The rapid growth of South-South trade is creating new opportunities for Vietnam to strengthen trade links with India, the Middle East and Africa. However, unlocking these markets requires reliable logistics corridors that integrate maritime transport, transshipment hubs, customs procedures, cross-border payments and domestic distribution networks.
South-South Trade Growth Expands Logistics Opportunities
According to a mid-2026 update from the United Nations Conference on Trade and Development (UNCTAD), South-South merchandise trade — trade between developing economies — reached approximately US$7.2 trillion in 2025, up 17.2% from the previous year. Its share of global merchandise trade rose to 28%, compared with 11% in 2000.
Developing economies now account for 46% of global merchandise exports, highlighting their growing importance in international trade.
However, growth remains uneven across regions. East Asia continues to lead, supported by dense regional production networks and well-established supply chains. According to UNCTAD, South-South trade declined in the first quarter of 2026 when East Asia was excluded from the figures.
In Africa, more than half of exports go to developing markets, yet intra-African trade accounts for only around 16% of total exports. In 2025, primary commodities, mainly raw materials and minimally processed products, still represented 76.7% of Africa’s exports.
These figures show that rising trade volumes do not automatically translate into more efficient logistics corridors. To ensure reliable cargo flows, businesses must assess shipping frequency, transshipment times, customs efficiency, domestic transport capacity, exchange-rate risks and access to trade finance.
A market with strong import demand but weak inland connections, lengthy cargo dwell times or complicated border procedures may incur higher overall logistics costs than a more distant market supported by a well-functioning transport corridor.
New Logistics Corridors Require Integrated Infrastructure, Customs and Finance
Sustainable South-South logistics corridors depend on three interconnected foundations: transport infrastructure, trade institutions and financial systems.
Infrastructure includes seaports, shipping routes, airports, railways, roads and warehousing facilities. Institutional factors include free trade agreements, customs procedures, rules of origin and product standards. Meanwhile, banks, trade finance, insurance and payment arrangements help maintain cross-border capital flows.
Without any one of these elements, shipments may remain sporadic rather than developing into regular, scalable transport routes.
The United Arab Emirates (UAE) illustrates how a transshipment hub can play a role beyond the size of its domestic market. The Vietnam-UAE Comprehensive Economic Partnership Agreement (CEPA), which entered into force on February 3, 2026, provides market access for Vietnamese goods across 94.9% of tariff lines and eliminates tariffs immediately on 74.2% of tariff lines.
The UAE is considered a gateway for Vietnamese businesses seeking to reach markets across the Middle East and Africa. Its advantages extend beyond tariff preferences to include bonded warehouses, free trade zones, regional distribution networks and re-export operations.
India, meanwhile, offers opportunities to connect consumer markets directly with manufacturing activities. Bilateral trade between Vietnam and India reached a record US$16.46 billion in 2025, up 10.5%. In the first two months of 2026, trade exceeded US$3 billion, representing a 24% increase.
The growing share of computers, electronics, mobile phones, machinery and industrial goods is increasing demand for reliable transport capacity, on-time delivery, cargo security and after-sales logistics services.
In Africa, reaching a seaport does not necessarily mean reaching the end market. Inland transport distances, customs clearance, payment conditions and security risks can all determine whether a shipment is commercially viable.
Tariff preferences can reduce trade costs, but their benefits may be offset by port congestion, lengthy border procedures or high financing costs. Efficient logistics systems are therefore essential to turning trade agreements into tangible business advantages.
Vietnam Expands Logistics Links from ASEAN to India, the UAE and Africa
With relatively well-developed shipping, feeder services and air cargo networks across East and Southeast Asia, Vietnam can use the Association of Southeast Asian Nations (ASEAN) as a foundation for expanding connections with other developing economies.
Priority markets include India, the UAE, Saudi Arabia and East African countries with growing import demand. Each market, however, requires a tailored transport and distribution strategy rather than a one-size-fits-all logistics model.
India: Building Long-Term Strategic Shipping Routes
With bilateral trade exceeding US$16 billion in 2025, the Vietnam-India trade route has the potential to develop into a strategic logistics corridor.
Businesses can establish regular cargo consolidation schedules, negotiate long-term shipping capacity, maintain spare-parts inventories and monitor delivery reliability for individual port-to-port connections.
These measures can improve cost predictability, strengthen supply continuity and reduce exposure to fluctuations in spot freight rates.
UAE: Using Bonded Warehouses to Support Regional Distribution
Vietnam-UAE trade exceeded US$6.5 billion in 2025. Together with the opportunities created by CEPA, this growth allows businesses to explore bonded warehouses and facilities in free trade zones as regional distribution bases.
Such arrangements can support order splitting, re-export operations and the use of shared inventories to serve multiple destinations. Logistics management must therefore extend beyond port-to-port transportation to include inventory planning, regional distribution and order coordination.
Africa: Selecting Corridors Based on Total Logistics Costs
In Africa, the choice of an entry port should be based on overall operational efficiency. A port with streamlined customs clearance, capable local agents, reliable road transport and better security may offer lower total logistics costs than a closer port where cargo frequently experiences long delays.
Vietnamese logistics providers could establish dedicated support services for South-South trade across several regional clusters, including ASEAN-India, the Gulf-Middle East and Africa.
Integrated services could cover trade documentation, rules-of-origin compliance under relevant agreements, cargo consolidation, insurance, transport coordination and shipment monitoring at destination.
Data-Driven Logistics Corridor Management Becomes Essential
One of the key requirements for developing South-South logistics corridors is shifting from managing individual shipments to overseeing entire transport routes through data-driven systems.
Businesses need to monitor shipping schedule reliability, cargo dwell times at transshipment hubs, customs clearance times, exchange-rate fluctuations, payment issues, complaint frequency and inland delivery times.
These indicators provide a basis for comparing transport options, selecting transshipment hubs and adjusting distribution plans in response to changing conditions.
In 2026, UNCTAD continued to warn about geopolitical tensions, disruptions around the Strait of Hormuz and financial pressures. These risks highlight why market diversification must go hand in hand with diversification of shipping routes, storage locations and payment arrangements.
Simply shifting dependence from one market to a new transshipment hub may leave businesses exposed to similar disruptions.
In the long term, South-South logistics corridors can deliver sustainable benefits only when they support stable cargo volumes, timely data exchange and customs processing, uninterrupted financing and reliable domestic distribution.
Strengthening Logistics Capacity to Capture South-South Trade Opportunities
The expansion of South-South trade is creating new opportunities for Vietnam to diversify export markets, broaden its international partnerships and participate more deeply in global supply chains.
However, rising trade volumes must be matched by stronger capabilities in transportation, transshipment, distribution and cross-border payments. Businesses should assess performance based on total logistics costs, delivery times and operational reliability rather than focusing solely on individual freight rates.
Proactively developing logistics corridors linking Vietnam with India, the UAE and Africa, while integrating data into transport management, will help businesses respond more effectively to market volatility.
Building logistics capacity early is essential for Vietnam to turn South-South trade growth into a tangible competitive advantage, supporting market diversification and the development of more resilient and sustainable supply chains.
Source:
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