EVFTA is a golden opportunity for Vietnam logistics industry

However, this trade agreement also poses many challenges for Vietnam.

According to World Bank’s Logistics Performance Index 2018 (LPI), Vietnam ranked 39/160 countries which participate in the survey. This result showed a climb of 25 levels compared to the ranking of 64th in 2016.

Vietnam ranked the first position among emerging markets. All LPI 2018 evaluation indices increased significantly. The highest one was service quality (ranked 33, climbing of 29 levels), and the ability to track and trace goods (ranked 34th, increased 41 levels). The result showed that improving the capacity of enterprises is taking remarkable steps through the applications of information technology to logistics services.

EVFTA là cơ hội vàng với ngành logistics Việt Nam - Ảnh 1.

In the near future, when Vietnam successfully signs EVFTA, the development of Vietnam’s logistics industry will receive many benefits.

According to Center for WTO and Economic Integration: The impact of EVFTA on development prospects of logistics would be presented in two aspects. The first aspect would be the commitment of Vietnam and EU to open markets in the field of transport services and of serving transport. The second would be a commitment in fields that affect the market of logistics services.

Specifically, commitments in the field affecting logistics service market include: service demand, service quality and service implementation. For example, the commitment to eliminate tariffs to increase import and export activities, open public procurement markets for bidding packages relating to infrastructure or border control with intellectual property products, etc.

When the above commitments take effect, EVFTA can bring a great opportunity for Vietnam logistics industry.

First of all, a significant step to eliminate or reduce tariff barriers could increase the volume of imports and exports between Vietnam and the European Union. As a result, it will increase the demand for logistics activities, which is an opportunity to increase the scope of Vietnam’s logistics industry.

Secondly, it is an opportunity to attract investment from Europe, utilize the experience, management skills, capital, and available network of partners when entering into joint ventures with EU partners.

Next, when Vietnam implements institutional commitments to facilitate trade, shorten the time for goods import and export procedures, strengthen the infrastructure quality, business costs will decrease. At the same time, EVFTA also makes the purchase price of transport vehicles, machinery, equipment, technology for import logistics activities from the EU reduce due to Vietnam’s commitment to eliminate tariffs.

Finally, there is an opportunity to access logistics services market of EU member countries (especially shipping services and international aviation services).

In parallel with the opportunity, EVFTA is also expected to pose significant challenges for domestic logistics enterprises.

EVFTA là cơ hội vàng với ngành logistics Việt Nam - Ảnh 2.

Competition in some aspects of logistics services may increase, due to stronger competition from EU service providers, which are very strong in the logistics sector, competition with multinational companies, large modern shipping agencies, occupying a significant market share in the world logistics market. According to the LPI 2018 rankings, Germany was the leading country in logistics. The countries occupied the same position – the 2nd rank, also from the EU, the Netherlands and Sweden.

A significant number of state-owned enterprises in the logistics field operate ineffectively, with high demand for protection, and limited capacity for innovation and competition. These weaknesses may become issues that hinder the common development of the industry.

Moreover, the logistics service market in EU countries is promising but requires high quality of service and indirect legal constraints (entry, nationality of workers …); therefore, meeting the market standards is not easy.

Thai Trang

According to Tri Thuc Tre

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