Sixty-five per cent of Vietnam’s GDP depends on the quality and development of domestic logistics services, Mr. Juergen Weber, Chairman of EuroCham’s Transportation & Logistics Sector Committee, told the recent Logistics Forum 2025. “Reducing costs and improving logistics performance must remain Vietnam’s top priority if it aims to achieve breakthrough economic growth and sustain FDI attraction,” he continued. Indeed, Vietnam’s current logistics costs remain higher than the regional average.

Amid growing investments by countries like Japan and Singapore in infrastructure and the application of advanced technologies to manage logistics in real-time, Mr. Weber emphasized that, with its strategic geographic location, Vietnam must meet similar standards in cargo processing to keep pace with international logistics operations and avoid falling behind in global trade flows.

Innovative solutions applied

According to Ms. Nguyen Thao Hien, Deputy Director of the Department of Foreign Market Development at the Ministry of Industry and Trade, Vietnam’s logistics sector has shown marked improvements in recent years, responding well to rising trade demands and supporting the country’s goal of posting 8 per cent economic growth in 2025.

Vietnam’s Logistics Performance Index has risen to 43rd out of 139 ranked countries, placing it fifth in ASEAN. The sector now represents a market size of $40-50 billion annually, growing at an average rate of around 16 per cent a year.

Mr. Dinh Xuan Khanh, Director of the Saigon Newport Corporation’s Logistics Center in Ho Chi Minh City, noted significant improvements and investments in southern Vietnam’s logistics infrastructure. Leveraging the region’s extensive waterway network, many inland ports have been established and connected to inland container depots (ICDs) and warehousing zones, easing the burden of customs declarations and cargo transfers from deep-sea ports.

The Cai Mep Port cluster in Ho Chi Minh City (formerly in southern Ba Ria-Vung Tau province), for instance, handled approximately 6 million TEUs in 2024. Of that volume, 80 per cent was transported inland to the southern city and Dong Nai and Binh Duong provinces (the latter of which is now also part of Ho Chi Minh City) by waterway, while only 20 per cent was picked up directly at the Port. This figure is expected to continue rising in the near future. Drawing from the experience of countries with advanced logistics infrastructure like China, several Vietnamese enterprises, particularly large ones like Viettel, have begun making significant investments in digital transformation within the logistics sector.

“Viettel has built a comprehensive data park, consolidating all technological and technical equipment into a centralized cargo processing facility,” Mr. Khanh explained. “I have personally visited this site and found it offers a wide range of services, from sampling for animal and plant quarantine to certificate of origin verification and the handling of auxiliary licenses. Beyond just customs inspections or cargo preservation, these permits and licenses can now be bundled and processed quickly, expediting cargo handling.”

Aging infrastructure, limited capacity

Despite government efforts to develop a robust logistics sector to support double-digit economic growth, Vietnamese logistics service providers say numerous bottlenecks are still hampering the movement of goods domestically and across borders.

Mr. Nguyen Duy Toan, Director of Ratraco Solutions, pointed to major limitations in Vietnam’s rail network. “Vietnam’s railway lines were built over a century ago during the French colonial era, and are severely degraded and outdated,” he said.

The North-South rail line linking Ho Chi Minh City and Hanoi and continuing to Lang Son and Lao Cai on the Chinese border remains a single-track system with a narrow 1-meter gauge. This limits load capacity and slows transport speed. Consequently, trains in Vietnam carry fewer containers than their counterparts in China or Europe, making shipping costs per container higher.

Another constraint is that passenger and freight trains share the same track. Since passenger trains are prioritized, freight trains must frequently stop and pull into sidings, further reducing the efficiency and speed of cargo transport, especially in the north, where infrastructure is under heavy pressure.

While countries like China, the US, and Russia and regions such as Europe rely heavily on rail for cargo, Vietnam transports only about 1 per cent of its goods by rail. Mr. Toan noted that rail was once a major transport mode, but the rapid development of road and sea logistics has outpaced investment in rail, which remains underutilized despite its potential.

Vietnam is planning a high-speed North-South rail line and the Hai Phong-Hanoi-Lao Cai corridor, but these projects are not expected to be completed until 2030-2050. Only then can the current, outdated lines be repurposed primarily for cargo.

