Vietnam, Verified

By Liesl Venter

Has Vietnam stolen the spotlight from China in the global sourcing game? Project professionals from DHL, NMT Projects, Rhenus and Blue Water Shipping unpack how the Southeast Asian nation became a leading player in supply chain strategy.

From Issue 5, 2025 of Breakbulk Magazine.

(5-minute read)

Like everything else in supply chain strategy today, there’s never a one-size-fits-all answer. But as trade tensions heat up, tariffs bite and protectionist policies take hold, more companies are rethinking where and how they source.

Increasingly, one country is the subject of boardroom conversations: Vietnam. What once served as a fallback when China became too costly or complicated is now a bona fide sourcing power. Vietnam is no longer the footnote in the China+1 strategy, it’s the headline.

“Over the past decade, Vietnam has evolved into a strategic pillar of global supply chains,” said Laurence Cheung, managing director at DHL Global Forwarding in Vietnam. “Once viewed primarily as a tactical alternative, Vietnam has now firmly established itself as a manufacturing and logistics base. The country has built deep capabilities in production, trade connectivity and infrastructure, emerging as one of Asia’s fastest-growing export economies.”

In 2024, Vietnam’s exports rose 14.3% year-on-year to over US$405 billion, the growth underpinned by robust trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP), which grant Vietnam preferential access to markets representing over 30% of global GDP.

According to Cheung, companies are also investing in Vietnam’s local logistics ecosystem, workforce development and long-term infrastructure. “It signals a shift from short-term diversification to long-term anchoring,” he said, noting that the country’s commitment to digital transformation and sustainability further reinforces its position as a resilient, future-ready supply chain hub. “At DHL, we’ve identified Vietnam as one of the top 20 fastest-growing markets for the group.”

Carsten Schwenke, regional director of Vietnam, South Korea & Philippines at Rhenus Air & Ocean, agreed that companies no longer saw Vietnam as a temporary alternative but as a long-term investment. “It has definitely transitioned from a ‘China workaround’ to a strategic manufacturing and logistics base,” he told Breakbulk. “It now exports machinery, industrial components and high-tech products like solar panels and semiconductors.”

Other forwarders agree that project cargo is on the rise. “Five years ago, most exports were still dominated by consumer goods and textiles. Today, we’re regularly moving complex industrial cargo: modular building units, renewable energy components, machinery and fabricated steel structures,” said Grant Bell, operations director for NMT Projects.

“For example, a company like TLC Modular now manufactures in Vũng Tàu and ships complete building modules breakbulk from Phú Mỹ to markets worldwide. In addition to modular construction and fabricated steel, there’s a small but growing shipbuilding and marine equipment sector emerging out of the industrial estates around Vũng Tàu.”

According to Stephen Westfield, a global category manager at Blue Water Shipping, several of their industrial project clients and partners have expressed growing caution around sourcing from China, with some actively reassessing their China strategies in light of broader supply chain diversification efforts.

“This trend has benefited Vietnam and other Southeast Asian economies, as our clients look to diversify sourcing and reduce both economic and geopolitical risk in their supply chains,” he said.

Costs Down, Capacity Up

A combination of factors is driving Vietnam’s rise as a manufacturing and logistics hub. “Competitive labor costs, coupled with rising investments in industrial parks, deep-water ports and expressway networks, make Vietnam increasingly attractive for long-term manufacturing,” said Jason Goh, a regional senior vice president at Blue Water Shipping.

“Project cargo and breakbulk capacity is steadily expanding, supported by major port developments and growing expertise in handling oversized and heavy-lift components.”

There are clear advantages to the country, said Bell. “It’s more cost-competitive than Thailand and Malaysia, and logistically more efficient than Indonesia. The government has also been aggressive in attracting FDI and upgrading infrastructure, particularly ports and industrial zones. Where others have remained fragmented, Vietnam has moved forward to offer scale, efficiency and momentum.”

Major project investments such as Long Thanh airport near Saigon, the North-South Expressway and port expansions are all underway. “Add to this policy reforms that include digital customs, ESG incentives and trade facilitation measures, all of which put the country on track as a regional logistics leader by 2030,” said Schwenke.

Another game-changer, said Cheung, is the Lao Cai–Haiphong railway which, along with the North- South Expressway, is set to be a boon for inland logistics by cutting travel time and linking industrial zones to ports. The railway will stretch over 390 kilometers and is expected to be completed by 2030.

“Sea routes from Cai Mep and Haiphong are already seeing increased direct calls, while multimodal corridors are being prioritized to reduce dependency on road freight, which still handles over 70% of cargo in the country,” he added.

At least US$36 billion has been earmarked for infrastructure investment this year alone, with a focus on transport corridors, port upgrades and digital logistics systems. Continued investment into the Cai Mep-Thi Vai port complex, along with upgrades to National Route 51 and the ongoing development of Long Thanh Airport are all significant, according to Bell.

