Vietnamese firms maneuver to stay afloat amid rising fuel costs

Vietnamese firms heavily reliant on fuel are being forced to adapt operations and absorb lower margins to keep business running, as surging fuel prices drive up costs and strain cash flows.

Recent increases in fuel prices have pushed input costs higher across multiple sectors, exposing operational bottlenecks and raising the risk of disruption.

From passenger transport and logistics to construction and manufacturing, companies are facing tightening liquidity and growing pressure on profitability.

The impact has been most visible in the transport sector, where fuel accounts for a large share of operating costs.

A representative of Viet Tan Phat Co., which operates passenger routes between Ho Chi Minh City and the Central Highlands, said the company runs about 100 sleeper buses and limousines, each consuming between 1,800 and 2,500 liters of fuel per month.

Following the latest price adjustments, the firm’s fuel expenses have risen by an estimated VND1-1.5 billion ($57,000) per month - a significant burden as passenger demand has yet to fully recover.

"Passing on higher costs to customers remains difficult, as demand in the passenger segment is highly price-sensitive. Most customers are workers and students. Any sharp fare increase could immediately reduce demand,” the source added.

Long-haul routes of 300-600 km, often involving mountainous terrain, further increase fuel consumption and reduce operational efficiency due to longer turnaround times.

In freight transport, the pressure is similarly intense. A southern container transport firm's representative said its fleet of 80-100 tractors consumes about 300,000-350,000 liters of fuel monthly. “A VND1,000 (($0.04) rise per liter increases costs by roughly VND300-350 million ($13,300) per month,” the source said.

Large logistics companies face even greater exposure, with fuel consumption reaching 500,000-700,000 liters per month during peak periods. Recent price hikes have added several billion dong (VND1 billion - $38,000) in monthly costs, directly eroding profits.

Beyond pricing pressures, supply disruptions pose an additional risk.

In the construction sector, Tran Ha Dao, a representative of Dacinco Construction Investment Co., said the company, which operates around 200 vehicles transporting materials for an airport project, is facing both rising prices and unstable supply.

“Operations are currently maintained thanks to fuel reserves, but disruption risks are imminent if supply cannot be secured in the coming days,” Dao said.

Fuel stockpiling offers only a temporary solution, as supply chain disruptions can affect even long-standing suppliers, raising concerns for large-scale infrastructure projects where construction timelines depend heavily on transport capacity.

Firms seek workarounds to maintain operations

Rather than halting operations, many companies are adopting flexible measures to cope with rising costs, including operational optimization, cost restructuring, and renegotiation of contracts - often at the expense of profit margins.

Transport firms are tightening route management, reducing empty runs, and improving load factors.

“We are reviewing all routes, minimizing empty trips, and consolidating cargo both ways to reduce fuel costs per trip,” said a logistics firm's representative.

Some companies are also investing in fuel-efficient vehicles or piloting electric vehicles on short routes, although such transitions require time and capital. On the commercial side, firms are renegotiating contracts to include fuel surcharges and share cost burdens with clients.

Chau Quoc Nhat, director of a transport company in Hue city, said: “When fuel prices rise, we have to renegotiate with customers and adjust freight rates based on volume and distance. Otherwise, operations are not sustainable.”

However, raising prices remains challenging as customers face their own cost pressures and may cut back on orders.

Le Tan Thanh Tung, deputy CEO of logistics firm Vitraco, commented that in many cases, businesses are forced to absorb part of the increase. “Fuel prices may rise 30-40%, but service prices can only increase by 10-20%. The rest has to be absorbed,”

Companies are also cutting indirect costs such as administrative and operational expenses to offset higher fuel bills, while fixed costs like driver wages and vehicle maintenance remain largely unchanged.

Despite these efforts, many firms say internal measures offer only short-term relief. They are calling for policy support, including tax and fee reductions on fuel, more flexible use of price stabilization funds, transparent fuel surcharge mechanisms, short-term credit support, and prioritized domestic supply.

Tung of Vitraco noted that effective fuel price management will be key to easing cost pressures.

With fuel accounting for up to 30-40% of operating costs, sustained volatility or supply disruptions could quickly erode margins and push some firms into losses.

While the current pressures are forcing companies to rethink operations and cost management, analysts said a stable, transparent and predictable policy environment will be essential for these adjustments to translate into long-term competitiveness.