Pham Quang Thang, a senior executive of FedEx, an express forwarding firm, said that garment and footwear are the biggest clients of FedEx, which bring the biggest turnover to the air transport company.
Thang has revealed that the number of orders has been on the decrease, while the orders from garment companies have dropped by 30-40 percent. However, Thang declined to give detailed information.
FedEx mainly carries the samples of products foreign companies outsource to Vietnamese companies.
The senior executive has affirmed that the company’s turnover keeps growing, but the growth has clearly slowed down, the common problem of nearly all enterprises in the field of express forwarding.
It was estimated that 4-5 years ago, the growth rate of the business field was 30-40 percent, while the figure has dropped to 10-20 percent.
According to Thang, in Vietnam, there are four main express forwarding service providers, namely DHL, TNT, UPS and FedEx.
Bui Anh Duc, a senior executive of Bee Logistics in HCM City, also said that the company’s number of orders has decreased by 30-40 percent in comparison with the same period of the last year. The considerable decreases have been seen not only in the contracts to serve export, but import activities as well.
“Our clients are meeting big difficulties due to the global economic downturn, while they are facing financial problems themselves, therefore, they do not make products for export at this moment,” Duc explained.
While logistics firms now feel worried about the sharp falls of orders, they have received more bad news from shipping firms that the freights would increase further.
Duc said that the shipping fee to Europe has increased by 100 percent so far, to the US by 50 percent and to China by 300 percent.
In general, shipping fees makes up the biggest proportion of door-to-door logistics services. Therefore, the shipping fee increases will certainly influence the logistics firms’ service fees.
Meanwhile, businessmen said logistics firms, especially domestic ones, have to compete fiercely with each other to survive. Therefore, some firms would accept modest fee increases to share difficulties with clients.
All the logistics firms, which have their shares listed on the bourse, have shown their profits decrease significantly. The gross profit from sales and services (net revenue from sales and services minus the cost prices) of Sotrans, for example, was 26 billion dong in the first quarter of 2012, lower than the 28 billion dong level of the same period of the last year.
Meanwhile, Gemadept has reported the gross profit from sales and services in the first quarter of 2012 at 18 billion dong, a sharp fall from the last year’s 33 billion dong.
Meanwhile, Vietnam’s logistics remain an attractive business field in the eyes of foreign firms. Jeff McLean, General Director of UPS Vietnam said on Doanh nhan Saigon that Vietnam’s logistics have great development potentials in the time to come thanks to the stable export growth and high GDP growth rates (Vietnam’s GDP increased by 6.1 percent in the fourth quarter of 2011).
A report by the World Bank showed that Vietnam, together with China, India, Thailand, Uganda, the Philippines and South Africa have been put into the group of developing economies with outstanding economic growth rates. Vietnam’s logistics industry has great potentials to develop thanks to the strategic geographical position and the deeply integrated economy after the admission to WTO.