Improve the competitiveness of vietnamese logistics sector

Enhancing the information and logistics sector and establishing multimodal transport and logistics centers within transportation infrastructure will improve the competitiveness of transp

BANKING ACADEMY OF VIETNAM FACULTY OF INTERNATIONAL BUSINESS

GRADUATION THESIS IMPROVE THE COMPETITIVENESS OF VIETNAMESE LOGISTICS SECTOR

Dr Nguyen Thi Thanh Tan

Ha Noi, May 2024

DECLARATION

I hereby affirm that my graduation thesis entitled “Improve the competitiveness

of Vietnamese logistics sector” is my personal research with the guidance of Dr Nguyen Thi Thanh Tan - Deputy Head of International Trade Finance Department, Faculty of International Business, Banking Academy of Vietnam Data sources and information used for analysis purposes in this thesis have clear and well-founded origins and were collected and processed in accordance with regulations Whole or any part of this work has not been previously included in a thesis submitted to Banking Academy of Vietnam or any other university for any academic degree

Ha Noi, May 5th, 2024

Student

Pham Thanh Van

ACKNOWLEDGEMENT

First and foremost, I would like to express my sincere gratitude to the lecturers

of the Banking Academy of Vietnam and the Faculty of International Business for providing me with favorable conditions and the best learning environment throughout

my four years of study The knowledge and guidance imparted by the lecturers have not only helped me to complete this graduation thesis but have also equipped me with valuable lessons for my future career development

In particular, I would like to extend my wholehearted appreciation to my advisor, Dr Nguyen Thi Thanh Tan, who has consistently provided dedicated support and careful guidance throughout my process of completing this thesis

Besides, I would like to express my heartfelt gratitude to my family for their continuous support and encouragement in all important decisions I have made I am thankful to my colleagues at Leschaco Vietnam Company Limited for providing opportunities and sharing with me practical experiences in the field of logistics I also extend my thanks to my beloved friends from Media Department of Blue Wings BAV for their mental support during times when I need it most Equally important are my closest friends, whom I deeply appreciate for sharing their precious experiences, providing essential academic sources, and always encouraging me to maintain a positive spirit throughout my thesis process

Finally, due to my limited theoretical knowledge and practical experience, this thesis may not be flawless Therefore, I hope to receive valuable feedback and suggestions from lecturers and esteemed readers to enhance and refine my work Thank you for all your support!

TABLE OF CONTENTS

DECLARATION i

ACKNOWLEDGEMENT ii

ABBREVIATIONS vi

LIST OF FIGURES vii

LIST OF TABLES viii

INTRODUCTION 1

1 Research motivation 1

2 Literature review 2

3 Research purpose 4

4 Research object and scope 4

5 Research methodology 5

6 Structure of the thesis 5

CHAPTER 1: THEORETICAL FRAMEWORK 6

1.1 OVERVIEW OF LOGISTICS 6

1.1.1 Definition of logistics 6

1.1.2 Classification of logistics 7

1.1.3 Dimensions of logistics 9

1.1.4 The role of logistics 15

1.2 OVERVIEW OF THE COMPETITIVENESS OF LOGISTICS SECTOR 16

1.2.1 Definition of competitiveness 16

1.2.2 Classification of competitiveness 17

1.2.3 Determinants of competitiveness of logistics sector 19

1.3 CRITERIA FOR EVALUATING COMPETITIVENESS OF THE LOGISTICS SECTOR 21

1.3.1 Demand and development potential of logistics services 23

1.3.2 Logistics infrastructure development 23

1.3.3 Legal policy and state management of logistics sector 25

1.3.4 Capacity of logistics businesses 26

1.3.5 Human resources in the logistics sector 26

1.3.6 Logistics costs 27

SUMMARY OF CHAPTER I 29

CHAPTER II: THE CURRENT SITUATION OF THE COMPETITIVENESS OF VIETNAMESE LOGISTICS SECTOR 30

2.1 THE SITUATION OF VIETNAMESE LOGISTICS SECTOR 30

2.2 THE CURRENT SITUATION OF THE COMPETITIVENESS OF VIETNAMESE LOGISTICS SECTOR 31

2.2.1 Demand and development potential of logistics services 31

2.2.2 Logistics infrastructure development 35

2.2.3 Legal policy and state management of logistics sector 42

2.2.4 Capacity of logistics businesses 45

2.2.5 Human resources in the logistics sector 49

2.2.6 Logistics cost 56

2.3 EVALUATION OF THE COMPETITIVENESS OF VIETNAMESE LOGISTICS SECTOR 61

2.3.1 Strengths 61

2.3.1 Weaknesses 63

SUMMARY OF CHAPTER II 66

CHAPTER III: RECOMMENDATIONS TO IMPROVE THE COMPETITIVENESS OF VIETNAMESE LOGISTICS SECTOR 67

3.1 DEVELOPMENT TREND OF THE WORLDWIDE LOGISTICS

SECTOR 67

3.2 DEVELOPMENT ORIENTATION OF VIETNAMESE LOGISTICS SECTOR 71

3.3 RECOMMENDATIONS CONTRIBUTE TO IMPROVE THE COMPETITIVENESS OF VIETNAMESE LOGISTICS SECTOR 73

3.3.1 Reduce logistics costs 73

3.3.2 Improve the quality of logistics services 74

3.3.3 Upgrade infrastructure to serve the logistics sector 75

3.3.4 Improve legal policy and state management of logistics sector 77

3.3.5 Improve the quantity and quality of human resources serving the logistics sector 78

3.3.6 Improve competitiveness for businesses in the logistics sector 80

SUMMARY OF CHAPTER III 82

CONCLUSION 83

REFERENCES 84

ABBREVIATIONS

ASEAN Association of Southeast Asian Nations

CPTPP Comprehensive and Progressive Agreement for

Trans-Pacific Partnership CSCMP Council of Supply Chain Management Professionals

FIATA International Federation of Freight Forwarders Associations

IATA International Air Transport Association

OECD Organization for Economic Cooperation and Development RCEP Regional Comprehensive Economic Partnership

UNCTAD United Nations Conference on Trade and Development VLA Vietnam Logistics Business Association

