Lowering logistics costs key to competitiveness

Lowering logistics costs is key to increasing the competitiveness of Vietnam’s export products and the whole economy.

The latest figures of the Vietnam Logistics Association revealed that logistics costs were equivalent to around 20% to 22% of the country’s gross domestic product, much higher than Thailand (19%), China (18%), Malaysia (13%) and nearly three times higher than the United States and Singapore (8%).

The association pointed out that about 4,000 enterprises were providing logistics services in Vietnam, 97% of which were micro, small and medium-sized enterprises.

However, service quality, capital, information technology application, digital transformation and human resources remained limited.

Tran Duc Nghia from the association said that logistics costs were pushed up by high road transport costs, seaport surcharges and limitations on seaport infrastructure.

Logistics services in Vietnam were largely dependent on road transportation, which accounted for nearly 80%, while railway, waterway and airway made up for the rest altogether.

According to the association, about 90% of companies operating in logistics in the country were domestic but held a modest market share of 30% while foreign ones still had a dominant share.

Nghia said that in the short term, the logistics industry needed to strengthen the ability to adapt to risks in the supply chain and accelerate the process of digital transformation and applying information technology.

In the long term, it is necessary to improve the legal framework to create favourable conditions for the development of the logistics industry while promoting multi-model and cross-border transport and low-cost transport.

Nghia urged Vietnamese firms to participate in the global value chain to gain experience, adding that Vietnam had significant advantages in promoting production, export and logistics services.