imply that while Vietnam is not at the forefront in these groups, its performance is still competitive, with ample opportunity for advancement In the APEC forum, Vietnam's rank of 10th out of 16 signifies a moderate position This ranking in the lower-middle segment among diverse economies points to the potential for Vietnam to enhance its green logistics strategies to climb higher in the APEC standings.
Impact of Green Logistics on Vietnam's regional trade
Table 8 presents the results of regression analysis where Vietnam's export (log_vnexp) and import (log_vnimp) values are used as dependent variables across five different models, each corresponding to different regional trade agreements — GLOBAL, RCEP, APEC, CPTPP, and ASEAN The independent variables include the natural logarithm of the Green Logistics Performance Index (LnGLPI), GDP (LnGDP), distance (LnDIS), population (LnPOP), economic openness (LnOPEN), and dummy variables for the regional trade groups
Model 5 ASEAN log_vnexp log_vnimp log_vnexp log_vnimp log_vnexp log_vnimp log_vnexp log_vnimp log_vnexp log_vnimp
LnGLPI has a positive and statistically significant impact on Vietnam's exports in all models except the GLOBAL and CPTPP model for imports This suggests that an increase in green logistics performance is generally associated with an increase in exports This finding implies that better green logistics practices in Vietnam — such as efficient and sustainable transportation and supply chain management — are likely contributing to increased exports Businesses may be leveraging Vietnam's greener logistics as a competitive advantage in international markets, possibly because global consumers and businesses are increasingly favoring environmentally friendly products and services The positive correlation between GLPI and exports suggests that sustainable practices can lead to economic benefits, not just environmental ones However, the lack of significance of LnGLPI in the GLOBAL and CPTPP model for imports indicates that the benefits of green logistics on trade might be more pronounced on the export side than the import side in the case of Vietnam Several factors could contribute to this phenomenon Firstly, global markets may place a greater emphasis on sustainability, thereby influencing exports more significantly than imports Secondly, export-oriented industries in Vietnam may be further ahead in the adoption of green logistics practices compared to sectors that are more focused on domestic consumption or imports Thirdly, the structure and specific provisions of trade agreements, such as those within the CPTPP, may determine how green logistics impacts trade flows, where other elements such as tariff rates and trade barriers could exert a more direct influence on imports For policymakers and business leaders, these findings highlight the necessity to tailor green logistics strategies differently for export versus import operations Policymakers, in particular, should consider how trade agreements and domestic regulations can support the adoption of green logistics practices that not only enhance export performance but also address the less apparent impact on imports Such strategies could ensure a balanced approach to economic growth and environmental sustainability, potentially redefining the competitive landscape for Vietnam in both regional and global markets
LnGDP is consistently positive and significant across all models for exports and imports, indicating that higher GDP is associated with higher trade values Higher GDP typically reflects a larger economic size and, consequently, greater capacity for both production and consumption, leading to increased trade activity (Krugman,
2015) This is because countries with larger economies have more resources to engage in trade and a higher demand for diverse goods and services, which often results in a higher volume of exports and imports The positive association between LnGDP and trade values in this regression analysis is consistent with the broader consensus in international trade literature, reinforcing the importance of economic size as a predictor of trade activity
LnDIS shows mixed effects; it's negative in the RCEP, APEC, and CPTPP models for export and aligns with the negative coefficients of LnDIS in some models, where increasing distance between trading partners correlates with reduced trade volumes; and positive in the full model for export suggesting that distance may sometimes have a positive relationship with trade This could be explained by modern logistical advancements and trade agreements that reduce the effective impact of distance on trade For instance, countries far apart may still have strong trade relationships if they have efficient logistics, free trade agreements, or shared sea routes that facilitate easy trade flow (Helpman et al., 2008) Interestingly, LnDIS shows a positive impact in RCEP, APEC, and ASEAN models for Vietnam’s imports, indicating that favorable trade agreements within these blocs potentially reduce or eliminate tariffs, offsetting the traditional costs of distance The trend might also reflect Vietnam's growing stature as a regional hub, attracting imports for redistribution, or the influx of foreign direct investment necessitating the import of capital goods from distant countries These factors demonstrate Vietnam's nuanced integration into regional economies, where the benefits of securing diverse, quality imports eclipse the deterring effects of geographical distance
LnPOP is positive and significant in most cases, suggesting larger population sizes are associated with higher trade volumes This relationship can be attributed to larger populations potentially offering a bigger workforce, creating a larger domestic market, and providing a broader base for innovation and specialization, which can lead to increased production and, consequently, more trade (Krugman & Obstfeld, 2009)