LIST OF FIGURES

Figure 2.1 The Agility Emerging Market Logistics Index 2024 -

Figure 2.2 Value of Freight and Logistics Market by logistics

Figure 2.3 Proportion of domestic, joint venture and foreign logistics

Figure 2.4 Software used by logistics service companies in Vietnam 48 Figure 2.5 Distribution of logistics businesses by human resource size 49 Figure 2.6 Distribution of logistics businesses by type of service 50 Figure 2.7 Qualification of logistics personnel at businesses 51 Figure 2.8 Evaluate the quality of technical and operations staff

Figure 2.9 Evaluate the quality of administrative and office staff

Figure 2.10 Evaluate the quality of management and executive

personnel, and coordination and supervision personnel compared to

business requirements

53

Figure 2.11 Degree of impact of factors on difficulty recruiting

Figure 2.12 Forms of training logistics human resources of businesses 55 Figure 2.13 Proportion of logistics costs compared to GDP of some

Figure 2.14 The ratio of elements in logistics cost of Vietnam 58

Table 2.4 Fees for using infrastructure works, service works, and

public utilities in Hai Phong seaport border gate area 59

INTRODUCTION

1 Research motivation

In recent years, the globalization of trade and commerce has intensified, leading

to an increased reliance on efficient logistics services to facilitate the movement of goods Therefore, Vietnam's logistics sector plays a vital role in creating favorable conditions for the movement of goods and services domestically and across international borders An efficient and competitive logistics system is essential to support national economic growth, enhance trade competitiveness, and attract foreign investment However, Vietnam's logistics operations still lag behind many regional countries, hindering the overall competitiveness of the nation in the global market Despite government efforts to improve logistics infrastructure and streamline management processes, several challenges persist These challenges include an inadequate transportation network, inefficient customs procedures, limited adoption

of modern logistics technologies, and a shortage of skilled logistics professionals Addressing these issues is imperative for Vietnam to fully leverage its strategic position, integrate into regional and global value chains, and capitalize on opportunities presented by free trade agreements

It can be seen that Vietnam is currently in a phase of promoting opening up and integrating into the world economy, actively participating in the new generation FTA network, bringing both opportunities and challenges to the overall economy and specifically the logistics sector Therefore, enhancing the competitiveness of Vietnam's logistics sector is essential to unlock potential benefits for the economy

By reducing logistics costs and improving service quality, Vietnamese enterprises can gain a competitive advantage in both domestic and international markets Furthermore, an efficient logistics system can attract more foreign direct investment, particularly in export-oriented industries, leading to job creation and economic growth

Based on the recognition of the critical role of the logistics sector in current

development and integration processes, I have chosen the topic “Improve the

competitiveness of Vietnamese logistics sector” for my research The aim is to reflect

the current situation of the Vietnamese logistics sector and identify solutions and strategies to improve its competitiveness in the face of intense competition

2 Literature review

The issue of improving the competitiveness of the logistics sector has been studied by many foreign authors, following different approaches and on different scales These studies go from factors of competitiveness on logistics to using different approaches such as factors that affect competitiveness or put into a context, thereby can provide policies and practical solutions to improve the competitiveness of businesses in a sector of a sector in a country and of the country in general

Jose Tongzon (2007) predicted that logistics would experience annual growth between 3% and 10%, offering significant economic prospects for ASEAN countries

In response to these opportunities, numerous nations have made concerted efforts to enhance their logistics sectors, upgrade infrastructure, and leverage technology to capture a larger market share Given the escalating competition and potential economic gains in logistics, the author aims to investigate the determinants influencing competitiveness in logistics and identify the essential elements for establishing a successful logistics hub The analysis focuses on Singapore as a case study for determining competitiveness in logistics, with subsequent implications and lessons drawn for Southeast Asian nations

Şule Önsel Ekici et al (2019) demonstrated the crucial importance of a country's logistics performance for both national and international trade, directly impacting economic development Given resource constraints, policymakers require guidance on prioritizing factors that can lead to immediate and significant enhancements in logistics performance Their research investigated how the competitiveness pillars of the Global Competitiveness Index (GCI) influence logistics performance, as measured by the Logistics Performance Index (LPI), using an integrative three-stage methodology involving a tree-augmented naive Bayesian network, partial least squares path model, and importance-performance map analysis Thia authors aims to propose a methodology for policymakers to develop a roadmap for improving their countries' logistics performance based on these findings

Elena Karanina et al (2020) highlighted that during economic crises, including unforeseen events like pandemics and border closures, the logistics sector is among the first to face risks and losses domestically and internationally International experience indicates that strong development of transportation and logistics systems

at a national level drives accelerated growth in associated industries and sectors of the economy Logistics is increasingly recognized as a key component for leveraging

a country's transit potential Enhancing the information and logistics sector and establishing multimodal transport and logistics centers within transportation infrastructure will improve the competitiveness of transport services

Not only is it a hot topic attracting foreign authors, logistics sector competitiveness is also a topic that attracts the attention of Vietnamese authors Vinh

V Thai et al (2015) conducted an analysis of Vietnam's national logistics system capability, using a national assessment framework for macro-logistics combined with semi-structured interviews with key Vietnamese stakeholders to assess the current situation The study has identified a number of limitations in Vietnam's logistics system, these shortcomings not only come from infrastructure but also from legal and commercial issues The framework presented for assessing national logistics systems can be adapted for use in other countries or regions undergoing similar assessments The study's findings offer insights for foreign investors and international logistics providers seeking to operate in Vietnam, providing context on the logistics landscape Additionally, policymakers in Vietnam can benefit from these findings to strategize improvements for their national logistics system This research introduces a standardized template for assessing national logistics systems and enhances understanding of logistics in Vietnam, a country that has received limited attention in existing literature

Vu Thi Kim Hanh (2020) used qualitative methodologies including analysis, comparison, synthesis, and description to explore the theoretical foundations of competitiveness in Vietnam's logistics service industry Furthermore, indicators were identified and utilized to evaluate the competitiveness of Vietnam's logistics sector Quantitative research methods were subsequently utilized to assess the industry's capacity from 2007 to 2018, involving data collection, analysis, and the application

of statistical techniques to identify the factors influencing competitiveness within the logistics service sector

