● Opening of a 20,000 sqm urban distribution centre in Di An, Binh Duong in March 2022
● New strategy to focus on omnichannel, urban logistics, automation and sustainable development
● Estimated revenue growth of 200% in Vietnam in the financial year 2021-22 (closing endMarch 2022)
● FM Logistic targets a revenue of €30 million in FY 2025-26
Ho Chi Minh City, 07 April 2022- France-based supply chain operator FM Logistic today announced the opening of a new 20,000 sqm urban Distribution Center in Di An, Binh Duong. The new site, which is well located just 15 km from the center of Ho Chi Minh City, will enable faster deliveries to retail stores and consumers. It is to be used as a multi-client urban Distribution Center for customers in the FMCG and Retail industries.
One of the first customers is a large international FMCG company, which awarded FM Logistic a major contract in February to manage omnichannel fulfillment and last-mile delivery for nearly 10,000 traditional grocery shops in Ho Chi Minh City.
The new facility will integrate warehousing, fulfillment and distribution under one roof and focuses on Omnichannel distribution to Ho Chi Minh City. The Di An urban DC mirrors FM Logistic’s grade A urban DC in VSIP Bac Ninh that already supports city distribution in Hanoi.
Addressing profound changes in supply chains
The move is part of a new strategy, called “Powering 2030”, designed to address profound changes in the retail & FMCG industries as well as in supply chain management, as consumers spend more online. FM Logistic aims to double its revenue to €3 billion in 2030 by focusing on omnichannel supply chain services, urban logistics, automation and sustainability.
COVID-19 has given a boost to omnichannel commerce, a multichannel approach to sales that focuses on providing seamless customer experience whether the client is shopping online from a mobile device, a laptop or in a brick-and-mortar store.
According to the Vietnam E-commerce White book, released by the Vietnam E-Commerce and Digital Economy Agency (IDEA), e-commerce grew 18% in 2020, reaching 11.8 billion USD. Vietnam is expected to become the fastest-growing e-commerce market in Southeast Asia, with an expected e-commerce Gross Merchandise Value (GMV) of 56 billion USD in 2026.
“As we face profound changes in consumption patterns, our ambition is to help our customers build sustainable omnichannel supply chains.. In Vietnam, this strategy will be supported by investments in an end-to-end digital ecosystem supporting efficient Omnichannel operations and urban logistics, as well as pioneering projects in automation and green deliveries” said FM Logistic Asia Managing Director Stephane Descarpentries.
Omnichannel growth boosted by the rise of B2B ecommerce in South Asia and South-East Asia
B2B Ecommerce,which consists of digitizing the distribution of FMCG products through a dedicated marketplace app, is on the rise in South Asia and South-East Asia with the likes of Amazon, Flipkart, TataCliq in India, Tokopedia in Indonesia, Vinshop, Gro 24/7 and Telio in Vietnam.
There is actually significant space for those operators to develop given the very low penetration rates of modern trade in most South-East Asia and South Asia economies as well as still relatively low levels of digitization of traditional / capilar distribution networks (Mom & Pop’s stores in Vietnam, Kiranas in India, etc.).
Although the e-B2B market is still nascent (under 150 Mn USD in Vietnam in 2020), digital and urban logistics solutions brought about by e-B2B players, thus have a significant runaway to durably transform urban distribution networks. This is especially true for Vietnam which has the highest share of the unorganized channel in retail sales among ASEAN countries, at 88 percent (in the FMCG category) with online sales currently accounting for less than 1% of FMCG sales for the country.
This is a boon for FM Logistic which is currently signing more than 60% of its new contracts in omnichannel logistics services globally and is currently investing worldwide in automation to support its e-commerce operations. Investments include automated sorters, on-demand packaging machines that produce the right size box for any order, “goods to person” picking systems, automated guided vehicles (AGVs) and robots for moving pallets inside warehouses.
Urban logistics: Bringing products closer to consumers
The rise in e-commerce (both B2B and B2C) is not without challenges for Asian cities. With restricted time-slots for urban deliveries for retailers and brands alike, congested traffic and increasing air pollution in most asian cities, brands, manufacturers and distributors are under pressure to imagine innovative ways to get their products delivered to consumers, more efficiently and in a sustainable manner.
In order to achieve these goals, some ideas can be picked from experiences in other metropolitan cities. In France for instance, with the cost of home-delivery already very high (in line with e-commerce penetration), companies such as FM Logistic have started to develop lockers for consumers to pick their goods from a fixed location. However, given the current context, such solutions are unlikely to become mainstream now in Vietnam given the current race to get even more shoppers online and the attraction for faster home-deliveries (vs. next-to-home deliveries or J+1 / J+2 deliveries).
“The way we see last-mile delivery networks evolve in Vietnam is closer to what FM Logistic does in Spain, China or India with the development of extensive networks of urban hubs within city centers sometimes built from unused urban areas (cf. our hub under Plaza Mayor in Spain). In Vietnam, we have the ambition to consolidate FMCG Urban distribution flows, thus increasing efficiency, reducing overall cost and lowering environmental impact using this kind of network.” said FM Logistic Vietnam Managing Director Hamza Harti.
Acting as a neutral part in the FMCG Supply Chain, FM Logistic is able to leverage “pooling” solutions, first implemented in Europe in the early 2000’s where it has been applied to FMCG and Beauty sectors to mutualize urban delivery resources (trucks, storage hubs, manpower and sometimes order management) to increase capacity utilization rates up to a 100% for all resources involved.
About FM Logistic Vietnam
FM Logistic Vietnam is a 100% owned subsidiary of FM Logistic Group with regional headquarters in Singapore. FM Logistic Vietnam covers an area of more than 60.000 sqm with 350 employees operating on 7 platforms. With a nationwide network of local transport partners and fully digitized operations (WMS, TMS, OMS, BI solutions), FM Logistic Vietnam aims to become the leading third-party logistic (3PL) in Vietnam and focus on the main priorities of building sustainable & competitive domestic supply chain solutions for Retail operators, FMCG brands and Industrial customers in North & South Vietnam. Currently, FM Logistic Vietnam has 3 warehouse locations including FM Logistic VSIP Bac Ninh Owned grade A urban DC, FM Logistic Urban Distribution Center in Di An, Binh Duong Opened on March 15th, 2022 and FM Logistic VSIP 2 Binh Duong Owned Multi-Client Facility (MCF) set to be opened in December 2022.
Supporting the development of sustainable omnichannel supply chains is at the core of FM Logistic’s strategy, as illustrated in its tagline: “Supply Change”. Founded in France in 1967, the independent company is one of the leading supply chain services companies in France and Europe, serving customers in the FMCG, retail, beauty and cosmetics, industrial manufacturing, and healthcare industries.
Its services include warehousing, omnichannel fulfilment, co-packing, domestic and international transport, urban logistics operations, as well as supply chain control tower services. FM Logistic is active in more than 14 countries across Europe, Asia, and Latin America. It has annual revenues of about €1.4 billion and 27,200 FTE employees.
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