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Dinh Vu


Last updated: Wednesday, September 19, 2018


Damco Vietnam: Keep Staying Ahead

Posted: Monday, September 25, 2017

Damco Vietnam will continue to be an active part of the global supply chain market,” said Mr Marco Civardi, Area Managing Director for Damco Vietnam / Cambodia / Myanmar in an interview with our reporter. Le Phuong reports.

What do you see as the challenges for Vietnam’s logistics industry now that the country is ready to take up new opportunties from FTAs, AEC and the TPP for example?
The creation of the AEC, and the signing of FTA, will expand access to key global markets and foster economic growth for the nations involved. Vietnam, with its low-wage economy that relies chiefly on exports such as high technology (mobile phones), footwear, textiles and agricultural products, is likely to be one of the biggest winners. 

It is estimated that over the coming decade, the country’s GDP could grow by 11%, and exports increase by 28% as a result. 

New free trade agreements could mean potentially more business and more opportunities for Vietnam’s logistics industry. It anticipated that the logistics market will develop across the ASEAN region and specifically in Vietnam given the strong emphasis under the AEC blueprint for infrastructure development and the gradual elimination of Non-Tariff Barriers across member countries. 

How has Damco prepared for serving the increasing demands of customers in Vietnam?
We have started by expanding our warehousing footprint in Vietnam to approximately 70,000 square meters. Most recently, this has involved an extension of our Southern Vietnam Logistics Centre in Binh Duong Province. This C-TPAT certified warehouse of over 52,000 square metres comprises 141 loading bays, state-of-the-art technologies such as a High Jump warehouse management system, a quality control room, RF scanning, digital CCTV system and an on-site customs office. In view of the increasingly strong sourcing growth in North Vietnam, our bonded license capability in Haiphong is perfectly suited to support the growth ambitions of our clients. In fact, we have increased our capacity in Haiphong by close to 10,000 square meters.

Damco is one of the few logistic players that has its own self-managed warehouse at HCM Airport where our clients’ shipments are palletized by our staff and supervised until their physical loading on aircraft. This set-up allows customers to benefit from our end-to-end process control resulting in improved transparency. Our focus is on seeking continuous improvements that simplify and connect our customers’ supply chain. 

These developments to our logistics infrastructure in Vietnam will enable us to support the country’s projected strong economic growth in the years ahead. It also means that our customers can take advantage of opportunities resulting from the creation of the AEC and the FTA between Vietnam and the European Union. 

Our role here is to enable our customers’ supply chains to become more lean while ensuring that environmental emissions can be reduced; this is important given the proximity of our facilities to the ports of Haiphong and Ho Chi Minh.

How does Vietnam factor into Damco’s development strategy in the region?

Firstly, we see the changing nature of Chinese manufacturing as a clear opportunity for businesses in Vietnam.

While Vietnam is the fourth-largest exporter of apparel globally, this emerging market offers more than just low labour costs for traditional, low-end manufacturing items. Technology companies from China, Taiwan, Japan and elsewhere for example are progressively investing within Vietnam to expand their production facilities and in anticipation of the FTAs that will soon be implemented.

Vietnam also has a young, energetic workforce that is eager to achieve fast-track careers both domestically and via employment opportunities overseas in order to upgrade their skills set.

Last but not least, the pro-business approach taken by the government of Vietnam, together with its macro-economic policy, has the dynamism to create strong partnerships with counterparts overseas. It is worth noting that from a macro-economic perspective, Intra-Asia trade already accounts for 52% of airfreight and 66% of ocean freight in Vietnam. This is expected to increase further thanks to the various economic treaties that are now coming into play.

In short, we see Vietnam as an important trading market for a number of reasons, all of which support our focus on tapping into high-growth opportunities in intra-regional trade and through trade lanes to Europe and across the Pacific. This is particularly important for manufacturers with factories mostly owned by Asian investors, and who export large volumes to these long-haul destinations.

In the long term, supply chains will have to become more self-sufficient (i.e. sourcing in-country or from other countries within the local FTA areas). Damco Vietnam will continue to be an active part of the global supply chain market. 

What are Damco’s key goals between now and 2020 for the Vietnamese market?

At Damco, we invest continuously in the training and development of employees and are committed to engaging with local business partners to foster long-term partnerships. Together with recent improvements made to our logistics centres in Vietnam, hopefully signals to all our stakeholders that we are here for the long-haul! While we are keeping a close watch on market developments such as those that are pointing increasingly to new opportunities in the digital space, our focus also remains on elevating and improving our supply chain solutions and accelerating the performance we are able to offer to clients as a result. 

What opportunities do you envisage the APEC 2017 bringing to Vietnam in general and to Damco in particular; and what are you expecting from the Summit?

Based on the growth and investment potential already mentioned, the logistics industry that serves Vietnam must address a number of challenges. At up to 25% of GDP, logistics costs are high and disadvantage the country when compared to its neighbours. This is despite Vietnam occupying a prime geographic position. 

Infrastructure can also be problematic. Road connections are improving although not at the pace logistics stakeholders would desire. There are major issues with air freight. Although the capacity out of Hanoi has greatly improved, similar investment has yet to be made at Tan Son Nhat International Airport where it is expected that, on the basis of currently projected growth rates, the airport should be operating soon at full capacity for both passengers and cargo.

To comply with new international standards demanded from APEC as well as from TPP and FTA pacts, Vietnam could face issues around product quality, intellectual property, and the need for a more decisive stance toward modernizing its infrastructure while reducing logistics cost to be more competitive with peers and neighbor countries. These challenges need to be addressed by local authorities soon and to the satisfaction of overseas buyers and stakeholders across the international community.

We are hopeful that APEC 2017 will provide a platform for looking at ways to address these developments.


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