Vietnam’s trucking services providers are prioritising profitability and sustainability and chasing new business avenues as they weather the adverse impact of the global pandemic-induced supply chain disruptions.
Unlike their last-mile logistics counterparts, who enjoyed a windfall riding on the e-commerce boom, first-mile trucking startups faced a severe growth slowdown in the months following the COVID-19 crisis, necessitating a change in their approach.
For instance, Ecotruck, a tech-driven logistics company with an ecosystem for first-mile trucking, embarked upon saving costs, improving operational efficiency, finding more financial solutions for suppliers and managing receivables closely to tide over the crisis.
“We lost six months of growth in 2020 due to Covid,” said EcoTruck founder and CEO Le Hoang Anh. The company now serves 500 B2B customers across the country. It also enhanced ecosystem services for transport partners such as petroleum, tyre, insurance and trucking financing services.
EcoTruck last year raised $4.2 million in a Series A round from Vietnamese unicorn VNG and other investors. It is also backed by Access Ventures, Nextrans, FuturePlay and Viet Capital Ventures.
B2B truck hailing and logistics network Logivan, meanwhile, launched new financing products to support small truckers. The products allow truckers easy access to cash to pay for fuel, tolls, and driver salaries. The company also adjusted AI pricing algorithms to accommodate the huge container price fluctuations.
Logivan also doubled the take rate [or the fee charged by a marketplace on third-party transactions] for enterprise contracts and became more selective with its customers. “Covid has shifted the business landscape towards profitability and sustainability. Therefore, we have become more focused on specific types of clients who are profitable in the long run,” Logivan founder and CEO Linh Pham said.
Logivan raised a total of $7.9 million in three fundraising rounds. Its investors include Alpha JWC, VinaCapital Ventures, Ethos Partners and Insignia Ventures Partners.
B2B startup Abivin is bullish on digitalisation to optimise operations and reduce face-to-face contact, according to founder and CEO Pham Nam Long. Founded in 2015, Abivin’s technology enables route optimisation and vehicle capacity maximisation for its clients to save up to 40% of costs.
“The trend of green and digital logistics will be an important highlight during and post the pandemic. Abivin will accelerate digital transformation projects to help Vietnamese businesses respond and meet the strict requirements of the international market,” he said.
Trucking solutions providers in Vietnam
|Company||Year of establishment||Description||Funding||Key investors|
|Gido.vn (under Scommerce)||2012||Freight service delivery platform for businesses (B2B trucking services), cross-border shipping ||Scommerce raised as much as $100M funding round in 2019||Temasek|
|Logivan||2017||"LOGIVAN offers a central platform that tracks the location of freight and truck. In doing so, it is able to optimize truck routes and reduce their empty load return rates. ||$600,000 Seed in March 2018; $1.75M Series in August 2018; $5.5m Series Unknown in 2019||Alpha JWC, VinaCapital Ventures, Insignia Ventures Partners, Ethos Partners, David Su, a founding managing partner at Matrix Partners China
|Ecotruck||2017||B2B Online marketplace for freight transportation services. Partners with truck operators and enables users to search, compare and book freight trucking services||$300,000 Seed round in 2018, $1.7M Pre-Series A funding round in 2018; $4.2M Series A funding round in 2020||Access Ventures, VNG, Nextrans and FuturePlay from Korea, and Viet Capital Ventures
|Boxme||2016||More of a B2C business but offers both transportation and delivery, cross-border fulfilment service, warehousing, and delivery services. Sellers can send their products to the company for warehousing who store the products and packs, ships and delivers when the consumer places an order|
|Abivin||2015||Big data analytics company currently focusing on its 3 products in the form of APIs; VDocs- to analyze and report document form, VRoute- machine intelligent method to solve order routing and VCore- its predictive analytics API for banking, e-commerce||$1 million top prize at the 2019 Startup World Cup in Silicon Valley in 2019|
|Smartlog||2015||The logistics solutions ecosystems (TMS, WMS, Transport exchange platform) based in Vietnam for the South East Asia.|
|SWIFT247||2019||An integrative, tech-based platform that allows disparate third-party-logistic providers to connect and optimize their offerings. It partners with Vietjet and Grab|
|LOGLAG||2016||Loglag is a truck and container booking platform. Loglag connects drivers and fleet owners to cargos and customers in order to make the logistics and transportation industry in Vietnam more accessible.|
Investors still optimistic
Despite the COVID-induced slowdown faced by first-mile logistics players, investors continue to be bullish on the sector thanks to the macro growth drivers.
The increase in the number of small and medium enterprises in Vietnam along with the shift of manufacturing facilities from China to Vietnam may spell a huge opportunity for logistics companies.
“With more companies relocating to Vietnam to manufacture products for exports, we see very strong growth prospects for the logistics sector. After the pandemic subsides, there may be some consolidation in the sector, with those companies effectively utilising technology and having the scale being the winners,” VinaCapital Ventures head Trung D Hoang told DealStreetAsia.
The logistics market, especially the first-mile segment, is largely dominated by traditional companies. There is a lot of potential in this sector as it continues to grow, possibly even outpacing the national GDP growth rate, according to Access Ventures manager in Vietnam Long Leo Pham.
Vietnam’s logistics market is dominated by numerous SMEs that provide low-value-added services. Over 90% of the country’s 3,000-plus logistics firms have their registered capital below $430,000.
According to Tran Ba Khoi Nguyen, associate director at VNG, “trucking and logistics are two very traditional industries, and as such, require more time and effort to transform into new, more tech-enabled modes of operations.”
Smaller companies are more likely to subscribe to technology solutions rather than developing them in-house, thereby creating more opportunities for B2B SaaS/managed services startups, such as Ecotruck, Abivin and Smartlog.
“For B2C users, price is usually the single most important factor in deciding which product and platform to choose, whereas, for B2B, consistency and high level of service are more critical,” Tran said.
Logivan’s Pham also believes that businesses will adopt outsourcing of heavy assets such as truck fleets and warehouses to become more capital-efficient.
“As the market grows, investors’ interest will increase accordingly. It won’t be long before we see large late-stage funding rounds going to this sector,” Pham from Access Ventures said.
According to Do Venture’s Vietnam Tech Investment Report, the logistics sector attracted about $63 million in 2018-2019. The data, however, does not include the $100-million funding in logistics provider Scommerce led by Singapore’s Temasek.
While B2B may not attract the same attention as last-mile delivery, there has been sizable capital flow into this space to help seed-stage startups go through market-fit validation, but additional funding is needed to fuel further market penetration and growth, Hoang said.
Vietnam Startup Report by South Korea-based venture capital firm Nextrans