Has the cost of logistics services decreased?

	Leader of Import and Export Duty Department responds to regulation of adding CIC fee, Cleaning Container fee and D/O into Customs valuation
	Logistics enterprises must stand on their own feet
	US company forms $200mln logistics joint-venture with local firm

Transportation costs account for more than half of logistics services costs. Photo: T.H

Transparent to reduce costs

Mr. Le Duy Hiep, the Chairman of the Vietnam Association of Logistics Services, said that logistics costs accounted for 51% to 59% of the cost of logistics, including domestic transport and international transport.

For domestic transport cost, there will be specific solutions to reduce this cost, which includes investment in infrastructure, expansion in freight routes, reduction in traffic jams to increase turnaround rates.

Mr. Nguyen Duy Minh, the General Secretary of the Logistics Services Association, said that logistics services were spreading in many areas, including warehouses, freight forwarding, transportation. Vietnamese logistics companies are very professional in international transport and have a wide international network to serve businesses.

According to statistics, Vietnam currently has about 3,000 businesses operating logistics services. There are 369 enterprises belonging to the Vietnam Association of Logistics Services. Logistics service of Vietnam is ranked 64 out of 160 countries (Vietnam is ranked No. 4 in ASEAN).

Regarding costs, according to Mr. Minh, recently there has been a lot of information about Vietnam’s logistics costs being high, causing investors and businesses confusion when using the services.

According to data released by the World Bank's representative in Vietnam, the cost of logistics calculated from 2010 was 20.9% of GDP, which was considered to be high compared to other countries .

This cost is calculated based on the supply chain of 12 industries from electronics, fisheries, footwear, garment and etc. In which, the highest cost is transportation cost, accounting for 51%; followed by cargo handling cost (23%) and storage cost (20%), with the rest being other types of expenses.

According to calculations of the Vietnam Logistics Services Association, the average cost of logistics services has decreased compared to 2010, currently at 14.5-19.2% (16.8% on average). The association expects the cost to be clearer, because many businesses are very concerned about the cost and worry that it is high.

According to Mr. Le Duy Hiep, it is expected that at the end of this year, the Vietnam Logistics Services Association will officially announce relevant documents on the status of logistics services in Vietnam with official figures on current status.

Non-billable charges are also included

Some businesses said that logistics costs were lower than before, but need to be carefully calculated to get the most accurate figures.

Mr. Ngo Tan Ba, Head of Logistics Services Division of Saigon Shipping Joint Stock Company, said that transportation costs were determined to account for more than 50% of logistics costs, but in fact, transportation costs were not high. Some businesses included all non-billable charges with transportation costs, which made the transportation costs increase.

Moreover, due to unfavourable traffic conditions, vehicles which are not used much are also counted to increase transportation costs.

From this fact, Mr. Ba suggested that the policy mechanism should be strict and clear. Accordingly, commissions and expenses without invoices should be separated from transportation costs, because the actual cost of transport is very low.

Given the statistical cost of road transport, representatives the Vietnam Logistics Services Association also said that with the competition of 3,000 enterprises, transportation cost of each unit would not be high. Currently, unofficial costs account for about 5% of logistics costs.

Logistics Vietnam: Great opportunities but difficult to develop VCN – With further economic integration, Vietnam has great opportunities to develop. However, challenges together with existing ...

In addition, some delegates also said that the cost of logistics services were high due to Customs clearance of goods and other procedures. In particular, the time for Customs clearance is only 28%, the remaining 72% from the specialized management agencies. To reduce the cost of logistics services, it is necessary to reduce the amount of time from the management of the specialized agencies. It is recommended to improve the efficiency of the national Single Window as well as transparency of the process of import and export procedures.