Vietnam’s logistic costs remain high compared to regional and global average

The logistics sector is widely regarded as a key ingredient for Vietnam's competitiveness and inclusive growth, although the country’s logistics costs remain high in comparison to the regional and global average, according to insiders speaking at the Vietnam Logistics Forum 2020 held on November 26 in Hanoi.

The forum is running with the theme of "Reducing logistics costs, improving business environment, enhancing competitiveness in the context of international economic integration" and is being held with the aim of helping to improve the competitiveness of businesses. This is amid deeper international economic integration, while simultaneously recovering from a loss in growth momentum caused by the various impacts of the novel coronavirus (COVID-19).

During the forum, Secretary of Hanoi Party Committee Vuong Dinh Hue emphasised that the country’s logistics industry is currently ranked third in Southeast Asia, with a scale of between US$40 billion and US$42 billion. Indeed, the current rate of logistics costs can still be considered to be high, therefore serving to reduce the competitiveness of local firms.

With the goal of developing Hanoi into a major trade exchange hub for the country and the wider region, the capital has proposed many solutions aimed at attracting investment in order to develop commercial and service infrastructure, including logistics infrastructure.

Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry (VCCI), underlined the need to develop an advanced logistics sector that features higher levels of international competitiveness amid intensive international integration following several new-generation Free Trade Agreements (FTAs) coming into force.

With over 4,000 logistics enterprises currently operating in the market, the cost of Vietnamese logistics remains high, making up approximately 20.9% of GDP, a far higher rate compared to other regional countries, double that of developed economies, and higher than the global average of 14%.

He added that transportation costs are also too high, making up between 30% and 40% of product costs, while the rate accounting for roughly 15% in other countries.

Loc therefore underscored the importance of improving logistics activities in relation to infrastructure, administrative procedures, and linkages among domestic companies.

At present, the market share of local logistics services can be viewed as being overwhelmed by foreign businesses, while domestic enterprises hold only 25% of the market share of logistics services.

Stefanie Stallmeister, operations manager of World Bank for Vietnam, pointed out that the country has steadily improved in terms of Logistics Performance Index, moving from a rank of 53 in 2010 to 39 in 2018. This represents a stronger performance in the rankings compared to its regional neighbours, including Malaysia, Indonesia, and the Philippines, but trailing behind Thailand, Singapore, China, and Hong Kong (China).

Stallmeister noted that the country’s integration into global and regional markets through the Regional Comprehensive Economic Partnership (RCEP) and the EU-Vietnam Free Trade Agreement (EVFTA) has increased the impetus to boast a strong and competitive logistics sector.

These trade agreements will serve to generate greater trade between the nation and its trading partners, thereby boosting economic growth and reducing poverty. An increase in trade flows will also boost demand for better and more competitive logistics services.

According to the WB official, two new trends have emerged from the COVID-19 pandemic that can be seen as relevant for the domestic logistics sector, including an acceleration of e-commerce and the use of digital platforms nationwide.

She went on to reveal that businesses are turning to e-commerce and digital platforms in an effort to reach consumers more easily, especially during periods of reduced operations and mobility restrictions. Indeed, customers are also becoming more comfortable with digital tools in order to purchase goods and services.

In a World Bank survey conducted in June, almost 50% of businesses reported an increase in their use of digital platforms as a way of adapting to the COVID-19 pandemic. As the trend of e-commerce accelerates, there will be an increase in demand relating to logistics services and the need for last-mile delivery.

Furthermore, the use of digital technology solutions will also help to improve efficiency and offer new services for customers. By adopting digital technologies, companies will be able to offer cargo visibility and traceability, whilst also communicating with customers online. This will require investment in technology such as the Internet of Things (IoT), cloud computing, automation, and data analytics. In addition, frontier technologies, such as robotics, drones, and autonomous vehicles can also increase the efficiency of logistics service providers, she stressed.

Source: VOV
vov.vn

Related News

Wood exports started well

Wood exports started well

VCN - After a year of missing the growth target, the year of 2024 exporting wood and wood products has had a good start, but there are still many potential risks.
Leverage to increase the scale of Vietnam - Laos trade turnover

Leverage to increase the scale of Vietnam - Laos trade turnover

VCN - From 2012 until now, trade turnover between the two countries has grown by 10-15%/year, but it has only reached US$1.65 billion which is not commensurate with the potential and special relationship between the two countries.
Vietnam-China trade reaches over US$ 27 billion

Vietnam-China trade reaches over US$ 27 billion

VCN – China continues to be the Vietnam's largest trading partner.
How more than 6 tons of smuggled gold transported to Vietnam?

How more than 6 tons of smuggled gold transported to Vietnam?

VCN - Taking advantage of border residents' policies, using homemade camouflaged vehicles to transport gold... in just a short time, dozens of subjects illegally transported more than 6 tons of gold, worth VND 8,461 billion from Cambodia to Vietnam to sell, illegally profiting tens of billions of Dong.

