Artificial Intelligence (AI) is transforming logistics and transportation industries worldwide, streamlining operations, and enhancing efficiency through automation, data analysis, and predictive capabilities. As Vietnam strives to become a competitive logistics hub within Southeast Asia, the use of AI could be the key to overcoming operational inefficiencies and positioning itself on the global stage. This article examines the current applications of AI in Vietnam’s logistics sector and explores its promising prospects for future growth.

Current situation of AI in logistics and transportation in Vietnam

As of 2023, Vietnam ranks 43rd out of 100 on the Logistics Performance Index, placing it among the top five ASEAN countries, following Singapore, Malaysia, and Thailand, and tied with the Philippines[1]. Vietnam’s logistics market is anticipated to grow by 14-16% by 2025, contributing around 5% to the nation’s GDP in 2023[2]. This market is expected to continue its strong momentum from 2023 to 2027, with a projected compound annual growth rate (CAGR) of 5.5%[3].

Despite the robust growth seen across both sectors, numerous challenges and issues remain. The adoption of technology in general, and specifically artificial intelligence (AI), remains low in both Vietnam’s logistics and transportation sector. To date, only a few companies—both private and government-owned—have begun integrating AI into their operations and business activities.

Application of artificial intelligence (AI) in piloting penalties for overloaded vehicles applied by Ho Chi Minh Department of Transport

Source: Ministry of Transportation

Some Prominent AI Applications the Field of Logistics and Transportation in Vietnam

Source: B&Company

Government policies and supports

The Prime Minister has issued Decision No. 127/ in 2021 the National Strategy for Research, Development, and Application of AI through 2030. The strategy emphasizes a human – and business – centered approach to AI development and application for all sectors of Vietnam economy. With logistics and transportation sector, some areas that encourage the application of AI as follow:

• – Enhanced Toll Collection and Monitoring: Improve the processes at road toll stations with AI-powered vehicle detection and recognition systems.
• – Logistics System Optimization: Provide real-time data and insights to optimize logistics systems, ensuring efficient routing, scheduling, and resource allocation within the supply chain.
• – Automated Route Planning and Customer Advisory: Enable AI-driven systems to offer automated route-finding services and customer advisory for technology-based transportation models
• – Traffic Infrastructure Maintenance and Planning: Use AI to support statistical analysis, evaluation, and planning for the maintenance and repair of transportation infrastructure.

Opportunities for applying AI in logistics and transportation in Vietnam

Regardless, AI is still a very prominent sector in Vietnam. Vietnam’s AI market was valued at approximately 547 million USD in 2023 and is projected to grow to $2.1 billion by 2032, with a compound annual growth rate (CAGR) of 16%[4]. Key Vietnamese companies such as Viettel, FPT, and Vingroup have been pioneering AI applications. Notably, FPT recently planning construction on a 200 million USD AI center in southern Vietnam, signaling significant investment in the sector[5]

FPT Partners with NVIDIA to Build AI Factory

Source: Hanoi Times

International players like Google are also partnering with local institutions, focusing on talent and building for AI startups, with the launching of “Build for the AI Future”. Not only this project offers 40,000 scholarships across 80 universities but also fostering a robust startup ecosystem in Vietnam since the early stages, showing through continuous initiatives such as Google for Startups Accelerator from 2022 until present[6].

Vietnamese technology universities are intensifying their AI training programs to meet the growing demand for skilled professionals. For instance, Phenikaa University offers an Artificial Intelligence undergraduate program designed to equip students with comprehensive AI knowledge and skills.  Similarly, Hanoi University of Science and Technology has launched the Generative AI Engineer Program, focusing on advanced AI applications[7].  These initiatives aim to enhance the supply of high-quality AI professionals in Vietnam, aligning with the country’s strategic goals in technology and innovation.

Challenges for applying AI in Logistics and Transportation in Vietnam

Currently, most logistics companies in Vietnam have only implemented basic technologies in their operations or are in the initial stages of digital adoption; a majority remain unacquainted with advanced technological solutions. This attitude reflects a reluctance toward transformation and adaptation in a world where the technological era is becoming increasingly widespread[8].

IT Applications in Logistics Companies in 2023

Source: Vietnam Logistics Report in 2023

Another obstacle to digital transformation is the lack of capital. In Vietnam, over 98% of businesses are small and medium enterprises (SMEs), and 99% of these companies face capital constraints[9]. Besides, there is a lack of cohesive policies and regulatory frameworks specifically tailored to logistics. The shortage of specialized logistics professionals, particularly those with high-level skills in implementing new technologies, limits the industry’s ability to meet evolving demands[10].

Conclusion

In summary, AI adoption in Vietnam’s logistics and transportation sectors is still in its early stages, with limited integration due to funding constraints, skill shortages, and a lack of tailored policies. However, government support, substantial investments from companies like FPT and Viettel, and partnerships with international tech leaders are laying the groundwork for growth of AI application in logistics and transportation sector in Vietnam.

[1] World Bank (2023) Logistics performance report <Assess>

[2]Vietnam Logistics (2024) Vietnam logistics situation in 2023 <Assess>

[3] Vietnam Economic Times (2023). Promotion Digital Transformation in Vietnam <Assess>

[4] Vietnam Economic Times (2024). Vietnam AI future: A promising outlook <Assess>

[5] Hanoi Times (2024). FPT investment in AI factory <Assess>

[6] Ministry of Planning and Investment (2024). Accelerate Vietnam’s advancement in AI <Assess>

[7] Hanoi University of Science and Technology (2024) Vietnam’s first university to offer training in Generative AI <Assess>

[8]  Vietnam Trade and Industry Review (2024). IT applications in Vietnam logistics company <Assess>

[9] Ministry of Industry and Trade (2023). Vietnam Logistic Report in 2023 <Assess>

[10] Vietnam Economics Times (2024). Current stage of Logistics sector in Vietnam <Assess>

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