Vietnam to open up booming express delivery market

As part of its accession plans in the World Trade Organisation, Viet Nam has committed to liberalising the express delivery market to level the playing field for both local and foreign express delivery companies.

Viet Nam plans to open its market in 2012 to allow joint-ventures to be made with 51-per-cent foreign investment capital or to establish wholly-foreign companies in the next five years, according to Paul Needham, chief editor of CEP-Research, the first internet portal specialised on the courier, express and postal market.

The country’s revenue in express delivery has grown steadily from US$50 million in 2007 to around $200 million in 2010. In urban areas where the abundance of enterprises means express delivery is in high demand, expenditure is estimated to reach between VND10-100 million per unit (US$512-$5,120).

According to HCM City’s Department of Planning and Investment, the increasing number of businesses joining in express delivery service are not yet accounted for.

Big domestic and foreign companies including VNPost Express, Saigon Post, Viettel, and multi-nationals like TNT, DHL, FedEx and UPS are operating in a joint-venture model.

These companies are more powerful in technology and finance than the remaining small-scale companies in the country.

Meanwhile, companies with domestic prestige like Tin Thanh, Netco, Nasco, Hop Nhat, 247 Express and 365 Express account for 20 % of the market share.

The domestic companies are experienced with long-term development from three to 10 years; however, they are unable to compete with foreign express delivery companies who have powerful international networks.

The country’s exports are expected to reach 8.8 % in 2010 and the swift movement of goods both domestically and internationally is key to facilitating and enhancing economic growth that will generate more opportunities for express delivery services.

The four leading express delivery companies, DHL, TNT, FedEx and UPS, have expanded their network in Southeast Asia in order to get a firm foothold in this market.

They have invested in their network, equipment and services as well as expanded their aviation network in Singapore, Indonesia, Malaysia, Thailand and recently Viet Nam – a newly emerging market.

International express delivery companies have entered the logistics services market, which has been growing quickly in Viet Nam.

Onno Boots, regional managing director of TNT Southeast Asia and India, said “Viet Nam has tremendous growth potential and occupies a strategic position in Asian trade being so close to China.”

In Southeast Asia and Viet Nam, TNT has been expanding its network and service in a unique way. It has focused its efforts on developing a cost efficient road network service that links seven countries and 127 cities across Southeast Asia and China, including Viet Nam – a total distance of more than 7,650km.

Its unique road network is linked to its air network, thereby enabling customers to choose from a wider variety of transports that suit their needs – by air, road or a combination of both.

Today, TNT has launched an expanded and newly-designed integrated air and road hub located at ICD My Dinh, Ha Noi, to handle soaring freight volumes. – VNS

Tags: vietnam logistics