Logistics Boom Drives Modern Warehouse Development in Hanoi

The logistics and warehousing industry in Hanoi, the capital city of Vietnam, is experiencing astonishing changes. This is fueled by the fast expanding e-commerce market, increased foreign investment, and active policymaking. Powerful government initiatives are enabling the city to become an important center for Vietnam’s logistical operations. These changes indicate improvement in economic status and serve to underscore Hanoi’s role in the supply chain of the nation.

There is no denying that Vietnam’s e-commerce industry has experienced an upward trend with modern warehouses on the horizon. Traditional shopping habits become more and more obsolete as consumers’ expectations follow a similar upward trajectory. The expectations of efficiency, convenience and speed from the average consumer has resulted in the demand for modern, high-quality storage and distribution centers in major metropolitan cities such as Hanoi.

As reported by Savills Vietnam, the country’s stock of ready-built factories and warehouses was 15.1 million square meters at the end of the year 2024, which represents an impressive growth rate of 31% compared to the previous year. Approximately 4.5 million square meters of this increased stock was due to Hanoi and the Northern Economic Region. This notable growth highlights the importance of the region to the development of Vietnam’s logistical and e-commerce industries.

Vietnam’s e-commerce market is projected to grow at a compound annual growth rate (CAGR) of 28% from 2022 to 2027, with an estimated market value of $57 billion by 2027. This explosive growth directly correlates with the increasing need for advanced warehousing solutions to accommodate the rapid turnover of goods. Major players in the retail and logistics sectors, such as Tiktok, Shopee, Lazada, and Tiki, are expanding their warehouse footprints to keep pace with demand.

Foreign Direct Investment (FDI) has played a significant role in shaping Vietnam’s logistics and warehousing sector. By the end of 2023, foreign investors held over 75% of warehouse and factory leases, outpacing domestic firms. Their contributions extend beyond capital investment to include expertise and technology, fostering advancements such as automation systems, temperature-controlled facilities, and environmentally friendly design.

The influx of FDI has driven competition, prompting domestic firms to innovate and enhance their capabilities. Many local companies have responded by forming strategic partnerships with foreign investors or upgrading their infrastructure to remain competitive. This dynamic environment has elevated industry standards, improved supply chain efficiency, and contributed to Vietnam’s growing reputation as a key logistics hub in the region.

The impact of FDI extends beyond warehousing, influencing the broader logistics sector, including transportation networks, e-commerce fulfillment, and supply chain management. As Vietnam continues to attract foreign investment, the synergy between international expertise and local market understanding is expected to drive further advancements, benefiting businesses and consumers alike.

Recognising the critical importance of logistics to economic development, the Vietnamese government has implemented several initiatives aimed at modernising the country’s logistics infrastructure. Hanoi, as a key economic and political center, has been a focal point of these efforts.

In October 2024, the ambitious logistics development agenda was launched by the Hanoi People’s Committee, which targeted a cost of logistics as a percentage of GDP reduced by 15% by 2030. It would comprise building new logistics hubs and new extensions of industrial zones as well as bringing multifunctional transport systems. There are also ongoing key infrastructure projects, such as the expansion of Noi Bai International Airport and upgrades of key highways linked to Hanoi and the rest of the northern provinces.

Furthermore, the government has introduced incentives to attract private sector investment in logistics. These include tax breaks, streamlined land acquisition processes, and favorable leasing terms for logistics operators. Such measures are designed to ensure Hanoi’s logistics infrastructure meets international standards, bolstering the city’s competitiveness on a global scale.

As the logistics sector grows, sustainability has become a focal point in warehouse development. Many modern facilities in Hanoi are incorporating green building practices, such as solar energy systems, rainwater harvesting, and energy-efficient lighting. This shift aligns with Vietnam’s broader commitment to reducing carbon emissions and promoting environmental sustainability.

For example, FM Logistic’s VSIP Bac Ninh Multi Client Facility is a perfect example of sustainability in warehousing. Situated 20 km from the Hanoi City Centre, Phase 1 and 2 of this facility with 79 docks incorporates a high level of firefighting along with robust environmental protection measures. Focusing on energy efficiency, waste reduction, and environmentally responsible design, the platform is equipped with motion-sensor lighting, which automatically turns off lights in unoccupied areas, significantly reducing energy consumption.  An integrated SD (Sustainable Development) dashboard tracks key metrics like energy usage and waste generation, enabling the identification of areas for improvement and monitoring the effectiveness of our sustainability initiatives. Such initiatives not only minimise environmental impact but also contribute to building a greener future for the industry, setting a benchmark for sustainable logistics.

The logistics boom in Hanoi shows no signs of slowing down. E-commerce growth, driven by a tech-savvy population and increasing internet penetration, will continue to fuel demand for modern warehousing solutions. Foreign investment is expected to remain robust, with new entrants and existing players expanding their footprints in the region.

Supportive government policies and infrastructure upgrades will further enhance Hanoi’s logistics capabilities. By 2030, the city aims to become a leading logistics hub in Southeast Asia, leveraging its strategic location, skilled workforce, and modern infrastructure.

However, challenges remain. Rising land costs, regulatory complexities, and competition for prime locations could pose hurdles for investors and developers. Addressing these issues will require continued collaboration between the public and private sectors.