1. Vietnam Logistics in Motion
Prepared for: Vietnam Logistics Summit 2008
Prepared by: Spire Research & Consulting
Date: 27 August 2008
Prepared for: Vietnam Logistics Summit 2008 Date: 27 August 2008 Page 1

2. Global Outlook & Growth Drivers
Growth to continue but at a slower rate in 2008 & 2009
World growth will slow to ~4% in 2008, with emerging markets remaining as lead
growth drivers
While weaker US demand and a weakening US$ will make a big impact on the
more export dependent economies of TW, HK & SG…
… other growth drivers in the region - including healthy domestic demand, exports
to non-US markets, foreign direct investments (FDIs), and fixed asset investment (FAI)
– remain on track
Real GDP Growth (Y-o-Y) Based on PPP Weights
Difference from
Current Projections Oct 2007
IMF Update
2005 2006 2007 2008 2009 2007 2008
World Output 4.4 5.0 4.9 3.7 3.8 -0.3 -1.1
United States 3.1 2.9 2.2 0.5 0.6 0.3 -1.4
Euro Area 1.6 2.8 2.6 1.4 1.2 0.1 -0.7
Germany 0.8 2.9 2.5 1.4 1.0 0.1 -0.6
China 10.4 11.1 11.4 9.3 9.5 -0.1 -0.7
India 9.1 9.7 9.2 7.9 8.0 0.3 -0.5
Source: IMF, World Economic Outlook, April 2008
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3. Global Outlook & Growth Drivers (cont‟d)
Growth to continue but at a slower rate in 2008 & 2009
Foreign Direct Investment (FDI) inflows into AP remain strong, including for Vietnam
China FDI will probably exceed US$70b for 2008
Indian FDI has been surging since 2006 and is likely to hit US$25-35b for 2008
Vietnam‟s FDI surge (~US$30b likely in 2008) continues unaffected by the inflationary crisis,
due to continuing political stability & a likely easing of the Dong
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4. Regional Overview for Logistics
Robust but slowing growth in 2008
Developing Asia's trade performance in the
last two decades has been remarkable
Asia now accounts for 40% of the world's total
output in PPP terms, and this percentage is
expected to rise to 60% with the rapid output
expansion in China and India
The Asian transportation market is projected to
grow from US$700 billion to over US$1.3 trillion
by 2020*, with most of the growth coming from
the North-east Asian mega market
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5. Air/Ocean Freight
Growth will continue but at a slower rate compared to 2007
Fuelled by strong trans-Pacific and East Asian
trade, air and ocean freight volumes have been
increasing steadily
Long-term growth prospects are bright
By 2025, 2,990 aircraft will be added to freighter
fleets
Double-digit growth in demand for international
container shipping services in 2007…
Cape-size ships, the largest type of bulk carrier,
have almost tripled in price to US$96m from 1998
Container shipping on the Asia-EU and Asia-US
routes have slowed in 1Q-2Q 2008, though
intra-Asian routes have not been badly affected
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6. ASEAN Initiatives
ASEAN integrates further into single market
ASEAN logistics market: upward trend for the past 3-4 years,
and is expected to continue growing strongly over the next
five years
Under the ASEAN Free Trade Area (AFTA), significant progress
has been achieved in reducing goods tariffs
99.8% of goods under the Inclusion List for the Asean-6 countries
are in the tariff range of 0-5%
ASEAN Open Skies Agreement in 2008
China implemented the China-ASEAN Trade in Goods (TIG)
Agreement in July 2005
China-ASEAN trade, which grew annually by 23% from 1997-2005
to reach US$130.5b
China‟s trade with ASEAN 9% of total in 2005, making ASEAN its fifth
largest trading partner
Vietnam was admitted as a member of WTO in 2007
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7. Asia‟s Infrastructure Initiatives
New infrastructure & systems will aid logistics growth in Asia
China Road & Rail
23% more in the next 5 years; highway from Hanoi to Kunming
Construction of 100,000 km of new rail lines
Hong Kong Air
World‟s busiest airport for international cargo since 1996
Air cargo reached 3.6mil tonnes & express air cargo grow 13% annually
India Road & Rail
USD12b road project through National Highway Authority of India
Privatizing rail infrastructure
Korea Sea
Gwangyang and Busan ports
Air
Incheon International Airport: 4th largest air freight handler, expanded to 429,000 m2 by 2020
Malaysia Air
Senai Airport Terminal Services: M$1b upgrade to increase throughput to 328,000 tons
Philippines Road & Rail
US$430m project "logistics hub" as part of the Luzon Urban Beltway super regions' blueprint
Singapore Sea
World‟s largest container port, connecting 123 countries and >600 ports
A full range of logistics and supply chain management capabilities
Taiwan Logistics: revenues of NTD 791.9b
Government policies streamlining trading, customs clearance & shipping procedures
Thailand Road & Rail
East-West Economic Corridor (road); North-South Economic Corridor (rail)
Sea
e-logistics and RFID electronic container and seal systems
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8. Vietnam‟s Infrastructure Investment
VN is committed to investing heavily in logistics
Logistics volume continues to rise
In 2007, ships & cargo going through Vietnam‟s sea ports 88,619
with a total of 320,176 million tons of goods
Strong growth in key economic hubs such as Hai Phong
(47.32%), HCMC (17.41%) and Da Nang (27.27%)
Noi Bai and Cat Bi airport will be enlarged to enhance capacity
Roads will be upgraded to meet international or national
standards
The Asian Development Bank soft loans totaling US$880m to
Vietnam, helping three projects on building expressways and
roads this year.