Latest News

Forum seeks to increase PPP investment effectiveness

Forum seeks to increase PPP investment effectiveness

Investment cooperation in the public-private partnership (PPP) form is seen as a strategic option to mobilise private investment and improve public service delivery. However, the implementation of PPP projects in Vietnam still faces a lot of difficulties and obstacles, leading to a low number of successful projects and making the private economic sector cautious.
Linking businesses with cooperatives to increase the value chain

Linking businesses with cooperatives to increase the value chain

VCN - The issue of linking the value chain between domestic production units still has many "bottlenecks" that need to be resolved. In particular, solving the "problem" of linking businesses with cooperatives will help improve efficiency as well as meet the requirements of collective economic development.
Vietnam has a trade deficit of over US$17 billion with China

Vietnam has a trade deficit of over US$17 billion with China

VCN – In the first quarter 2024, Vietnam-China trade reached US$43.6 billion. The country had a large trade deficit.
Tra fish export to UAE jumps 67% in Q1

Tra fish export to UAE jumps 67% in Q1

Vietnam’s tra fish export to the United Arab Emirates (UAE) reached more than 7 million USD in the first quarter of this year, a rise of 67% against the same period last year, statistics of the General Department of Customs showed.

More News

Pepper prices continue increase trend

Pepper prices continue increase trend

Pepper prices are forecast to soon exceed 100,000 VND per kilo on the domestic market.
More efforts needed to maintain export growth to China: Insiders

More efforts needed to maintain export growth to China: Insiders

Exporters should further strengthen trade connections and improve the quality of their goods to sustain export growth to China as this is no longer a "lenient" market, said insiders.
It is expected that there are higher orders and revenue in the second quarter from European businesses

It is expected that there are higher orders and revenue in the second quarter from European businesses

VCN - The Business Confidence Index (BCI) according to a survey by the European Business Association in Vietnam (EuroCham) reached 52.8 in the first quarter of 2024 - the highest level since 2022, showing increasing confidence in Vietnam's European business community.
Vietnamese rice prices on the hike

Vietnamese rice prices on the hike

The prices of Vietnamese paddy and rice continued to increase last week, according to the the Vietnam Food Association (VFA).
FDI flow into garment and textile sector bounces back

FDI flow into garment and textile sector bounces back

The flow of foreign direct investment (FDI) into the Vietnamese garment and textile sector has rebounded thanks to the country’s sound investment climate and abundant workforce as well as its open economy, according to insiders.
Investors play a key role in developing the industrial park system

Investors play a key role in developing the industrial park system

VCN - Dr. Phan Huu Thang, Chairman of the Executive Committee of the Vietnam Industrial Park Finance Association, former Director of the Foreign Investment Department (Ministry of Planning and Investment), said that basically, developing an industrial park successfully or not mainly depends on businesses, entrepreneurs - industrial park investors.
Find ways to a corporation for businesses in industrial parks

Find ways to a corporation for businesses in industrial parks

VCN - The country has nearly 300 industrial parks in operation, but with the requirement to join the global value chain, the issue of linkage and connection between businesses in industrial parks and industrial clusters needs to be concentrated on more.
Export turnover of two agricultural product groups grows three-digit

Export turnover of two agricultural product groups grows three-digit

VCN – In March, the export turnover of agricultural product groups grows three-digit compared with the previous month.
Early warnings reduce risks in trade defense

Early warnings reduce risks in trade defense

VCN - In the first months of 2024, export turnover of goods grew strongly, continuing the recovery momentum from the end of 2023. Along with that, the risk of trade defense investigations also escalated
Read More

Your care

Latest Most read
Forum seeks to increase PPP investment effectiveness

Forum seeks to increase PPP investment effectiveness

Investment cooperation in the public-private partnership (PPP) form is seen as a strategic option to mobilise private investment and improve public service delivery. However, the implementation of PPP projects in Vietnam still faces a lot of difficulties and obstacles, leading to a low number of successful projects and making the private economic sector cautious.
Linking businesses with cooperatives to increase the value chain

Linking businesses with cooperatives to increase the value chain

VCN - According to experts, in value chain links, agricultural cooperatives both play a role in promoting links between farmer households through collective economic activities to organize production and promote vertical linkages with businesses along the
Vietnam has a trade deficit of over US$17 billion with China

Vietnam has a trade deficit of over US$17 billion with China

VCN - According to the latest statistics of the General Department of Customs, the import-export turnover between Vietnam and China in March reached US$ 16.32 billion, including Vietnam's exports achieved US$5.15 billion, imports reached US$11.17 billion.
Tra fish export to UAE jumps 67% in Q1

Tra fish export to UAE jumps 67% in Q1

Vietnam’s tra fish export to the United Arab Emirates (UAE) reached more than 7 million USD in the first quarter of this year, a rise of 67% against the same period last year, statistics of the General Department of Customs showed.
Pepper prices continue increase trend

Pepper prices continue increase trend

Pepper prices are forecast to soon exceed 100,000 VND per kilo on the domestic market.
Mobile Version