With the enhancement of Vietnam’s infrastructure and the transformation of global supply chains, more and more foreign enterprises are positioning Vietnam as a key node in their investment and operations. Understanding the state of Vietnam’s infrastructure and transportation networks, as well as how to plan logistics and storage costs, is critical for the successful expansion of foreign enterprises. This article provides in-depth, practical insights based on official data, covering location advantages, regulatory policies, and market conditions, to help businesses make well-informed decisions.

I. Vietnam’s Strategic Location and Infrastructure Development

Vietnam’s Location Advantage

Vietnam, with its strategic geographic position, serves as a vital hub connecting Southeast Asia and East Asia. Particularly, the South China Sea shipping route passing through Vietnam makes the country a crucial part of global trade. According to the Vietnam Ministry of Transport, Vietnam has over 3,200 kilometers of coastline, offering convenient logistics channels to major global markets【1】.

The three key economic zones driving Vietnam’s development are:

• Northern Economic Zone (Hanoi, Haiphong): Close to the Chinese border, ideal for import-export trade, especially cross-border e-commerce and manufacturing. Haiphong Port is the major international port in the north, handling 48 million tons of cargo annually【2】.
• Central Economic Zone (Danang): Danang Port faces the South China Sea and is a central logistics hub with strong transportation links, though industrial development is relatively weak.
• Southern Economic Zone (Ho Chi Minh City, Binh Duong, Dong Nai): The most developed region in Vietnam, with modern transportation infrastructure. The Cai Mep Port, one of the most advanced deep-water ports in Southeast Asia, handles over 10 million TEUs annually, making it an ideal location for large manufacturing enterprises.

Current Infrastructure Development

According to the World Bank’s 2022 Logistics Performance Index (LPI)【3】, Vietnam ranks 39th globally for logistics performance, following Singapore and Thailand in Southeast Asia. The LPI evaluates logistics infrastructure, customs clearance efficiency, and international transport convenience.

• Road Transportation: Vietnam boasts a road network spanning 210,000 kilometers, including major north-south and east-west highways. The government has invested over USD 7 billion in highway expansion projects, notably National Highway 1, connecting northern and southern economic corridors【4】.
• Rail Transportation: Vietnam’s rail system is underdeveloped, but the North-South High-Speed Railway Project, with a total investment of USD 58 billion, is expected to significantly improve freight and passenger transport efficiency when completed by 2030【5】.
• Port Facilities: Ho Chi Minh City’s Cai Mep Port is a world-class deep-water port, while Haiphong Port is undergoing upgrades to enhance connectivity with Chinese trade routes.
• Air Transportation: Tan Son Nhat Airport in Ho Chi Minh City and Noi Bai Airport in Hanoi are key air cargo hubs, with Tan Son Nhat’s annual cargo throughput exceeding 1 million tons【6】.

II. Warehouse and Logistics Cost Analysis

Components of Warehouse and Logistics Costs

In Vietnam, logistics costs for enterprises mainly consist of the following:

• Transportation Costs: This includes road, sea, and air transportation, with road transport being the dominant mode across the country.
• Warehouse Rent: Rental prices vary by region, particularly in key economic areas like Ho Chi Minh City and Hanoi, where rents are higher.
• Labor Costs: Vietnam’s labor costs are relatively low, but the shortage of skilled logistics workers and warehouse managers can push up costs.

According to the 2024 Vietnam Industrial Park Report【7】, average warehouse rent in Ho Chi Minh City is USD 5.5 per square meter per month, while in Hanoi, it averages USD 4.8 per square meter per month. In regions with lower rental rates, such as Binh Duong and Dong Nai, rents are USD 3.5 per square meter per month.

Warehouse Location Ratings and Rankings

Warehouse locations should be evaluated based on factors like geographic location, logistics convenience, rental costs, government incentives, and labor supply. Below are the ratings for key warehouse locations (out of 10 points):

Ho Chi Minh City and Surrounding Areas: 9/10

• Pros: Developed transport network, proximity to ports and international airports, high logistics efficiency.
• Cons: Higher rental costs, intense competition for warehouse space.

