High logistics costs threaten product competitiveness

Illustrative image (Source: canthoport.com.vn)

Workshop participants raised their concerns regarding the poor quality of logistics services, the challenges faced with the supply chain of agro-aquatic products, and fragmented linkages in the logistics infrastructure and product delivery.

Domestically logistics costs remain high, at an estimated 20 per cent of the country’s annual GDP value. Of the figure, transportation costs occupy more than 60 per cent, 2-10 per cent higher than the average regional and worldwide ratio. Such costs do considerable harm to the competitiveness of Vietnamese exports.

According to Le Duy Hiep, Chairman of the Vietnam Logistics Business Association, logistics costs for fruit and aquatic products, two key exports of the Mekong Delta region, represent between 20 and 25 percent of total costs, much higher than the 10-15 percent ratio faced among regional peers. 

In order to leverage the production and consumption of farm produce, other participants called for the building of an integrated system which comprises of three elements such as logistics, transport, and agriculture.

Greater attempts must be made to perfect logistics management mechanisms as well as to enhance mutual co-operation and regional linkages for the sake of higher competitiveness. Delegates emphasized regional linkages as a strategic measure which could help to lure additional foreign direct investment in the logistics sector.

Mekong Delta localities must stimulate the use of supply chain and logistics administration systems among local firms, as well as increase the application of technologies in both managing transport services and developing transport infrastructure.

Truong Quang Hoai Nam, Vice Chairman of the Can Tho Municipal People’s Committee, said that Mekong Delta localities need to mobilize land sources to serve the development of transport infrastructure and to improve the quality of logistics workforce.

Nam urged logistics centers located in transshipment hubs to operate under multimodal transport to better improve their linkages and the value chain of agro-aquatic products.

Can Tho city looks to intensify its linkages with other Mekong Delta provinces in order to cut down logistics costs with the aim of increasing the competitiveness of regional products, he said.