Samsung and ALS form joint logistics venture in Vietnam
August 23, 2016
Samsung is setting up a joint venture with Aviation Logistics Service (ALS), Vietnam’s leading air freight terminal operator. This is the second joint venture in south-east Asia for Samsung’s SDS subsidiary after announcing a joint venture with Thailand’s customs clearance company Acutech last month.
The rapid growth of Vietnam's logistics market, marking 15 to 20 per cent per year, affected the decision to establish the joint venture. Thanks to the recent change of international trade environment related to the Trans-Pacific Partnership and the Asean economic community, global companies are relocating their manufacturing facilities to Vietnam, which leads to increasing foreign direct investments and export-import volume.
The fact that mobile phones and components became Vietnam's largest export item since 2013 also influenced Samsung SDS to make this strategic decision. By using its current capacity in global transportation, Samsung SDS may expand its business beyond the Samsung group. Samsung SDS currently handles 40 per cent of all import and export logistics at the Hanoi airport.
Samsung Electronics, which is one of Samsung SDS's largest customers, covered 20 per cent (US$32bn) of all Vietnam exports ($162bn) last year.
Hanoi based ALS is the leading air-freight terminal operator in Vietnam, and handles almost all operations. ALS is also the first and only company in Vietnam to provide an off airport cargo terminal system, which it introduced in 2007. That model is said to have benefitted aviation logistics services in the country.
Samsung SDS plans to provide its integrated logistics service, including global and inland transportation, warehousing service, and customs brokerage, while using ALS’s customer network. It also aims to attract potential customers by strengthening its external sales force through this partnership.
The South Korean company said it would now be able to handle the fast-growing volume of logistics in Vietnam by taking advantage of local warehouses and terminals.
“Considering ALS’s local network and diverse business capabilities we decided that Vietnam is the most optimised partner for Samsung SDS,” said HyungTae Kim, executive vice president of the smart logistics business unit at Samsung SDS. “With this agreement we will continue to expand our business in the south-east Asia market.”
Samsung is also discussing partnership agreements with Chinese companies and will continue its efforts to provide its advanced logistics business to customers outside the Samsung group.
Samsung provides its global logistics service through an integrated logistics system called CelloSCLIS, which covers the whole range of logistics business, from supply chain management to logistics execution. Additionally, Samsung launched a logistics platform called Cello Square last year to create an ecosystem in the logistics business.