Trang Bui from our investment team writes about the impact of the pandemic on Vietnam’s logistics industry in 2021 and how LOGIVAN rose to the occasion with its flywheel: B2B solutions to help enterprise and MNC brands navigate local trucking services, built on pricing and routing algorithms built on data from their trucker network which has grown thanks to their B2B clientele.
- Disruptions due to the pandemic in 2021 have only compounded logistics costs for companies that have been looking to benefit from Vietnam’s trade boom. When it comes to availing for trucking services, it’s not just about costs; It’s also about understanding how various factors unique to Vietnam impact these costs.
- LOGIVAN’s B2B solutions have provided a much needed relief for companies looking to streamline their operational costs during the pandemic, with LOGIVAN’s enterprise client book including some of the biggest FMCG and agricultural brands.
- A large part of what has made LOGIVAN’s B2B solutions valuable and attractive in navigating the nuances of Vietnam trucking is the strong, strategically-located network of truckers and trucking companies the company has amassed since it was founded in 2017.
- To do its part in this Vietnam’s Industry 4.0 effort, LOGIVAN has been building a self-sustaining flywheel to address the cost challenges and fragmentation of Vietnam’s trucking industry with technology.
While Vietnam in 2020 weathered the pandemic better than most countries, 2021 was the year the country bore the brunt of the impact. Over the period of July to October that year especially, the majority of manufacturing activities in Vietnam were suspended and supply chains were upended more so than any prior period.
One specific example is the holdup of goods at port containers, with container dwell times estimated reaching nearly a week of delays on average per container by the time the nationwide lockdown was lifted on October 1.
All these disruptions have only compounded logistics costs for both multinational and local companies that have been looking to benefit from Vietnam’s trade boom since 2019 and the initial impact of the US-China trade tensions.
For trucking, in particular, it’s not just the costs per se that are a challenge for companies looking to strike gold in Vietnam. It’s also about understanding how various factors unique to Vietnam (e.g. type of SKU, the terrain of the destination and route, the season) impact costs and being able to calculate optimal trucking services to meet specific company needs. LOGIVAN CEO and co-founder Louise Linh Pham writes in a recent article about some of the local nuances of understanding trucking costs in Vietnam, with a snippet graphic showcasing a breakdown in cost variation depending on truck size.
Case Study: The LOGIVAN Flywheel
The Price is (more) Right than ever
LOGIVAN, a Vietnamese company that made its mark in the country with its vision of “With LOGIVAN, no trucks will ever run empty”, has been developing B2B solutions to make it a lot easier for companies to navigate the costs of trucking options in Vietnam, including (1) fixed-price enterprise contracts for stable volume and (2) routing using LOGIVAN’s highest-rated drivers. Their in-house, real-time pricing algorithms and models also enable more cost-effective linking of these shippers (e.g. brands, MNCs) to trucking companies.
Their B2B solutions have provided a much needed relief for companies looking to streamline their operational costs during the pandemic, with LOGIVAN’s enterprise client book including some of the biggest FMCG and agricultural brands (i.e. essential and pandemic-resistant industries) many of which came onboard over the lockdown.
Some of those brands have even relied completely on LOGIVAN to handle their trucking needs in certain regions. In some cases, LOGIVAN was able to help their clients reduce up to 40% logistics costs.
B2B growth standing on the shoulders of trucks
A large part of what has made LOGIVAN’s B2B solutions valuable and attractive in navigating the nuances of Vietnam trucking is the strong, strategically-located network of truckers and trucking companies the company has amassed since it was founded in 2017 and began as a marketplace for shippers and trucks.
Data from their marketplace has been the fuel for their pricing algorithms enabling competitive pricing with a bidding system. This has not only been valuable in attracting brands and companies looking for the best trucking services but also for the truckers themselves, who have benefited from LOGIVAN helping them to effectively secure orders — and wait for it, making sure none of them “will ever run empty.”
The company has thus seen steady growth in GMV and number of shipments especially in regions where the company had already gained a strong foothold in terms of network of truckers such as the Central Highlands.
The virtuous cycle: Keeping up with the shippers means keeping up with the truckers…
The Vietnamese government has initiated many Industry 4.0 goals and logistics/supply chain is among the top priority sectors requiring the public/private sectors’ coordinated efforts for digitization.
To do its part in this nationwide digitization effort, LOGIVAN has been building a self-sustaining flywheel to address the cost challenges and fragmentation of Vietnam’s trucking industry with technology. While the growth in data from the marketplace for trucks has fuelled pricing and routing efficiency for shippers, the fast growth of LOGIVAN’s B2B business will give the company more resources to scale the marketplace’s geographical footprint.
As the pandemic has made most commercial activities to be conducted online, even some of the most traditional truckers are keeping up with these technological changes. To take advantage of this digitalization, LOGIVAN has been experimenting with more creative online channels to recruit truckers (surprisingly, one of them is TikTok!) and so far has seen promising results.
And given that trucking retention only serves to increase their value to brands, MNCs, and other enterprise shippers, LOGIVAN has set it sights to expand to other value-added services in terms of payments and insurance for the trucking industry to become a full-suite digitized trucking platform.
The value of this virtuous cycle (data from trucking services enabling better shipper services enabling wider trucking coverage enabling more data from trucking services so on and so forth) given the uncertainty we have just covered is that it introduces much-needed flexibility to an industry that has historically (even until today as we’ve seen) been halting to a stop at the first sign of trouble.