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Many factors affect logistics costs to increase

10:50 | 21/07/2021

VCN - Talking to the press about increasing logistics costs over the past time, Tran Thanh Hai, Deputy Director of the Import-Export Department (Ministry of Industry and Trade) emphasised that import-export enterprises which have to face many difficulties and are facing many difficulties try to stay productive. If more factors push up the price crisis, some firms will not be able to endure any more.

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Many factors affect logistics costs to increase
Tran Thanh Hai, Deputy Director of the Import-Export Department (Ministry of Industry and Trade).

Since the beginning of the year until now, in the context of complicated pandemic developments, logistics costs have not stopped "escalating“. How does the Ministry of Industry and Trade assess the pressure from increasing logistics costs on the operations of enterprises and enterprises?

Logistics costs are an important part of the competitiveness of exported goods. Enterprises reported that they are facing many difficulties, including increased logistics costs and raw material costs. Firms are trying to cope and maintain production activities through this period. However, the possibility of accumulation will narrow. Notably, if there are more shocks, such as a prolonged pandemic or seaport congestion still not reduced, even if there are other factors that push the price crisis to increase, there may be businesses that do not can bear anymore.

Could you please analyse the factors that lead to the increasing logistics costs?

Through monitoring, it is found from the fourth quarter of 2020 until now; the impact of the Covid-19 pandemic has caused congestion at ports, especially in Europe and North America. Therefore, trains are limited, the mobility is also limited. This causes a scarcity of space on ships as well as a shortage of vehicles, increasing freight rates. This is an unprecedented event in the history of world logistics. In addition, there are other problems, like congestion at some Chinese ports recently creating additional cost pressures.

Domestically, the application of anti-pandemic measures is now a top priority. However, cost requirements, such as testing requirements for drivers, are also quite expensive. Those are recent developments on issues related to logistics costs. All of these are adversely affecting businesses, especially import-export enterprises.

What solutions have the Ministry of Industry and Trade has worked with ministries and sectors as well as proactively implemented to support and reduce pressure for import-export enterprises in the context of a lack of containers and increasing logistics costs today?

From March 2021, the Ministry of Transport has established an interdisciplinary inspection team to work with shipping lines. In addition to checking freight rates, the delegation also checked surcharge issues related to freight rates and beyond. The Ministry of Transport will soon report to the Government, including recommendations on solutions.

With costs related to road transport, problems arising in the past as well as at this time, especially in the southern provinces, the Ministry of Industry and Trade has worked with the People's Committees of the provinces, ministries such as the Ministry of Health and the Ministry of Transport, proposing to create a "special green channel" for goods circulation. This is to avoid congestion as well as to introduce unnecessary measures that affect which increases costs. In fact, anti-pandemic measures must be strictly applied, but at the level deemed necessary and created flexibility to ensure dual goals.

To reduce pressure and difficulties for businesses, HCM City has decided to start collecting fees for the use of infrastructure works and public utility services in the seaport border gate area in the city. October 1, 2021 instead of from July 1, 2021 as expected. What do you think about this move?

The toll collection before or after will also have to take place, which increases logistics costs. Currently, HCM City has decided to postpone three months, starting from October 2021. However, in the story of applying this fee, there is still an unreasonable point. That is, distinguishing among businesses opening declarations in localities other than HCM City must pay double the fee.

In the long-term view, would you like to explain more clearly your assessment of the potential and development opportunities for Vietnamese logistics enterprises?

Vietnamese logistics enterprises are only in the early stages of development although this field has been operating for a long time. The development opportunities are still great because Vietnam is a country with great production and export potential, creating a source of goods; with a convenient location in the centre of trade routes, can be connected like Singapore or Hong Kong, does not need to be exported but it becomes the center for transshipment of goods. Vietnam can do the same with good policies.

Although the opportunity is great, whether it can be taken advantage of or not depends on businesses and people, and they must be professional to take advantage.

By Duc Quang/Bui Diep