Water transport - an effective solution to reduce logistics costs

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Water transport will reduce freight costs. Photo: N.K

Low shipping cost

According to experts, in order to reduce logistics costs, the fundamental solution is to increase water transport connecting inland ports close to the factory, and at the same time develop inland ports and warehouses with waterway connections in key economy areas. The advantages of this solution are stable barge route, unrestricted access to cargo handling areas, and large volume of shipping containers (from 36-96 TEUs), economic fleet of vehicle operators (only from 3-4 personnel).

Colonel Bui Van Quy, Deputy General Director of Saigon Newport Corporation, said that according to calculations, transporting a 20-foot container from Lach Huyen deep-water port - Hai Phong to ICD Que Vo - Bac Ninh by barge of 96 TEU loading takes about 10 liters of oil, while transporting by tractor takes about 45 liters of oil. With a capacity of 30,000 TEUs in 2022, the company's barge transport on waterways contributes to reducing emissions by up to 80%, therefore, the development of waterway transport is crucial to the development of green transport from which contributes to the development of green logistics in Vietnam.

Mr. Phan Van Co, Vrice Co., Ltd. said that the majority of rice exporting companies in the Mekong Delta choose to transport by inland waterway instead of road to save costs and increase goods price competitiveness. Specifically, the cost of transporting by barge through the waterway from ports in Ho Chi Minh City to Thot Not port is 5.3-5.5 million VND/container. Meanwhile, if going by road, the cost will be doubled, making goods uncompetitive with foreign countries. Similarly, Mr. Tran Quoc Toan, VAS An Hung Tuong Steel One Member Limited Company, informed that to reduce costs, the company chooses waterways as the main transport route to transport imported goods from ports in Ba Ria - Vung Tau to Binh Duong to save costs. Because, the average transport volume of each barge is equivalent to 50 vehicles traveling on the road, while the cost per barge is only about 15 trips.

As the leading port operator and logistics service provider in Vietnam, over the years, Saigon Newport Corporation has deployed many waterway connection services in the Southern key economic zone and the Mekong River Delta. At the same time, the Cooperation has linked water transport services from Cai Mep port cluster - Ho Chi Minh City and Can Tho to Cambodia with the active participation of units in the system. “Currently, we are expanding and promoting green transport by increasing inland waterway transport connecting major gateways, such as Cai Mep - Ba Ria - Vung Tau deep-water port, Hai Phong port cluster connecting with other local ports, industrial clusters by water transport. This mode of transport, not only reduces transportation costs, but also contributes to reducing emissions into the environment..." - Mr. Bui Van Quy shared.

Focus on developing water transport

Recently, answering a question from a National Assembly delegate in Ca Mau about logistics costs, Deputy Prime Minister Le Minh Khai said that according to Agility's annual ranking in 2023, Vietnam entered 10 new emerging global logistics markets and ranked 4th in Southeast Asia. However, the average logistics cost of Vietnam is currently equivalent to 16.8 - 17% of GDP and is still quite high compared to the world average (currently about 10.6%). According to the Deputy Prime Minister, this cost has approached the Government's target set out in the action plan to improve competitiveness and develop Vietnam's logistics services by 2025, with the goal of reducing costs equivalent to 16-20% of GDP.

In order to reduce logistics costs, in the coming time, the Government will continue to direct the Ministry of Transport to coordinate with the Ministry of Industry and Trade, relevant ministries, branches, localities and businesses to focus on some key points such as: upgrading and synchronizing the current infrastructure; invest in the development of logistics centers and inland ports to promote multimodal transport, continue to review and adjust policies related to prices, transportation fees... infrastructure exploitation.

Regarding the cost of transporting a container from the North to the South, the Deputy Prime Minister stated that according to the current survey and survey data, the cost of transporting a 20-foot container from the North to the South as given by the delegate ($2,000 USD) is corresponding to the mode of transport by road. However, depending on the goods to be transported, the needs of the shipper in terms of time and conditions of transportation, businesses can choose other modes of transport such as rail, sea with the cost equivalent to only 50%. - 70% by road (depending on loading and unloading conditions). For example, the current sea freight rates from Hai Phong to Ho Chi Minh City are fluctuating from 9.2 to 9.5 million VND/container of 20 feet and about 12 million VND/container of 40 feet. In the opposite direction from Ho Chi Minh City - Hai Phong, the freight rate is about 6 - 8 million VND/container of 20 feet and 9 - 10 million VND/container of 40 feet.

Thus, the water transport method is much more cost-effective than the current road transport. To promote transport development in 13 provinces and cities in the Mekong Delta in a modern, synchronous and cost-reducing direction, by the end of 2022, the Ministry of Transport has issued Plan No. 13197/KH-BGTVT develop transport in a modern, synchronous manner, reduce costs and ensure national defense and security by 2030, with a vision to 2045. Particularly, it clearly stated the main task of promoting market share in transportation and taking waterways, Encouraged enterprises to increase investment in inland waterway vessels carrying containers; Promoted the development of the inland port system according to the approved plan and the ports are adjusted and added to the master plan on the port system to act as the focal point for connecting the combined transport modes and providing logistics services.