Poor logistics infrastructure creates bottlenecks for exporters

25-Apr-2019 Intellasia | The Saigon Times | 6:18 AM Print This Post

The poor logistics infrastructure in the Mekong Delta region has led local exporters to grapple with high costs and made locally produced goods less competitive, warned experts at a seminar in Can Tho City today, April 23.

On the sidelines of the seminar “Enhancing connectivity to improve the value chains of farm produce and seafood in the Mekong Delta,” Associate Professor Dr Ho Thi Thu Hoa, director of the Vietnam Logistics Research and Development Institute (VLI), told the local media that the Mekong Delta has many advantages in developing logistics, including the largest inland waterway system in the country.

However, the region also has multiple shortcomings, such as the lack of shipping routes connecting the delta with other countries in Asia, the Americas and Europe.

At present, most of the cargo from the Mekong Delta is transported to Cai Mep-Thi Vai Port in Ba Ria-Vung Tau Province and Cat Lai Port in HCM City for export, Hoa added.

Meanwhile, most exported products from the region are farm produce and seafood, so the transport of these products over long distances will affect their quality.

In addition to the traffic infrastructure, there is a shortage of logistics services, specifically cold storage facilities, Hoa noted, adding that the delta currently has only six cold storage facilities: four in Long An, one in Can Tho and one in Hau Giang. Meanwhile, the region is home to hundreds of agricultural and seafood product processing plants.

As a result, enterprises must transport their products to HCM City for storage before shipping them abroad or store the products in their warehouses. However, these warehouses do not meet standards, leading to a 20-40 percent loss.

Chu Van An, deputy general director of Minh Phu Seafood JSC, the world’s largest exporter of frozen shrimp, said that his company annually exports 6,700-7,000 containers of shrimp, valued at a total of $750-850 million.

It takes up to 30 hours to transport products from the Mekong Delta to HCM City by river while road transport costs are high.

Minh Phu spends VND11 million and VND7 million per container transported from Ca Mau and Hau Giang, respectively, to HCM City. Thus, the company spends more than VND60 billion (US$2.6 million) per year transporting containerised cargo from the Mekong Delta to HCM City.

If products can be exported directly from the delta, the company could cut 30 percent-40 percent of its costs. Moreover, the company’s products will become more competitive, An said.

VLI director Hoa said that in 2015, the government issued a plan to develop logistics centers nationwide, including two in the Mekong Delta area. However, these projects remain on paper.

Therefore, the delta, especially Can Tho City as the centre, should develop a regional logistics centre to meet the local demand, Hoa said. However, the project should be carefully weighed before being executed to ensure its feasibility.

Meanwhile, Nguyen Minh Toai, director of the Can Tho Department of Industry and Trade, proposed expanding Dinh An Estuary to directly export products from the Mekong Delta, as Quan Chanh Bo Canal, connected to Cai Cui Port in Can Tho City, has failed to meet demand.

https://english.thesaigontimes.vn/67865/poor-logistics-infrastructure-creates-bottlenecks-for-exporters.html

 


Category: Economy, Vietnam

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