LnOPEN shows a strong positive effect on both exports and imports in most models, implying that more open economies have higher trade volumes Economic openness generally includes trade liberalization policies such as reduced tariffs and non-tariff barriers, which can facilitate a greater flow of goods and services between countries This positive association aligns with the conclusions of classic trade theories, which suggest that countries stand to gain from trade through comparative advantages and resource allocations (Krugman, 2015)
The regional dummy variables (APEC, ASEAN, CPTPP, RCEP) show varied impacts on trade For example, being part of APEC or ASEAN is associated with higher exports in some models but not others Firstly, the APEC and ASEAN memberships having varied impacts on trade suggest that the benefits of being part of these blocs are not uniform across all types of trade This could be due to the diverse economic profiles and strategic priorities of member countries within these groups
APEC, with its wider geographic span and more varied economic development levels among member countries, might not always present uniform trade advantages for Vietnam On the other hand, ASEAN, being a more regionally focused and integrated group, may offer more consistent trade benefits due to shared regional goals and similar economic development stages (Balassa & Stoutjesdijk, 1975) Secondly, the differential impact highlighted by the regional dummy variables aligns with previous research, which suggests that trade agreements can have asymmetric effects on member countries, often contingent on the specific terms of the agreement and how they align with a country’s economic structure (Fan et al., 2023) For instance, Vietnam's exports could be bolstered by ASEAN due to tariff reductions and trade facilitation measures within the region, whereas APEC's broader focus might not translate to immediate trade volume increases for all member countries.
SUMMARY
Chapter 3 presents a detailed examination of the impacts of green logistics on regional trade with a specific focus on Vietnam, using both descriptive and inferential statistical methods Descriptive statistics highlight a significant variance in environmental impacts and consistent logistics performance, emphasizing robust trade activities The analysis of the Green Logistics Performance Index (GLPI) from 2007 to
2020 shows a positive trend in the adoption of green logistics practices The chapter utilizes the Gravity Model to analyze the nuanced effects of green logistics on regional trade, indicating that better green logistics practices correlate with increased exports but have a mixed impact on imports Regression analyses confirm that economic size, population, and trade openness significantly influence trade flows, aligning with traditional economic theories The differential impacts of regional trade agreements on Vietnam's trade are also discussed, providing insights into the complexities of leveraging economic and environmental benefits from green logistics within regional trading contexts.
POLICY IMPLICATIONS
Opportunities, challenges and trends in green logistics development in Vietnam 1 Green logistics development trend in Vietnam
4.1.1 Green logistics development trend in Vietnam
+) Transition to green energy economy
The Prime Minister of Vietnam and 124 heads of state attended and spoke at the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP 26) In addition to committing to bringing net emissions to
"zero" by 2050, Vietnam also actively participates in other initiatives and commitments to reduce methane emissions, as well as gradually converting coal power to energy cleanliness in the world The project on tasks and solutions to implement the results of the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26) has been approved by the Prime Minister in Decision No 888/QD-TTg Specifically, the project sets out goals such as: Completing a synchronous legal framework, promoting low carbon, creating favorable conditions for development and reducing gas emissions; Strengthen building and actively participate in partnerships on energy transition; At the same time, joining the Global Adaptation Alliance and international initiatives on limiting greenhouse gas emissions and energy transition; The transportation sector is encouraged to use electricity and green energy by 2030, E5 gasoline is used 100%; to help reduce greenhouse gas emissions in energy by 32.6%, 70% in forestry, 43% in agriculture, and land use; At the same time, there was an increase of 60.7% in waste treatment, 20% in carbon sequestration, and 38.3% in industrial processes (compared to conventional development)
Vietnam has set a goal to reduce 210.5 million tons of CO2 equivalent compared to BAU in the period 2021-2025, and reduce 563.7 million tons CO2 equivalent compared to BAU in the period 2026-2030 In recent years, Vietnam has actively made efforts to implement policies and actions to reduce greenhouse gas emissions even though it has not yet had to fulfill its mandatory greenhouse gas emission reduction obligations and has achieved many outstanding achievements, recognized and highly appreciated by the international community The Government actively implements activities and measures to reduce greenhouse gas emissions at different scales from the national level to the grassroots level through the implementation of specific strategies, plans and programs Typically, Hanoi has officially joined the "Aspiring City Commitment" project since October 2017 with the goal of committing to reducing greenhouse gas emissions through cleaner production activities in the industry, economical energy use programs in the area as well as guiding key energy users in Hanoi to carry out their responsibilities under the Law on Economical and Efficient Use of Energy
