Currently, logistics costs in Vietnam account for about 16.8% of the value of goods (currently 10.6% in the world); Transportation costs on total logistics costs in Vietnam are at a very high level, up to more than 60%, double that of other countries.
Vietnam has more than 3,000 domestic transport and logistics enterprises and about 25 leading forwarding corporations in the world providing services from goods transportation procedures to tax payment or payment. The annual development rate of Vietnam’s logistics industry reaches from 14-16%, the scale of 40-42 billion USD / year.
“Currently, transportation costs on Vietnam’s total logistics costs are at a very high level, up to more than 60%, while other countries in the world account for only 30-40% of total logistics costs, this is a huge inadequacy” – Assoc. Dr. Le Quan (Hanoi University of Transport) shared.
STARTLED BY THE NUMBERS
Currently, about 90% of our country’s import and export goods are transported by sea; Road transport accounts for about 75%, mainly domestic freight, of which 101,317 container trucks are the key force to “piggyback” large volumes of goods, instead of railways like developed countries.
“Fuel costs for more than 100,000 container trucks alone cost more than $1.9 billion a year, not including drivers’ salaries, repair costs, road tolls. If connecting the railway to a seaport. Just spending about 400 million USD to buy 200 new locomotives, we will shoulder this volume, reduce traffic accidents and environmental pollution” – expert Nguyen An (Ministry of Transport) shared.
Logistics costs in Vietnam account for about 16.8% of the value of goods, 6% higher than Thailand, 7% higher than China, 12% higher than Malaysia and 3 times higher than Singapore (the world average is 6.2% / value of goods). That is, for every export of 100 billion USD of goods, losing nearly 17 billion for logistics (Vietnam’s goods exports in 2022 will reach more than 372 billion USD). If we bring logistics costs to the world average, we will save $ 23 billion per year.
In 2023, Vietnam’s total agricultural, forestry and fishery export turnover is forecast to be 54 billion USD. If calculated for agricultural products alone, our logistics are 2 times higher than Thailand. This explains why in the first quarter of 2023, China imported 376.3 thousand tons of these fruits from Vietnam, worth 342.3 million USD. Along with that, China also imported 204.6 thousand tons from Thailand, worth $ 583 million. Thus, the amount of Vietnamese fruit exported to China is 1.8 times more than the amount of Thai fruit, if calculated in terms of sales proceeds, we are far behind.
A LOOK BACK AT THE PAST
Expert Nguyen An said that we have more than 3,000 kilometers of coastline, but there is a shortage of deep-water ports in the North, so goods have to be transshipped abroad when exported to the US and Europe, leading to the cost of loading and unloading goods 2 times the port, leading to an increase in logistics costs. Currently, we have Quang Ninh and Hai Phong seaports associated with the Northern Key Economic Region;Seaports of Vung Ang, Thua Thien Hue, Da Nang, Dung Quat, Quy Nhon, Nha Trang associated with the Central Key Economic Region; Seaports of Saigon, Ba Ria – Vung Tau, Dong Nai associated with the Southeast dynamic economic zone; Can Tho seaport, An Giang is associated with the key economic region of the Mekong Delta. But without linking seaports with railways, the transport picture cannot develop synchronously, it is difficult to reduce logistics costs.
It is no coincidence that when building the Trans-Indochinois railway, the French started building the Saigon – My Tho line (71km) in 1881, completed in 1885. In 1902, France completed the construction of the Hanoi – Dong Dang and Bang Tuong railways (China) and the Hanoi – Hai Phong route. It was not until 1906 that they inaugurated the Hanoi–Lao Cai and Kunming–Yunnan railways in China. It started in 1899, but it was not until 1936 that the French completed the construction of the North-South Railway (15 years’ interruption).
It started in 1899, but it was not until 1936 that the French completed the construction of the North-South Railway (15 years’ interruption).However, due to the difficult terrain, the section of Hamlet Cuc-Ban Na Phao was changed to a cable car. Looking at how the French developed Indochina railways, they focused on connecting with seaports in Hai Phong, Vinh, Da Nang, Nha Trang and Saigon as well as connecting railways to Cambodia and Laos to reduce logistics costs.
For more than 140 years, everyone saw that the railway initiated and built by the French needed to be replaced by high-speed rail. Currently, the railway sector is lagging behind other transport sectors mainly because investment in the railway industry for decades accounts for only about 3% of the total investment from the central budget for transport infrastructure.
Currently, the market share of rail transport accounts for only 1.02% in passenger transport and 0.94% in freight transport, as a consequence of a serious imbalance in investment as well as market share between modes of transport. This imbalance has negatively affected a number of socio-economic aspects, which from an economic perspective have led to increased logistics costs.
Over the past 10 years, there have been many meetings, workshops to contribute ideas to the high-speed rail project and debate has not been concluded.Not only debating whether to build a high-speed rail option in the future only passenger transport or mixed transport of both passenger and cargo transport, but even the divergence of investment in Hanoi – Vinh, Nha Trang – Ho Chi Minh City also leaves many concerns when it comes to economic efficiency, how to reduce logistics costs, ensure economic development goals.