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Smart Logistics System: Opportunities and Challenges for the Mekong Delta
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 Proceedings of the 7th International Conference on Digital Innovation – Sustainability & Corporate Governance

Smart Logistics System: Opportunities and

Challenges for the Mekong Delta Region
Chuyen Tran Trunga & Trinh Phan Tran Xuanb
a
Faculty of Business Administration-Marketing, Nam Can Tho University,Vietnam
a
PhD student at MUST (Malaysia University of Science & Technology), Malaysia
b
Faculty of Technology and Industry, Nam Can Tho University, Vietnam
*Corresponding author: Chuyen Tran Trung ([Link]@[Link])

Abstract: The smart logistics system is one of the factors contributing to the development of the
logistics industry in the Mekong Delta region, especially with existing advantages and challenges. This
study aims to assess the current status of the logistics industry in Vietnam and the Mekong Delta region
while highlighting the technologies such as the Internet of Things, Cloud Computing, Big Data, and
Artificial Intelligence that make up the smart logistics landscape. In particular, the article also evaluates
digital transformation activities, opportunities, and difficulties when implementing smart logistics in the
Mekong Delta region. This study uses the qualitative research method to synthesize, analyze, and
evaluate secondary data from specialized reports, and domestic and foreign articles related to smart
logistics topics. The research results show that while the Mekong Delta region has the potential to
develop smart logistics, it still faces obstacles such as enterprise scale, human resources, financial
issues, and linkages between related parties. Therefore, improving the policy, investing in technologies,
focusing on human resource training, and strengthening links between agencies and businesses are
suggested to overcome difficulties in developing smart logistics. Overall, the region has significant
potential for smart logistics system development, and it is crucial to properly assess its strengths and
address its challenges to contribute to the growth of the region and the country as a whole.

Keywords: smart logistics, smart logistics system, Mekong Delta, logistics 4.0

1. Introduction

In recent years, logistics has become one of the fastest-expanding sectors in Vietnam which accounts for
nearly 4.5 percent of the total country’s GDP in 2022 (Nguyen, 2023). Based on the statistics of Vietnam
Industry Research and Consultancy (VIRAC), the logistics market in Vietnam showed an outstanding
growth rate in 2023, which ranked in the top 10 of emerging logistics markets in the world and top 4 in
Southeast Asia. In general, the development of logistics will contribute directly to increasing the proportion
of imports and exports significantly. For example, the import and export of Vietnam reached $732.5 billion
in 2022, 9.5% higher than the rate of 2021.

The growth of the logistics market will be affected by digital transformation, the requirements of
customization, responsiveness, and flexibility, which require the expansion of smart logistics to optimize
the process (Cimini et al., 2020). Smart logistics is the key solution for business right now because it helps
save cost and time, and enhances the competitiveness for transportation and distribution of goods and
services. According to the report from Saigon Newport Corporation, applying technology will reduce the
waiting time at the port. Using e-customs clearance can reduce the time of about 2 minutes for a container
waiting at the gate, which increases the output of gate delivery from around 11,000 vehicles/day to nearly
20,000 vehicles/day (Nguyen, 2023). And, smart logistics also received support from the government
because of its benefits for Vietnamese enterprises in the global value chain (Feng & Ye, 2021).

The Mekong Delta is considered one of the key economic hubs of Vietnam, which contributes nearly 90%
of the country’s exported rice, about 70% and 65% of fruit and aquatic products respectively. Therefore,
the opportunity for developing logistics by applying smart logistics in this region is big enough to improve
activities such as goods storage, packaging, warehousing, customs clearance, and goods rotation (Tung,
2022). However, in the annual economic report of Mekong Delta 2020, the experts analyzed that the
Mekong Delta’s logistics system remains inadequate and has some limitations in infrastructure, capacity,
and digital transformation. In the following, this research will review the related literature on smart logistics
and explore the opportunities and challenges in implementing smart logistics in the Mekong Delta.

