[NEWS] - Logistics costs become a barrier for businesses

Currently, export activities are expected to continue to prosper thanks to the recovery of the world economy. In the current context that logistics costs are a problem for businesses, it is necessary to have new solutions to choose the right route for Import and Export.

According to Ms. Vo Thi Lan Phuong, Head of Transportation and Forwarding Department - Vietnam Association of Logistics Service Enterprises, said that the problem of international freight rates is continuously increasing. She also added that in 2021, the volume of goods exported from Asian countries to the US will increase, leading to a sharp increase in demand for transportation on these routes, and at the same time pulling up sea freight rates. In addition, oil prices also continuously increased with an increase of 21% in 2021 and continued to jump another 52% in the first quarter of 2022. While the price of oil constitutes up to 40% of the domestic freight rate. This leads to the inevitable consequence that in the first quarter of 2022, enterprises have received notices of increasing domestic freight rates.

In addition, the situation of port jams is also a problem that needs to be solved. The problem of port jams causes headaches for import-export businesses, because it affects the progress and costs more. According to Ms. Lan, in the past, it took about 52 days for a container from a Vietnamese factory to arrive at a supermarket in the US, but in 2021, this time will double, which means it will take up to 104 days. At one point in 2021, there were 102 ships lined up off the coast of the US port waiting to enter the port of Los Angeles. The problem of port jams also affects the rotation of empty containers. Although a lot of empty containers are put on the market, most of them are at sea. When ships docked in the US, they only had time to unload and immediately turn around to let other ships in, no time to wait for empty containers to be loaded back to Asia. 

The difficult situation of port jams that is not resolved and supported in a timely manner will be severely affected to the global supply chain. According to Ms. Lan, head of the transport and forwarding department (VLA) to control the above issues, more specifically, the oil price issue is beyond the control of the Enterprise. She gave a number of solutions to help alleviate some of the difficulties, businesses can find a solution to keep the imported container to pack the goods for export. Currently, there are 6 international shipping lines operating in Vietnam providing this solution. To do this, businesses need to be proactive in booking ships to choose a shipping company that is similar in import and export. In addition, should choose FOB input method to reduce logistics costs as much as possible.

In 2021, due to the lack of ships, many businesses have to book train schedules through 3-4 forwarders, making transportation costs increase. Businesses must choose transport agents with FMC license from the US Federal Bureau to be able to book ships directly. Currently, if you choose an FMC licensed agent, the price will be lower than the market with the price of only 11,500 USD/container.

Offer a solution with a cheaper route

In addition to the issue of international freight charges, domestic costs are also a problem that causes businesses to suffer, especially after Ho Chi Minh City conducts the collection of seaport infrastructure fees. Ms. Pham Thi My Le, Marketing Deputy Director of Saigon Newport Corporation, commented that in order to save time and costs, Cai Mep area has a high growth potential, so it should be exploited as a source of income. goods at Thanh Phuoc, then transported by barges to Cai Mep port. Ms. Le also hopes to form a logistics center here.

To find solutions to reduce Logistic costs, INDOCHINA HOLDINGS provides Logistics services. Support for consulting and importing and exporting products to international markets, especially the European region in the context of high demand. INDOCHINA HOLDINGS with a team of staff and experts with many years of experience of INDOCHINA HOLDINGS, we are confident in our commitment to bring long-term sustainable values ​​in business activities to member businesses.

Ngoc Duc