Vuong Thi Bich Nga (2022) undertook a research with the objective of assessing logistics policies and regulations in Vietnam, as well as researching the country's logistics infrastructure The study also delves into factors influencing the logistics industry, including human resources, the implementation of information technology in logistics services, and the current state of commodity trade development, all approached in a detailed and systematic manner The thesis focuses

on describing the current state of the research problem using a theoretical basis, research questions, objectives, and by addressing research problems through qualitative and quantitative methods It emphasizes the importance of sound policy planning and the development of logistics infrastructure aligned with Vietnam's socio-economic development trajectory This approach aims to provide policymakers and strategists with an overview of the logistics landscape in Vietnam

3 Research purpose

The thesis has proceeded for the following purposes Firstly, it gives a

theoretical basis related to logistics and the competitiveness of the logistics sector

Secondly, this study analyzes and evaluates the current situation of the

competitiveness of the Vietnamese logistics sector Thirdly, the thesis gives some

recommendations to improve the competitiveness of the Vietnamese logistics sector From the research purpose stated above, the thesis needs to answer and clarify the following research questions:

- What is logistics and the competitiveness of logistics sector?

- What is the current situation of the competitiveness of Vietnamese logistics

sector?

- What are the strengths and weaknesses of Vietnamese logistics sector?

- How to improve the competitiveness of Vietnamese logistics sector?

4 Research object and scope

Research object: The competitiveness of the logistics sector

Research scope:

The scope of time: The period from 2018 to 2024

The scope of space: The competitiveness of Vietnamese logistics sector

5 Research methodology

The thesis is built and researched based on a combination of methods of synthesis, analysis, listing and dialectical thinking methods The information in the topic is collected and built based on secondary information sources (published research works, articles, articles published in scientific journals ) The database is from official information sources such as the Vietnam Government Portal, General Statistics Office of Vietnam, Ministry of Industry and Trade, Viet Nam Association for Logistics Manpower Development, Vietnam Logistics Business Association, etc

6 Structure of the thesis

Apart from the introduction, conclusion and reference parts, the thesis contains three main chapters:

Chapter I: Theoretical framework

Chapter II: The current situation of the competitiveness of Vietnamese

logistics sector

Chapter III: Recommendations to improve the competitiveness of Vietnamese

logistics sector

CHAPTER 1: THEORETICAL FRAMEWORK 1.1 OVERVIEW OF LOGISTICS

1.1.1 Definition of logistics

According to the Council of Supply Chain Management Professionals (CSCMP), “logistics” is the process of planning, implementing and controlling procedures for the efficient and effective transportation and storage of goods including services and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements and includes inbound, outbound, internal and external movements

Vietnam Commercial Law 2005 does not introduce the concept of logistics, instead it is the concept of "logistics services" According to Article 233 of Vietnam Commercial Law: “Logistics services are commercial activities in which traders organize and perform one or more tasks including receiving goods, transportation, storage, warehousing, customs procedures, other documentation procedures, customer consultation, packaging, labeling, delivery, or other related services in agreement with customers for remuneration.”

Although there are various interpretations of logistics, these concepts can be divided into two groups The first group represents a narrow definition, exemplified

by Vietnamese Commercial Law According to this perspective, logistics services involve the gathering of related factors to support the process of transporting goods from production to the final consumer The second group takes a broader view, considering logistics as an integral part of the supply chain, encompassing all stages from raw material procurement through production processes, manufacturing goods, and distribution to the final consumer This broader perspective describes the impact

of both tangible (material) and intangible (information) factors from pre-production

to the delivery of goods to the end consumer

Therefore, logistics is the process of planning, implementing, and controlling

the transportation, storage of raw materials, finished goods, products, and handling related information from origin to final consumption The goal of logistics is to meet

customer requirements in a timely and cost-effective manner

1.1.2 Classification of logistics

There are multiple ways to classify logistics based on criteria and selection methods, which can be categorized as follows:

Based on logistics service providers

First Party Logistics (1PL): Also known as self-supply logistics, 1PL refers to

a business or an individual who owns goods and independently performs and organizes logistics activities to serve their own needs In this form, the goods owner must invest in purchasing transportation vehicles, have warehouses, build information systems, and employ labor to operate logistics activities

Second Party Logistics (2PL): Second Party Logistics providers offer a

specific link in the logistics chain to meet customer demands 2PL providers are typically actual transporters such as shipping lines, airlines, or trucking companies They own and use their specialized transport vehicles to carry out transportation tasks

or provide individual transport services within the entire logistics chain

Third Party Logistics (3PL): Simply put, 3PL refers to entities entrusted by

goods owners to perform logistics activities in a logistics chain This includes acting

on behalf of the sender to handle import and export procedures, providing shipping documents, transporting goods, or representing importers in customs procedures and delivery to specified locations

Fourth Party Logistics (4PL): This is an integrated logistics entity responsible

for managing, supervising, and operating all logistics activities toward a predefined goal for customers The 4PL service focuses on managing the entire production process, including receiving goods, customs clearance, distributing goods to consumers, and warehousing The 4PL model helps connect customers' support services more systematically and integrates these services with other tasks such as procurement, purchasing, payment, and information technology

Fifth Party Logistics (5PL): The convergence of technology and e-commerce

is making logistics operations increasingly modern and complex The rapid

development compels businesses to use external logistics services 5PL is a new and effective option due to the rapid growth of e-commerce, making the 5PL model more popular This service manages and coordinates the operations of 3PL and 4PL on an e-commerce platform A key difference with 5PL compared to other forms is its significant involvement in managing transportation fees

Based on operational processes

Inbound Logistics: Inbound Logistics ensures the timely availability of

necessary products and resources to a production facility for continuous production processes without interruption In simple terms, inbound logistics are the initial activities that initiate subsequent logistics operations

Outbound Logistics: Outbound Logistics involves transporting finished

products to end consumers This logistics process includes preserving inventory produced, transporting products to wholesalers, retailers, or directly to end customers Specifically, outbound logistics begins with receiving orders from customers, moving goods to packaging locations, and ends with delivery and related customer services

