Air freight to prompt foreign production shift to Vietnam: aviation executive

Major foreign-invested enterprises will move their original equipment manufacturing (OEM) facilities to Vietnam if air freight is operational in the country, said Le Hong Thuy Tien, CEO of IPP Air Cargo.

Air cargo delivery service in Vietnam is underdeveloped and costly, while air freight is the sustainable solution to reduce cost, Tien told a forum in Hanoi last week.

"Vietnam is calling for foreign direct investment, but the country does not have a professional contingent of air freighters. A foreign firm in Hai Phong currently has to bring their goods to Noi Bai International Airport in Hanoi for delivery to other countries. If it can have its cargo transported by air directly from Hai Phong, it can save up to $500,000 a year," she said.

Cat Bi International Airport in Hai Phong city will launch Vietnam’s first air cargo route later this year, the municipal Party Committee said last week without further details.

Cargo transported by air currently accounts for only 2% of the volume of import-export goods in Vietnam, but makes for 25% of the value because the cargo is mostly of high-value, including fashion products, mobile phones, fresh food, and others, according to Vietnam Logistics Business Association.

Tien recalled the multi-sector corporation IPPG initiated the establishment of the air freight during the Covid-19 pandemic, which has disrupted the supply chain. The airline featuring four aircraft as of now is waiting for approval from the Prime Minister to become Vietnam’s first air-cargo airline.

She emphasized the airline will invest in wide-body planes and expect Boeing and Airbus to hand over more aircraft by end 2023 for direct routes to the Americas and Europe.

She added that IPPG expected air cargo to record losses in the first three years, but it would continue the path to develop Vietnam into an air logistic hub of the region.

The CEO noted that IPP Air Cargo's ambition is to bring Vietnam’s top fruits and farm produce, like premium crabs and rice, to the world at the best cost, while helping exporters in the country.