Vietnam’s logistics costs remain high as they represent 20.8% of gross domestic product (GDP) and are double the world’s average, with transport expenditures making up the largest proportion and thus hurting the competitiveness of domestic products.

Vietnam’s logistics costs remain high, affecting the competitiveness of domestic goods

At a conference on logistics development in the transportation sector in the Mekong Delta held in Dong Thap Province on December 18, Le Duy Hiep, chairman of the Vietnam Logistics Association (VLA), said the logistics sector has grown at an annual rate of 15-16% and has been ranked 64th in the logistics performance index.

However, high transport costs are the main culprit, followed by cargo handling and storage costs.

Particularly, respective transport costs of seafood, textiles and garments, rice and fruits are 51%, 61%, 58% and 61%.

High logistics costs are ascribable to service charges at seaports, collected by foreign shipping lines, underdeveloped seaport infrastructure and a maze of fees.

In addition, fuels make up nearly 30% of transport costs while toll fees at build-operate-transfer (BOT) road toll stations across the country account for 15% and even 30% on the Haiphong-Hanoi route.

Hiep said road transport is much expensive than seaborne transport. For example, it costs VND30-35 million and VND37 million respectively to transport a 20-feet container and a 40-feet container by road from Haiphong to HCMC while the sea transport cost is only VND5.2 million and VND6.7 million.

Hiep proposed developing waterway transport to cut transport costs and logistics costs as a whole.

Traffic congestion at seaports and in many parts of HCMC, especially in Cat Lai Port, also plays a part in high logistics costs, Hiep added.

Fees imposed on exports also send transport costs higher. In Haiphong City, exporters must pay a VND250,000 fee for each 200-feet container.

The time-consuming customs clearance procedure is also a factor for exorbitant logistics costs. The country annually spends 28.6 million working days, equivalent to VND14.3 trillion, on inspections of goods, with those subject to at least two separate inspections making up 58%, Hiep said.

Minister of Transport Nguyen Van The said high logistics costs have eroded the competitiveness of Vietnamese goods and eaten into farmers’ already-low incomes. The ministry would work towards improving logistics infrastructure and reducing intermediate costs.

Hiep said relevant ministries, agencies and the association should effectively carry out the Prime Minister’s Decision 200/QD-TTg on action plans to raise the competitiveness of the logistics services. Especially, the Government should make road toll fees at BOT stations transparent and low.

The country should improve policies, streamline administrative procedures, develop infrastructure, warehouses and product distribution centers, and promote multimodal transport and training courses, The said.

SGT