Dam Quang Thang, general director of Agrice Vietnam Company, said that his company lost several export contracts to Thai counterparts due to the high freight cost.
Air freight cost of Vietnamese airlines is higher than that of other regional airlines
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However, Thang said, the air freight cost of Vietnamese airlines is much more expensive than that of other regional airlines. He cited the freight cost of Thai airlines as an example, which is at some $1.2-1.8 per kilogram for transporting to the European market.
Thang said that therefore his company has to use Thai, Malaysian and Singaporean airlines because their cost is half or one third their Vietnamese counterparts.
Nguyen Manh Hung, general director of Nafoods Group, agreed, saying that the high air freight cost is the biggest hurdle to the development of Vietnamese fruit exports.
Due to the high cost, his company can only export around 1,000 tons of passion fruit, he said, adding that the company can sharply increase the shipment if being able to cut transport costs.
According to Ta Duc Minh, Vietnam’s commercial counselor in Japan, as fruits are preferred to be consumed fresh, shipping by sea is not appropriate as the long duration can rotten the produce. However, high air freight costs are pushing up prices of Vietnamese agricultural products overseas.
In Japan, Vietnamese mango is priced higher than that of Ecuador and Thailand, even though the distance from Vietnam to Japan is shorter compared to those countries, Minh said.
Due to the high logistics costs, Vietnamese fruits are now exported only to Japan, South Korea and China.
Even large companies can only export a few thousand tons of fruits a year to more distant markets like America and Europe, according to a senior official in the Ministry of Industry and Trade’s American and European markets department.
“Fresh fruits can only be exported by air, and logistics account for a big chunk of their price,” Nguyen Quoc Toan, head of the Ministry of Agriculture and Rural Development’s agricultural product processing and market development department, said, adding that high air freight costs are limiting the competitiveness of Vietnamese fruits in the international market.
Vietnamese fruits and vegetables are drawing significant interests from strict markets like the Unites States, Japan and Australia, opening opportunities for the products to sharply increase exports.
The United States has so far opened the door to Vietnamese star-apples and mangoes while fresh longans are likely to be granted an import license for Australia in early 2019.
At present, Vietnam also successfully exports red dragon fruit, mango, lychee, perilla leaves and parsley to the Japanese market.
Experts said that it is a good sign that Vietnamese fruit and vegetables are gaining a foothold in more stringent markets which require primary quality and the profile of products. They therefore urge local producers and exporters to promote the products’ exports to the markets.
Vietnam’s exports of fruits and vegetables have increased sharply by 30 percent in the first four months of this year to US$1.32 billion. With the high export growth rate, they forecast that the sector’s export will surpass the threshold of $3.5 billion this year.
