Fragmentation is pulling back the competitiveness of the logistics industry

The main cause of the imbalance among transport modes is the low investment in transportation for road transport. Photo: Thai Binh.

“3 legs” are not balanced

According to a report from the Ministry of Transport, transport costs still account for the highest proportion of total logistic costs. Noteworthy, as the transport infrastructure is not synchronized, the efficiency of multi-modal transportation has not been exploited, as well as the use of transportation vehicles is not optimal, there is cost difference between the road transport and the other types of transportation.

Preliminary survey shows that the cost of transporting 40-foot containers by road from Hanoi to Ho Chi Minh City is about 35 million VND, which is twice as much as sea transport and more than 3 times that of rail transport.

Agreeing with this point of view, the Vietnam Railways said that before 1990, the national railway system had many branches linking to the ports such as Quy Nhon, Da Nang, Ben Thuy, Cua Lo, Do Che (Nam Dinh) and some special roads such as: K2 Vinh Station, coal mine - Red river, Quang Trung road, wood yard, coal mine, rock mine at Giap Bat station, Sao Vang - Thanh Hoa station,… but now they are dismantled. At present, there are only 20 specialized roads, of which 3 roads are connected with Hai Phong port and Viet Tri Inland waterway port and Ninh Binh river port.

Mr. Duong Van Hung, Director of Hai Phong Railway Services JSC, analyzes that only the price of rail freight is inexpensive, but if the cost consists of loading and unloading fee in a short distance, it will be higher.

Specifically, the price of rail freight from Hai Phong to Yen Vien is just about 2 million VND per 40-foot container, but the loading and unloading fee is 300-500 thousand VND/time, excluding short-haul transportation to the warehouse. Meanwhile, road transport is much more convenient, transporting from warehouse to warehouse using only one means. With many multi-site operations, the total cost of rail transport is halfway up the road. This is the reason why it is difficult for rail transport to compete with road transport.

Not only railway, the proportion of freight transported also indicates the inadequacies among types. In particular, road transport has a high cost but occupies 77.2% market share. While large, low cost modes of transport such as inland waterways and sea transport only account for 17.14% and 5.22% respectively. The rail transport accounts for only 0.42%, and the air transport is only 0.02%.

Difficult to connect due to the infrastructure

One of the main causes for the imbalance among the above types of transportation is the low investment in transportation in comparison to the road transport. Accordingly, in the period 2011 - 2015, road networks received 299,115 billion for investing in the infrastructure, while the railway received only 9,203 billion for investment, sea transport received 7,398 billion.

Not only the railways have difficulty, the inland waterway and sea transport also encountered many difficulties.

According to Danang Port Joint Stock Company, the connection among modes of transport, the connection between seaports and other types of marine services is still limited, so it is not able to promote all the potential and advantages of each transport mode, resulting in the unreasonable market share of transport modes, putting pressure on the road system.

Proposing some recommendations to promote effective road transport connections, Mr. Phung Ngoc Minh, Deputy General Director of Saigon New Port Corporation proposed to have policies to encourage domestic enterprises to develop inland sea-going vessels, specialized waterway vessels with large tonnage, SB barges (restrict the development of small and private vehicles), especially in the Mekong Delta area to take full advantages of the water transport system (currently only 30% of cargoes in Cuu Long Delta cargo is transshipped to the ports in Ho Chi Minh City and Cai Mep by waterway, resulting in higher transport costs of 10-50% depending on the route).

Mr. Minh also proposed to have incentives for both maritime fees and related policies for enterprises to deploy shipping lines, which directly link the Mekong Delta region with the Cai Mep area, because now there is 14% of export volume of Cai Mep coming from the Mekong Delta region.

At the same time, allow S1 registered inland waterway vehicles to operate from inland waterway area to the water area of Lach Huyen international seaport in good weather conditions (currently only SB barges can operate).

In particular, to overcome the disadvantages in railway logistics, although the cost of transportation from a station to another station is quite low, but the cost of transporting before and after the station is very high because the stations do not have a system of warehouses, yards, loading and unloading facilities, which increases the total logistics cost,

Mr. Minh has asked the Ministry of Transport and Communications to instruct and allow the Vietnam Railways to joint venture with capable units (especially units owning seaport system, warehouses, yards, specialized equipments...). Soon upgrade and build new infrastructures, warehouses, yards, distribution centers, loading and unloading equipment in the vicinity of train stations to quickly overcome weaknesses, raise competition, confirm the superiority of rail transport in the multi-modal transport chain.