Logistics industry forecast to grow in 2021 on global recovery

The seaport and logistics industry was forecast to grow significantly on the prospect of global trade recovery in 2021 when the vaccine to prevent COVID-19 is administered worldwide.

SSI Securities Company expects the revenue of the seaport and logistics industry would expand by 10 percent this year.

Despite being affected by the COVID-19 pandemic last year, the industry was fuelled by expectations about Vietnam’s trade growth thanks to positive impacts of free trade agreements (FTAs) which were signed recently, including the European Union – Vietnam FTA (EVFTA) and the Regional Comprehensive Economic Partnership (RCEP) as well as expectations about an increase in investment inflow triggered by the global production shift out of China.

“The growth prospect of the seaport and logistics industry is bright in 2021, driven by the global recovery,” SSI analysts wrote.

The COVID-19 pandemic would still be developing globally, SSI noted, however, adding that social distancing measures would be diminished and vaccines become more ubiquitous, SSI expected that the “new nomal” and the re-establishment of inventory would take place in the second half of this year.

Vietnam’s exports would benefit from the recovery of global consumption but not at a very high rate because other exporting countries would also resume production.

SSI predicted that Vietnam’s import-export value and total goods via seaports would increase by around 10 percent in 2021, pushed by global recovery, FTAs’ impacts and global production shift.

This expectation was also driving demand for logistics infrastructure. According to real estate services firm CBRE, the total areas of warehouses increased by 25 percent in the north and 28 percent in the south in 2020 with the prices up by 5 percent to 10 percent year-on-year.

SSI also pointed out that deep-water seaports would continue to be the spotlight of the industry. The expansion of Cai Mep – Thi Vai and Lach Huyen seaports would attract big ships to Vietnam instead of Singapore and Hong Kong, thus, these seaports were expected to see increases of around 20 percent.

Despite expecting the revenue growth rate of the seaport and logistics industry at 10 percent in 2021, SSI said that the profit would grow at a single-digit rate because the largest company in this industry Gemadebt would not see growth in profit in the first year the Gemalink seaport went operational.

There were also risks, SSI pointed out. The demand for containers could increase in the second half of this year.

According to the Vietnam Maritime Administration, the total volume of goods transported via ports in Vietnam rose by 9.8 percent in 2020.

Statistics of the General Statistics Office showed that Vietnam’s total import-export value reached 543.9 billion USD in 2020, an increase by 5.1 percent over the previous year.