HCM City (VNA) – Logistics costs have been a headache to the Vietnameseagricultural sector as they account for a lion share in the price of agricultural products.

Logistics cost eroding profit

According to processing and exporting businesses, transport costs make up 60%of the total logistics cost, as compared to some 30% recorded in othercountries.

Chairman of the VinaT&T Import Export Trading Service Co.,Ltd Nguyen Dinh Tung said thatlogistics costs are equivalent to 30% of his enterprise’s revenue, notmentioning fruit irradiation.

Many fruit exporters prefer air transport to keep their exports fresh for alonger time. However, their pocketbooks may be hit if foreign airlines adjusttransport costs, he elaborated.

The freight rates, which have increased and shown no signs of reverse, haveposed formidable challenges to agricultural processing and exportingenterprises. Although Vietnamese enterprises have meticulously studied tocompete in the global market, they could do nothing with the transport costs.

Communications Director atthe Vietnam Association of Seafood Exporters and Producers (VASEP) Le Hang said amidstescalating tensions at the Red Sea, foreign liners have been the dominants whodecide to increase the cost of shipping and other related services.

Within less than a month, sea freight prices to Canada, the US, and the EU rose 80% and event 300% because geographical tensions forced liners to divert theirroutes, subsequently leading to longer delivery and higher expenses.

Meanwhile, Chairman of Sao Ta Foods Joint Stock Company Ho Quoc Luc said thatlogistics costs have fluctuated greatly over the past four years, adding shipping acontainer to the US now costs 13,000-14,000 USD as compared to 3,000 USD beforethe COVID-19 pandemic.

He added that expensive logistics costs could force exporters to sell theirproducts in near-by markets such as China, the Republic of Korea, and Japan.

Measures sought for development

Logistics experts said Vietnam holds strengths in exports as well as potentialto broaden logistics services to serve transportation of goods.

Managing Director of Zim Intergrated Shipping Services Company EliasAbraham said that 15 years ago, there were no services to bring goods to the EU and the US. However, more than 200 shipping routes have been established, whichmeans Vietnam is a star in the logistics industry.

Insiders also said that Vietnam should develop logistics centres in differentlocalities, while applying advanced technologies to reduce costs.

Chief Operating Officer atSLP Vietnam Edwin Chee said thanks to automation and modern machines in use at SLP, only three to five workers are enough to operate a 8,000-square-metrelogistics facility.

According to Deputy Minister of Planning and Investment Tran Huy Dong, to improve the competitive edge of the logistics sector amidst deepinternational integration and the Fourth Industrial Revolution, it is necessaryto complete policies and legal frameworks regarding logistics services.

Along with logistics infrastructure, the country should review its masterplansto ensure the harmony between the transport system and the logisticsindustry development goals./.