1. Multiple challenges exist in Vietnam’s logistics infrastructure…

Some challenges in current logistics network include:

• Remote location of logistics facilities
• Cash-based transactions
• Traffic congestion in key cities
• Difficulty in access tier 2 and other locations

2. While first-mile needs some time to take-off, last-mile growth has strong due to increasing demand for online grocery and customers’ expectation of fast delivery

Vietnam’s inefficient logistics infrastructure (with logistics costs at high-teens % of GDP) offers ample scope for improvement and innovation.

The first-mile logistics stands to benefit from likely demand in the manufacturing sector. Currently, the segment is dominated by legacy companies with significant potential for technology-led innovation. While the pandemic has been a drag for first-mile logistics, the positive medium term outlook remains intact.

Meanwhile, last-mile logistics has witnessed strong growth momentum, due to demand for online products. In addition, newer opportunities in e-grocery and quick commerce offer a long runway for this segment. We estimate last-mile logistics shipments to grow 1.8x during 2020-23E.

Decision Drivers for Online Grocery Shopping, N=100

3. Smaller players still dominate the sector; many of them are trying to cater wider coverage across regions

Currently, less than 15% of ~3000 logistics players, have more than VND 10 Bn (USD 450K) in capital. The presence of this long-tail of small players creates room for tech innovation across the logistics value-chain. Accordingly, technological upgrades have been a key area of investments.

Meanwhile most eCommerce, QCommerce, Social Commerce, etc. players are also strengthening their in-house logistics capabilities. Accordingly, we expect the share of in-house logistics to improve over time. However, 3PLs are likely to contribute the majority share of logistics in the next five years.

Logistics Companies Capital Split, In Percentage (%)

4. Vietnam logistics market sees a promising growth with CAGR ~20% to 2023, with international players also eyeing to tap into this sector

Express delivery in Vietnam, which usually takes 24-72 hours to deliver goods, is witnessing a promising uptrend. Many local players have emerged, with international/regional players making significant inroads as well.

Express Delivery Market and Growth, In Mn Parcels