Singaporean logistics mainstays keen on expansion

15:04 | 13/08/2020
Amid the rising demand from tech-savvy and innovative companies that demand hassle-free and rapid logistics options, Singaporean logistics investors are looking towards Vietnam again, after short disruptions by the ongoing health crisis and domestic slowdown.
1504p5 singaporean logistics mainstays keen on expansion
Singaporean logistics mainstays keen on expansion. Photo: Shutterstock

Jeffrey Tan, group head of Corporate Development and Network & Connectivity at YCH Group, told VIR that there is renewed interest of foreign direct investment shifts due to rising cost pressures from the US-China tariff retaliation and countries like South Korea and Japan moving the manufacturing activities to ASEAN countries like Vietnam.

Manufacturers also see Vietnam as an attractive base, with wages being the second lowest in Southeast Asia and warehouse or factory infrastructure costs being lower than China, India, Indonesia, and Malaysia. The country’s skilled labour, geographical proximity to China, and its free trade agreements, which include pacts with the EU and South Korea, put Vietnam in an ideal position to capitalise on the effects of the US-China trade tensions.

“YCH is committed to increasing our investment in Vietnam by developing key logistics in north Vietnam, which includes warehouse, a logistics centre, and an inland dry port. We are also planning to increase and enhance our existing investment in Ho Chi Minh City, for additional warehousing capacity and a major logistics infrastructure project,” Tan said.

Since its entry in 2009, YCH has built extensive networks, asset footprints, and partnerships within Vietnam and is well-positioned to meet the current and future supply chain requirements of the market. Coupled with its deep-rooted understanding of Asia-Pacific and in-depth presence, this enables the company to empower its customers to achieve a comprehensive footprint and a seamless global connectivity not only within Vietnam, but throughout the ASEAN region and beyond,” Tan said.

On the same note, Chun How Loh, general director of APL Logistics Vietnam Co., Ltd., told VIR, “We have witnessed firsthand the surging manufacturing effects of the US-China tensions in Vietnam, which are causing massive disruptions in industrial real estate, labour supply, and logistic services as factories struggle.”

“While the pandemic and geopolitical situation has distorted some of these trade patterns and left a consequential impact on production in Vietnam, we remain highly optimistic that Vietnam will be one of the first to recover to pre-pandemic levels,” Loh said.

To capitalise on the opportunity, APL Logistics continues to expand its warehouse footprint in Ho Chi Minh City. The company has also doubled its warehouses rapidly in northern Vietnam. APL Logistics plans to continue to invest to further expand that capacity.

Elsewhere, omnichannel logistics and channel management solutions firm UrbanFox, a subsidiary of Keppel Logistics, is expanding its presence in Vietnam. UrbanFox has tied up with Keppel Land to establish online-to-offline (O2O) capabilities at the Estella Place shopping mall in Ho Chi Minh City, as reported by The Business Times. The O2O features allow shoppers to purchase the mall’s products at either its physical stores or webstore. Customers can also opt for in-mall collection or home delivery services. Moreover, interactive kiosks have been set up in the mall to highlight promotions and products.

Meanwhile, Scommerce, the parent company of startups Giaohangnhanh (GHN) and AhaMove, wrapped up its latest and largest funding round led by Singapore’s state-owned investment company Temasek in 2019. Although the funding amount was not disclosed, it is said to be worth up to $100 million.

Founded in 2012, Scommerce is one of the leading e-logistics service providers in Vietnam, offering last-mile express and instant delivery, as well as business-to-business trucking and fulfilment services under the brands GHN and AhaMove. The two have been delivery partners for Vietnam’s four largest e-commerce platforms – Shopee, Tiki, Sendo, and Lazada – as well as over 100,000 small- and medium-sized online merchants.

In 2019, Singapore-based Symphony International Holdings Ltd. acquired a significant minority stake in Vietnamese Indo Trans Logistics Corporation (ITL) for approximately $42.6 million.

According to market research by tech firm Reportlinker, the logistics market in Vietnam is in a transition stage and the demand for logistics is rising strongly. High economic growth, increasing domestic manufacturing, rising consumption, and booming e-commerce are some of the key drivers of the Vietnamese freight and logistics market. However, weak transport infrastructure and high logistics costs remain market restraints. Moreover, the booming e-commerce in Vietnam facilitates startups with innovative technologies demanding more efficient logistics services, especially in the areas of last-mile delivery and value-added services.

As the country’s logistics market is becoming more liberalised, new opportunities for businesses to cash in on the rising demand are created.

By Thanh Van

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