To develop green logistics, transportation infrastructure in Vietnam is increasingly being invested in, built and improved, especially key highway systems with the goal of reducing transportation costs such as Save time for Vietnamese businesses In addition, the seaport system has also been focused on investment and continuous improvement, actively applying advanced, modern and more environmentally friendly transportation services In addition, in recent years, Vietnam has focused on developing solar power, to ensure energy security and reduce greenhouse gas emissions According to Draft Power Plan VIII, it is expected that the installed capacity of solar power will increase from 17 GW (2020-2025 period) to about 20 GW (2030) The proportion of solar power is expected to account for 17% (by 2025), 14% (by 2030) in the structure of power sources
+) Enhanced awareness of green logistics among businesses
Vietnamese businesses and the government are increasingly focusing on applying green logistics solutions to minimize environmental impact and save resources Some businesses have implemented green logistics projects, using electric trucks and smart management systems Typically, realizing the decline of energy sources from fossil fuels and the increasingly serious problem of environmental pollution, Vingroup has successfully produced electric cars aimed at using environmentally friendly vehicles environmentally friendly Another example, Ha Tinh has applied science and technology in agricultural production such as producing microbial organic fertilizers from biological products Hatimic, Hatibio, to supply and distribute to the market products clean, safe and environmentally protected agricultural products According to the survey, up to 73.2% of businesses have included green logistics in their business strategies, thereby showing that businesses are aware of the role of green logistics in sustainable development Typically, South Hanoi cold storage has implemented green logistics control processes right from the packaging of goods by using simple wrapping films that can decompose in nature At the same time, instead of When using packaging to place products, businesses have replaced it with pallets (wooden, plastic) to minimize warehouse area and limit the impact on the level of greening From the survey results, the proportion of businesses using friendly packaging such as paper and cardboard reached 42.9%, 1.2% for wooden packaging, and less environmentally friendly packaging such as Styrofoam, nylon, and recycled plastic are used at 12.5%, 11.9%, and 11.3%, respectively
Green logistics is considered an indispensable link in the process of "greening" the supply chain and plays an important role in promoting sustainable development With the increasing popularity of the trend of transitioning to a global green economy, green logistics is receiving professional and serious attention and investment
By adopting green logistics practices, businesses can enhance their competitiveness in the regional trade market This can be achieved through improved efficiency, reduced costs, and meeting the growing demand for sustainable products and services Global brands such as Nike, Hitachi and Kuehne + Nagel have committed to reducing greenhouse gas emissions and eliminating carbon emissions from their businesses by 2030 or 2050 Since then, the development of green logistics along with green production have helped these businesses improve their competitiveness and reach consumers in the global supply chain
Developing green logistics capabilities enables businesses to tap into new markets both domestically and internationally With the rise of global green initiatives, countries are increasingly favoring environmentally friendly products and services, presenting opportunities for businesses with green logistics practices to expand their reach The global logistics market size is expected to reach 3,215 billion USD in 2021, an increase of 17.6% over the previous year In Vietnam, this industry is also growing rapidly, on average about 14-16% per year According to the latest report from Agility
- one of the world's leading logistics service providers, Vietnam has risen to 8th place in the Top 10 countries with the emerging market logistics index in 2021, an increase of 3 level compared to 2020 Developing green logistics will help businesses in the industry improve their competitiveness in the domestic market, in the context that Vietnam is increasingly integrating internationally and e-commerce is developing strong, while also opening up many opportunities for foreign markets
+) Compliance with Free Trade Agreements (FTAs)
FTAs such as EVFTA, CPTPP, and RCEP often include provisions related to environmental sustainability Developing green logistics aligns with these provisions, ensuring compliance and facilitating smoother trade relations with partner countries This can lead to increased import-export turnover and improved market access for businesses operating within the framework of these agreements
Countries with developed green logistics environments offer valuable insights and experiences that can benefit regions seeking to enhance their sustainability practices Through knowledge exchange and collaboration with these countries, regions like Vietnam can accelerate their green logistics development, fostering innovation and best practices in the industry
