Samsung enters VN’s logistics market

Samsung SDS, the Korean conglomerate’s information and communications technology (ICT) and logistics arm, will enter the Vietnamese market through a joint venture with Aviation Logistics Service (ALS).

The news was officially released on the Samsung SDS website last week, explaining that it will establish a joint venture in Việt Nam and boost its presence in the Southeast Asian logistics market.

This is the second joint venture in Southeast Asia for Samsung SDS, following the joint venture it established last month with Thailand’s leading customs clearance company, ACUTECH.

Việt Nam is considered to have significant potential in logistics. According to Samsung SDS the rapid growth of its logistics market, at 15 to 20 per cent per year, influenced its decision to establish the joint venture.

Thanks to recent changes in the international trade environment relating to the TPP and the ASEAN Economic Community (AEC), global companies are or are at least considering relocating their manufacturing facilities to Việt Nam, which has led to increasing FDI and trade volumes.

Kim Hyung Tae, Executive Vice President of Samsung SDS’s Smart Logistics Business Unit, said that considering ALS’s local network and diverse business capabilities, it decided that Việt Nam was its most optimal partner. “With this agreement we will continue to expand our business in the Southeast Asian market,” he added.

Samsung SDS plans to provide an integrated logistics service, including global and inland transportation, warehousing services, and customs brokerage, while utilising ALS’s customer network along with attracting potential customers by strengthening its external sales force through the partnership.

The rapid growth of Việt Nam’s export-oriented manufacturing sector has boosted demand for logistics services but the local logistics sector has largely failed to fully meet this demand. Many enterprises are therefore looking for opportunities to enter the sector.

According to the Việt Nam Logistics Business Association, logistics costs in Việt Nam represent 25 per cent of annual GDP, significantly higher than in countries such as the US, China and Thailand. When the TPP officially comes into being, the tariffs on tens of thousands of goods will gradually come down to zero per cent, boosting Việt Nam’s imports and exports and requiring a logistics sector that can cope.

ALS was founded in July 2013 to invest and manage the ALS cargo terminal at Nội Bài, which has become a key link in supply chain services. It has made significant contributions to improving the quality and capacity of air cargo at the airport and become the leading cargo handling operator of international standard in Việt Nam

Source: VNS