Reverse Logistics: While conventional logistics start with inbound and end

with outbound logistics, reverse logistics involves moving products or goods from end consumers back to the supply chain or related units Reverse logistics typically involve cases such as product returns, where some items are sent back to service centers for maintenance, repair, refurbishment, replacement, or product recall due to technical faults, labeling issues, or market recalls Reverse logistics encompasses all activities conducted after the point of sale or from consumer consumption back to production facilities to address errors and customer complaints

Based on goods categories

Fast Moving Consumer Goods Logistics: This includes logistics activities for fast-moving consumer goods with short shelf lives, such as clothing, perishables, and pharmaceuticals

Automotive Logistics: Logistics operations that serve the automotive industry Chemical Industry Logistics: Logistics services tailored for the chemical

industry, including hazardous or dangerous goods

Electronics Logistics

Oil and Gas Industry Logistics, etc

1.1.3 Dimensions of logistics

1.1.3.1 International transport

Definition and characteristics of International transport

Transportation is a multifaceted economic and technical sector closely tied to

a nation's infrastructure, addressing production and distribution challenges domestically and globally through modern scientific and technological advancements, transportation laws, and transparent logistics facilitated by skilled labor It's a specialized physical sector that evolves with human civilization, giving rise to innovations such as multimodal transportation, shipping, warehousing, and logistics From there, international transportation is the transportation of goods or passengers between two or more countries In other words, international transportation is the movement of people or goods across national borders

Therefore, from this concept, the distinct characteristics of international transport are brought about by international factors, specifically:

- Transport occurring across the territories of at least two countries

- Origin and destination points belonging to different countries

- The relationships formed during transportation involve international elements, thereby subject to international legal regulations The international factor here does not necessarily encompass all parties but may apply internationally to one party, meaning that the laws of one party can govern the process

Classification of International transport

There are many types of international transport, depending on the standard, selection methods can be divided into the following types:

- Based on the mobile environment: roadways, railways, waterways, airways, pipeline transport

- Based on the object of transport: passenger transport, freight transport, mixed transport

- Based on the way the transport process is organized: unimodal transport, multimodal transport, segmented transport

Roles of International transport

Transportation plays a vital role in promoting the development of a nation's economy The transportation system of a country comprises two main components: infrastructure (including roadways, railways, airways, waterways, canals, seaports, terminals, etc.) and vehicles (ships, airplanes, automobiles, trains, buses, etc.) Therefore, the transportation system reflects the level of development of a country Transportation serves all activities of social life; without transportation, these activities would not be possible In the production sector, transportation facilitates the movement of raw materials, fuels, semi-finished and finished goods, labor, etc., to support the production process Additionally, it enables the distribution of products

to consumers, thus realizing the utility value of goods

1.1.3.2 Inventory management

Definition of Inventory

During business operations, enterprises may encounter various supply chain issues such as inaccurate forecasting, unreliable supply, production disruptions, undesirable product quality, and unforeseen anomalies that require effective solutions One such solution involves storing products at the point of production, at the point of consumption, and at intermediate stages between production and consumption to facilitate a continuous and smooth reproduction process The accumulation and storage of products at various stages throughout the supply chain from origin to endpoint is referred to as inventory

Inventory costs

Inventory management policy has a significant impact on business profits The goal of businesses is to perform inventory management at the lowest cost to achieve the customer service level that the company has set To be able to make decisions

about inventory size, businesses need to consider the following costs:

- Storage/Holding cost: includes costs for storage facilities, insurance, pilferage, damage, discounts, taxes and opportunity cost of capital

- Setup costs: Inventorying different products may require differences in arranging necessary equipment and materials, completing various paperwork and moving furniture around the warehouse

- Ordering cost: includes costs related to material and human resources costs to prepare for purchasing and placing orders

- Shortage cost: occurs when customer demand for goods is not met due to out

of inventory

Roles of inventory include

- Helps businesses achieve economic scale efficiency

- Helps balance supply and demand

- Increases flexibility and flexibility in the production process

- Create a shield to protect businesses from unforeseen events

- Provides safety throughout the supply chain

1.1.3.3 Warehousing

Definition of Warehouse

Warehouse, which is a critical component of the logistics system, is a facility used for storing and preserving raw materials, semi-finished goods, or finished products to supply customers quickly and at the lowest cost when they make requests Warehouse management activities provide information about the status, storage conditions, and location of goods stored within the logistics service chain Therefore, warehouses need to be designed and operated in accordance with specific requirements of the logistics service chain

Functions and roles of Warehouse

A modern warehouse that meets logistics needs often includes smaller

warehouses with different functions However, fundamentally, warehouse systems must perform the following basic functions effectively:

- Storing goods and ensuring the quality of stored goods

- Supporting production and meeting demands promptly

- Consolidating goods into larger batches

- Breaking down goods into smaller lots

- Providing information about the status, storage conditions, and location of stored goods for the logistics service chain

With these functions, warehouses help organizations and businesses save transportation costs and production costs by consolidating goods into larger batches for one-time transportation Additionally, warehouses enable businesses to proactively manage their supply sources, store materials for smooth production operations without interruptions, thereby increasing productivity, improving operational efficiency, and saving production costs

Furthermore, warehouses allow businesses to benefit from purchasing discounts for bulk orders, seasonal discounts, and gradual usage of stored goods Importantly, efficient warehouse management operations optimize logistics activities, timely satisfying customer needs at the lowest cost and highest product quality, thereby enhancing the quality of logistics services and improving business competitiveness

1.1.3.4 Packaging

Definition of Packaging

Packaging of goods involves understanding the characteristics of the goods and the environmental conditions they will encounter during transportation to ensure that the packaging both protects the goods and achieves the highest economic efficiency

Classification of Packaging

- Based on the function of packaging: commercial packaging, non-commercial packaging

- Based on the use of packaging: direct packaging, outer packaging

- Based on the number of times the packaging is used: single-use packaging, multi-use packaging

- Based on the compression properties of the packaging: hard packaging, hard packaging, soft packaging

semi Based on manufacturing materials

Functions and roles of Packaging

Packaging serves several fundamental functions in logistics: facilitating logistics operations to protect, contain, store, and transport products and goods; providing customers with information about products; and contributing to environmental protection

