Source: baotintuc.vn
Vietnam attracts investment in developing logistics infrastructure. Photo: TTXVN
Logistics costs eat away at profits
According to statistics from processing and exporting enterprises, currently transportation costs over Vietnam’s total logistics costs are at a very high level, up to more than 60%, about twice as high as other countries. This is a very large number.
As an agricultural export enterprise that has used air transport from the beginning, Mr. Nguyen Dinh Tung, Chairman of the Board of Directors of Vina T&T Group, said: Logistics accounts for more than 30% of the enterprise’s revenue, not including other services. Cost of importing fruit, irradiation… Therefore, the business has very little profit left. Furthermore, many agricultural export enterprises depend on foreign airlines, and prices vary depending on the airlines. As for transportation by rail, road, waterway… fruits are easily damaged, the already low competitiveness is even lower.
With logistics costs continuously increasing and showing no signs of turning back, it has caused difficulties for businesses processing and exporting agricultural products. Currently, Vietnam exports many types of agricultural products abroad and businesses have also carefully calculated the cost problem to be able to compete in the fierce international market. However, even reducing costs cannot impact shipping costs because Vietnam is still heavily dependent on foreign shipping companies.
Ms. Le Hang – Communications Director of the Vietnam Association of Seafood Exporters and Producers (Vasep) said that the current Red Sea tensions have once again revealed the shortage of Vietnam’s logistics industry, when shipping lines Foreign countries dominate, monopolize and determine prices as well as decide to increase freight rates along with other transport services.
For example, recently, the Vietnam Association of Seafood Exporters and Producers received information from seafood businesses showing that in less than 1 month, sea freight rates to routes such as Canada, the US, and Europe have increased. from 80%, even up to 300% compared to December 2023 due to the story in the Red Sea region. And transport routes have to be redirected, making routes longer and taking longer, increasing costs.
According to Mr. Ho Quoc Luc, Chairman of the Board of Directors of Sao Ta Food Company, logistics costs have fluctuated strongly in the past 4 years. In the past, sea freight rates to the US went from 3,000 USD/container before the COVID-19 epidemic, now up to 13,000 – 14,000 USD/container to the West Coast, while to the East Coast it was 17,000 USD/container… There was a time when it increased. nearly 25,000 USD/container. This fluctuation will lead to a situation where many businesses only choose to export to markets such as China, Korea, and Japan to cut costs.
As a long-time rice exporter to the Chinese market, current logistics costs have also impacted the business’s profits, Mr. Nguyen Quang Hoa, Director of Duong Vu Co., Ltd. said, currently the company If you want to export, you have to carefully calculate costs that cannot be cut, so ensuring export contracts and trying to break even is a blessing for businesses to overcome current rice market fluctuations.
Proposing proactive development directions
Container warehouse at Cat Lai Port, Thu Duc City, Ho Chi Minh City. Photo: TTXVN
In addition to transportation problems, problems in the logistics chain such as cold storage and long-term storage are also currently obstacles for these products.
Mr. Tran Thanh Hai, Deputy Director of the Import-Export Department (Ministry of Industry and Trade) shared that the current Panama Canal is not only due to human impacts, but also due to the impact of the current dry climate. , ships passing through here also have to reduce their load, affecting the transport of import and export goods. Therefore, Vietnam is also calculating a temporary backup transportation plan for this route to bring goods to the US and Europe.
Experts in the logistics industry assess that Vietnam has great potential in export products, and also has great potential in developing logistics to serve the transportation of export goods. Mr. Elias Abraham, CEO of Zim Integrated Shipping Services Co., Ltd. (Ho Chi Minh City) commented that 15 years ago Vietnam did not have any service to bring goods to Europe and the US. However, currently according to statistics there are more than 200 routes to these areas. This is considered one of the commitments of shipping lines showing that Vietnam is a bright star in the logistics industry and the picture in the logistics industry still has brighter areas.
Besides, experts also believe that Vietnam still needs to develop a variety of logistics centers, not just focusing on one area or one province but also needing to diversify. At the same time, the trend of applying modern technology transformation in logistics needs to be promoted quickly to improve costs.
Mr. Edwin Chee, CEO of SLP Vietnam Co., Ltd. shared that SLP’s facilities are applying the most advanced technology, serving fashion brands, providing automation, robotics, and supply chains. full response. With only 3 – 5 people, we can operate an 8,000m2 facility, automation facilities, modern machinery…
In response to the assessments of logistics industry experts, Mr. Tran Duy Dong, Deputy Minister of Planning and Investment said: To improve the competitiveness of Vietnam’s logistics industry in the context of international economic integration and the The fourth industrial revolution needs to quickly improve policies and laws on logistics services. The state needs to improve logistics infrastructure, continue to review master plans and plans, and ensure the synchronization of transportation infrastructure and transportation services with the goal of developing the logistics service industry.
