Gasoline prices have escalated, and the supply chain of goods is broken due to the shortage of empty containers, causing logistics costs to be "teamed" to a high level.

Fuel costs account for 60-65% of transportation costs

At the recent launch of the Hanoi Logistics Association (HNLA), Mr. Tran Duc Nghia, General Director of Delta International Joint Stock Company, Chairman of HNLA said: "High logistics costs in total GDP are limiting the health of our customer's competition of the Vietnamese economy. This situation stems from the economy's structure, the reasons for the low efficiency of logistics activities in Vietnam, and the suboptimal operation scale of logistics enterprises.

According to Mr. Tran Duc Nghia, the high logistics costs in Vietnam are also caused by logistics planning that has not been paid enough attention in the past decades and caused by policy institutions.

A representative of the Vietnam Logistics Business Association (VLA) said that: Logistics costs are at a high level, causing difficulties for Vietnamese businesses, especially import-export businesses.

“The cost of transporting goods has increased continuously for the past 2 years, causing many difficulties for businesses in production because all costs are added to the cost of the product. The shipping fee to Europe and the US increased many times compared to the time before the COVID-19 epidemic, but the selling price only increased slightly", a representative of a business in Dong Nai lamented.

Not only do logistics costs increase, but the time to transport goods is also extended by 1.5 - 2 times compared to the beginning of 2020. For example, in the past, enterprises transporting goods by sea to the United States took from 30-35 days but now increased to 45-60 days. As a result, most businesses speed up the fulfillment of orders to compensate for the possible extra shipping time.

According to Mr. Le Quang Trung, Vice President of VLA, in the structure of logistics costs, transportation costs account for a very large proportion of which, fuel costs account for 60-65% of transportation costs. Therefore, when petroleum "escalates", logistics costs in Vietnam increase sharply. In addition to fuel costs, the cost of renting empty containers has also increased sharply in recent years, causing not only domestic enterprises but also export enterprises to face many difficulties.

Mr. Bui Thanh Binh - General Secretary of the Hai Phong Logistics Association (HPLA) admitted: Recently, the quantity of goods has dropped seriously due to the sharp increase in world inflation; The conflict between Russia and Ukraine is still tense, so the supply and demand of goods in the world decreases, leading to a decrease in orders, the low purchasing power of the people, leading to a decrease in production.

“The world economy is difficult, and Vietnam is no exception. It is forecasted that from now until the end of the year, the volume of goods will decrease further. The price of gasoline fluctuates up and down, so the production activities of logistics enterprises are very difficult. Therefore, at this time, businesses must take advantage of improving operational processes; apply a digital transformation that the Government is promoting; strengthen internal corporate governance training to overcome this difficult period," said Mr. Bui Thanh Binh.

There is a need for a total solution to cut logistics costs

In the context that the disruption of the global supply chain cannot be restored overnight, many economists believe that: Freight rates will not immediately cool down. Moreover, warehousing costs also increased by more than 20% due to the increased demand for warehousing while the supply is not enough, the shortage of human resources, and the high real estate prices… This requires appropriate solutions. Deputy to cool down logistics helps businesses reduce cost pressure, and improve the competitiveness of Vietnamese goods in the international market.

To solve specific problems of Vietnam's logistics, the Prime Minister issued Decision 200/QD-TTg dated February 14, 2017, and Decision 221/QD-TTg dated February 22, 2021, on approving approved the Action Plan to improve competitiveness and develop logistics services in Vietnam by 2025 with the ultimate goal of increasing the efficiency of logistics operations, reducing logistics costs, and improving the capacity of logistics enterprises.

“Hanoi, as one of the two largest economic centers of the country, needs to take the lead in implementing the Prime Minister's Decisions 200/QD-TTg and 221/QD-TTg to improve infrastructure logistics, building a team of efficient and professional logistics service enterprises, thereby contributing to reducing logistics costs and increasing the competitiveness of the whole economy," said the HNLA Chairman.

Accordingly, the most important thing is to promote the connection of various types of logistics activities, multimodal transport, planning, and building logistics centers at the national and regional levels, linking businesses to promote the development of logistics services in Hanoi, contributing to the development of the logistics industry in the country.

In order to reduce logistics costs to support businesses to increase their competitiveness, Vietnam needs to build a synchronous, continuous, and linked transport system, which promotes the key role of railways - means of transport that has the capacity to transport large volumes, fast speed, low cost...

Mr. Bui Thanh Binh proposed: The Government has policies to regulate gasoline prices, and reduce fuel surcharges more to support businesses because 2 years of the pandemic, the "health" of businesses is exhausted. To cut costs, businesses and the Government need to take overall measures, review administrative procedures, and cut specialized inspection procedures to remove difficulties for businesses. "On the business side, it is also necessary to apply advanced technology, apply software to have optimal solutions in the process of transporting goods in the way and back," said a representative of Hai Phong Logistics Association.

Although Vietnam has many types of transportation by rail, sea, road, and air, the connection infrastructure between modes of transport is still not synchronous. Therefore, the Government needs to build a new transshipment connection point to create favorable conditions for logistics enterprises.

Mr. Le Quang Trung, Deputy General Director of Vietnam Maritime Corporation (VIMC) said: In order to reduce logistics costs, VIMC has increased the frequency of ships entering ports, near the source of goods as well as contracts rationalize the process of delivery on the basis of technology. “Besides the rationalization of the supply chain in the production organization; infrastructure connection problems; The problem of developing new modes of transport as well as promoting rail transport, especially organizing inland waterway routes to connect international routes, is the key solution in reducing business costs. import-export industry in particular and the economy in general" said, Mr. Le Quang Trung.

A representative of VIMC said: In order for economic centers and industrial parks to play their optimal role in the circulation chain, it is necessary to have multi-modal connectivity, not just road traffic, but also need to combine other routes. modes of air transport, railways, and routes connecting inland waterways and international routes. “Personally, I think rail transport is the most optimal method in terms of cost per unit price. In the long term, railway connection is the fundamental solution in connecting the center of industrial zones with the system of airports and seaports," said VIMC's leader.