Feb 03, 2018 / 14:10

Vietnamese logistics urged to enhance connectivity

The Hanoitimes - Logistics development plans of provinces and cities nation-wide should have a better connectivity to make the industry become more effective, experts have said.

According to Pham Thi Thuy Van, deputy marketing director of the Saigon Newport Corporation, a lack of connectivity has caused the local logistics industry high costs and low competitiveness.
A lack of connectivity has caused the local logistics industry high costs and low competitiveness
A lack of connectivity has caused the local logistics industry high costs and low competitiveness
Van explained that the Prime Minister has approved an action plan to improve the competitiveness and development of logistics services in Vietnam by 2025 with specific objectives, however, each province and city have build their own local logistics development plans without connectivity with other provinces or cities. Meanwhile, the nature of logistics is a chain that connects this province or city with others.
Currently, most logistics facilities are located in areas around Cat Lai, Thu Duc, Song Than, Linh Trung and neighboring areas of Dong Nai Bridge, she said.
Ho Chi Minh City in particular has 11 container ports covering a total area of 310 ha in addition to 7,000 sq meters of piers.
The concentration of all the logistics facilities has created a pressure on the traffic system, which would incur costs. For instance, the average storage time of imports has also increased due to slow release of goods.
In addition, Van said a number of bridges in Ho Chi Minh City have low clearance levels, causing difficulties for transport by waterway and increasing transport costs for businesses.
Van recommended that Ho Chi Minh City and other localities in the key southern economic zones and the Mekong Delta develop an action plan to build centralized logistics centers and distribution warehouses.
The construction of centralized distribution facilities would facilitate the service of a broader market and the development of integrated infrastructure.
To do that, the localities should have early planning studies detailing cargo volumes, cargo flows, and construction of roads and railways to ease traffic congestion.
Meanwhile, Dao Trong Khoa, vice president of the Vietnam Association of Logistics Service Enterprises (VLA), said factors contributing to the high cost of logistics, included costs for transporting goods by road and surcharges at seaports and limits on seaport infrastructure, among others.  
To reduce logistics costs, transport costs must be reduced first as transport accounts for 50 per cent of logistics costs, according to Khoa.
Phạm Son, head of the logistics division of Ben Nghe Port Co., Ltd, said it was necessary to improve the capacity of infrastructure connectivity.
In addition, logistics companies in Vietnam need to develop markets and build brand names.
Agencies need to apply more e-customs clearance, infrastructure and information-sharing among specialized agencies to simplify administrative procedures.
Efficient transport and logistics play a significant role in increasing productivity, according to experts. 
Vietnam now has more than 1,300 domestic and foreign logistics firms. The domestic logistics market is estimated at US$22 billion per year, accounting for almost 21% of the national GDP.
The annual World Economic Forum’s Global Competitiveness Report last year showed that Vietnam was ranked below many other regional countries because of lagging transportation services. 
According to the World Bank, Vietnam’s logistics ranked 64th of 160 countries around the world and 4th within ASEAN after Singapore, Malaysia, and Thailand. 
The Prime Minister has so far also issued a decision to boost the competitiveness of Vietnam’s logistics service by 2025, under which logistics will contribute 8-10% of GDP to make Vietnam one of the world’s 50 leading logistics services providers.
Tran Thanh Hai, Deputy Director of the Export-Import Department of the Ministry of Industry and Trade, said Vietnam has sufficient conditions to develop its logistics industry thanks to its bustling export-import market whose revenues exceeded US$400 billion last year. Improving domestic logistic services will create a major breakthrough for exports.