As Vietnam becomes a top destination for production shifts and procurement by many corporations, American logistics “unicorn” Flexport has quickly seized the opportunity.

“This is the right time to invest in Vietnam, a super important market,” Flexport President Sanne Manders told VnExpress during his visit to Ho Chi Minh City.

Late last month, Flexport’s subsidiary opened an office in Vietnam with an initial team of 12 employees. This team works alongside local partner ITL in a building in Tan Binh District, totaling over 50 people. They aim to recruit 60-70 employees by the end of the year.

Globally, Flexport has about 2,000 employees across 16 countries in North America, Europe, and Asia, serving clients in 89 markets. Founded in 2013 by Ryan Peterson in San Francisco, Flexport is one of the most valuable logistics startups in the U.S., with a recent valuation of nearly $8 billion, earning it the “unicorn” status, as reported by Reuters. A unicorn is a term for startups valued at over $1 billion that haven’t gone public yet.

The company has raised $2.3 billion from SoftBank, Founders Fund, and GV (formerly Google Ventures), with annual revenue exceeding $3 billion. Even before establishing a presence, they provided services to 1,300 Vietnamese export factories, transporting goods for over 500 importers. Hence, Manders has regarded Vietnam as a “strategically important market” for the past few years.

“Vietnam is our second-largest sea freight market (after China) and is poised to continue growing,” he revealed. Looking to the future, there are two main reasons Flexport considers Vietnam a “super important” market.

First, in the “China + 1” strategy, Vietnam always ranks high on the list of considerations for global corporations. “Many of our clients are shifting their supply chains here. The domestic market is also growing robustly. The more shifts there are, the greater the service demand,” Manders noted.

Second, the economy is projected to grow by 5-6% this year. Typically, the logistics sector can grow twice the GDP rate. Therefore, the logistics market could expand by 6-10%. “We want to capitalize on both of these macro trends,” he said.

In 2023, the total import-export turnover reached over $681 billion. In the first five months of the year, exports were estimated at $156.5 billion, up 15% from the same period in 2023. Manders predicts Vietnam will lead in manufacturing and logistics in the long term, as it receives significant investments in technology and consumer electronics sectors.

Simultaneously, e-commerce is booming. According to consultancy Access Partnership (UK), Vietnam’s retail e-commerce export value alone is forecasted to reach 296.3 trillion VND by 2027.

By combining ITL’s multimodal transport capabilities with Flexport’s strengths, both believe they can offer comprehensive services with very short shipping times, such as an “expressway for e-commerce” to the North American market.

However, Flexport still faces several challenges in deepening its involvement in the Vietnamese market, such as cost issues and emission reduction.

In May, shipping costs on some of Vietnam’s core export routes nearly tripled due to the prolonged Red Sea crisis, which is consuming a large proportion of the global fleet and disrupting availability and efficiency in the industry.

“We find ourselves in a surprisingly supply-constrained market,” Manders said. Container prices are expected to remain high in the short term before gradually normalizing with new capacity additions later this year.

Excluding unforeseen incidents, logistics costs in Vietnam are relatively high. However, Manders points out this is a common issue in many places, with logistics often accounting for 10-12% of total costs.

According to him, costs can be reduced by lowering error rates in the shipping process, increasing automation, and optimizing transportation methods. “Some of our clients still use many people to manage their supply chains. But if you have all the data at hand, you won’t need as many people,” Manders explained.

In Vietnam, they are considering barge transport, owned by ITL, as a replacement for trucks when suitable. Barges are considered cheaper and more environmentally friendly. “Transit times might be a bit longer, but sometimes equivalent due to truck congestion. The roads here are very crowded,” he noted.

Besides cost, he acknowledged that customers increasingly demand tools and resources from logistics providers to reduce their carbon footprint. Therefore, they focus on solving this issue by concentrating on three main areas.

First is the ability to measure emissions using technology. They report the amount of CO2 emitted per shipment on each invoice sent to customers. In the execution phase, the company reduces emissions by choosing appropriate means – for instance, using barges instead of trucks in Vietnam, optimizing routes, and developing Sustainable Aviation Fuel (SAF) programs. When further reduction isn’t possible, they participate in climate programs.

In the future, Flexport aims to focus on three pillars of growth in Vietnam, including developing sea and air freight products, integrating domestic logistics services for global brands, and launching additional products to help customers manage supply chains flexibly in real time.

“We believe the potential of Vietnam’s logistics industry is very promising. There is still a great opportunity for transformation through improving infrastructure and adopting digital technology and automation,” Sanne Manders said.

Source: VNexpress


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