Although the name change for Vietnam Freight Forwarders Association (VIFFAS) has been planned since 2007, only until January 04, 2013 after many “delays”, the Ministry of Home Affairs issued the Decision (1) to change said name to Vietnam Logistics Business Association (VLA), which was regarded as the approval of relevant ministries and industries.
Vietnam’s logistics enters the development period!
Although the name change for Vietnam Freight Forwarders Association (VIFFAS) has been planned since 2007, only until January 04, 2013 after many “delays”, the Ministry of Home Affairs issued the Decision (1) to change said name to Vietnam Logistics Business Association (VLA), which was regarded as the approval of relevant ministries and industries.
Thus, it took 20 years for Vietnam’s freight forwarding industry to enter the trend of international logistics development and 8 years after the Vietnam’s Commercial Law 2005, for the first time prescribing logistics service as an act of commerce. It can be said that the name change from freight forwarding to logistics is a great turning point (if it is not termed as a victory) for the logistics industry, enabling Vietnam’s logistics industry to move through the "fledgling" period, which has been regarded by local and foreign experts as such for a long time.
FREIGHT FORWARDING AND LOGISTICS SERVICES
Actually, in Vietnam as well as in other regional and international countries, freight forwarding services and logistics services coexist and develop in parallel. The freight forwarders and the logistics service provider (LSP) had activities with different goals and methods. While freight forwarders gradually act more as carriers instead of as authorized parties (agents) like they did in previous decades, modern logistics service providers may conduct integrated logistics activities to provide customers with a whole-package service that was often known as 3PL logistics service.
On the other hand, the distinction between the freight forwarder and the carrier in providing transport services to customers is not quite clear, for example based on the business method with assets to refer to the actual carrier and non-asset carrier to refer to the forwarder, or also known in some countries as non-vessel operating common carrier (NVOCC). Meanwhile, it is easy to distinguish a transport service provider from a logistics service provider as the logistics provider is not just conducting transport.
And a new concept has been formed by FIATA (International Federation of Freight Forwarders Association) in 2004: freight forwarding and logistics services (2) belong to the same category of the Federation. According to this understanding, logistics and freight forwarding services coexist and develop together.
VIETNAM’S LOGISTICS SERVICE ENTERED THE DEVELOPMENT PERIOD
In Vietnam, according to the Commercial Law 2005, the logistics service industry is understood to include freight forwarding, transporting, warehousing, loading and unloading services, port services, Inland container depot (ICD) service, customs clearance and export/import services, etc.
In the early stage, especially after promulgation of the Law on Enterprises and implementation of WTO integration commitments, the establishment of logistics service businesses had certain advantages, attracting foreign investment to motivate development of the industry and its human resources. At present, the impression of Vietnam’s logistics industry is not inferior to other countries in the region, Vietnam’s logistics service businesses have matured to cooperate and compete with foreign counterparts; Vietnamese merchandise owners have begun to put more trust and take the initiative in using logistics services from domestic service providers.
Awareness of logistics has changed from the state management, logistics service providers, and also service users: merchants, manufacturers, processors, importers and exporters. The concept of supply chain and logistics management has quickly become staple knowledge among other management knowledge in the life of a business. That is a very respectable fact!
On the threshold of opening up for the WTO integration of logistics services (to 2014 at the latest for most logistics sub-industries), although there are concerns in the logistics integration in ASEAN (2013) about capability and competitiveness, some experts provide the analysis as follows: Just like some other services, Vietnam’s logistics service businesses have matured significantly, grasped opportunities to learn and collect many experiences, the majority of them has survived many challenges, especially in the current crisis of global economic decline. This fact has been proved in Vietnam’s LPI (logistics performance index), which have been investigated and recently announced by the World Bank (WB), as well as Vietnam’s growth rate of export and import turnover throughout the years.
Thus, having stepped up from freight forwarding, the logistics service industry has made not-so-slow steps compared to other countries in the region as well as the development history of freight forwarding – logistics in developed countries!
THE PATH TO DEVELOP VIETNAM’S LOGISTICS INDUSTRY
The responsibility for development of Vietnam’s logistics system, as well as logistics service industry, should not be handled by VLA alone. It should be jointly handled by the State, relevant industries and associations, logistics service providers as well as customers enjoying logistics services.
The Association should create an important turning point. Below are suggestions for activities and programs of the Association in the coming time:
1. Further raise logistics awareness and knowledge within the human resources of businesses providing logistics services. It may be done through communication and training so as to demonstrate the great role of logistics service providers in developing the national economy as well as developing businesses.
2. Create a close connection between businesses providing logistics services in order to facilitate cooperation, form integrated logistics service chains:
– Invest in technologies, facilities to ensure high logistics service quality and competitiveness.
– Develop 3PL, 4PL logistics services and get ready to the trend of outsourcing logistics from merchandise owners.
3. Become even better in the role of a bridge connecting to the State, opportunely propose policies to improve and bring transparency to the logistics service market, providing necessary supports for logistics service businesses to enhance their competitiveness and professionalism.
4. Take advantages of international, regional integration opportunities to enhance professional skills and practices as much as possible; stay ready to cooperate with logistics businesses having professional global networks.
5. Establish an alliance of logistics associations (such as associations of ship owners, merchandise owners, seaports, brokers, etc.) to ultimately form a national logistics association (3).
Although twenty years for the development from freight forwarding to logistics may be rather slow, they have created many premises for the VLA to complete the "fledgling" period and establish themselves as pioneers in the development of Vietnam’s logistics industry.