In logistics activities, packaging plays a crucial role that directly impacts costs and customer service From a cost perspective, using packaging with appropriate materials and dimensions can result in significant savings Alongside cost reduction, customer service is also enhanced because customers can benefit from reduced shipping costs from suppliers by maximizing the quantity of goods per shipment Furthermore, from an environmental perspective, packaging can be recycled or reused Using environmentally friendly packaging can also save waste disposal costs and improve the company's image

1.1.3.5 Information system

The logistics information system is an interactive structure involving people, equipment, methods, and processes designed to provide appropriate information to logistics managers with the goal of planning, executing, and controlling logistics effectively

Continuous information exchange among all parties is crucial to overcome geographical distances and any cultural differences within the supply chain members, enabling logistics operations to achieve optimal cost and service efficiency The logistics information system provides information about goods and tracks delivery routes, progress, and the status of goods, as well as the impact of changes on

purchasing systems, production, warehousing, finance, and accounting Therefore, information needs to be accurate, timely, and observable Without effective information management, logistics managers cannot know what customers want, how much inventory to reserve, when to produce and transport goods, etc Information enables businesses to clearly see logistics activities, allowing managers to make improvements during implementation

Some popular methods of information exchange:

- Mobile data: Increasingly sophisticated mobile devices enable the capture, storage and sending of photos, internet access and email facilities This helps employees no matter where they go to stay in touch with their base office as long as there is network coverage

- Electronic Data Interchange: EDI is used by supply chain partners to exchange information essential for effective business operations These structural links are often established between organizations with long-term commercial relationships

- Information exchange by satellite: In places where there is no mobile or fixed telephone facility, satellite phones can be used Mobile assets such as road vehicles, ships and containers can be tracked through the use of satellites

- Barcode: A barcode is a representation of a number or code in a form suitable for a scanner to read the information Barcodes are widely used throughout the supply chain to identify and track goods at all stages in the process

- Radio Frequency Identification: RFID is a technology that allows objects to

be tagged with a device containing a memory chip This chip has read and write functions performed using multiple radio frequencies Meaning a pallet of goods can

be tagged with an RFID tag containing a large amount of information related to the pallet

- Cloud computing: Cloud computing is a model that enables ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., network, servers, memory, applications, and services) can be rapidly provisioned and released with minimal management effort or service provider

interaction

- Big Data: Big data primarily refers to data sets that are too large or complex

to be dealt with by traditional data-processing application software Data with many entries offers greater statistical power, while data with higher complexity may lead

to a higher false discovery rate

- Internet of Things: IoT is based on a model in which intelligence is embedded

in physical objects and these objects can communicate with each other using the Internet or other radio frequency technologies (e.g RFID, GSM, etc.) IoT is expected

to grow at an increasingly rapid pace as communications and security standards are developed and communication protocols are formalized

1.1.4 The role of logistics

The role of logistics in the economy:

Given the strong global economic development trend towards globalization and regionalization, logistics plays an increasingly crucial role in national economies Logistics constitutes a continuous chain of interrelated activities that form an economic and informational linkage throughout almost the entire process of production, distribution, and circulation of goods An economy can only develop smoothly and cohesively when the logistics chain operates efficiently

Logistics directly impacts a country's ability and level of economic integration Countries with developed logistics activities, capable of connecting with the global logistics system, are more effective in accessing multiple markets and consumers worldwide Low logistics costs are significantly important in strategies aimed at promoting exports and economic growth for each country, while also enabling domestic consumers to access foreign-produced goods

The development of logistics contributes to enhancing a nation's competitiveness National competitiveness encompasses institutional structures, policies, and factors that determine a country's efficiency and productivity Logistics serves as a tool linking activities within the Global Value Chain such as supply, production, circulation, distribution, thereby expanding economic activities in the

market The development of logistics ensures the optimal operation of production, circulation, and distribution of raw materials and finished products in terms of time, quality, and cost A country's level of logistics development and costs are also considered critical indicators for attracting foreign investment

The role of logistics for businesses

Logistics contributes to improving the management efficiency of businesses Logistics plays a crucial role in optimizing the flow cycle of production and business activities from input materials, accessories, to the final product reaching the end-user Through logistics operations, businesses can proactively plan production, manage inventory, and deliver products to consumers on time and at the lowest cost By standardizing documentation, logistics helps reduce costs and improve business efficiency

Logistics supports managers in making accurate decisions in production and business operations During production and business activities, managers must solve numerous challenges related to raw material supply, effective timing and quantity for material replenishment, transportation routes, locations, storage facilities for finished products, and sales Logistics plays an essential role in addressing these challenges efficiently, allowing managers to control and make accurate decisions to minimize additional costs and ensure operational efficiency in production and business activities

Therefore, with its positive impacts, logistics also contributes to enhancing the competitiveness of businesses in the market

1.2 OVERVIEW OF THE COMPETITIVENESS OF LOGISTICS SECTOR 1.2.1 Definition of competitiveness

Competitiveness refers to the ability to achieve success in competition among

similar goods, enterprises within the same industry, and on the same consumer market In reality, there are numerous different concepts related to competitiveness

or competitiveness This is because this phrase encompasses a vast domain that can

be approached from various perspectives Competing entities can be organizations,

sectors, product lines, or countries and include factors that influence them such as market efficiency, policies, market structure, and business functions related to trade, investment, and regulatory provisions

Michael Porter defines competitiveness based on productivity and focuses on the microeconomic foundations of competitive advantage that support productivity

in nations, regions, and clusters While this concept accurately describes competitiveness, it narrows the focus to the national level of competitiveness, overlooking the competitiveness of individual enterprises and industries

According to the Trade Policy Glossary (2003), the capability of an enterprise, industry, or even a country is not surpassed economically by other enterprises, industries, or countries This definition covers competitiveness at various levels but does not fully articulate the meaning of the term "competition."

Meanwhile, the Organization for Economic Cooperation and Development (OECD) provides a definition: "Competitiveness is the ability of enterprises, industries, countries, or regions to generate higher employment and income under conditions of international competition."

