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Transport fees hurt business performance
High transport charges are impairing the competition of Vietnamese companies on global and domestic markets, experts have said.
Although Viet Nam is situated in the middle of an international transit, exporters have to pay ocean transport charges considered to be the highest in the region, according to Dr. An Thi Thanh Nhan of the Financial Institute.
The fee to transport goods in a 40-foot container to the US is US$3,000 on average. The rate is $2,700 to China and $2,500 to Thailand.
The fees are high because local companies must rent from foreign transport companies and buy freight insurance from foreign companies, which charge high prices to Vietnamese companies, according to Nhan.
However, domestic transport costs are also high for a variety of reasons, including poor management.
Studies jointly conducted by the Transport Development and Strategy Institute and Australia-based Meyrick and Associates also showed that costs for transportation and communications services in Viet Nam accounted for about 20 per cent of enterprises' total production costs.
The rate is only 5 per cent in Japan, 8.4 per cent in the US and 9 per cent in Australia. Developing countries like China and Brazil have transportation costs that account for only 10 per cent and 15 per cent of their total production costs, respectively.
According to a 2009 Vietnamese Logistics report from the Transport Intelligence, a leading independent source of research and analysis for the European logistics market, costs for logistical services in Viet Nam made up 25 per cent of the country's Gross Domestic Products (GDP), much higher than 9.5 per cent in the US and 21.6 per cent in mailand China.
Vietnamese companies'expenses for transportation services account for up to between 30 per cent and 40 per cent of their product costs while it is only 15 per cent in other countries, according to the report.
Such high transport costs have seriously affected the price competitiveness of Vietnamese goods in both overseas and domestic markets, Nhan said.
In spite of recognising this disadvantage, Vietnamese enterprises have not controlled transport costs because 90 per cent of exports are transported under Freight on Board (FoB), in which transport charges are decided by foreign partners.
Nhan said most Vietnamese exporters had little information about international transporters and did not have representative offices abroad. In addition, they have not established long-term ties with foreign transport companies.
Costs for domestic transport services are calculated in ways that take the price of fuel into account so transport rates are not transparent, thus creating opportunities for transport firms to easily raise transport prices.
Nhan suggested some measures which would help domestic enterprises partly cut transport costs.
They include use of direct transportation services, bidding transport services, separating fuel costs from transport charges, applying fuel hedging strategies and participating in associations to have more opportunities to negotiate with transport firms. Setting up strategic relationship with some major vessel firms would also be helpful in winning transport contracts at preferential rates, she said.
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