Mr. Toan also highlighted the shortage of locomotives and freight cars, especially during peak periods. Even when tracks are available, operations are hampered by a lack of wagons, containers, and lifting equipment. Meanwhile, most Vietnamese rail terminals don’t have the necessary specialized cranes for loading and unloading, forcing companies to invest in costly mobile equipment.

Station infrastructure and sidings are also too small, limiting train lengths to about 325 meters, or just 23 containers per train. Additionally, Hanoi’s Yen Vien Train Station, as the only facility granted certification to transport cargo through to China, is severely overloaded due to rising trade with Vietnam’s northern neighbor. Carriers are increasingly having to divert to auxiliary stations like Kep and Dong Mo.

The limitations in rail logistics are compounded by inadequate multimodal connectivity, especially in the north. According to Mr. Khanh, Vietnam’s ports handled roughly 20 million TEUs in 2024. Of these, around 65 per cent passed through ports in Ho Chi Minh City, 30 per cent through northern Hai Phong city and Quang Ninh province, and only 800,000 TEUs through central and south-central regional ports like Da Nang and Quy Nhon.

In the first half of this year, these regions saw significant cargo growth, with 25 per cent at Cai Mep Port, 10-12 per cent in other Ho Chi Minh City ports, and 18-20 per cent in Hai Phong ports. This surge caused major congestion, however, especially on roads leading to the ports. At Lach Huyen deep-sea port in Hai Phong, long lines of trucks frequently form near the Tan Vu-Lach Huyen Bridge.

The government has approved the expansion of Lach Huyen to 12 berths, but with only one bridge connecting them concerns have been raised that an over-reliance on road transport will lead to chronic bottlenecks.

In addition to infrastructure limitations, Mr. Khanh emphasized that Vietnam must also streamline administrative procedures and introduce policies that encourage investment in domestic logistics infrastructure. Currently, land rental costs for facilities such as ICDs and inland waterway ports are calculated at the same rates as industrial parks instead of transportation infrastructure. This has made logistics investors hesitant to enter the Vietnamese market. Customs clearance procedures also remain overly complex and in need of simplification.

Agreeing, Mr. Weber noted that Vietnam still faces significant challenges in automating and streamlining customs procedures. He emphasized that improving regulations and administrative capacity is key to enhancing logistics performance. He also stressed the need for the sector to transition toward greener, more sustainable operations. Currently, most of Vietnam’s thousands of logistics firms offer only basic services, falling short of advanced supply chain management and inventory solutions.

Streamline and go green

He also emphasized the need for Vietnam to build and modernize its logistics infrastructure to match the pace of its economic growth and international trade ambitions. This includes upgrading transport networks such as roads, seaports, and airports, while also improving multimodal connectivity to ensure the seamless movement of goods across regions.

Another key suggestion was to invest in digital transformation within the logistics sector. Stakeholders urged the government to adopt and promote technologies such as blockchain, AI, and big data analytics to enhance transparency, optimize operations, and reduce costs. They also highlighted the importance of creating a level playing field for both domestic and foreign logistics providers, ensuring fair competition and enabling small and medium-sized enterprises (SMEs) to participate more actively in the market.

In addition, several experts pointed out that Vietnam should focus on developing a skilled logistics workforce. This would involve establishing specialized training programs and fostering partnerships between the government, academia, and the private sector to meet the growing demand for high-quality human resources.

Stakeholders also stressed the importance of implementing consistent and transparent policies. Frequent changes in legal regulations, unclear licensing procedures, and overlapping jurisdictions between agencies have created confusion and increased compliance costs for logistics firms. Clearer, more predictable regulations would, in their view, encourage long-term investment in the sector.

Adding to this, Mr. Khanh also emphasized the need to continue investing in inland and coastal waterway transportation in the north as a low-cost alternative to ease pressure on road and rail. He predicted that with sufficient investment, water transport could soon see double-digit growth in the northern region. This would require that companies invest in developing ports along inland waterways and building ICD facilities to facilitate the use of this mode of transportation.

Each inland barge can carry up to 128 containers, equivalent to removing 128 trucks from the road. “According to the Vietnam Inland Waterways Administration, waterway transport has the lowest infrastructure cost compared to road, rail, or air,” Mr. Khanh added.

He highlighted the opportunity to develop coastal barge fleets to transport goods from provinces like Ninh Binh to Hai Phong. “The cost of waterway transport is at least 30 per cent cheaper than road transport, offering substantial savings,” he explained.