Hanoi (VNS/VNA) - Experts recommend that Vietnam establish aspecialised logistics and transportation system for its agricultural sector,tailored to accommodate a wide variety of agricultural goods.

This will aid in preserving the quality of produce destined for internationalmarkets while facilitating the comprehensive development of domesticagriculture, encompassing production, processing, and consumption.

Nguyen Thanh Binh, the chair of the Vietnam Fruit Association (VINAFRUIT),noted that the fruit and vegetable sector is grappling with numerous challengesrelated to exporting, particularly to distant markets with rigorous standards.

Presently, the infrastructure designed to facilitate this commodity is lacking,contributing to substantial post-harvest losses, estimated to be around 30-35%.This scenario results in significant economic repercussions, Binh pointed out.

In addition, antiquated preservation technology is causing a decrease in thequality of fruits and vegetables, hampering their competitiveness in globalmarkets, he said.

While Vietnamese fruits and vegetables have garnered favour among consumersworldwide, logistical and preservation challenges remain significant hurdlesfor both producers and exporters, according to Binh.

Exporters of fruits and vegetables find it particularly challenging totransport various types of produce to discerning markets like the United Statesand Europe. Despite their popularity in these regions, the inability to ensureefficient logistics has deterred businesses from exporting certain types offruit, Binh concluded.

Nguyen Dinh Tung, Chairman of the Board of Directors at Vina T&T Group,indicated that for dragon fruit to be exported to the American market,exporters must guarantee a shelf life of 35 days.

However, he pointed out that the utmost quality of dragon fruit,post-irradiation, lasts for a mere 27 days.

Similarly, the peak quality of star apple fruit, following irradiation, extendsonly to 10 days. This necessitates the use of air transport for exporting thestar apple to the US, he further explained.

"Yet, the transport costs prove exorbitant for sustained exporting,"he added.

Pham Van Trong, deputy chairman of the People's Committee of the Mekong Deltaprovince of Tien Giang, stated that the province has successfully exportedfruit products to numerous global markets.

Nevertheless, he lamented the fact that if the high transportation costs arecoupled with a lack of preservation technology and standardised warehouses, itrepresents a significant missed opportunity.

The resulting high post-harvest losses, attributed to subpar storageconditions, lead to substantial revenue losses, he highlighted.

Furthermore, he noted that synchronising technology application withinlogistics also plays a pivotal role in preserving agricultural producepost-harvest, in line with market requirements.

High logistics costs

In Vietnam, the high cost of shipping agricultural products is often due tothese goods being purchased by a multitude of buying units directly from theproducers. The sheer number of purchasing units, and the diverse stagesinvolved, inadvertently inflate the shipping costs of agricultural commodities.

As per the data from the Vietnam Logistics Business Association, logisticsexpenses for agricultural products in Vietnam were 6% higher than in Thailand,12% more than in Malaysia, and triple that of Singapore in the recent past.

A 2022 report from the global logistics group, Agility, revealed that logisticscosts in Vietnam account for approximately 20% of GDP, which is double the rateseen in developed nations.

Nguyen Tu Uyen, director of CMU Logistics Transportation Services CompanyLimited, stated that agricultural goods from the Mekong Delta must traversethrough a variety of transport modes. These range from three-wheeled vehiclesto lorries, and boats to reach a central location, owing to the multitude ofnarrow and minor rural roads scattered throughout the delta.

She described the logistics system in the region as small and dispersed.

The quality tends to decrease while selling prices of agricultural productstend to increase due to the numerous transportation stages involved, Uyenexplained.

At present, numerous agricultural commodities have been given a planting areacode by significant markets such as China and the US, or have been certified ashaving a production process equivalent to the standards of these countries.Yet, inadequate logistics still pose challenges to exporting these agriculturalgoods, she pointed out.

Taking Bac Giang lychees as an instance, Uyen noted that these fruits musttravel from Bac Giang to Hanoi and then to Ho Chi Minh City, before reachingthe irradiation and export packing facilities.

This extensive journey inadvertently diminishes the quality of the lychees andshortens their preservation duration, she elaborated.

Uyen emphasised that if all aspects of the logistics process are tightlyinterconnected, it could potentially decrease logistics expenses and extend thestorage lifespan not just for lychees, but for other fruits as well.

Solutions

Tran Cong Thang, director of the Institute of Policy and Strategy forAgriculture and Rural Development, recommended the creation of a logisticssystem that connects the production area with both domestic and export marketsfor the local agricultural sector.

He proposed a three-tier logistics centre system.

The first tier consists of logistics centres affiliated with the productionarea, and the second involves regional logistics centres that act as a catalystto link the production area with significant markets, he explained.

The third tier comprises logistics centres servicing imports and exports,ideally located at border gates experiencing extensive trade with neighbouringcountries, he added.

Consideration should also be given to the quality of traders to develop acomprehensive logistics hierarchy, he stated.

Tran Thanh Nam, deputy minister of Agriculture and Rural Development, revealeddata indicating that there are over 5,000 logistics enterprises operating in Vietnam,with domestic firms accounting for 89%. The majority of these businesses aresmall to medium-sized enterprises.

These companies facilitate the shipment of 67% of Vietnamese agriculturalproducts by sea and 7.5% by air to markets in Europe, the United States, andAustralia.

Nam stressed the need to enhance all components of the agricultural products'logistics system to ensure that Vietnamese produce can conveniently reachglobal markets while preserving its innate quality.

The logistics system should be clearly segmented, based on the topography andtraffic conditions of each region, to facilitate easy and convenientconnections, he concluded.

The ministry has suggested Can Tho City as a hub for initial processing,packaging, and logistics within the Mekong Delta region. This would serve as acentral point for the region's agricultural products, ensuring coordinatedprocessing prior to export, he shared.

Additionally, Nam emphasised the need for enhancing infrastructure such asdual-purpose warehouses for storage and packaging of high-quality agriculturalproduct groups; the development of new markets along transportation routes;research into combining transportation of diverse items; and coordination amongbusinesses within the same sector to optimise efficiency and minimise costs.

For this to materialise, localities must encourage local businesses tocontribute and utilise resources and materials unique to each region in themost efficient manner, he stressed.

Nam further underscored the importance of developing a logistics system for thee-commerce of agricultural products. He characterised this as a promisingconsumption channel, potentially becoming the main route of consumption, shoulda pandemic or economic instabilities arise./.