Hanoi and Haiphong Region: 8/10

• Pros: Close to the Chinese border, ideal for cross-border trade, lower warehouse rents.
• Cons: Infrastructure improvements are still ongoing and will take a few years to complete.

Central Danang Region: 7/10

• Pros: Convenient transport, lower logistics costs.
• Cons: Slower economic development, limited market opportunities.

III. Vietnam’s Logistics Regulations and Support Measures

Investment Incentive Policies

The Vietnamese government has implemented several incentives to attract foreign investments in logistics and warehousing sectors. According to the Vietnam Investment Law【8】, foreign enterprises setting up warehouses and logistics facilities in specific industrial zones and economic zones can enjoy:

• Corporate Income Tax Reductions: Newly established foreign enterprises in industrial zones can benefit from two years of tax exemption, followed by 50% reduction for the next four years.
• Land Rental Reductions: Companies building logistics facilities in designated industrial zones can receive 50%-70% reductions on land rent.
• Import Tax Exemptions: Imports of equipment and machinery for building logistics infrastructure are exempt from import taxes.

Customs and Import-Export Procedures

Since joining the WTO, Vietnam has simplified its customs procedures and implemented an electronic customs declaration system. According to the Vietnam General Department of Customs【9】, the electronic system has reduced customs clearance time by 40%, significantly simplifying import-export procedures. Additionally, Vietnam has signed various free trade agreements (e.g., CPTPP, RCEP), which have drastically reduced import-export tariff costs.

IV. Practical Logistics Strategy Recommendations

To help businesses effectively plan their warehousing and logistics strategies, here is a detailed operational guide that can be directly applied:

1. Warehouse Location and Leasing

• Step 1: Prioritize warehouses near major ports, airports, and highways. For example, industrial zones around Ho Chi Minh City are ideal for export-driven enterprises.
• Step 2: Conduct cost analysis before leasing, considering warehouse rent, transportation costs, and labor availability. In areas with high warehouse rents (e.g., Ho Chi Minh City), reduce costs by opting for flexible storage facilities or shared warehousing.
• Step 3: Collaborate with local industrial park authorities or third-party logistics providers to access the latest rental incentives and policy support.

2. Logistics Optimization

• Step 1: Partner with local logistics providers such as Gemadept or TBS Logistics to ensure goods are delivered quickly and safely to their destinations.
• Step 2: Use modern Warehouse Management Systems (WMS), such as those used by local companies with SAP systems, to improve warehouse efficiency and minimize human errors.
• Step 3: Implement an on-demand logistics model to adjust inventory and transportation plans based on market demand, avoiding overstocking or shortages.

3. Tax Incentives and Financial Optimization

• Step 1: Register logistics facilities in industrial zones to benefit from corporate income tax reductions, particularly after the initial tax exemption period.
• Step 2: Work with local tax advisors to ensure compliance with local tax laws and maximize import tax exemptions for logistics equipment.
• Step 3: Regularly review financial expenses and strategically plan logistics and warehousing budgets, especially optimizing transportation plans during peak and off-peak periods.

Conclusion

With its strategic location and rapidly improving infrastructure, Vietnam has become an ideal destination for foreign enterprises focused on cross-border trade and logistics. Through effective warehouse location planning, optimized logistics cost management, and leveraging government incentives, foreign enterprises can efficiently operate in Vietnam’s logistics market.

References:

1. Vietnam Ministry of Transport Report
2. Haiphong Port Annual Report
3. World Bank Logistics Performance Index 2022
4. Vietnam Road Development Plan 2030
5. North-South High-Speed Railway Project Details
6. Vietnam Airport Authority Cargo Data
7. 2024 Vietnam Industrial Park Report
8. Vietnam Investment Law Guidelines
9. Vietnam Customs Authority Data