Vietnam seeks to cut logistics costs to drive sector's development

Vietnam needs to reduce its high logistics costs to improve the new global production hub’s competitiveness, Minister of Transport Nguyen Van Thang has said.

The minister mentioned the subject on Thursday as parliament members discussed why the sector’s contribution to Vietnam’s economy is still low but logistics costs are high.

Thang said logistics costs in Vietnam in 2012 were equal to 16.8% of the country’s GDP. Under Vietnam’s logistics development strategy, the ratio by 2025 is in the range of 16-20%.

According to the Vietnam Logistics Business Association (VLA), the Vietnamese ratio is higher than others in Southeast Asia - 8.5% in Singapore, 13% in Malaysia, and 15.5% in Thailand, and the fourth highest in ASEAN.

The minister told the parliament that his ministry will continue to work closely with the Ministry of Industry and Trade and other relevant ministries to reduce costs via a number of solutions.

The first is to focus on developing a synchronous transport infrastructure system, including building dry ports and logistics centers to promote multimodal transport. He said the Ministry of Transport is working with ministries, government agencies and localities on investment plans to connect different forms of transport, concentrating on connectivity between waterways and seaports.

In the near future, the Hai Phong-Hanoi-Lao Cai railway line, and a railroad connecting the port cluster of Cai Mep-Thi Vai in Ba Ria-Vung Tau province near Ho Chi Minh City with border gates in the Mekong Delta will be built.

Secondly, the transport ministry will continue to review the current situation to make cost cutting proposals and reduce fees for using roads and seaport infrastructure facilities.

The minister said Lach Huyen Port in the northern city of Hai Phong, the cluster of Cai Mep-Thi Vai, and other ports already have a capacity equivalent to major seaports in Singapore and Malaysia.

Container shipping in Vietnam and its neighbor Cambodia had the lowest turnaround times at ports across ASEAN in June 2022 as both secured an average of 0.9 days, the World Bank said this April. The findings were included in the bank’s Logistics Performance Index (LPI) 2023 report, which came after three years of unprecedented supply chain disruptions during the Covid-19 pandemic when delivery times soared.

The LPI, which covers 139 economies, measures the ease of establishing reliable supply chain connections and the structural factors that make it possible, including the quality of logistics services, trade and transport-related infrastructure, and border controls.