COVID-19 And The "Boom" Of Global Logistics Industry

Monday - 05/04/2021 15:57
The year 2020 marks the global economic slowdown due to the influence of Covid-19. Almost the industry had to face major challenges. Many companies go bankrupt and the tourism industry turned to "freezes mode" as well, ...
COVID-19 And The "Boom" Of Global Logistics Industry

Only in 2020 is the year marking the extremely downstair of the logistics industry with impressive growth numbers.

Let’s have a look back to Vietnam's logistics industry 2020

According to a report by the Vietnam Logistics Business Association (VLA) in Mar 2020, about 15% of businesses had decreased about 50% in revenue compared to the same period in 2019 and there were more than 50% of businesses reducing the number of domestic and international logistics (10% - 30% over the same period last year).

According to these numbers, it was not optimistic to analyze the growth in 2020 while the government and the State have well-controlled the epidemic. Luckily, it has created a stepping stone for businesses in general and the Logistics industry.
Particularly, there are advantages to recovering and catching up with the growth momentum. The evidence is that the survey of Vietnam Report conducted in October-November 2020 shows that the situation has improved significantly. The operational capacity of 87% of businesses at this time reached over 60% compared to the pre-pandemic.

To be fair, due to COVID-19, many businesses successfully applied technology, thereby bringing great efficiency to the Logistics industry. From there, related costs such as electronic ports (ePort), electronic delivery orders (eDo), digital authentication from transport (Invoicing and Payments), investment in the overall solution application in post-service need (Saas), Big Data, cloud computing, smart warehouse (Smart Storage) ... all dropped significantly.

As a revolution, '' Work From Home'' is a new working model for the worldwide business, the ratio 82% of enterprises apply the remote working model to ensure safety and not interrupt work seems to be evidence for this.



E-commerce – A Leverage for Logistic

On the other hand, Covid-19 is an "opportunity" for e-commerce to thrive. According to the Vietnam E-commerce Association (VECOM), in 2019 the growth rate of e-commerce (e-commerce) of Vietnam reached over 32%, and the scale of consumer goods and services retail in the e-commerce sector in 2019 must also reach about 11.5 billion USD.

The growth rate of revenue in the first 6 months of 2020 compared to the same period in 2019 is estimated to decrease by about 6%, in spite of the number of transactions increases by 25% (due to the low value of e-commerce transaction items in the COVID-19 period).

According to the latest report, as of the fourth quarter of 2020, the e-commerce revenue growth rate will increase by 20%, the retail scale of the retail e-commerce market in 2020 will reach about 12 billion USD. The increasing demand for e-commerce market leads to increasing demand for Logistics services such as courier, warehouse, ...

A revival for Logistics 2021

E-commerce is the "bright spot" to solve difficulties caused by delayed international trade activities but there are still challenges for the Logistics industry in the next periods of pandemic disease.

Once the epidemic situation in the world is out of controll, it can completely occur not only international trade but all field. Domestic logistics enterprises, which is talked to be a link of the global supply chain, need to actively engage with the business community in the industry in particular and the region and the world in general.

Therefore, businesses need to change as well as apply the following issues:
- Apply curent business technology (digitization, automation, AI, ..)
- Restructuring / repositioning images in existing markets
- Look for M&A opportunities and / or pursue a divestment strategy
- Reallocating inputs in supply chains

Remote work is becoming more common and E-commerce transactions are becoming more popular as well.
There are still many difficulties ahead, but the logistics industry is still the one that is forecasted to have the highest growth during the Covid-19 period!



Editor: Nguyen Van Dung


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