Efforts underway to reduce logistics costs
Efforts underway to reduce logistics costs
The Suez Canal blockage and persistently high logistics costs in the beginning months of the year have greatly affected import-export activities, prompting the need for solutions to reduce logistics costs in order to facilitate import-export activities.
Removing bottlenecks in transport infrastructure and devising policy mechanisms are important solutions to help cut logistics costs
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Causes for high logistics costs
Logistics costs have surged three- to four-fold in recent times, significantly reducing the competitiveness of Vietnamese businesses.
According to the Ministry of Transport, unsynchronized infrastructure is one of the causes of high logistics costs. The total length of the Vietnamese road system is more than 630,000km, but the total length of highways in operation is less than 2,000km. With 80 percent of goods being transported by road, it is essential to complete the highway systems. In addition, improving the efficiency of other modes of transport is also underlined. The domestic railway system remains outdated and lacks connections to cargo ports, while the inland waterway system has not been exploited effectively. Infrastructure connecting roads with seaports, such as inland container depots (ICD) and logistics centers is also lacking.
Maritime transport has developed well in recent times, being mainly used for bulk goods, such as construction materials, iron and steel and mineral materials that do not require fast delivery and good packaging and preservation.
The demand for air transport is large because of Vietnam’s exports of electronic products that require speedy shipping. While the cost of air transport has decreased, the problem is the lack of cargo airlines.
Road transportation remains the top choice due to flexibility and speed, especially when exporting to markets which share a border with Vietnam. Road transportation is being used excessively, especially for long-distance transport, which is unreasonable and makes costs increasing.
Long Bien ICD has a complete system of operational repositories
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Building logistics centers
Tran Thanh Hai, deputy director of the Agency of Foreign Trade under the Ministry of Industry and Trade, said that in the short term, localities should build logistics centers to promote the development of logistics services and reduce their costs. In the long term, the efficiency of all modes of transport and transport infrastructure must be strengthened and improved, and connectivity strengthened.
Hai also underlined the necessity of promoting administrative reforms and the digitalization of administrative procedures, increasing links between logistics infrastructure networks, and paying due regard to training and improving the quality of human resources in the industry.
Nguyen Hoang Dung, deputy dean of the Faculty of International Economic Relations under the University of Economics and Law, said the government should review all taxes and fees, such as BOT and road fees, as well as devise solutions to help cut logistics costs and improve the competitiveness of Vietnamese businesses and goods. In addition, the government needs to issue specific policies and build appropriate orientations on logistics development.
