Logistics Knowledge

Logistics

Knowledge

Logistics Knowledge

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FREQUENTLY ASKED QUESTIONS

What are the main challenges facing logistics businesses in Vietnam today?

The main challenges facing Vietnamese logistics businesses include inadequate infrastructure, high costs (fuel, operating costs), a shortage of high-quality human resources, fierce competition (both domestic and international), limited technology application, pressure for digital transformation and “greening,” complex supply chain management, along with macroeconomic fluctuations and constantly changing customer demands, according to recent sources.

1. Challenges Regarding Infrastructure & Costs

Poor infrastructure: Incomplete multimodal transport systems, inefficient seaports, and warehouses that do not adequately meet domestic and e-logistics needs.
High logistics costs: Especially transportation costs (accounting for 60-80% of logistics costs), affected by energy prices, exchange rates, and inflation.
High technology investment costs: Equipment, maintenance, and deployment of new technologies are expensive.

2. Challenges in Human Resources & Technology

Lack of qualified personnel: A shortage of highly specialized workers with management skills and foreign language proficiency, especially for e-logistics.
Limited technology application: Communication and customs clearance are still manual; solutions such as IoT, EDI, and smart warehouse management (WMS) are not yet effectively implemented.
Poor data management: Difficulty in collecting and analyzing data to improve efficiency.

3. Challenges in Competition & Transformation

Intense competition: From large domestic and international companies, forcing continuous innovation.
Pressure for digital and green transformation: Requires the application of environmentally friendly technologies and operations to avoid being left out of the global market.
Complex supply chain management: Facing supply chain disruptions and the need for faster response times.

4. Market & Customer Challenges

Changing customer needs: Demanding faster, more flexible, and optimized services.
Macroeconomic instability: Economic recession and inflation affect consumer demand and logistics.

5. Internal Operational Challenges

Inefficient management: Leading to financial losses, fraud, and damage to reputation.
High risks: Damaged or lost goods, delays, documentation errors, and legal risks.

What are the common modes of transportation in logistics, and what are the advantages and disadvantages of each?

In logistics, the five most common modes of transport are: Road (flexible, door-to-door delivery, suitable for short distances), Rail (low cost, large volume, stable), Water (cheapest, extremely large cargo capacity, slow), Air (super fast, safe, expensive for high-value/urgent goods), and Pipeline (for transporting liquids/gases). The choice depends on the type of goods, cost, time, and distance, often combining multiple modes for optimal efficiency.

1. Road Transport

Advantages: Maximum flexibility, door-to-door delivery, not dependent on fixed schedules, suitable for short and medium distances, easy to adjust routes.
Disadvantages: Dependent on transportation infrastructure (traffic jams, damaged roads), high fuel costs, not suitable for very large cargo or long distances.

2. Rail Transport

Advantages: Transports large volumes and bulky items; cheaper than road transport; safer; less affected by weather and road traffic.
Disadvantages: Slower speed; no door-to-door delivery; fixed routes (requires combination with road transport).

3. Water Transport

Advantages: Lowest cost; extremely large cargo capacity (bulk goods, containers); crucial in international trade.
Disadvantages: Slow; dependent on seaports/rivers; no door-to-door delivery (requires combination); easily affected by weather.

4. Air Transport

Advantages: Fastest speed; minimizes risk of loss/damage; suitable for high-value, perishable, and urgent goods.
Disadvantages: Most expensive; weight and size limitations; dependent on airports.

5. Pipeline Transport

Advantages: Continuous 24/7 transport, low operating costs, absolute safety (for liquid/gas products).
Disadvantages: High initial investment cost, only transports liquids/gases/powders, fixed routes.

Multimodal Transport

Combines the above methods (e.g., Truck -> Sea Transport -> Truck/Rail Transport), leveraging the advantages of each to optimize costs, time, and safety, especially effective in global supply chains.

What are Incoterms and why do businesses need to understand these terms when importing and exporting?

Incoterms (International Commercial Terms) are a set of 11 international standard rules issued by the International Chamber of Commerce (ICC), clearly defining the responsibilities, costs, and risks between buyers and sellers in import and export transactions. They determine the time of goods delivery, helping to avoid misunderstandings and disputes, and optimize logistics. Businesses need to understand Incoterms to manage risks, optimize transportation, insurance, and customs clearance costs, ensure international compliance, and avoid financial and legal losses in contracts.

What are Incoterms?

Definition: A set of rules outlining the responsibilities of the seller and buyer in the international delivery of goods, including: delivery, costs (transportation, insurance, customs), risks (loss, damage), and documentation.
Purpose: To provide a “common language” for parties to have a unified understanding, minimizing misunderstandings and disputes in global trade.
Structure: Consists of 3 letters (e.g., FOB, CIF, DDP) followed by the name of the location, clearly indicating the point of transfer of responsibility and costs.
Version: The current version is Incoterms 2020, with 11 terms, divided into 2 groups (for all modes of transport and only for sea/inland waterway transport).

