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Transport costs in Vietnam highest in the world

VietNamNet Bridge - Transport and warehouse costs in Vietnam account for 21 percent of product value.
VietNamNet Bridge - Transport and warehouse costs in Vietnam account for 21 percent of product value.

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Citing reports by international institutions, Nguyen Hoa Binh, chair of Peacesoft Group, said in the first quarter of 2014, the expenses on freight & forwarding, warehousing and logistics in Vietnam totalled $25 billion, a heavy burden on the economy as it accounted for 21 percent of GDP (gross domestic product). 

The figure was much higher than that in the US (10 percent), Singapore (8 percent) and the world (15 percent). If Vietnam can cut these expenses to the world’s average level of 15 percent, e-commerce traders would see 6 percent profit more, according to Binh.

Binh said that transport and warehousing, two of the four links in e-commerce (buy, sale, warehousing and transport) make up 50 percent of the e-commerce chain. 

Peacesoft recently launched BoxMe, a transport and warehousing service, which he said would allow businesses to increase their profits by twofold as it can help cut the cost by a half.

Nguyen Ngoc Dung, the Vietnam E-commerce Association’s southern office’s chief representative, noted that transport and warehousing were the two important links in e-commerce. 

He said online sellers previously thought that they would succeed if they focused on building up their websites to lure more buyers. However, they have realized that transport and warehouse were also very important links in e-commerce.

Dung said if BoxMe can develop warehouses in 63 provinces and cities as it promised, this would reduce buyers’ costs and time.

More than 90 percent of online transactions are implemented under the mode of COD (cash on delivery). 

Therefore, there is a high possibility that buyers will refuse to receive products if the products are not as advertised, or if the transport & warehouse services are unprofessional. 

A report shows that the average value of an online purchase order is VND500,000. 

Meanwhile, the transport cost alone is VND38,000. Besides, sellers also have to bear other kinds of expenses, which account for about 25 percent of selling prices. 

In most cases, a profit of 40 percent of selling prices would be enough to satisfy traders. 

Therefore, cutting down transport and warehouse cost is what businesses all try to do. An analyst quoted The Financial Times as saying that one of the most important reasons behind the high profits that Alibaba makes is the very cheap delivery cost in China.

Buu Dien

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