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2. Theoretical basis and research methods

2.1 Theoretical basis

2.1.1 Smart logistics

Smart logistics is also known as “intelligent logistics” or “logistics 4.0”. This concept does not have a
unified definition, which many researchers might define from different perspectives. First, Uckelmann
(2008) explained smart logistics based on the term smart products and services. He presented that smart
products and services are evolving from new technologies in a technology-driven approach so that the
concept of smart logistics developed as the same. On the other hand, McFarlane (2016) stated that smart
logistics is related to plan and controlling logistics activities with smart tools and methods. He mentioned
that applying intelligent technology will help trace and identify the products, detect the problems, and
provide the automatic execution of the solution. Besides that, other researchers considered smart logistics
as a system that can increase flexibility, manage warehousing and transportation effectively, and deliver
better services to customers (Barreto et al., 2017). Industry 4.0 has led to notable improvements in
productivity and cost efficiency. On average, the reductions in costs are as outlined below:

• Production cost: Decreased by 10-30%.

• Logistics cost: Reduced by 10-30%.
• Quality management cost: Trimmed by 10-20%.

Esmaeilian et al (2020) provides an overview of blockchain technology and Industry 4.0 for advancing
supply chains towards sustainability, evaluating the capabilities of Industry 4.0 for sustainability under
topics such as smart logistics and transportation. Woschank et al (2020) analyze the scientific literature
on artificial intelligence, machine learning, and deep learning in the context of smart logistics management
in industrial enterprises, highlighting artificial intelligence as a major enabler for smart logistics and smart
production initiatives. Ding et al (2020) conducted a bibliometric analysis to reveal the main technologies
and impacts of the research and applications of IoT-based smart logistics, demonstrating the role and the
impact of IoT on smart logistics and providing research needs for the development of smart logistics.
Humayun et al (2020) explore the potential of IoT and blockchain technology in smart logistics and
transportation, proposing a layered framework for smart logistics and transportation that integrates IoT and
blockchain.

Bag et al (2020) investigate how Industry 4.0 resources influence smart logistics, instrumented logistics,
interconnected logistics, and intelligent logistics, and their impact on business logistics sustainability. Pan
et al (2020) investigate the main factors influencing the establishment of smart logistics in Chinese cities
and the effects of a smart logistics policy on carbon emissions. Ammar et al (2021) study various Industry
4.0 technologies for improving the material quality and manufacturing systems, including smart logistics
and smart supply chains. Song et al (2021) provide a comprehensive survey of the literature involving IoT
technologies applied to smart logistics, reviewing how IoT technologies are applied in the realm of smart
logistics from various perspectives. Lian et al (2021) focus on the planning and scheduling problems in
the cyber-physical system-based multiple automatic guided vehicles logistics system, highlighting the
application of the cyber-physical system and edge computing in smart logistics systems.

According to Tyagi, A. K., et al (2023), the development of the 4.0 industrial revolution goes through each
stage with different characteristics. Figure 1 shows that Industry 1.0 was the era of mechanization and steam
power; Industry 2.0 represents the development of electricity and mass production; Industry 3.0 represents
advances in robotics, automation, and computers; Industry 4.0 is the stage of IoT, cloud computing, big
data, and AI.

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INDUSTRY 1.0 INDUSTRY 2.0 INDUSTRY 3.0 INDUSTRY 4.0

Mechanization Electricity Robotics, IoT, Big data and
Steam power Mass Automation and AI,
production Computers cloud computing,

Figure 1. Historical evolution of Industry 4.0

To sum up, with the development of technology, logistics services are becoming dependent on technological
innovation and the term smart logistics develops accordingly. Smart logistics refers to different logistics
activities such as inventory management, transportation, distribution, and warehousing that are planned,
managed, and controlled intelligently compared to traditional methods (Song et al., 2021).

2.1.2 The development stages of smart logistics

According to the research of Feng & Ye (2021), smart logistics is considered a new method that optimizes
real-time tracking, multichannel control, intelligence, and automation for the entire logistics process.
However, the development of smart logistics is divided into four stages. Figure 2 shows that in the first
stage, smart logistics focuses on enhancing the specific function in the logistics field, such as optimizing
transportation, organizing warehouse layout, planning, or forecasting real-time data. Then, in the second
stage, smart logistics pays attention to the intelligent development of the entire logistics process. At this
stage, logistics functions will be combined and extended between resource allocation, real-time tracking,
flexibility management, and high technology systems to improve efficiency and save implementation costs.
In the third stage, smart technologies are applied to achieve comprehensive optimization of the logistics
process to increase efficiency in coordinating with the participants in the supply chain. Smart logistics in
this stage will adjust to adapt to the new processes, management systems, logistics platforms, technologies,
and modern business operations. The last stage focuses on integrating a cross-supply chain with smart
technologies and innovative methods. During this period, optimizing resource allocation between
homogeneous and heterogeneous supply chains becomes the main task in logistics management.

