High logistics costs trigger declined export competitiveness

Lack of large logistics enterprises

Tran Thanh Hai, Deputy Director of the Agency of Foreign Trade under the Ministry of Industry and Trade, said Vietnam ranks 43rd among 155 countries and territories in logistics performance index (LPI) according to the World Bank and 11th among 50 emerging logistics markets according to the Agility, while reaching a growth rate of 14-16 percent with about US$40-42 billion per year according to the Vietnam Logistics Business Association (VLA).

Statistics from the General Statistics Office of Vietnam show that 43,568 enterprises operate in the warehousing and transportation sector, along with 5,000 third-party logistics (3PL) service providers. However, up to 95 percent are small- and medium-sized enterprises.

Hai said the majority of Vietnam’s logistics enterprises operate within the domestic market, while the number of subsidiaries, affiliated companies, and representative offices abroad remains limited. On the other hand, many foreign businesses come to Vietnam to establish offices, branches, and even 100-percent foreign-owned companies in the logistics sector. Therefore, it is necessary to promote the search for foreign markets, starting with neighboring countries such as Laos, Cambodia, China and Thailand, which are all major trading partners of Vietnam.

In addition, logistics infrastructure connecting with commercial and information technology infrastructure in Vietnam and the region is not yet well developed. Currently, there is a lack of large enterprises and pioneering businesses in the logistics sector to create trends and orientations for its development.

Improving infrastructure

Tran Hoang Yen, Deputy Chief Representative of the Vietnam Association of Seafood Exporters and Producers (VASEP), said the fishery sector is lacking cold storage warehouses, especially during peak seasons or when encountering market difficulties. Most seafood businesses have to invest in cold storage warehouses, but the capacity is only sufficient for their own demand.

Yen also said transportation relies mainly on road, while railway and waterway routes remain limited, adding that Vietnamese seafood businesses are at a disadvantage compared to foreign companies. For example, the selling price of Vietnamese shrimp is US$2 per kg higher than that of India and US$4 per kg higher than that of Ecuador due to high logistics costs.

Associations and businesses have made proposals and recommendations to improve the current logistics system. Regarding the logistics system for seafood exports, Yen suggested that the government establish mechanisms for land and incentives for medium- and long-term capital sources to encourage domestic enterprises to invest more in cold storage warehouses. In addition, it is crucial to enhance the capabilities of Vietnamese maritime transport companies and increase investment in logistics infrastructure for the fishery sector.

Nguyen Duyen