Made in Vietnam: Emerging logistics giant isn’t slowing down post-TPP

The art of the pivot

In many ways, Vietnam is already turning its attention away from its long and troubled relationship with the United States and facing to the west, eying increased trade with the European Union.

“Our current main trade lanes are from Vietnam to Europe,” said Li Wenjun, DHL Global Forwarding’s senior vice president of airfreight for the Asia-Pacific region and head of airfreight for China. E.U.-bound airfreight business is already “showing strong growth and has immense potential for further development,” he added. “With the Vietnam- European Union free-trade agreement, we expect that it will boost our air freight tonnage between Vietnam and Europe.”

The E.U. free-trade agreement, Li said, “will take effect in 2018 and is expected to bring more business activities in the next few years, leading to positive growth in GDP.”

This E.U. connection is also bringing in a massive influx of foreign direct investment and intra-Asian investment, which bodes well for South Asia trade. “A lot of [foreign direct investment] is flowing into Vietnam,” said Andrew Chen, acting country manager for forwarder Dimerco Vietnam. “China is already number two and Japan and Korea are close behind because they are investing in manufacturing. That means there is a huge demand for import-export, so for logistics companies, the demand will increase accordingly.”

One of the pioneers of the overseas investment wave is C.H. Robinson, the first fully foreign-owned global forwarding company to set up shop in Vietnam after the government removed restrictions on foreign ownership in 2015. That deregulation alone was an important signal to multinationals that Vietnam was moving fast to integrate into the international economy, trade deals or no.

C.H. Robinson opened its Ho Chi Minh City office in April 2015. Tony Tan, the company’s regional manager for Southeast Asia, told Air Cargo World that “the E.U. already had a large presence that dates back to as early as the ’80s, and it promises to be one of Vietnam’s largest markets going forward, presenting even more opportunity.” For Tan, customs delays and infrastructure shortages were the primary concern, given Vietnam’s built-in growth potential. “Without investment,” he explained,  importers and exporters will run into problems.”