Vietnam's express delivery to hit $1.6 bil. by 2028, driven by pharmaceuticals and food

03, Aug. 2021

Launched in Vietnam in July 2021, FedEx delivery manager service allows customers to choose their preferred delivery location and time. (Photo: FedEx)
Launched in Vietnam in July 2021, FedEx delivery manager service allows customers to choose their preferred delivery location and time. (Photo: FedEx)

By Celine Chen

VIETNAM, NNA: The high demand for express delivery services in Vietnam across major essential sectors such as food and beverage; and healthcare is driving a dramatic growth for the market from $700.4 million in 2020 to a projected $1.65 billion by 2028.

Expecting the market to surge at a compound annual growth rate of 11.9 percent from 2021 to 2028, Research and Markets noted that the demand from Vietnam customers wanting items to be delivered on the same day or within a day has risen over the years.

The research firm said the healthcare sector saw the highest adoption of delivery services.

This is not surprising as the Vietnam government has been "robustly focusing on investing toward the advancement of the pharmaceutical industry and developing a domestic standard pharmaceutical industry to efficiently meet the demands of its customers," said Research and Markets in their report.

Despite government efforts, several domestic pharmaceutical manufacturers lack the resources to cater to the growing market while foreign multinational companies (MNCs) need to be given better opportunities to manufacture their products in Vietnam.

The research firm said, "With the current global economic disruptions due to COVID-19 impact and the ongoing trade uncertainties with China, developing countries such as Vietnam offer an appropriate opportunity for expanding and hedging operations, by providing sustainable long-term growth opportunities for foreign MNCs."

Many domestic express delivery companies are already operating in Vietnam, and they are constantly witnessing huge growth opportunities. They are also investing in modern technology to cope with the rising demand for the delivery of e-commerce goods.

Stringent requirements of the healthcare sector and their stronger demand for delivery services are also placing high expectations on logistic solutions.

In November last year, Nippon Express (Vietnam) Co. obtained a Good Distribution Practice (GDP) certification covering air and ocean cargo forwarding, road haulage and warehousing services of its Amata Logistics Center in Bien Hoa City. It also certifies the facility's compliance with standards for the proper distribution of pharmaceuticals.

In a press statement, Nippon Express said, "Having acquired this GDP certification, NE Vietnam will be working to handle the anticipated increase in pharmaceutical imports from Europe as well as business expansion by Japanese pharmaceutical manufacturers and extending its services globally in cooperation with other Nippon Express Group companies that have already obtained GDP certification."

With an enormous growing population of about 100 million, Vietnam has in recent years seen its gross domestic product (GDP) grow at an annual rate of 6-7 percent, producing a high growth rate for its pharmaceutical market as well, said Nippon Express.

The market's expansion has been driven by rapid economic growth, widespread participation in medical insurance programs and a high awareness of health among the Vietnamese, said Nippon Express.

In addition, the ratification of the EU-Vietnam Free Trade Agreement (EVFTA) in 2020 is expected to stimulate both domestic demand within Vietnam and the production and export of generic pharmaceuticals, it added.

In Vietnam, the integration of technologies such as radio-frequency identification (RFID) systems and tags for better handling of cargoes and parcels to reduce errors are also expected to fuel delivery growth in the coming years, said Research and Markets.

Courier companies are increasingly investing in high-tech solutions to make operations simpler and more efficient.

DHL International GmbH has deployed cutting-edge equipment and applications, from risk management tools to automated container unloading systems, which help prevent misplacement of parcels during transportation.

In July this year, FedEx launched a new interactive e-commerce delivery solution in Vietnam, allowing retailers to give their residential customers the ability to customize the delivery location and schedule shipments.

Using the service called FedEx Delivery Manager, retailers will be able to better manage the spike in international online shipping, said FedEx.

Meanwhile, the emergence of COVID-19 hotspots across Vietnam leading to lockdowns and travel curbs is expected to continue disrupting delivery services beyond the middle of the year.

However, industry experts believe the express delivery of parcels and electronics is likely to pick up pace soon as containment measures are eased steadily.

While there had been a significant drop in letters and document parcels of B2B clients due to the pandemic, the delivery of e-commerce parcels has shot up as more people shopped online during lockdowns.