HCM City (VNS/VNA) - Vietnamese garment and textile enterprisesare losing their competitiveness due to high costs of logistics services forexports, experts have said. 

According to statistics from the Vietnam Textileand Apparel Association (VITAS), textile and garment export value last year reached31 billion USD, an increase of 19.2 percent compared to 2016.

Of the 31 billion USD in export value, theindustry spent nearly 18 billion USD to import raw materials, including cloth,fibre and cotton, among others.  

However, the cost of logistics activities fortextile and garment enterprises accounted for 9.1 percent of total export turnover,around 2.79 billion USD.

According to VITAS, the cost of logisticsservices in Vietnam is much higher than that of neighbouring countries and theregion. 

In particular, logistics costs in the countryare 6 percent higher than in Thailand, 7 percent more than in China, 12 percenthigher than in Malaysia and three times more than in Singapore.

Despite reasonable labour costs, competitivenesshas been affected by transport costs, surcharges at seaports, and limitedseaport infrastructure.

Pham Thi Thuy Van, deputy director of marketingat the Sai Gon Newport Corporation, Vietnam’s leading container port operator,attributed high logistics costs to a number of reasons. 

“The current regulations on fees and charges forlogistics services are high, making transport costs also relatively high,accounting for between 30 and 40 percent of the cost of the products, comparedto some 15 percent in other countries,” she said.

For example, BOT charges on the Hanoi-Hai Phongexpressway for businesses from Hanoi and Bac Ninh are about 75 USD per trip,accounting for 40-42 percent of the total trucking fee, while in Malaysia, theBOT fees account for only 6 percent of trucking costs.  

In addition, the surcharges of shipping linesalso contribute to the cost of logistics operations in the country.

Experts said the expanded costs for logisticshave significantly affected the garment and textile industry, which employs alarge number of labourers and is hugely dependent on input importation, whichresults in low added value.

Nguyen Xuan Duong, Chairman of the Board of Directorsof the Hung Yen Garment and Textile JSC, said it was difficult for enterprisesto be highly competitive because of the high cost of logistics.

“The company has to spend around 5 million USDon logistics services for exports every year,” he said.

In the first eight months of the year, exportsof the garment and textile sector reached nearly 20 billion USD.

This year, the garment and textile industry hasset a target of 34-35 billion USD worth of exports. If achieved, the costs forlogistics services would reach up to 3 billion USD, reducing competitiveness ofbusinesses. 

To address the challenges, many firms haveapplied technology to better manage warehousing as well as optimise supplychains.

One of the most commonly used technologiesincludes backing up bills and contracts, and automatically transferringdocuments between firms.

Experts said that logistics enterprises shouldwork to improve their competitiveness, and consider cooperating in transportservices to reduce costs for other enterprises.

They also suggested that the Government outlinea roadmap to improve the quality of logistics services to meet the demand ofmany sectors, especially the garment and textile industry. 

According to the Vietnam Logistics BusinessAssociation, Vietnam’s logistics costs in 2016 totalled 41.26 billion USD,equivalent to 20.8 percent of the country’s GDP.

Despite high logistics costs, the logisticssector has contributed a mere 3 percent to GDP, according to the association.

According to the World Bank, in 2016, thecountry’s logistics sector ranked 64 out of 160 countries, and fourth in the ASEANregion after Singapore, Thailand and Malaysia.-VNS/VNA