Why do businesses need to understand Incoterms?

Clear division of responsibility: Precisely identifies who is responsible for arranging transportation, purchasing insurance, handling import/export customs procedures, and obtaining necessary documents.
Defining the point of risk transfer: Knowing when the risk (damage, loss) transfers from the seller to the buyer helps in making appropriate insurance decisions.
Cost allocation: Clearly defines which costs belong to the seller and which belong to the buyer (transportation, packaging, unloading, taxes, etc.).
Limiting disputes: Avoiding misunderstandings about obligations and costs, minimizing legal risks and contract disputes.
Optimizing costs and negotiations: Helping businesses choose appropriate terms to allocate responsibilities and logistics costs effectively, leading to better contract negotiations.

International standard: Incoterms are globally recognized and are an important standard in international trade.

Note: Incoterms are not laws, but international trade customs. They are only effective when voluntarily stated in the contract by the parties involved.

What factors affect a company’s logistics costs?

Business logistics costs are affected by many factors such as geographical distance, type of goods, transportation method, fuel prices, shipment size, technology, human resources, and legal policies; along with other factors such as transportation infrastructure, management efficiency, and seasonality, all impacting total costs from transportation, warehousing, handling to management, requiring continuous optimization.

1. Factors Related to Goods & Transportation

Distance & Geography: The further the distance, the higher the fuel costs, tolls, and risks.
Type of Goods: Fragile, hazardous, bulky goods, and goods requiring cold/hot (freezing) storage have higher costs.
Shipment Size: Size and weight affect transportation and warehousing costs.
Transportation Method: Air transport is more expensive than sea/land transport; choice of vehicle (truck, ship, plane).
Delivery Time: Expedited delivery usually has higher costs.

2. Infrastructure & Technology Factors

Infrastructure: The condition of roads, seaports, and airports affects the speed of goods circulation.
Technology: Applications of WMS (warehouse management), TMS (transportation management), and GPS help optimize processes, reduce errors, and save costs.

3. Management & Human Resources Factors

Labor costs: Driver salaries, warehouse staff salaries, training costs, and benefits.
Management efficiency: Flexible processes, good inventory management, and minimized errors.
Risk management: Costs incurred due to incidents, delays, and paperwork errors.

4. Market & Policy Factors

Fuel prices: Fluctuations in gasoline and diesel prices have a direct impact.
Policies: Taxes, customs fees, import/export regulations, and trade agreements.
Seasonality: Increased demand during holidays and festivals increases pressure and logistics costs.

5. Other Constituent Costs

Warehousing costs: Warehouse rental, utilities (electricity and water), equipment (forklifts), packaging materials.
Procedural costs: Customs, quarantine, documentation.
Handling costs: Loading and unloading at the port, transshipment.

How are Industry 4.0 technologies (such as IoT, AI, and blockchain) changing the logistics industry?

Industry 4.0 technologies (IoT, AI, Blockchain) are revolutionizing the logistics industry by creating smarter, more automated, transparent, and efficient supply chains. This is achieved through route optimization, demand forecasting, inventory management, warehouse automation, real-time goods tracking, and enhanced data security and reliability, thereby reducing costs, increasing speed, and improving customer experience.

IoT (Internet of Things):

Real-time tracking: Sensors mounted on vehicles, containers, and shelves collect instant data on location, temperature, and humidity.
Smart warehouse management: Robots integrated with AI and IoT automatically sort, move, and pack goods.
Transportation optimization: Monitoring shipping capacity to select appropriate vehicles and optimize space.

AI (Artificial Intelligence):

Forecasting and Optimization: Analyzing big data to predict demand, optimize routes, and schedule transportation.
Process Automation: Automated warehouse robots, self-driving vehicles, and delivery drones perform complex tasks.
Intelligent Decision-Making: Provides in-depth analysis to help managers make timely decisions.

Blockchain:

Transparency & Trust: Publicly records transactions, prevents shipping fraud, and ensures information integrity (origin, quality).
Smart Contracts: Automated payment execution, triggers processes when conditions are met, and reduces intermediaries.
Data Security: Secure storage for supply chain data, facilitating document reconciliation and reducing disputes.

Overall Impact:

Cost Reduction: Automation, route optimization, and reduction of manual labor.
Increased Speed & Efficiency: Automated processes and faster data processing.
Enhanced Customer Experience: Fast, transparent service that meets personalized needs.
Competitive Advantage: Businesses that adopt early will have a significant advantage in the market.

The logistics industry is transforming into Logistics 4.0, an intelligent, connected, and resilient ecosystem that responds to fluctuating market demands.

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