Governments play a crucial role in facilitating the development of green logistics through policies, incentives, and support mechanisms By aligning with government initiatives promoting sustainability, businesses can access financial incentives, technical assistance, and regulatory support, creating a conducive environment for green logistics development and regional trade growth The Government has issued many guidelines and policies on resolutely eliminating projects that pollute the environment, ensuring the quality of the living environment, protecting Vietnam's biodiversity and developing and building the economy Green economy, circular economy Not only that, the Government also provides incentives and support for environmental protection activities, helping businesses transfer and apply modern production technologies to minimize negative impacts on the environment and improve productivity high productivity, with incentives to attract foreign investment in the fields of environment and clean energy
Green logistics not only benefits businesses economically but also contributes to environmental sustainability By reducing CO2 emissions and minimizing the environmental footprint of the logistics industry, regions can preserve natural resources, mitigate climate change effects, and build a more sustainable environment conducive to long-term economic growth and regional trade stability This is done jointly all over the world, including Vietnam According to Prime Minister Pham Minh Chinh's speech at COP26 on November 1, 2021, Vietnam will strongly implement measures to reduce greenhouse gas emissions and cooperate with the international community, especially countries with large emitting economies, to achieve net zero emissions by 2050 Mechanisms under the Paris Agreement will be implemented in this process, to ensure sustainable development of country
+) Transportation and logistics infrastructure has not met the needs of economic development and exports, causing congestion, increasing transportation costs and affecting the environment
The World Economic Forum's (WEF) Global Competitiveness Report points out that the quality of Vietnam's transportation infrastructure is still very poor, lacking synchronized planning, unreasonable layout, and poor infrastructure quality The traffic layer is uneven and ranks behind many countries in the world as well as in the region such as Singapore, Malaysia, Thailand, Indonesia, and is one of the factors holding back Vietnam's trade competitiveness Specifically, there is a lack of connection between the seaport and the road and rail transportation system and support services behind the seaport
Railway logistics infrastructure in our country still faces many limitations due to outdated technology, lack of safety due to the use of narrow railway gauges, and inconsistent infrastructure, leading to very difficult transportation of goods Currently, Vietnam's railways only handle less than 1% of the amount of goods transported and the number of international intermodal transport stations in Vietnam is not many, mainly located in the Northern region
Policy implications
Vietnam's green logistics sector, crucial for sustainable development, faces unique opportunities and challenges To harness these opportunities effectively and overcome the challenges, several managerial implications are proposed Implementing these strategies will require coordinated efforts between the government, private sector, and international partners By focusing on these areas, Vietnam can enhance its green logistics capabilities, meet international standards, and improve its competitive edge in regional and global markets
Vietnam must prioritize upgrading its transportation and logistics infrastructure to meet the needs of a growing economy and to support efficient green logistics practices Investment in high-quality, sustainable infrastructure such as eco-friendly seaports, modernized railways with broader gauges, and upgraded road networks capable of handling heavy loads is essential This will not only reduce congestion and lower transportation costs but will also decrease the environmental impact associated with logistics activities Initiatives could include the development of green corridors and logistics parks that focus on sustainability
+) Strengthen Information Systems and Technology Integration
The Vietnamese logistics sector should advance its information technology systems to enhance efficiency and reduce environmental impacts Implementing advanced technologies such as Electronic Data Interchange (EDI), Transportation Management Systems (TMS), and Warehouse Management Systems (WMS) can help streamline operations and reduce emissions Additionally, investing in IoT and AI for better logistics tracking and management can optimize routes and loads, thereby decreasing fuel consumption and emissions
There is a critical need to enhance the quality and quantity of logistics personnel in Vietnam Initiatives should focus on education and training programs that not only improve technical skills but also raise awareness about green logistics practices Partnerships with international institutions and logistics companies can facilitate knowledge transfer and upskilling of the workforce, preparing them for higher standards required in green logistics operations
+) Simplify Regulatory and Customs Procedures
To support green logistics, Vietnam needs to streamline and modernize its customs and regulatory procedures Reducing bureaucratic red tape and adopting more transparent processes will decrease delays and associated costs, which are currently a barrier to efficient green logistics operations Implementing digital and automated systems for customs clearances and documentation can significantly enhance the speed and efficiency of cross-border trade
The Vietnamese government should continue to develop and implement policies that promote green logistics This includes providing incentives such as tax breaks, subsidies, and financial support for companies investing in green technologies and practices Policy frameworks should also encourage the adoption of renewable energy sources within the logistics sector and support initiatives for recycling and sustainable packaging solutions