Figure 2. Development stages of smart logistics

(Source: B. Feng & Q. Ye, 2021)

2.1.3 Key elements in smart logistics

There are some key elements in smart logistics such as sensing, integration, intelligent analysis,
optimization decisions, system support, and timely feedback. These elements help collect a large amount
of information for transportation, warehousing, loading and unloading, and other aspects of the logistics
field. The data collection will be analyzed and transmitted through the entire process to create a better
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integration between the participants in the logistics chain. Then, it will lead to optimizing the decisions for
business in different situations. Also, a smart logistics system is a real-time updated data which enhances
the accuracy in problem-solving on time. Therefore, applying smart logistics will benefit transportation,
warehousing activities, and resource management and boost sustainability (Song et al., 2021).

2.1.4 The key technologies in smart logistics

The development of Industry 4.0 impacts directly on smart logistics with the application of some
technologies such as the Internet of Things (IoT), Cloud Computing, Big Data, and Artificial Intelligence.
The technologies change logistics practices and the management framework that supports the growth of
logistics in the future.

Internet of Things: The Internet of Things (IoT) is the foundation for developing smart logistics. The
concept after IoT is that objects connect and interact with others to make a computer sense of information
without human intervention through unique addressing schemes. The IoT will be applied through RFID
tags, sensors, actuators, computers, and mobile phones. It can obtain information on cargoes, vehicles,
transport routes, and warehousing at any time and anywhere, and the companies can track information by
network communication technologies. By using IoT, the smart logistics system can analyze and process a
massive amount of logistics data and information to make accurate decisions to control the process
(Douaioui et al., 2018).

Cloud Computing: Cloud computing is a system for enabling ubiquitous and on-demand access to shared
computing resources. The main goal of cloud computing is to utilize computing and storage to transparently
share among users elastic resources over a limitless network, which makes it like the nerve center of a smart
logistics system. In general, implementing cloud computing will be more beneficial to integrate and share
resources. It helps improve the efficiency of logistics operations as well as solve the problems of the layout
in warehouse management (Song et al., 2021).

Big Data: Big data is a system that helps analyze and extract information from large data sets in a systematic
way. These data sets are large and complex to process traditionally. Big data will anticipate user behaviors
to improve the logistics processes such as transportation, warehousing, packaging, and delivery. In short,
big data is the basis for the awareness of smart logistics (Song et al., 2021).

Artificial Intelligence: AI will boost the development of smart logistics. Artificial intelligence technology
will help manage the warehouses more effectively through intelligent algorithms. In addition, artificial
intelligence is also beneficial for transportation. Through the AI algorithm, the unmanned distribution robot
can realize path planning, intelligent obstacle avoidance, which will change the distribution mode and help
to reduce logistics costs (Issaoui et al., 2021).

Based on the above analysis, smart logistics requires investment from the government and businesses in the
infrastructure, technologies, digital transformation, and human resources. It helps plan, operate, change,
and apply new methods to earn more benefits for the logistics industry.

2.1.5 Research method

The research uses qualitative methods by collecting secondary data from domestic and foreign journals,
books, and newspapers. In addition, data is collected from related reports and departments. In this topic, the
keyword "smart logistics" is used to look for some reference documents and journals. Then, researchers
start to synthesize and analyze the data related to the topic.

3. The smart logistics system in the Mekong Delta

3.1 Overview of logistics operations in the Mekong Delta

Mekong Delta is a crucial economic region of Vietnam that mainly produces and exports agricultural and
aquatic products (Tung, 2022). According to the Ministry of Agriculture and Rural Development, the total
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rice output of the Mekong Delta increased 1.9 percent to 43.5 million tonnes in 2023. The export volume
and prices achieved 8.3 million tonnes and 4.78 billion USD respectively. In addition, this area also has a
favorable geographic location with a dense river network up to 28,000 km in length, which is an advantage
for developing water transport (Mekong Delta needs more investment in waterway transport infrastructure,
2022). Therefore, the Mekong Delta has the potential to develop a systematic and sustainable logistics
system to increase the competitiveness of our products in the global market.

