Local logistics firms are facing fierce competition since the Vietnamese government allowed foreign investors to set up wholly-invested firms in the industry starting January.

Foreign investors used to be allowed to own a maximum stake of 49 percent in such companies, reported Vietnam News Brief.

The country’s preparation for the fully-opened logistics market was slow because leaders had underestimated the role of logistics in the economy, said Dang Dinh Dao, a senior logistics expert and director at the National Economics University’s Institute for Economics and Development Studies.

Vietnam has not built any national plans to develop the sector, Dao said, adding that over 1,000 local companies in the logistics industry, fourfold the number of their foreign competitors, now hold less than a quarter of the market.

Major global names in logistics such as Singapore-based APL Logistics, Germany’s Hapag-Lloyd and Japanese shipping firm NYK Line all have a presence in Vietnam.

The local market would likely see even more dominance by foreign firms in 2014, said Dao.

Do Xuan Quang, chairman of the Vietnam Logistics Business Association, expected more competition from foreign firms to prompt local businesses to adapt. Local firms should upgrade their operation or cooperate with other firms in terms of capital and IT infrastructure to cover specific areas in logistics, he added.