Currently, Vietnam’s logistics costs account for about 20-25% of GDP, which is much higher than that of other countries in the region. Finding a solution to reduce import and export costs is an urgent task to improve the competitiveness of Vietnamese goods.

Logistics costs increased dozen times

The outbreak of the Covid-19 pandemic has greatly affected the economic development of the country including import and export activities. Along with that, the Russian-Ukrainian military conflict has been causing the global oil prices to strongly fluctuate. As a result, the costs of transportation, logistics, export, and import have sharply up.

Recently, container shipping fees have continued to be adjusted to go up 20%, although the fees were very high and increased several times compared to before the pandemic.

At the conference “Finding solutions to reduce import and export costs for enterprises” on April 6, 2022, Mr. Jonathan Hanh Nguyen, Chairman of the Board of Members of IPPG Group, said that Vietnam’s logistics costs are much higher than the world’s common ground.

According to the World Bank’s data in 2020, Vietnam’s logistics costs account for about 20-25% of GDP. Meanwhile, the cost in Thailand is only 19%, Malaysia at 13%, Singapore at 8%, and the United States at only 7.7%.

Currently, international freight rates have rocketed three to four times, even five to six times at some moments compared to before the pandemic. Previously, the freight rate from Asia to the United States was about 1-1.8 USD/kg, but now it has reached 17-18 USD/kg.

“The high logistics cost has caused Vietnam’s cost of imported and exported goods to increase, which has lost its competitive advantage over other countries in Asia. Finding a solution to reduce the costs is an urgent task to improve the competitiveness of Vietnamese goods,” Mr. Johnathan Hanh Nguyen emphasized.

Vietnam’s logistics costs are much higher than the world’s common ground (Photo: Internet)

According to the recent survey by the Vietnam Logistics Business Association (VLA), in the first quarter of 2020, 15% of enterprises experienced a reduction of 50% in revenue compared to 2019; more than 50% of enterprises reduced the number of logistics services domestically and internationally from 10% – 30% compared to the same period last year. About 97% of logistics service businesses are small and medium-sized and are heavily impacted.

Since May 2020, logistics activities have been recovered following the economy. But up to now, 20% of logistics service businesses have declined in operation. Compared to before the pandemic, the number of goods transported across the border, especially with China, is still congested.

Mr. Tran Viet Huy, Head of Customs and Trade Facilitation under the VLA, said Vietnam’s logistics costs are very high because container shipping routes depend on foreign enterprises.

“The logistics cost has increased many times due to the disruption in the supply chain. The reason for this disruption is the impact of the pandemic and changing global trade trends. In particular, the administrative procedure is one of the many factors that increase the cost “, Mr. Huy emphasized. 

It is necessary to reduce the cost of “Law Forest” 

Regarding import and export procedures, the system of legal documents is very large with over 50 laws, and over 200 decrees and circulars.

According to Mr. Dao Duy Tam, Deputy Director of the Department of Supervision and Management, General Department of Customs, the cost reduction must be joined by all relevant agencies.

Currently, all core customs procedures are completely implemented by the automatic method through the VNACCS/VCIS system at a very high level in 100% of customs units nationwide with more than 99% of enterprises involved, processing more than 99.6% of declarations and customs clearance time for green flow goods from one to three seconds.

Mr. Dao Duy Tam, Deputy Director of Customs Supervision and Management Department, General Department of Customs is sharing at the conference – Photo: CL.

The General Department of Customs has also officially provided free customs declaration software for enterprises in the field of import and export since December 29, 2021.

According to the Customs office, with about 92,000 export and import enterprises in operation, the provision of free software will help save about 432 billion VND.

Cat Lai Port (Ho Chi Minh city) under the New Saigon Port Corporation has the output of goods exploitation accounts for 50% of the export and import nationwide. However, the transport infrastructure structure does not catch the growth rate of goods through the port, causing the risk of congestion at Cat Lai port and the impact on traffic in the neighborhood.

Mr. Dang Thai Thien, Deputy Head of Management Supervision Department, Ho Chi Minh City Customs Department, said that to reduce 70% of the time for receiving and checking customs documents as well as 70% of the time for physical inspection of goods, Ho Chi Minh City Customs Department issued Decision 2318 and the “Scheme on Trade Facilitation: Customs Procedures in Logistics and Combating Import and Export Congestion at Cat Lai Port”.

The scheme has three solutions, including building a centralized and closed working model; implementing customs procedures 24/7 based on establishing a private information exchange channel between customs offices – Saigon New Port Corporation – enterprises to implement customs procedures; allowing the participation of enterprises under the scheme in procedures for goods delivery.

However, Mr. Dao Duy Tam also said that the current problem is that there are still some manual administrative procedures, many regulations issued have not caught the practice, and overlaps in specialized management. Therefore, the reduction of logistics costs requires standardization from customs as well as from enterprises in the process of procedures.