Vietnam’s agricultural boom hobbled by high logistics costs, experts urge system overhaul

Logistics costs are eroding the competitiveness of Vietnamese agricultural products, accounting for 20-25% of production costs - significantly higher than regional peers such as Thailand and India.

Dr. Nguyen Anh Tuan, chairman of the Vietnam’s Association of Foreign Invested Enterprises (VAFIE), noted that in the context of Vietnam restructuring the agriculture sector toward a modern, sustainable model and deeper integration into global supply chains, logistics is seen as the “lifeblood” driving value creation.

However, in practice, this “lifeblood” is still operating inefficiently, with Vietnam’s agricultural logistics costs remaining relatively high compared with many countries in Asia, Tuan told a Friday seminar on agricultural logistics investment promotion, organized by VAFIE in collaboration with the Vietnam Farm and Agricultural Enterprises Association (VFAEA).

For agricultural products, logistics costs account for a remarkable portion of production expenses, covering everything from harvesting and storage to transportation and distribution, he added.

VFAEA vice president Ta Thuy Hanh said many key production areas, including the Mekong Delta and Central Highlands, still lack dedicated logistics hubs. Transportation infrastructure and ports fall short of demand, while agricultural production remains fragmented. Supply chains largely operate manually, with limited use of technologies such as blockchain, IoT, and e-commerce.

This has pushed logistics costs to 20-25% of production expenses - an unusually high level compared with the region, she said.

Three major bottlenecks in agricultural logistics

Nguyen Doan Giang, deputy CEO of San Ha Co., Ltd., a leading agribusiness company, said logistics costs even reach 25% at his company.

San Ha delivers more than 200 tons of fresh food to the market daily, operating a closed-loop supply chain from farm to table with over 150 transport vehicles, he said, adding that even with such a large-scale system, the company still faces a host of bottlenecks.

One of the problems lies with weak and fragmented cold chains. Giang elaborated that products such as meat, seafood, and fruit require strict temperature control, yet cold storage facilities are insufficient and unevenly distributed. Many small-scale producers lack access to refrigerated transport, causing quality degradation from the earliest stages of shipping.

Fragmented supply chains also pose a major hurdle. Small-scale production and multiple intermediaries drive up costs while complicating traceability and product standardization.

Another challenge is misaligned transportation infrastructure. Despite improvements to the road network, bottlenecks persist - narrow rural roads, congestion in major cities like Ho Chi Minh City and Hanoi, and poor connections between farms, warehouses, and ports. Heavy reliance on road transport further pushes logistics costs.

Vietnam excels in production but struggles to bring agricultural products to market

Losses extend beyond transportation costs, with logistics gaps also driving substantial post-harvest waste.

Vice president of the Vietnam Rice Sector Association Dr. Tran Minh Hai said most current storage facilities lack advanced preservation technologies such as silos or controlled-atmosphere systems, resulting in post-harvest losses of 10-12%.

In addition, disruptions between inland waterways and road transport, coupled with a lack of large-scale logistics hubs, drive up transshipment costs and undermines the competitiveness of Vietnamese rice in international markets, he noted.

Therefore, to restructure the logistics “lifeblood” and resolve bottlenecks, experts say a holistic approach is needed rather than isolated solutions.

They suggested developing a network of modern logistics hubs and storage facilities, using advanced preservation technologies, particularly in key production areas such as Can Tho, Dong Thap, and An Giang provinces in southern Vietnam.

They also touched upon accelerating the digitalization of supply chains through AI, blockchain, and IoT to improve data transparency, traceability, and operational efficiency.

Developing multimodal logistics infrastructure and maximizing the use of inland waterways would cut transportation costs, they added.

Attracting investment in warehouse, logistics infrastructure

Tuan said that alongside the dynamic growth of the economy, with GDP expanding over 8% in 2025, and deepening international integration, particularly the rising value of agricultural exports, Vietnam has become an attractive investment destination in agricultural logistics.

Foremost is the need for investment in warehouse and storage infrastructure for agricultural products, especially grain silos, cold storage, and post-harvest preservation systems, the VAFIE chairman said.

These are key factors in reducing post-harvest losses, improving product quality, and extending the shelf life of agricultural goods, Tuan explained.

He stressed it is necessary to develop large-scale agricultural logistics hubs that connect production areas with seaports, airports, and major domestic and international markets.

Establishing modern logistics centers would help optimize supply chains, cut transportation costs, and improve distribution efficiency, according to the VAFIE chairman.

"The application of new technologies in agricultural logistics will not only enhance logistics efficiency but also create new business models for companies. Moreover, the rapid growth of sectors such as industrial livestock, food processing, and agricultural trade is driving increasing demand for specialized logistics services," Tuan commented.

Vietnam has built major advantages in agricultural production, but these are being eroded by high logistics costs and inefficient supply chains.

Without a comprehensive restructuring of the agricultural logistics system, the problem of “good harvest, low prices” will persist, making it difficult for Vietnamese produce to capture greater value in the global supply chains, he warned.

"Vietnam’s agriculture does not lack output - what is missing is a robust logistics system capable of delivering that value to the market efficiently," Tuan added.