The most unlikely innovator in Vietnam: the post office

From warehouse sorting robots to delivery drones, Viettel Post is pinning its hopes on tech as the salve to an inefficient logistics sector.

On Christmas Eve in 2024, a warehouse in suburban Hanoi kept pace with the festive season frenzy. Thousands of packages intended for Shopee and TikTok Shop customers were off-loaded, sorted, and dispatched to an unceasing rhythm. On the warehouse floor, however, there were barely any people in sight. Instead, about 200 beetle-shaped robots whirred across the facility, moving concave trays loaded with packages.

Gliding at two meters per second, the robots passed under a scanner that read the QR codes affixed to the packages and guided them to delivery bags for their respective provinces.

The robots, called automated guided vehicles (AGV), were first unveiled by Viettel Post — a postal and courier service company owned by Vietnam’s Ministry of National Defence — in January 2024.

The machines run on software “designed entirely by Viettel Post,” Bui Quang Trung, the 26-year-old head of operations at the organization’s technology department, told Rest of World. The robots don’t make mistakes, he said. “Only occasionally, there would be a mechanical error,” Trung added, referring to instances in which the robots malfunctioned because of minor problems with their hardware, such as a wheel that was not working properly.

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  Viettel Post

Viettel Post’s robots were developed by a team of 11 engineers, some of whom had won domestic and international robotics competitions.

The robots are part of Viettel Post’s efforts to reap the dividends of the online shopping boom in Vietnam, one of the fastest-growing e-commerce markets in Southeast Asia. In the Hanoi warehouse, the introduction of the robots and other warehousing technology has helped Viettel Post shorten delivery times by 8–10 hours, grow output by 3.5 times, and increase processing capacity for the “entire system” to about 4 million parcels a day, which roughly amounts to meeting 50% of Vietnam’s e-commerce capacity, a company spokesperson told Rest of World.

Viettel Post is now eyeing foreign markets, such as Cambodia and Myanmar, for its robots. “AGV technology is modern and popular,” Trung said. “It is the trend of logistics companies now.”

The Vietnamese logistics sector has grown between 14% and 16% to about $40 billion annually in recent years, according to the industry body Vietnam Logistics Business Association. But the fragmented industry is notoriously inefficient. Vietnam ranks 43rd in the World Bank’s logistics performance index, lumbering behind regional peers Singapore, Malaysia, and Thailand. By some estimates, logistics costs currently account for at least 16%–17% of the country’s GDP, almost double the proportion that Singapore spends.

Viettel Post dominates Vietnam’s logistics sector with a market share of about 17%, according to a 2023 report by research firm VietData. But it has to contend with the other state-owned postal enterprise, Vietnam Post, as well as homegrown app Be and foreign private players including J&T Express, Best Express, Shopee’s SPX, and Grab.

“That brings pressure to a lot of logistics companies to think about how they try to capture that market,” Hung Nguyen, who teaches logistics and supply chain management at RMIT University in Hanoi, told Rest of World. For state-owned companies such as Viettel Post, it is also a “political mission,” he said. “How do we integrate [the logistics sector] to compete with international ones like China?”

Unlike China’s centralized logistics infrastructure, consolidation between sellers, e-commerce platforms, and logistics companies in Vietnam remains weak, Nguyen Xuan Hung, head of logistics for e-commerce at the Vietnam Logistics Business Association, told Rest of World.

“Vietnam has too many small-scale sellers, making the sorting center’s job difficult,” he said. Since some vendors outsource packaging and delivery services, while others manage on their own, fulfillment centers without a sizable client base struggle to automate.

To complicate matters further, Vietnamese e-commerce buyers prefer cash on delivery, and delivery workers often have to make multiple trips to locate the recipients. “So logistics companies have one more task, that is payment collection,” said Hung from the logistics association.

In this climate, Viettel Post and Vietnam Post have an inherent advantage: their extensive networks. Their existing scale allows for automation, said Hung from RMIT. In February last year, Vietnam’s deputy minister of information and communications, Phan Tam, directed major postal companies to expand their coverage for e-commerce through tech-focused solutions and shared infrastructure.

Viettel Post has deployed 10 teams, each dedicated to a stage of the logistics chain — such as warehousing, transportation, customs clearance, and last-mile deliveries — to build automated systems that can “optimize the movement of goods,” the company spokesperson told Rest of World.

Viettel Post’s robots were developed by one such team that was set up in 2023. It comprised 11 engineers, some of whom had won domestic and international robotics competitions.

The engineers began their work with a trip to China, where they met peers from leading logistics companies including Alibaba’s Cainiao and Yunda Express, and Libiao, which specializes in logistics automation. They studied the models used by China’s national postal service and e-commerce giant Amazon. Back in Vietnam, the team purchased robots made by Viettel Post’s competitors to understand how they functioned.

The gambit paid off. According to Trung, once the robots arrived, workers no longer had to dash around the warehouse to separate round packages, which tended to fall off fast-moving conveyor belts. Productivity increased significantly, he told Rest of World.

According to a Viettel Post press release, one of its clients, Yody — a Vietnamese fashion retailer that has 300 stores across the country — cut labor costs by half after it purchased 48 AGV robots and warehouse management software.

The flip side to the productivity gains, however, is the “risk of job losses, requirements for new skills, and mental pressure on workers,” Pham Trung Thanh, director of the Institute of Creative and Digital Transformation, which conducts training and consultations on digitalization projects in Vietnam, told Rest of World.

Over the past year, Viettel Post has tested delivery drones for access to remote areas, cut off by natural disasters. Apart from AGV robots, it has introduced robotic systems with flexible arms to automate warehouse inspection, sorting, and handling of material. Viettel Post has also installed 1,000 smart boxes — multicompartment digital lockers that store packages for unavailable recipients — within buildings in Hanoi and Ho Chi Minh City, the company spokesperson told Rest of World.

In January, Viettel Post introduced its latest robots to its warehouse in Ho Chi Minh City — even the hardware for them was manufactured in-house. “Previously, using imported AGV robots was a popular choice for Vietnamese businesses,” Viettel Post’s spokesperson said. Now, the company is developing its own.

Viettel Post’s self-reliant approach is not necessarily cost- or time-efficient. This is why logistics companies in Vietnam prefer to import available tech, said Hung from the logistics association.

The state-owned enterprise’s focus on research and development is likely motivated by ambitions that surpass the e-commerce market, Hung from RMIT told Rest of World. The “main job” of Viettel Post’s parent company, Viettel, “is still the military,” he said. Logistics automation, according to him, offers an opportunity for tech ownership, and Viettel seeks to lead by example. This is aligned with the state’s aspirations to transition Vietnam from low-cost manufacturing and assembly to high-tech sectors, such as artificial intelligence and semiconductors.

Last December, Viettel Post inaugurated Vietnam’s largest logistics park, built across nearly 144 hectares at the cost of $130 million.

The park will be equipped with a standardized database, directly connected to Vietnam and China customs data, to reduce the time taken for customs clearances for cross-border products to under 24 hours, instead of the current four to five days, the spokesperson said. The company is also establishing a subsidiary in China’s Guangxi province to expand its cross-border logistics system.

Viettel Post believes technology will lay the foundation for a transformation in the national logistics infrastructure, the company spokesperson said. With these initiatives, the company is seeking to “turn Vietnam into a regional logistics hub.”