However, the logistics system of the Mekong Delta has not fully exploited its potential. Firstly, for the
transportation aspect, despite having a dense system of rivers, this region cannot create an inland waterway
transport route due to the differences in its routing. It leads to only 10 percent of shipments being transported
by waterway. Because of poor transportation infrastructure, the barges cannot carry the maximum allowable
load. As a result, the barge tonnage is only from 1,500 tons to 3,500 tons (Le, 2022). In addition, the ports
are not fully invested and exploited, leading to the import and export shipments having to be transshipped
through Cat Lai port in Ho Chi Minh City or Cai Mep-Thi Vai port in Vung Tau province, which increases
costs and time (Tung, 2022).

Secondly, the Mekong Delta has a limited cold storage system. There are 10 large cold warehouses located
in Long An, Hau Giang, and Can Tho, which have not met the needs of seafood and fruit exports. Moreover,
this region has 1,461 logistics businesses, which account for 4.39 percent of the total logistics enterprises
in the country. Logistics company in the Mekong Delta only offers freight forwarding, renting warehouses,
and customs clearance, but cannot integrate, organize and link all of the operations in the logistics system.
Lastly, the Mekong Delta lacks logistics centers, satellite systems, empty container yards, and transportation
infrastructure (Phong, 2022).

3.2 The need for smart logistics in the Mekong Delta

Based on the above analysis, even though logistics plays a crucial role in the economic development of the
Mekong Delta, the logistics system in this region has some limitations and barriers, especially in
infrastructure, transportation, and warehousing. And to solve the problems and optimize these sectors, smart
logistics is considered as the key solution. Applying digital transformation in logistics operations will bring
more benefits because it is a breakthrough point to boost industrialization and modernization (Nguyen,
2023). Smart logistics helps save costs, increase efficiency, and meet the demand of domestic trading and
import-export activities. For example, if smart warehouses are built near roads and ports, it is expected to
reduce preservation time and improve competitiveness for agricultural and aquatic export products. In
transportation, applying intelligent technology will enhance the prediction, control, and management of
transport routes. It helps update real-time data and track the shipment for the company to plan and manage
its delivery process more effectively (Nhat Phuong, 2022). In conclusion, smart logistics should be invested
and developed more in the Mekong Delta to optimize logistics activities.

3.3 Opportunities to develop smart logistics systems

The above analysis shows that the Mekong Delta region needs to apply smart logistics to improve trading
activities. Therefore, there are many opportunities to develop smart logistics in this region. Regarding
policy, the Mekong Delta region is also included in the national digital transformation program. According
to Decision No. 749/QD-TTg dated June 3, 2020, of the Prime Minister approving the National Digital
Transformation Program until 2025, Orientation to 2030 has identified logistics as one of eight digital
transformation priorities. Digital transformation in logistics helps reduce logistics costs, improve service
quality and customer experience, and increase connectivity within the organization and between parties in
the supply chain, thereby improving performance and increasing competitiveness of businesses and the
entire Mekong Delta region.

In addition, in the promotion and investment planning for the Mekong Delta region in the 2021-2030 period,
the Government sets 10 key tasks to develop the region. In particular, focuses on building and developing
transportation and logistics infrastructure, clean energy infrastructure, renewable energy, education and
healthcare infrastructure, digital transformation infrastructure, and combating climate change to promote
socio-economic development in the Mekong Delta.

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Implementing state policies, provinces in the Mekong Delta region carry out digital transformation to
strongly promote innovation activities, exploit digital data to create new value and help increase labor
productivity, create new growth drivers, and contribute to the region's socioeconomic growth. The most
prominent is Can Tho City, the provincial-level digital transformation index of Can Tho City in 2022 will
rank 5/63 provinces and cities nationwide.

