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  Logistics firms get moving

Local logistics firms are mulling ramping up operational efficiency before the market totally opens to foreign investors from 2014.

Vietnam is home to 800-900 logistic firms, most small with limited capital sources and just holding a 30 per cent market share.

One of logistic firms' biggest concerns is
Vietnam totally opening its logistic market to foreign players from January 1, 2014 as per World Trade Organization commitments, meaning foreign firms will be liable to open wholly foreign-owned logistic firm in Vietnam.

In this context, many local firms are planning mergers and acquisitions (M&A) to sharpen their competitiveness.

Gemadept Logistics Joint Stock Company is one firm looking for a strong restructuring plan in the next three years.

Albeit active in ports services, shipping, real estate and rubber growing this year Gemadept is set to boost incomes from ports services and shipping.

Especially from second quarter of 2013 its Nam Hai-Dinh Vu port will enter into service to serve northern market to catch up with rebounding demands for goods transport, for instance to China. The port's ground and wharf area is to triple that of its existing Nam Hai port in
Haiphong city.

"Parallel to completing Nam Hai-Dinh Vu port, we are carrying out M&A with other logistic firms having good infrastructure," said Gemadept general director Do Van Minh.

Eyeing an annual average growth of 30 per cent, Minh Phuong Trade Services Company is a weighty competitor in local logistic field.

"In the long haul, we may consider M&A as a way to enhance our position," said Minh Phuong's chairwoman Dang Thi Minh Phuong when being queried about the company's strategy to stay firm in the market after 2014

Big investments were also required to grow professionalism in logistic services, according to Phuong. Accordingly, Minh Phuong Company had pumped millions of US dollars into procuring 100 container truck trailers, dozens of vans and 12,000sq.m wide holding yard. These are the company’s advantages in sourcing partners.

"Local logistic firms with good infrastructure like Minh Phuong will be the targets of foreign-invested firms often with minor investments into infrastructure," said MUTRAP III's senior expert Jan Tomczyk.

Tomczyk assumed M&A perspectives in the logistic field would be promising since logistic field eyes a high annual growth of 20-25 per cent thanks to steadily rising retail and import export sector value.

Put-through cargo volumes at Vietnamese ports are expected to hike from 280 million tonnes per year to 500-600 million tonnes per year from now to 2015, reaching 900-1,100 million tonnes by 2020 and from 1,600 to 2,100 million tonnes by 2030. In this context, local logistic firms can only meet one-fourth of the demand.

Vietnam Shipowners Association chairman Tran Duc Minh said local firms needed to weigh up creating synergies to help them compete equally with foreign players when the market is totally opened from 2014.


Source
: VIR
Date: 06/05/2012
 
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