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High logistics cost undermines Vietnam's farming competitiveness

Wednesday, April 14, 2021, 14:47 GMT+7
High logistics cost undermines Vietnam's farming competitiveness
Enterprises’ representatives attend a panel discussion on logistics held in Hau Giang Province, Vietnam, April 9, 2021. Photo: C.P. / Tuoi Tre

Vietnam’s competitive edge in agricultural exports is lower than those of China, Thailand, Indonesia, and the Philippines because of its costly logistics costs, a logistics expert said during a panel discussion last week. 

Such expenses accounts for 30 percent of the production cost in Vietnam in comparison to 12.5 percent ​​in Thailand and 14 percent in the world, Pham Tien Hoai, general director of Hanh Nguyen Logistics, said at the panel discussion on leveraging logistics for farm produce in the Mekong Delta held in Hau Giang Province on April 9.

As part of the total logistics cost, air freight for fresh fruits exported from Vietnam to the U.S. currently amounts to US$6.62 per kilogram, far higher than $3-3.5 per kilogram previously, Ngo Tuong Vy, deputy director of the Chanh Thu Fruit Import & Export Co. Ltd., said at the event.

Logistics costs for shipments to many key markets such as the U.S. or Europe have doubled, lessening the competitive edge of Vietnam’s fresh fruit products and creating a bottleneck for export, the panel discussion heard.

On the other hand, a number of fruit items have to be exported by air instead of by sea owing to the lack of advanced storage technologies that help maintain fruit quality during time-consuming sea transport.

A part of the kumquat juice production line at Tien Thinh Agricultural Product Processing Co., Ltd. Photo: Le Dan / Tuoi Tre

A part of the kumquat juice production line at Tien Thinh Agricultural Product Processing Co. Ltd. in Vietnam. Photo: Le Dan / Tuoi Tre

Air fruit exports have increasingly decreased because of unaffordable air freight that is much higher than sea freight.

With the perspective of an export fruit processor, Vy laid emphasis on improving post-harvest storage technologies as a solution for enhancing the exported fruit quality and thereby making them qualified for sea transport.

Sea transport helps reduce the overall logistics cost greatly, as air freight is 15 times costlier than sea freight.

“The sea freight for lychees exported to Japan is $3.8-4.2 per kilogram, which, together with many other costs, pushes up the price of this commodity,” Vy said, adding that such a high price makes Vietnam’s lychee less competitive than that of Thailand.

Meanwhile, Le Thi Thu Truc, deputy general director of Phu Thinh Food Processing Export JSC, based in Hau Giang Province, pointed out that many enterprises build warehouses only when they win contracts to export fruits.

As fruits are seasonally harvested, Phu Thinh faces difficulty in ensuring enough fruit volume for export contracts, Truc said.

Sometimes, the company obtains contracts but it does not have enough fruits and vice versa.

“Enterprises should have enough storage for fruit preservation," she advised.

"Finished products may be stored at deep cold temperatures."

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Vinh Tho / Tuoi Tre News

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