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Vietnam needs large domestic shipping lines

The lack of domestic shipping firms has caused difficulties for export companies.

At a seminar on September 22 on the logistics industry and opportunities brought by the EU-Vietnam Free Trade Agreement (EVFTA), Ngo Chung Khanh, deputy director of the Multilateral Trade Policy Department under the Ministry of Industry and Trade (MOIT), said after two years of EVFTA, enterprises’ ability to exploit the trade preferences from the agreement has improved.

Exports to the EU in 2021 grew by 14 percent and in the first eight months of 2022 by 15 percent. 

According to Khanh, in 2021, the usage rate of preferential C/O (cerficiate of origin) was 14 percent, while the figure was nearly 15 percent in 2022.

However, Le Hoang Khanh Nhut, CEO of DaNang Rubber Company, pointed out that logistics costs are a very high expense item for enterprises when exporting products to the EU.

As Vietnam lacks its own shipping lines, its exports are controlled by foreign shipping firms, which causes difficulties for export companies.

“China is in lockdown because of its Zero-Covid strategy, so if we cannot seek empty containers we won’t be able to control the source of shipping firms, and thus won’t be able to control expenses,” Nhut explained.

Nhut suggested that Vietnam develop logistics centers at large ports to ensure a reasonable number of ships going in and out. 

Also, Vietnam also needs to develop shipping lines, he said.

Admitting that it is difficult to compete with foreign players in the logistics industry such as DKL and Maersk, Mai Tran Thuat from Supply Chain Solutions, Bee Logistics Group, said: “We are temporarily acting as agents, cooperating with large shipping lines and working as their subcontractors to increase our presence to European enterprises as well as get more jobs."

Tran Thanh Hai, deputy director of MOIT’s Import-Export Authority, said the EU is one of Vietnam’s traditional markets. After Vietnam signed an FTA with the EU, the volume of traded goods increased very sharply. These include products which require high transport volume such as textiles and garments, footwear and seafood products.

He said that, in bringing Vietnam goods to EU areas at reasonable costs and on time, logistics firms play a very important role.

In related news, a report released in 2021 by the Vietnam Logistics Association (VLA) showed that the industry’s growth rate in recent years was 14-16 percent and the value $40-42 billion a year.

Luong Bang

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