Prepared for: Vietnam Logistics Summit 2008 Date: 27 August 2008 Page 8

9. Vietnam‟s Infrastructure Investment (cont‟d)
VN is committed to investing heavily in logistics
MOUs were signed between 16 companies from both the south
of Vietnam and the city of Zhanjiang of China regarding a
number of projects worth a total of US$158m in seaports and
other industries
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10. Country Outlook – Commodities & Logistics
Vietnam logistics and infrastructure set to ride on commodities boom
Vietnam has set an ambitious target of earning more than
US$58b from exports in 2008, an increase of around 20% from
2007
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11. Country Outlook – Commodities & Logistics (cont‟d)
Vietnam logistics and infrastructure set to ride on commodities boom
Rising commodity prices are lifting Vietnam‟s
booming commodities exports and, together Vietnam‟s share of world markets for
with a post-WTO surge in manufacturing FDI, agricultural/wood commodities, 2000
helping turn the country into a global export
exports Share of Change in
powerhouse Commodity (USD world market share
mil) market (1996 – 2000)
Vietnam‟s produce – particularly seafood, rice
and coffee Rice 360.2 5.9% -30%
The Ministry of Fisheries plans to export US$2.3b Coffee 585.4 4.8% +38%
worth of seafood this year, $380m from Ca Mau Spices 130.4 4.8% +88%
Province alone
Shellfish 820.8 4.3% +80%
The second largest coffee exporter in the world –
Natural
revenue of US$1.8b in coffee exports, rubber
140.0 2.9% +94%
Demand for specialized handling and Pulpwood 39.7 1.5% +38%
transportation will rise significantly – especially in Tea 30.7 1.2% +67%
the area of integrated cold chain
Source: Comtrade
Public refrigerated warehouse (PRW) investment
will increase storage capacity by more than
90,000 pallet positions
Haisan Resources invested US$3.6m to set up a
temperature-controlled logistics facility in
southern Vietnam
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12. Country Outlook – Collaboration
Vietnam‟s collaborations with Singapore
Vietnam is collaborating with Singapore in
developing integrated port and logistics
facilities in Vietnam
At least four new container sea ports projects
with Singapore PSA‟s joint venture with Saigon
Port to develop a container terminal in the Ba
Ria-Vung Tau province
NOL Group has a stake in the Vietnam
International Container Terminals, the first
dedicated container port in Vietnam
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13. Country Outlook – Collaboration (cont‟d)
Vietnam‟s collaborations with Singapore
A Vietnam-Singapore joint venture kicked off
construction of Vietnam's first petroleum
bonded warehouse in Van Phong Bay of Khanh
Hoa Province on the central coast
A JV with PB Tankers of Singapore, total
investment US$170 million in Van Phong petrol
terminal
With the most advanced equipment,
comparable to any other storage terminals in
Asia
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14. Case study 1
Views from Vietnam‟s manufacturing/exporting companies
Industry Furniture Garment Electronics
Exports Sales 100% – 200 containers a month 70% 0% but planning to export
mainly to Europe and Asia
Imports Raw materials – wood and cloth Raw materials – cloth (60- Electronic parts (50%)
70%) mainly from Asia
Current Logistics Sea freight Sea freight Warehousing
Requirements Bonded warehousing Bonded warehousing Land transport
Land transport Land transport
Tracking System Manual JIT 60% software,
GPS 40% manual
Challenges Faced Time lapse between date Slow loading and Poor stock management
of ship arrival and date of unloading periods due to Poor traffic conditions on
warehouse entry at port strain on sea port the roads lead to delays
Shipping company infrastructure Limited equipment for
appointed by clients Complicated custom loading and unloading
Frequent changes in shipping procedures
company addresses without Limited warehouse space
proper channel of updating at any one time
Few companies provide
full service because of
heavy responsibilities