Encouraging collaboration between the public and private sectors can lead to more significant advancements in green logistics Public-private partnerships can drive innovation, facilitate the sharing of best practices, and provide the capital necessary to invest in new technologies and infrastructure developments that support green logistics
+) Adapt to New Market Realities with Green Logistics
As global trends increasingly favor environmentally sustainable business practices, Vietnamese companies must adapt to remain competitive This involves not only adopting green logistics practices but also ensuring that these practices are well- communicated to potential international partners and consumers, highlighting Vietnam's commitment to sustainability in its supply chain operations
Beyond infrastructural and technological upgrades, comprehensive sustainability programs that address waste management, carbon footprint reduction, and overall environmental impact assessments should be standard practice within logistics operations These programs should be integrated into the corporate strategy of logistics firms, aligning business objectives with environmental sustainability goals
4.2.2 Enhance economic size and GDP
Enhancing Vietnam's economic size and GDP is crucial for boosting its trade capabilities and overall economic health A key strategy in this regard is to strengthen domestic industries This can be achieved by focusing on sectors with high export potential and providing robust support in research and development The government could offer subsidies for the adoption of advanced technologies and innovative processes, which not only enhance productivity but also improve the competitiveness of Vietnamese products on the global stage By bolstering the domestic industrial base, Vietnam can significantly increase its GDP, which is directly linked to higher trade volumes and greater economic resilience
In parallel, promoting the growth of small and medium-sized enterprises (SMEs) is vital SMEs are often the backbone of the Vietnamese economy, but they face numerous challenges, particularly in scaling operations and reaching international markets The government can assist SMEs by providing easier access to finance, such as low-interest loans and grants, specifically tailored for expansion and modernization Additionally, offering training in export-oriented production and facilitating compliance with international standards can empower these enterprises This support not only helps SMEs to thrive domestically but also enables them to tap into regional and global markets, thereby contributing to the expansion of Vietnam’s economic size and enhancing its trade capacity Through these combined efforts, Vietnam can create a more robust economic environment conducive to sustained growth and increased international trade engagement
4.2.3 Leverage geographic and strategic position
Vietnam's geographic and strategic position offers a unique advantage that can be leveraged to enhance its trade performance significantly As a centrally located nation within Southeast Asia, with extensive coastlines and proximity to major shipping routes, Vietnam is ideally positioned to act as a key player in regional trade
To capitalize on this advantage, there is a critical need to optimize the use of existing trade agreements within ASEAN, APEC, and CPTPP This involves actively engaging in negotiations to either enhance these agreements or to forge new ones, with a strategic focus on reducing tariffs and non-tariff barriers that impact Vietnam's strategic exports and imports By improving the terms of these agreements, Vietnam can secure more favorable conditions for its key industries, potentially increasing its trade volumes and economic growth
In tandem with optimizing trade agreements, Vietnam should also focus on developing regional logistics and redistribution hubs, particularly in regions that demonstrate significant import activities Investing in state-of-the-art infrastructure to support logistics—such as advanced port facilities, efficient road and rail networks, and technologically equipped warehouses—can transform these areas into pivotal trade hubs This development would not only streamline the distribution and transportation of goods within the country and to neighboring nations but also attract foreign investment and boost local economies By enhancing its logistical capabilities, Vietnam can more effectively utilize its strategic geographic location to become a central gateway for trade flows in Asia, thereby reinforcing its role as a dynamic player in both regional and global markets This dual strategy of refining trade agreements and bolstering logistical infrastructure is essential for Vietnam to fully harness its geographic and strategic potential, thereby elevating its trade profile on the international stage
Vietnam's trade growth is significantly influenced by its population dynamics, making it crucial to harness this demographic advantage through strategic workforce development and market expansion initiatives
Firstly, investing in education and vocational training is essential By enhancing the skill level of the workforce, Vietnam can boost productivity across various sectors
A well-trained workforce is more adept at adopting new technologies and processes, which are essential for increasing the efficiency and competitiveness of Vietnam’s exports Moreover, higher education and skill levels can attract higher-value industries to the region, moving the economy up the value chain and creating jobs that contribute more significantly to GDP growth This, in turn, increases the country’s trade potential as it shifts towards producing and exporting more complex and high-value products