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Vietnam’s logistics costs higher than global average
The Saigon Times Daily
Thursday,  Oct 18, 2018,17:07 (GMT+7)

Vietnam’s logistics costs higher than global average

The Saigon Times Daily

Containers are seen in Cai Mep-Thi Vai Port in Ba Ria-Vung Tau Province. Vietnam’s logistics costs remain high - PHOTO: ANH QUAN

HCMC – Vietnam’s logistics costs currently account for nearly 20.9% of gross domestic product, double that of developed economies and higher than the global average of 14%, Thanh Nien newspaper reported, citing statistics from the Vietnam Logistics Business Association.

The high logistics costs, of which 40%-60% are transport expenses, are attributed to the loose link between transport modes.

According to the HCMC Cargo Transport Association, road toll fees are even higher than fuel costs.

Nguyen Van Chanh, vice chairman of the association, said many tollgates have been built along roads from HCMC to Binh Duong, Dong Nai, Tay Ninh and other southern provinces, which places a heavy burden on transport firms. They pay more than VND17 million in road maintenance fees per truck.

Meanwhile, seaborne and inland waterway transport modes help carry a large volume of freight at the lowest cost among the available transport options, but its connection with other transport modes remains poor, according to Nguyen Xuan Sang, director of the Vietnam Maritime Administration.

Customs clearance for most shipments of goods to HCMC, Binh Duong, Long An and Dong Nai is done in Cat Lai Port due to the low cost, convenient location and simple procedures. However, cargo is then transported to Binh Duong, Dong Nai and Long An provinces by road, pushing up transport costs.

Ship owners in these localities said the costs would be lower if goods were shipped to Cai Mep-Thi Vai Port in Ba Ria-Vung Tau Province.

However, the cost to transport each container by road from Dong Nai Province to Cai Mep-Thi Vai Port is some VND5 million, well above VND2.4 million it costs to carry a container to Cat Lai Port. Besides this, most shipping firms are located in HCMC, so the storage costs would rise if their shipments were sent to Cai Mep-Thi Vai Port.

Railway transport, which is also a low-cost option, has seen the deterioration of its required infrastructure, and investors are not keen on the sector due to concerns over capital recovery.

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