Mail and logistics company TNT launched a new international and domestic operations centre in Vietnam in August as part of a $128m investment plan over the next five years to support anticipated growth in the region.

TNT has facilities in all three of Vietnam’s main economic centres – Ho Chi Min City, Da Nang and Hanoi – as well as 20 smaller centres. But the company’s investment focus has shifted to Hanoi because of its strategic location and proximity to China, says TNT’s head of Vietnam, Mark Van Den Assem. “Until now, the economic centre has been in Ho Chi Min City, but Hanoi is catching up significantly,” he says. The new facility represents an $11.5bn investment, with further planned investments focusing on sales, marketing and support functions.

Following a trend

Mr Van Den Assem says that the reason behind this growth is a trend among large international hi-tech, healthcare, and equipment and machinery companies to move operations from southern China into northern Vietnam. “Infrastructure in the wider sense, such as cheap labour and government support, is still available in Vietnam whereas the Chinese authorities, in an effort to cool the rapidly growing economy, are starting to withdraw some of the preferences they showed international companies,” he says.

The trend for companies moving operations from China is further compounded by global interest from foreign investors since Vietnam’s accession to the World Trade Organisation in January 2007 – attracted by the country’s average 7.5% annual growth rate and young, motivated workforce.

Trans-loading hub

The 1200-square-metre facility will increase TNT’s capacity in Hanoi fourfold and employ about 90 full-time staff. The centre will form a hub for the trans-loading of trucks to provide effective integration between the firm’s air and road networks. Designed to handle heavy freight, the new facility will consolidate shipments through Vietnam and will process them before they make their way northwards to China and southwards to Singapore by road for subsequent airlift to Europe and China, respectively. “We are applying the same model of air and road combinations in south-east Asia as we have in Europe, and the centre in Hanoi is a perfect example of executing that strategy and is part of the whole Asian road/air combination we are building,” says Mr Van Den Assem.

Growing network

The company has been present in Vietnam for more than 10 years, establishing a joint venture with local partner Vietrans in 1997, which has since seen the business grow throughout 23 Vietnamese cities and provinces. “We were obligated to work with a local partner– otherwise we could not enter Vietnam because of foreign investor laws – but the benefits are that they have a local network and knowledge,” says Mr Van Den Assem.

This local knowledge helped TNT to address the biggest challenge – which Mr Van Den Assem says was selecting the My Dinh, Tu Liem district of Hanoi. The company needed to select from a number of government-bonded warehouse sites, which combine sorting with an official customs function.

Although the facility was custom-built, TNT does not own the centre because of restrictions on foreign ownership of real estate. “Even though the rules are changing now, I believe that it is better to work with a landlord because they are experts in real estate; we are experts in express business,” says Mr Van Den Assem.

COMPANY PROFILE

TNT

Head office

Hoofddorp City, Netherlands

2007 turnover

$13.37bn

Leading industry sector

Transportation, logistics and distribution

Employees

161,500

Global operations

200 countries