Therefore, competitiveness can be divided into different levels, including national-level competitiveness, industry-level competitiveness, enterprise-level competitiveness, and the competitiveness of goods and products The division of competitiveness into these levels is relative; however, each level has a close relationship with the others

1.2.2 Classification of competitiveness

1.2.2.1 The competitiveness at the National Level

The United States President's Commission on Industrial Competitiveness defines a nation's competitiveness as its ability to produce goods and services meeting international market standards under conditions of free and fair trade, while maintaining and expanding its citizens' real income

According to the Global Competitiveness Report by the World Economic Forum in 1997, a nation's competitiveness is its ability to sustain and achieve progress

in improving living standards, reflected by an increase in GDP per capita

In summary, a nation's competitiveness refers to its ability to penetrate international markets with goods and achieve macro-level goals such as GDP growth, income, and citizens' living standards

1.2.2.2 Competitiveness at the Industry Level

The Organization for Economic Cooperation and Development defines industry-level competitiveness as the ability of an industry to generate higher employment and income under conditions of international competition Although this definition pertains to industry-level competition, the OECD links it to international competitiveness, which is highly relevant in the current era of economic globalization Industry-level competitiveness encompasses the collective competitive abilities of businesses within an industry and their interrelationships Generally, the competitiveness of a business or industry depends on its ability to produce goods or services of comparable or superior quality and price to those commonly available in the market without subsidies

According to the United Nations, industry's competitiveness can be evaluated through the profitability of its businesses, trade balance, foreign investment balance (outbound and inbound), and direct measurements of industry-level costs and quality Industry competitiveness is also reflected in market share, structure, internal industry competitiveness, related supporting industries, and the integration of these factors

1.2.2.3 Competitiveness at the Enterprise Level

The competitiveness of a business reflects its long-term ability A business is considered to have good competitiveness when it achieves better-than-average results For businesses, competitiveness means the ability to provide products and services more efficiently than competitive counterparts

The competitiveness of a business is assessed based on price competitiveness and non-price competitiveness (market share, product quality, productivity, etc.) For businesses engaged in international trade, evaluating competitiveness can involve profit margins, export revenue as a percentage of total revenue, market share by

region, or global market share

Market position on the international stage is a direct measure of a business's competitiveness In commercial settings, competitiveness means successful sustainability in international markets without the need for protection or subsidies Although transportation costs may allow businesses to compete better in domestic markets, competitiveness is primarily considered based on advantages derived from higher productivity

In non-commercial sectors, competitiveness refers to the ability to match or surpass the best businesses in terms of product or service cost and quality

The competitiveness of a product refers to its ability to meet customer needs regarding quality, price, features, design, uniqueness or differentiation, brand, packaging, etc., significantly better than similar products The competitiveness of products is determined by the competitiveness of the business The competitiveness

of a product is weak when the competitiveness of the business producing or selling it

is low To enhance the competitiveness of a product, businesses must not only improve quality and reduce production costs but also implement marketing strategies and develop product markets to encourage consumption

Measuring competitiveness in non-commercial fields is often more challenging and typically involves assessing business profitability, costs, and quality For industries with foreign direct investment, measures of business competitiveness can include the percentage of foreign revenue or market share in regional or global markets

1.2.3 Determinants of competitiveness of logistics sector

The competitiveness of the logistics sector is shaped by various elements, such

as production costs, with wage expenses being particularly significant in intensive industries Key factors also include the quality of management, pricing of services, service quality, exchange rates, government policies, political stability, and investments in human and physical infrastructure Together, these components provide a country’s sector with a competitive edge and can be divided into macro and

labor-micro factors

At the micro level, costs and service quality are the most relevant factors The success of a sector in the international market hinges on major factors such as cost-based advantages in producing standardized products and product-based advantages

in developing differentiated products

A sector can enter new markets or expand its share in existing ones based on its cost advantages, which are crucial in price-sensitive markets However, quality remains a significant factor in consumer decisions While some consumers may prioritize lower prices over quality, there is a threshold of quality that cannot be compromised even at reduced prices This sets a minimum quality benchmark Porter's research indicates that it is not possible for a business to pursue cost-based and differentiation strategies simultaneously Developing differentiated products often increases costs, and cost advantages are not sustainable unless they evolve into product-based advantages

Michael Porter emphasized that productivity is the most meaningful measure

of a sector's competitiveness at the national level Productivity depends on product quality and production efficiency Porter asserts that a nation's standard of living is linked to its firms' ability to achieve high productivity levels, which requires continuous economic upgrades This involves enhancing product quality, adding desirable features, improving technology, and boosting production efficiency Additionally, the government plays a crucial role in fostering a competitive environment that promotes quality, efficiency, and innovation

In addition to operational efficiency and adaptability, several other factors influence the competitiveness of a country's logistics sector

It can be said that strategic location is crucial The sector should be positioned along major shipping and air routes An air terminal with extensive global connectivity is essential, as is a seaport that serves as a key hub for shipping lines with strong linkages to ports worldwide Good capabilities in warehousing and related services are also necessary, supported by adequate and highly efficient

infrastructure

Human capital availability is another vital component for a successful logistics hub Workers should possess essential language skills, such as proficiency in English, and be open-minded and adaptable to changes, including those brought about by globalization Additionally, workers should be well-educated in logistics, with access

to trained professionals in the field

Political and economic stability, along with a strong and supportive government, are also critical The government should promote the growth of the logistics sector through transparent policies and foster harmonious relations among management, labor, and government entities These factors collectively contribute to

a competitive logistics sector

1.3 CRITERIA FOR EVALUATING COMPETITIVENESS OF THE LOGISTICS SECTOR

The competitiveness of the logistics sector is equivalent to industry-level competitiveness, so it can be measured through factors such as the profitability of its businesses, trade balance, foreign investment balance (outbound and inbound), and direct measurements of industry-level costs and quality as mentioned in section 1.2.2.2 However, this thesis will assess the competitiveness of logistics sector through a number of criteria based on Porter Diamond Model

Figure 1.1 Porter Diamond Model

Michael Porter explained 4 points of his Diamond Model:

Firm strategy, structure, and rivalry

Firm strategy, structure, and rivalry define that competition leads to increased production and the development of technological innovations The concentration of market power, degree of competition, and ability of rival firms to enter a nation's market are influential

Related supporting industries

Related supporting industries consider the upstream and downstream industries that facilitate innovation through exchanging ideas These can spur innovation depending on the degree of transparency and knowledge transfer

Demand conditions

Demand conditions refer to the size and nature of the customer base for products, which also drives innovation and product improvement Larger consumer markets will demand and stimulate a need to differentiate and innovate and increase market scale for businesses

