Wednesday, 17 Jan 2018

Proposal to form Steering Committee for Logistics development

Updated at Tuesday, 17 Oct 2017, 14:44
The Hanoitimes - It is expected that with the presence of a Steering Committee for Logistics development, barriers and high cost in this sector will be removed.
According to the Feasibility Study for Vietnam Southern Region Waterways & Transport Logistics Corridor Project carried out by consultant Egis International (France), total transport volume in 2015 in the Mekong Delta region – Ho Chi Minh is 125 million tons, in which volume transported in inland waterways contributed 73%, while the remaining was transported in road. At present, goods and products transported in the region include: agricultural products and fisheries, construction materials, light industrial products (textile & garment, leather products, wood, etc.,), industrial crops, steel and energy. 

It is expected that by 2030, the volume for transportation will be double or even triple if the economy maintains its current growth rate, goods transported in inland waterway will be double the amount transported in road. However, this may change in 2040. The forecast shows road transport will be favor for 3 categories of goods instead of inland waterway: light industrial products (more than 9 times), industrial crops (more than 4 times), agricultural products and fisheries (more than double).

This means the inland waterway may lose its advantages and strength in the future. “Inland waterway transport in the Mekong Delta region is underdeveloped, which can be changed due to the lack of industrial complexes and logistics centers” – Team Leader of Egis International Edwin Lock said. Reasons for this situation is the transport infrastructure in the region is outpaced by the estimated transportation development. The master plan for river ports in the southern region is in consistent with sea ports. Proposals to expand the inland container depots (ICDs) are relied on the connection with road transport and the road network, which have not considered the potential of the goods flow through inland waterway or railway. 

Besides, there are many potential costs for manufacturers, in cased of applying the Free on board (FOB: the seller pays for transportation of the goods to the port of shipment, plus loading costs. The buyer pays the cost of marine freight transport, insurance, unloading, and transportation from the arrival port to the final destination) for goods at the ICD; there are differences with regard to tax and additional costs for loading/unloading 20 feet/40 feet containers.

According to Edwin Lock, the legal framework for logistics development is too broad, which can easily be changed or impractical. The reason is the participation of many ministries and administrative agencies. “There should be a focal point of administration for better management. Specifically, it may be a temporary agency to manage in 3 years, to be responsible for the completion of the infrastructure and the network of multi-modal transport, with a view to ensure a clear and efficient logistics development strategy” – Edwin Lock proposed. 

Another solution proposed by Edwin Lock is the government to encourage start-ups in multi-modal transport by sharing the risks in the star-up process, and support the cooperation between start-ups and other logistics companies. This solution has been mentioned by other experts, due to current restrictions to domestic enterprises, such as high fees from the lack of infrastructure for connectivity and logistics chain. Vietnamese logistics enterprises are mainly small and medium enterprises, which are fragmented and lack of cooperation with export companies; as such, there should be a closer cooperation to contribute to the development of the Vietnam business community. 

At present, only 25% share of the logistics market in Vietnam are for domestic enterprises, while the remaining are for foreign companies. 
Nguyen Tung
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