A brief plan on

Logistic Networking
Le Tien Anh

Abstract : In this brief plan, I will briefly describe my plan of building a “Logistic network in Viet
Nam”. The plan will be described with General Ideas, Market Analysis, Competition Analysis,
Executive Plan, and Financial Analysis.

1. General Ideas:
• My project idea is to build a national-wide network of logistic in Viet Nam in order to
compete in the “20M$ challenge” held by Mekong capital. The total fund for this project
at the beginning is 400.000 $. The goal of the project is to increase the value of the
company to 20M$ after 5 years of executing.
• In Viet Nam, the economic is booming. It is undeniable that transportation, ware
housing in specific and logistic in general would be very important. However, the firms
working in this field are very separated and unprofessional. They are currently working
in different regions of the country. A few international company has developed their
own network but non of them has an idea of building the national wide network of all
logistic service providers.
• In the future, vendors would like to focus on their field of interest, they would love to
work with professional logistic service providers. That why I want to build a
professional logistic cooperation in Viet Nam which would be the believable partner for
the vendors as well as the strong Representative for all of individual logistic providers
(transportation and warehousing) against foreign cooperations intending to invest in this
field in the future.
• With 400.000$ at the beginning, I am not ambitious to invest in the fixed properties. An
information database of all the logistic provide in Viet Nam should be built instead. As
all the providers are now holding a very big fixed properties, they surely want their
information to be given to the users. With us, they don't have to pay for the
advertisement.
• Based on this database, various business packages will be prepared, for example end-to-
end services, export-import proxy services, on line tracking and ordering, insurance...to
name just a few.
• We will build our branches in different regions of the country to maintenance all the
services in that region.
2. Market Analysis:
 Phân theo cấp quản lý Phân theo khu vực vận tải
Sum
Trung ương Địa phương Trong nước Ngoài nước

Triệu tấn.km
1990 17766.2 11284.1 6482.1 9465.8 8300.4
1991 20021.0 12845.3 7175.7 11197.7 8823.3
1992 20738.2 13167.8 7570.4 11226.6 9511.6
1993 22678.1 14547.5 8130.6 12291.5 10386.6
1994 24072.9 15275.6 8797.3 12626.8 11446.1
1995 25328.1 15598.3 9729.8 12382.6 12945.5
1996 33029.1 22120.3 10908.8 13798.8 19230.3
1997 38644.7 26693.3 11951.4 14545.8 24098.9
1998 37262.7 24438.9 12823.8 17632.7 19630.0
1999 40298.2 26754.1 13544.1 21226.7 19071.5
2000 45469.8 31163.8 14306.0 22324.6 23145.2
2001 49810.2 34629.8 15180.4 20794.5 29015.7
2002 56431.7 40178.6 16253.1 24750.4 31681.3
2003 (*)
66624.7 43548.3 23076.4 26467.1 40157.6
2004 (*) 75015.4 48274.3 26741.1 27997.6 47017.8
Sơ bộ 2005 79992.1 51223.5 28768.6 29647.9 50344.2

Chỉ số phát triển (Năm trước =100)-%

1991 112.7 113.8 110.7 118.3 106.3
1992 103.6 102.5 105.5 100.3 107.8
1993 109.4 110.5 107.4 109.5 109.2
1994 106.2 105.0 108.2 102.7 110.2
1995 105.2 102.1 110.6 98.1 113.1
1996 130.4 141.8 112.1 111.4 148.5
1997 117.0 120.7 109.6 105.4 125.3
1998 96.4 91.6 107.3 121.2 81.5
1999 108.1 109.5 105.6 120.4 97.2
2000 112.8 116.5 105.6 105.2 121.4
2001 109.5 111.1 106.1 93.1 125.4
2002 113.3 116.0 107.1 119.0 109.2
2003 (*)
118.1 108.4 142 106.9 126.8
2004 (*)
112.6 110.9 115.9 105.8 117.0
Sơ bộ 2005 106.6 106.1 107.6 105.9 107.1
Averagement 10.79
(*)
Số liệu năm 2003 và 2004 được điều chỉnh theo kết quả điều tra doanh nghiệp.
• Competition Analysises:
• As it can be seen from the table, the average development is around 10.79% annually in
transportation. The latest year (2005) total amount of transportation.km was roughly
79992.1 million tons.km.
• Although, no figures about warehousing was found, but due to the management
capability of Viet Nam, the development of warehousing should be supposed to at least
 double the speed of transportation (around 22%).The following table is about the
development of ex-import. Its average increase is about 10.8%. The latest year (2004)
total amount of ex-import was about 33860.8 thousands ton. However, this year was not
the best year of Vietnam ex-import, the best year was 2003 with 34019.1 thousands ton.
With the joining of Viet Nam into WTO, AFTA...it would be reasonable to expect the
total amount of ex-import to be at least equal to 34019.1 thousands ton. With the current
management of Viet Nam, each ton of product can be averagely assumed to store in
ware houses for 2 days. So the amount of warehousing is about 68038.2 thousands
ton.day.