Factor conditions

Factor conditions are those elements that Porter believes a country's economy can create for itself, such as a large pool of skilled labor, technological innovation, infrastructure, and capital One way for the government to accomplish that goal is to stimulate competition between domestic companies by establishing and enforcing anti-trust laws

Based on the Porter Diamond Model, I will analyze four points of diamond model adapted for this thesis to analyze the competitiveness of a country’ s logistics sector:

Firm strategy, structure, and rivalry: Capacity of logistics businesses

Related supporting industries: Legal policy and state management of logistics

sector

Demand conditions: Demand and development potential of logistics services Factor conditions: Logistics infrastructure development, Human resources in

the logistics sector and Logistics costs

1.3.1 Demand and development potential of logistics services

The criterion of "demand and potential for the development of logistics services" plays a pivotal role and is the fundamental driving force behind the growth

of this sector Logistics demand originates from the increasingly dynamic and complex economic, manufacturing, and commercial activities As goods are produced and consumed across multiple countries, the transportation and circulation

of goods become more essential than ever Logistics is the service sector that meets this demand, ensuring smooth and efficient supply chain operations

High demand from economic and commercial activities creates a large market for logistics services, attracting businesses to participate and invest in this sector This stimulates development in scale, service quality, and diversification of logistics solutions The demand for logistics is not only current but also holds significant potential for strong future growth Global economic integration and the growth of e-commerce will continue to increase the demand for freight transportation, presenting substantial opportunities for the logistics sector

It can be said that high demand and development potential are key factors attracting investors to engage in the logistics sector Abundant investment capital enables logistics enterprises to upgrade infrastructure, adopt advanced technologies, improve service quality, and expand their market presence This strengthens the competitiveness of the logistics sector, establishing a solid position in the international market

1.3.2 Logistics infrastructure development

The infrastructure of logistics plays an extremely important role in driving the development of the logistics sector and enhancing the competitiveness of a nation A

diverse transportation system, including roads, railways, airways, and seaports, along with modern warehouse facilities and logistics centers, form the foundation for smooth, rapid, cost-effective, and efficient movement of goods This improvement enhances the quality of logistics services, meets the increasing demands of customers, attracts domestic and foreign investment, and contributes to socioeconomic development

The development of modern logistics infrastructure is crucial for the survival

of the logistics sector in the context of deepening international economic integration Logistics enterprises require modern infrastructure to meet the growing demand for logistics services, enhance competitiveness, and integrate internationally Investing

in the development of logistics infrastructure is an investment for the future, contributing to the sustainable development of the logistics sector in Vietnam The logistics infrastructure plays an extremely important role in promoting the development of the logistics sector and enhancing its competitiveness It can be said that infrastructure is pivotal in the development of logistics services as it directly impacts logistics costs, time, and service quality, thereby determining the overall efficiency of logistics operations Therefore, infrastructure improvements will enhance the quality of logistics services, meet the increasing demands of customers, attract domestic and foreign investment, and contribute to socio-economic development

Firstly, investing in upgrading the transportation system along with modern seaports and airports will significantly reduce transportation time, ensuring timely delivery of goods At the same time, advanced warehouse systems with good temperature and humidity control, and strict security measures will help safely preserve goods, minimizing the risk of damage

Furthermore, infrastructure improvements enhance the integration of transportation methods, facilitating seamless intermodal freight transfer Modern logistics centers will serve as hubs for training high-quality human resources, thereby enhancing professional expertise in this field The application of digital technology and advanced transport monitoring systems also improves management and control

of transportation processes effectively

Importantly, synchronized and modern logistics infrastructure optimizes logistics costs such as fuel, labor, insurance, etc This helps logistics enterprises enhance their competitiveness, meeting the increasing demand for quality logistics services in domestic and international markets

The development of modern logistics infrastructure is crucial for the survival

of the logistics sector in the context of deepening international economic integration Logistics companies need modern infrastructure to meet the growing demand for logistics services, enhance competitiveness, and integrate internationally Investing

in the development of logistics infrastructure is an investment for the future, contributing to the sustainable development of the logistics sector in Vietnam

1.3.3 Legal policy and state management of logistics sector

A stable and transparent legal environment is a prerequisite for creating conditions conducive to the development of the logistics sector Clear, transparent, and stable policies and laws establish a favorable business environment, reducing legal risks for logistics enterprises Conversely, a legal system lacking transparency and subject to frequent changes increases compliance costs, creates risks, and instability for logistics operations

Furthermore, policies that encourage investment, tax incentives, financial support, and the development of new technologies will promote the expansion and enhancement of logistics enterprises Conversely, a lack of supportive policies will hinder the development of logistics Moreover, through policies and laws, the state can prevent fraudulent and illegal practices in logistics, ensuring a transparent business environment This encourages healthy competition and drives enterprises to enhance their capabilities

Moreover, the state plays a crucial role in managing and regulating logistics activities nationwide, such as developing infrastructure, cross-border logistics procedures, and establishing service quality standards Effective and stringent management ensures the synchronized and sustainable development of the logistics

sector Additionally, logistics is a multi-sectoral and multi-disciplinary field, requiring coordination among various government ministries Sound policies ensure effective coordination, promoting interregional and international connectivity in logistics, enhancing global competitiveness

1.3.4 Capacity of logistics businesses

Logistics companies are direct providers of logistics services to customers The quality of service, reliability, operational efficiency, and ability to meet customer needs depend significantly on the capabilities of these companies If logistics companies have weak capabilities and do not invest adequately in technology, human resources, and infrastructure, it will reduce service quality, increase risks and costs, leaving customers dissatisfied and eroding trust in the logistics sector of that country/region

Moreover, large logistics companies with strong capabilities often play a leading role and set trends for the entire sector They invest in advanced technology, apply effective management models, and enhance the quality of their workforce This creates competitive pressure that compels other companies to improve their capabilities to keep pace, contributing to overall service quality and sector capabilities Additionally, large and powerful logistics companies usually have extensive domestic and international operational networks The synchronized and consistent operational capabilities they exhibit shape the image and brand of the national logistics sector in the eyes of foreign investors and businesses This significantly impacts the attraction of investments and the development of the logistics sector