3.4 Challenges when implementing smart logistics system in the Mekong Delta

Although there is much potential for developing smart logistics in the Mekong Delta to promote the region's
economic growth, reality shows that many difficulties need to be resolved when implementing a smart
logistics system. Some aspects that can be mentioned include:

Enterprise scale: The number of logistics service enterprises in the entire region is over 1,500 enterprises,
mainly concentrated in provinces such as Can Tho, Kien Giang, Long An, Tien Giang and An Giang.
However, the scale of businesses is still small, their operations are scattered, mainly focusing on small-
scale transportation and warehousing services. At the same time, most digital transformation activities in
businesses are still in the early stages and have not received adequate investment attention.

Human resources: to effectively deploy smart logistics, high-quality human resources are required to meet
the needs of society. However, the logistics industry's human resources in the Mekong Delta region do not
have uniform technological capabilities. Besides, many businesses do not have an information technology
department, or do have but only to a limited extent and only at a basic technical level. This is a huge barrier
when implementing a smart logistics system.

Finance: Financial potential is one of the challenges in building and implementing a smart logistics system.
Investing in building a smart logistics system and digital transformation requires huge costs. In general,
many businesses operating in the logistics field in the Mekong Delta region are small and medium-sized,
even super-small. Therefore, financial resources invested in smart logistics systems are not guaranteed.
Therefore, it causes many difficulties and obstacles in developing the smart logistics system of the entire
region.

Lack of cooperation between logistics businesses: Lack of uniformity in applying common standards and
protocols can reduce the interoperability and integration between systems and platforms of logistics
businesses. It also impacts the ability to exchange information, manage data, and optimize processes.
Logistics businesses can use different systems and technologies, from manual processes to automated
distribution or warehouse management systems. This difference makes integration and information sharing
complex, requiring a lot of effort to achieve compatibility.

4. Some recommendations for developing a smart logistics system in the Mekong Delta region

The Mekong Delta has great conditions and advantages to develop the logistics industry, contributing to
promoting the region's economic growth. However, it still has some challenges, which require effective
recommendations.

Regarding policy: Continue to build and perfect the strategy for developing the logistics industry throughout
the region, focusing on building the goals of developing smart logistics, green logistics, and digital
transformation in logistics. In addition, there needs to be specific solutions to perfect the smart logistics
system to the specific conditions of the region. Strengthen the connection and cooperation between state
agencies, organizations, and businesses, including associations and organizations in the Information
Technology and Logistics industries, to create synchronous efficiency in digital transformation efforts
overview.

On the enterprises side: It is necessary to recognize the importance of digital transformation activities in
production and business activities, contributing to improving the operational capabilities of the smart
logistics system of the entire region. Determining financial resources to invest in technology to improve

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connectivity, save costs, and improve business efficiency is a legitimate investment source, helping to
enhance the brand image and competitiveness of the enterprise.

Human resource training: Educational institutions need to train specialized, high-quality human resources
to meet the needs of agencies and businesses. Specifically, businesses operating in logistics need to have a
specialized information technology department to be able to absorb and deploy new and advanced
technologies in the world. Educational institutions need to update knowledge, new content, and new
technology to meet the needs of society. Improve practical ability and use modern software and technology
to complete work after graduation.

Strengthen links between agencies and businesses in the industry: Relevant parties need to share and
cooperate during operations and make full use of each other's existing resources to improve service quality,
save costs, and increase efficiency. At the same time, it is necessary to exchange experiences with each
other about digital transformation and the application of modern technologies in logistics activities. All
units cooperate and associate with each other in the spirit of mutual benefit, achieving the common goals
of the industry. This will contribute to promoting the growing development of the logistics industry in the
Mekong Delta region.

5. Conclusion

Technologies such as the Internet of Things (IoT), Cloud Computing, Big Data, and Artificial Intelligence
are mentioned in smart logistics which help improve quality, reduce costs, and enhance competitiveness for
logistics businesses. However, applying technologies in smart logistics systems is not an easy mission. It
requires business to overcome obstacles and difficulties. In particular, the Mekong Delta region is one of
the key economic regions of the country, with much development potential for the logistics industry.
Although the region enjoys many policies and receives attention from the State and Government, it also
faces many challenges, such as the scale of businesses, human resource level, financial problems, and
cooperation when developing smart logistics. Therefore, the policies need to be addressed, the human
resources should be trained professionally, and the related parties need to cooperate closer to improve the
operation. These recommendations will help the logistics industry in the Mekong Delta region increasingly
develop. And it will contribute to the overall result of the country.

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