Future plans To invest in inventory software To invest and upgrade To separate the logistics
inventory software, using arm from the parent
barcodes and scanners company
To build own warehouse To invest and upgrade
inventory software
Preference for bonded
warehouses
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15. Case study 2
Views from foreign logistics companies in Vietnam
Industry Yusen Air & Sea Service SP-PSA International Port Co. Ltd. DHL-VNPT Express Ltd
(Vietnam) Ltd
Logistics Yusen (Vietnam) currently SP-PSA‟s new container port in DHL-VNPT Express is a joint-venture
Asset in provides services such as Air & Vung Tau province, Vietnam will be between DHL and VNPT Group. The
Vietnam Sea operations, international developed in two phases, with the venture‟s US$14 million project
freight forwarding, 3PL services, first phase becoming operational involves:
warehousing, bonded in 2009 3,140 sq m service centre in
warehousing and customs Phase 1 construction of the Dong Nai, Southern Vietnam
clearance terminal will be handled by A fleet of 100 vehicles, currently
The company has a Penta-Ocean Construction the largest fleet in the express
warehouse leasing Co. Ltd from Japan industry in Vietnam
subsidiary near Hanoi as Courier depots in Hai Phong City,
well as a bonded Vung Tau and Da Nang
warehouse in Hai Duong DHL service centre in Hanoi by
province Dec 2008
Future Yusen will focus more on The terminal is projected to To continue to make more
plans staff development by have an annual capacity of 2 investments in Vietnam to help
providing them with million TEUs and will be expand network and connect
adequate training capable of receiving vessels of Vietnam‟s key economic centers
up to 80,000 DWT
Customizing their approach The company has shown interest
in overcoming regulatory Connected by an extensive in investing more in Binh Duong
limitations road and inland waterway and Dong Nai,
network to Ho Chi Minh City &
Eyeing investment South Vietnam‟s industrial
opportunities to expand parks
their business further
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16. The Concluding Picture
Vietnam Logistics Is in Motion! Ride On This Fast Motion
Asian economic growth will slow in 2008 and 2009, before going up again in 2010
Asian domestic demand to cushion against weaker exports, so what Asia will see is
probably a slowdown, not a 1998-style recession
The outlook for international trade and logistics is positive – governments and private
companies in Asia are prepared to invest in transport and logistics infrastructure
including in Vietnam
In spite of an inflation induced slump in domestic consumption, Vietnam will
continue to grow its export sector, particularly in commodities & manufacturing
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17. The Concluding Picture (cont‟d)
Vietnam Logistics Is in Motion! Ride On This Fast Motion
The logistics and infrastructure sector will become an important economic sector for
Vietnam in the next 3-5 years, capable of contributing up to 15% of the national GDP
and offering many opportunities to private business, both local and foreign
Sizeable growth in industries such as warehousing (including refrigerated storage),
specialized transportation (e.g. refrigerated trucks or “reefers”), distribution parks
(“distri-parks”), ports, airports, road infrastructure, power generation and water treatment
Transportation alone accounts for 40-60% of logistics costs – this sector will see more
investment, with maritime transport growing to take up a larger share of domestic cargo
transport
Commodities trading, especially in food products, will boom in Vietnam, requiring
specialized material handling systems
Technology advancement in supplies tracking and bonded warehousing will be the next big
thing in demand by Vietnam„s locally-based manufacturers/exporters
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18. Tel: (65) 6838 5355
Fax: (65) 6838 5855
78 Shenton Way #20-01
Singapore 079120
sg.info@spireresearch.com
www.spireresearch.com
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