In summary, the capabilities of logistics companies directly determine service quality, brand image of the sector, enhance competitiveness, and drive investment and development in this sector Therefore, enhancing the capabilities of logistics enterprises is a primary task to improve the competitiveness of the logistics sector in any country

1.3.5 Human resources in the logistics sector

Human resources play an incredibly important role in the development and success of the logistics sector This is a field that requires high levels of specialization along with the ability to adapt flexibly to rapid changes Therefore, building and maintaining a high-quality workforce is a key factor that determines the competitiveness of logistics sector

Skilled human resources optimize the efficiency of logistics operations from planning and coordination to practical implementation They possess deep knowledge

of supply chain management, operational processes, and applied technologies to design and operate logistics systems effectively, minimizing waste Additionally, high-quality personnel demonstrate problem-solving abilities and flexible responses

to complex and unexpected situations

In the context of rapidly changing global logistics, the human factor becomes increasingly decisive The growing demand for automation and digitization in the industry requires employees who understand technology to deploy and utilize it effectively Trends toward green and sustainable logistics also present new challenges for employees in terms of knowledge and specialized skills Moreover, communication skills, teamwork, and customer relationship management are crucial for logistics staff to serve customers better, build trust, and foster close collaboration with partners A team with a sense of responsibility and dynamism will enhance the image and reputation of the enterprise

Therefore, investing in the development of high-quality human resources through training, recruitment, and establishing a professional working environment

is important to increase the competitiveness of the logistics sector

1.3.6 Logistics costs

The cost of logistics plays a crucial role in the development of the national logistics sector, contributing significantly to a country's economic competitiveness This key factor impacts supply chain efficiency, import-export costs, and the country's ability to attract investment

Firstly, high logistics costs will reduce the competitive advantage of

domestically produced goods in both domestic and international markets Conversely, lower logistics costs provide price advantages for goods, enhancing competitiveness and stimulating trade growth

Logistics costs also directly affect domestic production activities and supply chains High costs hinder businesses' access to raw materials and distribution to consumers Supply chains are disrupted, leading to decreased productivity and economic competitiveness

Moreover, high logistics costs act as a major barrier to import-export activities Export businesses struggle to compete due to high transportation costs for goods Meanwhile, high taxes and fees for imports increase the cost of imported goods significantly compared to other countries

A high-cost logistics system also limits the country's ability to attract foreign direct investment (FDI) Foreign investors tend to avoid locations with excessively high logistics costs to maximize supply chain efficiency and profitability They prefer investment destinations with reasonable logistics costs, reducing the inflow of FDI and hindering economic development

Lastly, high logistics costs make it challenging for countries to participate in and benefit from global economic integration and cross-border supply chains Large corporations often choose manufacturing bases or logistics service providers in places with lower costs to minimize global operating expenses

In summary, logistics costs are a critical factor determining a country's international trade competitiveness, production costs, supply chain efficiency, FDI inflows, and economic integration capabilities Therefore, controlling and reducing logistics costs are top priorities for many governments to enhance national logistics sector competitiveness

SUMMARY OF CHAPTER I

Chapter 1 provides an overview of logistics by understanding the definitions, classification and dimensions of logistics as well as their roles This chapter also mentions the definition competitiveness and classifies them according to levels At the same time, chapter 1 introduces criteria for evaluating competitiveness of the logistics sector This is an important theoretical basis as a foundation for analyzing the current situation of the competitiveness of Vietnamese logistics sector and proposing solutions and recommendations to improve it

CHAPTER II: THE CURRENT SITUATION OF THE COMPETITIVENESS

OF VIETNAMESE LOGISTICS SECTOR 2.1 THE SITUATION OF VIETNAMESE LOGISTICS SECTOR

The logistics sector in Vietnam has undergone notable transformation over the past decade, emerging as a crucial part of the country's economy Driven by a combination of factors including strong economic growth, expanding international trade, and significant investment in infrastructure development, Vietnam's logistics sector has experienced substantial growth in recent years

In recent years, Vietnam's logistics sector has made significant strides, growing

at an average rate of 14-16% per year, with a scale of 40-42 billion USD annually The number of logistics businesses and the quality of their services have been increasing, contributing significantly to achieving record-high import-export results, reaching $732,5 billion USD in 2022 and $681 billion USD in 2023 Vietnamese logistics sector has not only attracted the attention of domestic stakeholders but has also been recognized globally for its potential and outstanding growth rate According

to the Agility Emerging Markets Logistics Index 2024, Vietnam ranks 8th out of 50 emerging logistics markets, rising two places from 2023

Figure 2.1 The Agility Emerging Market Logistics Index 2024 -

Overall Ranking

(Source: Agility https://www.agility.com/en/ )

However, according to the World Bank's Logistics Performance Index (LPI) report 2023, Vietnam ranked 43rd, dropping 4 places from the 39th position in 2018

Table 2.1 Vietnam's LPI index through the last 5 rankings

International shipments score 3.14 3.22 3.12 3.16 3.3

Logistics competence score 2.68 3.09 2.88 3.4 3.2

Tracking & Tracing score 3.16 3.19 2.84 3.45 3.4

(Source: LPI Dataset Sections from the World Bank)

Vietnam's decline in the LPI 2023 ranking reflects the consequences of challenges faced by the logistics sector due to the impact of the COVID-19 pandemic Prolonged lockdown measures extended transportation times, disrupted supply chains, and significantly affected production and consumption activities in Vietnam Specifically, logistics competence score, tracking & tracing score, and timeliness score decreased However, the overall LPI score increased to 3.3 points compared to 3.27 points in 2018, placing Vietnam among the top 5 leading ASEAN countries, after Singapore, Malaysia, Thailand, and tied with the Philippines This indicates a gradual improvement in Vietnam, particularly in customs efficiency and infrastructure quality It can also be assessed that Vietnam's logistics sector, while developing rapidly, still has room for improvement in overall operational efficiency and competitiveness compared to other countries

2.2 THE CURRENT SITUATION OF THE COMPETITIVENESS OF VIETNAMESE LOGISTICS SECTOR

2.2.1 Demand and development potential of logistics services

With strong economic growth and deep integration into the global economy, Vietnam is facing an increasing demand for logistics services to support commercial