Reducing logistics costs is key to boosting exports

20 May 2022

Lowering logistics costs is essential to enhancing the competitiveness of Vietnam’s exports and economy.

According to the latest figures from the Vietnam Logistics Association, logistics costs matched 20-22% of Vietnam’s GDP, surpassing those in Thailand at 19%, China at 17% and almost three times more than the U.S. and Singapore at 8%.

The Association added that there are around 4,000 logistics services companies in the country, with a majority 97% being micro, small and medium enterprises (MSMEs).

That said, quality of services, IT application, digital transformation and human resources remained restricted.

Furthermore, logistics costs were driven up by high road transport costs, seaport surcharges and seaport infrastructure limitations, according to Tran Duc Nghia from the association.

Vietnam’s logistics services were predominantly reliant on road transportation, making up nearly 80% of the logistics movement, whilst rail, sea and air make up the remainder.

The Vietnam Logistics Association added that 90% of logistics firms in the country are domestic, but maintained a 30% market share, as overseas companies continue to dominate.

Nghia said that the industry needs to boost its ability to adapt to supply chain risks in the short-term and speed up digital transformation and the application of IT, according to Vietnamese media reports.

Over the longer-term, the country needs to improve the legal structure to bolster the development of the logistics industry whilst at the same time promoting multi-model and cross-border, low-cost transport.

Vietnamese companies have been urged to take part in the global value chain to gain experience, adding that the country had substantial advantages in production, export and logistics services, taking into account its position in the region’s dynamic development area.