“Project cargo handling capacity is strengthening year-on-year,” he said. “Phu My and Cai Mep–Thi Vai are the standout corridors for heavy and breakbulk cargo, with deep-water access and growing connectivity. These ports are now supporting everything from modular buildings to renewable energy projects, with facilities on par with regional competitors.”

The fastest growth is being observed in the south of the country, particularly along the Vung Tau-Phu My corridor, thanks to industrial clustering and direct deep-water access.

Structural Challenges Remain

Despite the positive indicators, Vietnam faces several structural challenges, noted Cheung. “Logistics costs remain high at 16.5% of GDP, well above the global average of 11.6%. Port congestion, developing transport networks and limited hinterland access impact overall efficiency.”

Customs delays are also a real concern. “While procedures are improving, more can be done to further integrate digitization and develop a local workforce to support complex logistics operations and scale sustainably.”

According to Bell, port congestion remains problematic and limited hinterland connectivity for oversized cargo can create added complexity. “We recently had to move a consignment, but due to road restrictions, we had to then barge from Phu My to Haiphong to meet a vessel bound for the U.S. on time.”

Schwenke agreed that the heavy reliance on roads causes major bottlenecks. “Rail and waterway networks remain underdeveloped. Addressing these gaps is crucial for scaling logistics capacity,” he said.

While the country’s capacity to handle out-of-gauge and heavy-lift cargo is improving, it still lags behind more mature logistics hubs. “Deepwater ports such as Cai Mep–Thi Vai, Haiphong and Quy Nhon are equipped with heavy-lift cranes and dedicated project cargo terminals capable of managing wind towers, blades and other oversized components. But availability of specialized equipment, such as multi-axle hydraulic trailers, self-propelled modular transporters (SPMTs), and high-capacity lifting gear, remains limited,” said Goh.

He added that moving large cargo often involves complex coordination. “Road transport for wind tower and blade movements frequently requires police escorts, convoy planning, temporary infrastructure adjustments such as the removal of roadside obstacles and clearance with local authorities due to narrow or low-clearance routes.”

Nevertheless, Vietnam can handle these operations, Goh emphasized, though successful execution hinges on early planning and partnerships with experienced logistics providers. “For instance, we recently managed the transport of 27 full-size dampers, a critical wind energy component, from a manufacturing site in Vũng Tàu to Taiwan. Due to their oversized width of 6.5 meters, the project required careful preplanning over several months.

“Our team secured long-term freight rates to ensure cost competitiveness, obtained road permits one month in advance and scheduled silent-hour convoy transport with police escorts to navigate narrow routes safely. Empty flat racks were pre-delivered to the site; custom stoppers were designed and adjusted for secure lashing.

“A mix of low-bed and container trailers was deployed. The trucking plan had to be carefully coordinated with the vessel schedule and port gate-in plan, as authorities only accept out-of-gauge cargo 48 hours before a vessel’s arrival.”

Logistics as the Differentiator

Logistics is fast becoming the key differentiator in Vietnam’s competitiveness as a sourcing hub. “Beyond labor costs and favorable trade agreements, the expanding port and transport infrastructure, as well as the adoption of digital customs systems, is driving faster, more reliable export flows,” said Goh.

According to Cheung, there is a clear strategic recalibration underway in how customers approach logistics in Vietnam, especially as scrutiny from the U.S. and EU intensifies around origin verification, ESG compliance and trade transparency.

“These factors are no longer peripheral, they’re now central to supply chain strategy. Customers are demanding end-to-end visibility, including robust origin documentation, digital traceability, and real-time tracking of cargo movements.”

This means manufacturing capacity alone is no longer enough. “Logistics execution is the differentiator,” said Bell. “Vietnam’s competitiveness hinges on its ability to move complex cargo efficiently and transparently to global destinations.”

He believes the country is poised to solidify its position as Southeast Asia’s most dynamic sourcing hub outside of China. “We expect to see growth not just in volume, but in sophistication: more high-value, complex cargo, more project cargo and renewable energy equipment, and stronger integration into global supply chains.”

More importantly, said Schwenke, Vietnam is resilient. “This, along with its trade connectivity and political stability, continues to make it attractive for long-term investment. Firms will increasingly embed Vietnam into their core sourcing strategies.”

Vietnam, he said, is not trying to be the next China. Rather, it’s staking a claim as a sourcing and logistics power in its own right.

The impact of tariffs on project timelines and sourcing will be a key talking point at a main stage panel session at Breakbulk Americas 2025. “Ask the Experts: The Real Impact of Trade Tariffs on Project Logistics”, moderated by UTC Overseas’ Diana Davila, will take place on the Wednesday, Oct. 1 from 2:45pm-3:15pm.

Top photo: NMT Projects ships modular building units from Vietnam. Credit: NMT Projects