Input costs put pressure on transportation business
The top five costs for transportation businesses are fuel, tolls, informal costs, interest expenses and driver salaries. Photo: ST. |
Need to build a floor price framework
According to experts, there are many causes for the increasing freight rates of businesses. These include objective factors such as high gasoline prices (accounting for 45 percent of transportation costs) and some accompanying surcharges such as 10-20 percent for tolls, port service costs such as CFS fee (LCL), warehousing fee, container storage, container handling fee, terminal operation fee, container cleaning fee, and agency fee.Besides, the weak situation in transportation infrastructure happens in some areas, there are many overloaded and congested sections, which make vehicle traffic slower, and also wastes fuel, degrades vehiclesquickly.
Mr. Pham Dinh Thang, Director of Decam Transport and Services Co., Ltd, said that the principle of freight charge calculation is that if petrol price increases or decreases by 10 percent, then freight charge will increase by 3%-4%, respectively. Currently for each order, businesses often offer the overall price which includes all additional costs such as gasoline and tolls. Because the price of transportation service includes the price of gasoline, it is very easy to be passive, so businesses can not adjust the freight charges immediately when petrol price increases, Many units fall into the "dilemma" when increasing prices, it is easy to lose customers.If prices do not increase, they will suffer losses due to the pressure from petrol prices on input costs.
Many businesses have chosen overloading to reduce costs, but this also comes with endangering vehicles and affecting the safety of goods. This is an action to show the spirit of unfair competition in enterprises, unintentionally creating an unfair "war" in the the crowded transport market.
In order to reduce costs for transport businesses while ensuring healthy competition, transportation expert Bui Danh Lien said that for well-invested transport enterprises with a large number of vehicles, there is investment in personnel and management to improve service quality. Besides, it is necessary to put the floor price to apply the transport of goods into operation, to develop the price bracket of each mode of transport and to set criteria to ensure the connection between transport modes, avoiding the situation of massive investment and movement,so the new transport business has increased competition and initiative in prices.
Cooperation to connect
Another current situation makes the high cost of transport business, because most small-scale freight enterprises carry out intermediary transactions, causing many costs. The World Bank (WB) survey on strengthening Vietnam's road freight industry conducted a survey with 150 road transport companies and more than 1,400 drivers showing that the top five costs for transport businesses are fuel costs, tolls, informal costs, interest expenses and driver salaries.
A series of rising inputs has caused freight rates to increase, while the size of enterprises is still small and fragmented. The average number of trucks of each company is about five, and nearly 80 percent of the total truck volume nationwide is from five to 10 tons, which is also the cause of traffic congestion and increasing costs. By this calculation, small trucks are 75 percent less efficient than heavy trucks in terms of operating costs and greenhouse gas emissions.
In addition, the lack of a brokerage market in the country effectively connects existing transport services to the needs of potential customers. Therefore, the rate of non-truck trucks is up to 50 percent. This situation known as "unladen carriage", which has a direct impact on transportation costs. Moreover, the current use of technology to connect supply and demand is limited.
The volatility of the market results in transportation companies facing cost reductions to develop more comprehensively, it is the reduction that small transportation enterprises havelow investment costs. It is often considered to link routes to take full advantage of the costs.
Specifically, Mr. Nguyen Van Truong, Deputy Director of Anh Duc Transport and Service Company, said that the advantage will be in favor of transport enterprises with good service quality and reasonable prices. Therefore, usually we will arrange the transport orders connecting to each other to avoid the situation of "empty cars" when returning especially for some long routes such as Hanoi - Tay Nguyen or Hanoi - Dien Bien.Thanks to that price of transport service onthese routes will be significantly reduced.
Related News
Find solutions to attract goods through the first specialized container port in Vietnam
13:41 | 20/05/2024 Import-Export
The quality of economic management at the provincial level continues to improve
13:48 | 20/05/2024 Headlines
Many tax management solutions for e-commerce
10:01 | 16/05/2024 Finance
A series of solutions to improve administrative reform results in the Finance sector
19:02 | 19/05/2024 Finance
Latest News
Imports and exports achieve US$239 billion by the end of April
15:01 | 21/05/2024 Import-Export
Spending more than US$31 billion for importing computers and electronic products in 4 months
15:00 | 21/05/2024 Import-Export
Multi-dimensional picture of textile and garment enterprises
15:00 | 21/05/2024 Import-Export
Promoting Vietnamese pharmaceutical industry
14:57 | 21/05/2024 Import-Export
More News
HCM City to host iTech Expo 2024 in July
14:56 | 21/05/2024 Import-Export
Pangasius exports are forecasted to bounce back at the end of the year
09:38 | 21/05/2024 Import-Export
Exports to the US reaches over US$6 billion
09:37 | 21/05/2024 Import-Export
Market diversification key for enterprises to expand exports
15:59 | 20/05/2024 Import-Export
Businesses advised to focus on brand protection in online export
15:58 | 20/05/2024 Import-Export
Textiles and footwear in a greening spiral
10:23 | 20/05/2024 Import-Export
Agricultural, forestry and fishery product exports continue to "scoring points"
19:04 | 19/05/2024 Import-Export
Build and protect the rice value chain against market fluctuations
19:03 | 19/05/2024 Import-Export
VN's Steel industry ranks 12th in world crude steel production
18:59 | 19/05/2024 Import-Export
Your care
Imports and exports achieve US$239 billion by the end of April
15:01 | 21/05/2024 Import-Export
Spending more than US$31 billion for importing computers and electronic products in 4 months
15:00 | 21/05/2024 Import-Export
Multi-dimensional picture of textile and garment enterprises
15:00 | 21/05/2024 Import-Export
Promoting Vietnamese pharmaceutical industry
14:57 | 21/05/2024 Import-Export
HCM City to host iTech Expo 2024 in July
14:56 | 21/05/2024 Import-Export