Gov’t aims to boost logistics by cutting costs

Logistics costs are very high in Vietnam, at around 20.8% of GDP, two to four times the rate in developed countries.

In neighbouring Thailand, it is 16%, while in developed nations it is only 9–14%.

The major reason for the high transport costs is that most goods are carried by road, which is more expensive than railway or waterway.

In recent times the Ministry of Transport and other related authorities have tried to improve waterway and railway transportation, but met with limited success.

“Waterway transportation is quite developed but storage facilities are poor and it takes a long time to load and deliver,” Bui Van Quang, Chairman of the Ho Chi Minh City Goods Transportation Association, told Sai Gon Giai Phong (Liberated Sai Gon) newspaper.

His barge has to wait for 25 days to load and unload at ports because they are small and their equipment and facilities are inadequate.

“This is too long a time to load and costs a lot and so logistics companies cannot wait.”

Rail transport is limited because stations are small and have no space to store goods, he said.

This leaves roads for transporting most of the goods around the country, he said.

Despite the fact that the road infrastructure has received huge investments recently, the highway network does not meet demand, he said.

“Costs of road maintenance and building roads and bridges and parking fees have increased relentlessly, pushing up the cost of transport.”

HCM City’s ports suffer from a serious lack of parking space for trucks, and transporters have to pay VND50-100 million (US$2,150 – 4,300) per square metre per month for parking.

Besides, more than 20-30% of trucks have to go to or return from ports empty due to lack of dynamic links between transporters and customers.

At the end of 2015, the Ministry of Transport had licensed private company Vinatrucking as an intermediary connecting transport enterprises with customers.

But most transport companies joining the electronic transportation exchange are foreign companies because only they can afford the cost of joining it.

To make logistics one of the key sectors, the Government has to do several things, Quan said.

“Ports need to enlarge their parking and storage space and ports and trains must speed up loading and unloading of goods.”

Pham Thi Bich Hue, Chairwoman of the Long An International Port, said the master plan for logistics development is poorly drawn up.

“Logistics infrastructure is poor and distances from depots and Inland Container Depots (ICDs) to ports are too great, which increases the cost and time taken for transportation.

“Related authorities must amend the logistics master plan to create favourable conditions for enterprises to compete.”

According to recent statistics, the total logistics area in Vietnam is only around 280ha.

Of this, the south accounts for 265ha with the Cat Lai Logistics Centre in HCM City alone making up 250ha.

Deputy Minister of the Transport Nguyen Van Cong said: “Some localities have adjusted their master plan for transport development, including logistics. It suggests shutting down several ports and building others.”

The ministry is working together with localities to review all transport master plans to create the most favourable conditions to develop transportation, he said.

“Many localities have strongly invested in transport infrastructure but port infrastructure needs more attention.”