Multimodal transport can help lower logistics costs: WB
Multimodal transport can help lower logistics costs: WB
The stronger combination of land, inland waterways and sea transport modes will help slash logistics costs, which currently account for almost 21% of Vietnam’s gross domestic product, according to a recent report by the World Bank (WB).
According to the WB’s report on the enhancement of Vietnam’s land transport, even though Vietnam jumped from 64th place in 2016 to 39th place in 2018 on the WB’s Logistics Performance Index, its logistics costs are higher than in most other ASEAN countries, eroding the competitiveness of the nation's economy.
Logistics costs run high as 60% is spent on transport.
With a 3,200-kilometer coastline and 19,000 kilometers of inland waterway, Vietnam should develop inland waterway and sea transport modes to support land transport. In 2016, the two modes transported only 5% and 17%, respectively, of the total cargo volume, while 77% of cargo was transported by land.
The WB also suggested easing traffic congestion around seaports by building parking lots and cargo storage centers near ports and upgrading roads to support heavy-duty trucks. Seaports should be planned to connect logistics centers with cargo storage centers.
To promote waterway and sea transport modes, the WB also advised Vietnam to upgrade its cargo handling equipment at ports, design appropriate shipping routes and reduce the fees for these modes, especially cargo handling costs.
In addition, most of the land transport firms in Vietnam post low revenues, with half of them reporting annual revenue of less than US$500,000 each. Their unsystematic operations have also affected the quality of their services and led to unhealthy competition among them, according to the WB.
A WB survey conducted on 150 land transport firms and over 1,400 truck drivers showed that the five highest costs for these firms are fuel costs, toll fees, informal fees, loan interest and salaries for drivers. These fees accounted for up to 80% of their expenses.
Therefore, the WB proposed local transport firms increase the of their fleets and their vehicles’ tonnage.
To improve the effectiveness of truck fleets, the Government and local banks should offer preferential loans for transport firms to gradually eliminate old vehicles. Further, toll fees for outdated trucks should be hiked.
