Why in Vietnam logistics costs high?

In Vietnam, logistics costs account for about 25% of GDP, while transport accounts for about 50-60%, high over the world.

According to the International Monetary Fund (IMF), logistics costs account for 12% of the average gross domestic product in the world. In the US, logistics costs account for 9.9% of GDP. For businesses, logistics costs vary from 4% to over 30% of revenue.

Not focused on the role

The present situation shows, many companies VN not promote the advantages brought by the logistics, even companies not yet seen an important role in the reduction of logistics costs of production and business. Logistics have close links between marketing, production, inventory, transportation and distribution. However, many businesses arrange transport functions in administrative offices, inventory management is located in the accounting department - financial, procurement functions are also attached to the marketing department or sales ... The organizing discrete rooms that function like businesses manage discrete functions also. Therefore, the need to form a separate department for logistics / supply chain managers to this department can coordinate closely with other functions.

At VN, goods have to go through too many intermediaries, from the supply of raw materials to production, to delivery of goods to consumers, which increases transaction costs, increase selling prices. In this sequence, the parties are trying to profit for themselves, and for lack of information, so the members of the chain knows only the direct relationship with their businesses without knowing the other members and the results are inflated logistics costs.

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On the other hand, the distribution system focused on urban areas are mainly, but left unresolved the rural section. Distributors only transport undertaking deep short and agents to take care of their transportation problems. Moreover, the arrangement of the retail network in the relatively dense urban centers, while the large warehouse, it is far away, and because the majority of businesses are not well aware of the role of each warehouse types such as primary, secondary, and central repository should result in either low-cost transportation cost inventory held high or vice versa, but either this also increases the total cost of logistics.

One issue of concern is that, businesses no habit of using outsourcing services such as customs clearance agents, accounting agents and 3PL outsourcing services - which are mainly self-employed. When self-service enterprises, build self-storage investment or procurement vehicles will need a lot of capital and hard to reach the professional level. While the ability to exploit low, so the slow recovery of capital, inefficient and higher logistics costs.

Our country's logistics industry is growing fast and many companies providing logistics services are moving to the level of highly professionalized. More professionalism in the provision of logistics services, the cost decreases. The problem is that enterprises can focus on the role of logistics in order to reduce production costs or not?

Infrastructure is poor

Our country has over 17,000 km of asphalt, more than 3,200 km of railway, waterway 42,000 km, 266 airports and 20 seaports. However, the quality of the transport network asynchronously, much less where technical standards to ensure safety in traffic. But with 266 ports, but only 20 ports can participate in the international export of goods. The majority of this port can not receive the normal container vessels due to insufficient equipment and container handling experience ...

On the mode of transport, transport by air has not been popular, but mainly by means of road transport. However, as noted, this transportation system can not be used for heavy freight transport by road is narrow, technical quality is not high, and the transport capacity is too low, the traffic jams often occur . Many industrial park built, but no roads or industrial areas too remote layout seaport system, as freight costs increase.

Rail transport passengers now only mainly. Ray system with two different size (1 m and 1.43 m), vehicles can not be used to transport cargo by weight and lost a lot of time (train service north - south take up 32 hours).

Water transport mainly by barge, low cost, safe, less accident, but long shipping time, and customers are not willing for this form of transport.

In addition, the combination of different modes of transport (multimodal transport) to combine the advantages of each mode of transport has not common in VN. For these reasons, the total logistics cost (mostly transportation costs) is of course very high. This situation led to nationwide retail prices vary. A general trend of the DN VN (and exporters in particular) do not want to take risks, so commodity price based on FOB origin price (FOB origin), ie sold from the factory, which does not include transportation costs, whereas, in order to uniform retail prices across the country, need to apply special price FOB origin (FOB destination), ie the price of goods plus average transport costs from which sells to the customer's warehouse, to cost dock (landed costs) alike.

So in order to reduce production costs for enterprises, lowering the price of products, necessary to reduce logistics costs. Our country's logistics costs in 2011, estimated at more than $ 25 billion. Thus, if only 1% cost reduction that will benefit the company, for the country a significant amount.

According Baomoi

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