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  • Connecting Vietnam's ports to the world by improving logistics services: Japan's small and medium-sized enterprises’ superior technology and know-how to solve the problems of developing countries


November 21, 2019

Connecting Vietnam's ports to the world by improving logistics services: Japan's small and medium-sized enterprises’ superior technology and know-how to solve the problems of developing countries

“My dream was to open a distribution center at an overseas location, and I wanted to make it a reality someday. This dream, however, was achieved at an unexpected speed. Gaining the trust of the people of the government agencies in Vietnam, as a designated company of a JICA project, had much to do with the success. If we had to depend merely on the strength of our company to conduct market research, it would be impossible to tell when we could meet our goals,” says Tetsuya Kaihoko, president of Shirogane Transport Co., Ltd., an Iwate Prefecture’s logistics company.

The establishment of a logistics center in Vietnam, through a joint venture backed by Shirogane Transport, was adopted in 2015 as an “SDGs Business Supporting Surveys” by JICA, which matches the needs of developing countries and Japanese companies. The logistics center opened on Feb. 6 this year and is based in the province of Ba Ria-Vung Tau, an industrial cluster region, where Cai Mep International Terminal (CMIT), the largest international port in Vietnam built with the support of a Japan ODA loan, is located. In the future, there are plans to develop, mainly by local Japanese companies, comprehensive logistics services, such as shipping, storage, and customs clearance procedures.

photoLeft: Delivery operations in the completed distribution center
Right: There are plans to expand the number of logistics center staff members to 100 in 10 years

Encouraging private sector companies’ entry into developing countries

JICA’s ”SDGs Business Supporting Surveys (formerly the ‘Program for JICA’s Partnership with the Japanese SMEs’),” which has been implemented since FY2012, responds to a wide range of growing developmental needs in developing countries by utilizing private sector companies’ funds and vitality. At the same time, it is a win-win opportunity for companies providing an opening to enter developing countries where development is expected to expand.

photoJICA's research team (right side) explained the survey results of logistics improvement to the Vietnamese government officials (left side). Having direct contact with the government officials of the partner country is a unique advantage of JICA's projects

For this survey, JICA will call for proposals of the survey and business models from private companies in Japan, and decide on a proposal from among several criteria, such as “contribution to the development of issues in developing countries” and “the level of maturity of business development plans.” Once the proposal is adopted, JICA will commission the proposing company to investigate the feasibility of the business model, and JICA will support the gathering of information on businesses and with the establishment of relationships with the government agencies in the partner country.

Aiming to revitalize the port and improve convenience

photoOperations at Shirogane Transport's domestic warehouse in Japan. Various expertise has been accumulated in the logistics facilities

Shirogane Transport is a logistics company in the city of Oshu, located in the southern inland area of Iwate Prefecture. In domestic logistics, the company transports automobile parts, building materials, groceries, and daily sundries, while in international logistics, they handle imports and exports by containers. Their specialty is the 3PL (3rd Party Logistics) business model. Along with this, their clients can enjoy cost reductions and quicker service by outsourcing their logistics operations expertise in the areas such as trucking, distribution processing, including assembly and packaging in warehouses, and information management for inventory control.

In the SDGs Business Supporting Surveys, Shirogane Transport also made use of the expertise they have cultivated in 3PL to propose a feasibility study for the improvement of the functions of the port of Cai Mep and provide logistics services. The company plans to open a distribution center at the port, which has a low rate of operation due to a lack of logistics services. Plans include steps to improve convenience and revitalize the port by introducing such things as joint deliveries (one truck to transport cargo of multiple clients) and distribution processing.

Shotaro Ido of the JICA Private Partnership Division in charge of the SDGs Business Supporting Surveys, talks about the advantages of Shirogane Transport's proposal as follows.

”Previously, much of the cargo circulated via the ports around Ho Chi Minh City, which are located inland from the port of Cai Mep. However, in recent years, with the increase in the convenience of port of Cai Mep, which was supported by ODA loans, problems such as traffic jams in the surrounding roads have occurred due to the concentration of facilities into a single area. Shirogane Transport had the know-how and the backbone to be able to keep shipping imports and exports and production lines maintained on schedule.”

The port of Cai Mep becomes an international hub port

The port of Cai Mep has high expectations to be a “Free and Open Indo-Pacific Ocean” hub port that links ASEAN and Europe. Not only does the port have the geography to allow easy shipping to the Pacific and Indian oceans, but it is also deep enough to allow large ships to enter. There was the potential for it to become an international hub port to Europe. “Vina-Japan Shirogane Logistics,” a joint venture with Thanh Binh Phu My Joint Stock Company, which operates the Phu My 3 Specialized Industrial Park, was established under a joint declaration of the cooperation of Shirogane Transport, and the opening of the logistics center is expected from the Vietnamese side to push the further development of the port of Cai Mep.

photoOpening ceremony of the port of Cai Mep logistics center. Many government officials, such as the leader of Ba Ria-Vung Tau Province and the Consulate General of Japan in Ho Chi Minh City, participated in this event. The expectations of the logistics center are high

Also, in recent years, a tailwind is blowing for Vietnam as Japanese companies are setting up businesses one after another. In the future, the logistics center is expected to benefit from a further increase in logistics demand from Japanese companies.

Mr. Kaihoko, president of Shirogane Transportation, optimistically said, “In the Great East Japan Earthquake, the port of Ofunato and the port of Kamaishi in Iwate Prefecture were damaged. The desire to make use of the restored harbor was the source of inspiration for our overseas expansion. However, now we are thinking not only about Iwate but also about the future of the Port of Cai Mep. If the distribution center grows by providing logistics services that connect Japan, Asia, and the rest of the world, human resources will be needed, which should also lead to the growth of local employment.”

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