GREENER LOGISTICS
Weak financial capacity, technology, and management, plus a lack of relationships with major global cargo firms make it harder for Vietnam’s logistics industry to go green.
A GIANT GOES GREENER
At the end of May 2023, the leaders of several departments at the Ministry of Finance and the Ministry of Transport were surprised to receive a proposal from a major global maritime transport company, requesting permission to pilot electric trucks in Vietnam.
Operating in Vietnam since 1991, this company is currently one of the world’s largest container shipping companies with a significant market share in Vietnam. It operates transport routes connecting deepºwater ports in the Lach Huyen – Hai Phong area and Cai Mep – Thi Vai to Europe and North America, providing transportation solutions that ensure the supply chain and contribute to the development of Vietnam’s import and export sector.
According to this recent proposal, this company wishes to import 12 heavy and light electric trucks with the potential to expand to over 100 vehicles by 2030, along with a synchronized system of charging stations to be installed in Hanoi, Hai Phong, and Ho Chi Minh City. This focuses on initial and midºsegment transportation for key customers.
Although the investment for the pilot phase is only about USD 3 million, this is a longºterm, strategic step that would provide a significant advantage for this maritime transport and logistics giant in accessing major cargo owners, especially FDI enterprises that are highly concerned about reducing emissions.
Currently, this company is accelerating the licensing process to implement the project in 2024 and aims to establish a green journey chain from manufacturers to seaports and from seaports to green transport ships managed by this firm.
In recent years, to win the favour of consumers in developed countries in Europe and North America, this multinational maritime transport group has invested in 19 large cargo ships powered by green methanol fuel and acquired 450 heavy electric trucks in Germany and North America.
CHANGING PERCEPTIONS
It must be noted that, up to this point, this “greening” project remains one of the few concrete steps taken by transport and logistics enterprises in Vietnam, while the pressure to transition to green logistics is very high.
Mr. Luong Hoang Thai, Head of the Multilateral Trade Policy Department at the Ministry of Industry and Trade, emphasized that in the current context, enterprises that fail to quickly implement criteria to green the logistics industry will face many difficulties in the future, gradually being “eliminated” from domestic and global business, trade, and importexport activities.
At present, transportation is made “greener” through two common methods: replacing vehicles that use internal combustion engines with those that use electric or hybrid energy; and using biofuels and various types of sustainable fuels produced from different sources, such as used cooking oil, agricultural waste, or urban solid waste to power transportation.
Transportation can also be made greener by optimizing the carrying capacity of vehicles and transport routes through the use of new technology, digital transformation, and artificial intelligence, especially in lastmile delivery.
A representative of the Ministry of Industry and Trade stated that infrastructure and a lack of financial resources pose the biggest challenges to making logistics greener in Vietnam, while the economic capacity of enterprises is the internal factor with the biggest impact on the green logistics transformation process.
As of 2022, 98% of enterprises operating in Vietnam are small and mediumsized, so limitations in financial resources are understandable. To make logistics activities greener, enterprises need investment capital to purchase new technology and equipment and restructure existing operations.
Moreover, logistics enterprises’ perceptions and understanding of greener logistics remain insufficient especially among small and mediumsized enterprises in the field of transportation and warehousing.
Education, more investment, and Government policies are required to fuel changes.
According to Mr. Ngo Khac Le, Deputy Secretary General of the Vietnam Logistics Business Association, many businesses misunderstand the concept of green logistics. They plant trees and flowers around their warehouses and consider these efforts to qualify as green logistics, or smallscale transport businesses try to emulate the green logistics practices of large enterprises and corporations.
“We need to change our perception of the concept of green logistics; we must communicate effectively and regularly. However, communication alone is not enough. The participation of the Government and management agencies is needed, including specific and clear policies, such as tax policies and infrastructure development to promote green logistics,” suggested Mr. Ngo Khac Le.