Khối lượng hàng hóa chủ yếu được vận chuyển thông qua các cảng biển do trung ương quản lý
Nghìn tấn
1995 1996 1997 1998 1999 2000 2001 2002 2003 (*)
2004
0 6.54 -2.61 14.03 1.65 25.7 39.56 -6.06 18.48 -0.47
TỔNG SỐ 14487.9 15435.0 15032.0 17141.1 17424.7 21902.5 30567.8 28713.9 34019.1 33860.8
Phân theo loại hàng hoá
Hàng xuất khẩu 3737.1 4379.0 4647.6 4788.1 5262.1 5460.9 8530.7 6973.8 7118.4 6922.4
Hàng nhập khẩu 7903.2 7531.9 6678.3 7489.0 6626.6 9293.0 13447.4 11688.5 13574.9 14798.4
Hàng nội địa 2823.2 3524.9 3706.5 4864.0 5536.0 7123.7 8589.6 10051.6 13325.8 12140
Phân theo cảng
Hải Phòng 4515.0 4809.0 4588.0 5446.0 6509.0 7645.0 8575.5 9021.4 10919.9 11493.0
Trong đó: Xuất khẩu 493.0 665.0 803.0 850.0 939.0 1234.0 1336.0 1365.5 1894.6 1967.0
Sài Gòn 7212.0 7340.0 6820.0 7601.0 6971.0 9701.0 10275.0 13006.7 15080.1 12901.0
Trong đó: Xuất k hẩu 2308.0 2692.0 2766.0 2866.0 3271.0 3088.0 2977.0 3978.6 3033.7 2533.0
Quảng Ninh 704.0 813.0 798.0 1011.0 676.4 1533.0 1525.0 1508.2 1744.4 1918.0
Trong đó: Xuất k hẩu 477.0 491.0 322.0 231.0 197.0 288.0 297.0 308.6 481.6 534.5
Nghệ An 310.0 462.0 480.0 480.3 474.3 648.0 739.9 763.3 872.0 913.4
Trong đó: Xuất k hẩu 56.0 34.3 52.6 45.6 17.3 95.2 150.0 74.1 145.8 193.0
Đà Nẵng 830.2 847.9 882.2 829.5 1023.4 1410.6 1987.3 1874.1 2178.5 2308.8
Trong đó: Xuất k hẩu 149.4 198.2 279.7 314.2 371.2 421.6 428.7 511.2 554.6 739.8
Quy Nhơn 447.0 554.7 838.1 955.0 974.6 1462.0 1306.0 1548.2 2036.7 2415.5
Trong đó: Xuất khẩu 171.0 188.2 276.1 256.2 266.2 495.0 363.0 545.7 720.1 869.5
Nha Trang 343.4 426.0 424.0 500.0 486.0 549.3 552.6 548.0 647.3 515.0
Trong đó: Xuất khẩu 16.6 47.0 35.0 18.0 17.0 37.5 92.9 92.9 96.5 11.6
Cần Thơ 125.9 183.2 202.1 332.3 310.0 364.2 294.7 444.0 540.2 846.3
Trong đó: Xuất khẩu 66.1 73.3 113.2 208.1 210.6 223.2 189.1 97.2 191.5 74.0
Average 10.8
(*) Số liệu được điều chỉnh theo kết quả điều tra doanh nghiệp.
• Transportation and warehousing insurance can also add value to the logistic business.
• According to Nomura research, Vietnamese logistic has just fulfilled about 25% of the
market demand (http://www.vnexpress.net/Vietnam/Kinh-doanh/2006/07/3B9EB911/).
So all the above figures can be multiplied by 4 times in the real market.
• The information of logistic companies' profit is not very widely provided. So it is very
hard to price the services going to be provided and also it is difficult to roughly
calculate the profit of the cooperation in the future.
3. Financial Analysis:
• In order to be valued 20M$ in 5 years, assume that we normally increase the value of the
company, so the increasing speed would be around 222% each year. The inflation rate
 would be at least equal to the bank interest (8%/year at the moment), so the actual
increasing speed must be around 230%/year. It is really an awful rate for any business
idea. So beside the actual development of the company, we need a strategy to increase
the value of our trade mark at the beginning.
• Now, we have to care about our service price and predict the limit at which we can
obtain the increasing speed.
st
✔ As previously explained, we can expect in the 1 year:
✗ The amount of flow transportation.km is: 8.1010 ton.km/year.
✗ The amount of warehousing is: 68.106ton.day/year.
✗ Our price per 1 package (with transportation flow of ton.km and warehousing of
ton.day): x
✗ Our business proportion (percent): a
✗ The real coefficient: 4.
✔ We have this equation:
10 6 5 3
4.a.x 1. 8.10 34.10 =2,3.4 .10 .16 .10
st
✔ Assuming that we can just have a=10% of the market in the 1 year, so we can price
our service at x1 around 0.004VND/packet.
nd
✔ Similarly for the 2 year:
10 6 5 3
4.a.x 1. 8.10 34.10 =2,3.2,3 .4 .10 .16 .10
nd
✔ In the 2 year, assuming that we increase our proportion to 15%, so we can price our
service at x2 around 0.04 VND/packet.
✔ Similarly we have x3 = 1,21VND (a=15%), x4=2.23VND(a=20%),
x5=4.3VND(a=25%).
✔ Above is just a rough estimation about the service price. In this, only the
warehousing and transportation have been taken into account. Remember that,
besides these services, we also have many others like insurance, ex-im proxy...which
can also contribute to the decrease of the price.
✔ Many other cost like the human cost, advertisement cost, database, computer
networking, the amortization of the properties...haven't been taken into account,
however, with a fix price that low, we can expect to give a reasonable price and good
service to our customers.
✔ Also, these calculation needs a margin, so a price of about 1000VND/packet may be
reasonable.
4. Conclusion:
• The above are just brief ideas and analysises. However, with a low fixed price, we are
capable of building a high quality service, as well as at reasonable price thanks to the
pioneer idea of this project.