A worker wears protective clothing while working at Golden Logistic Co Ltd in the northern province of Bac Ninh (Photo courtesy of the company) Mandatory preventive measures among nations to contain the spread of thepandemic has resulted in disrupted trade flow and fragmented supply lines,dealing a blow to the logistics industry, which is viewed as an auxiliary fortrade and commerce, enabling other industries to deliver goods and servicesto consumers.
Factories reducing production or suspending operations has led to a curtailmentin the transportation and delivery of goods in the supply chain, greatlyaffecting the operation of logistics companies.
“Right from the early stages of the COVID-19 outbreak, the number of freightorders received by logistics companies in Bac Ninh fell sharply, at the sametime, the delivery of goods, storage and warehousing activity is slowed anddisrupted,” said Nguyen Hoai Nam, sales manager of Golden Logistic Co. Ltd. inthe northern province.
“Following government guidelines on COVID-19 prevention and control, webusinesses are making a continuing effort to realise the dual goal ofmaintaining production while ensuring work-related safety during the pandemic,prioritising workers' health,” he said.
Every stage involving transportation, warehousing, regular health check-ups forworkers and drivers transporting goods in pandemic-hit areas was all instrict compliance with guidelines for disinfection and sterilisation. But thishad resulted in a surge in operational costs.
Travel restrictions also led to worsening shortages of truck drivers to pick upcontainers, he said.
"Multiple unexpected costs have pressured logistics serviceproviders. However, it is time both manufacturing enterprises and logisticsenterprises need to work together,” Nam said.
Logistics costs in Vietnam account for about 20 percent of the goods value,which is relatively high compared to the average costs over the world.
“However, devastating consequences caused by the prolonged pandemic, togetherwith the rising prices of warehousing and freight services, makes logisticscosts continue to increase, putting great pressure on businesses,” Nam said.
Businesses also faced a significant reduction in revenue from goods exported andimported from pandemic-affected countries. Commodities shipped to Vietnamdropped dramatically, those undergoing customs clearance were strictlyquarantined. Delivery time from suppliers in the Asian market and some otherregions is reportedly longer.
According to statistics of the Vietnam Logistics Business Association, up to 50per cent of enterprises providing logistics services of alltypes experienced a downturn in activities and revenue. Air and roadtransportation services were hit the hardest.
Roughly 80 percent of the association's members are micro, small and mediumenterprises, thus many of them are on the brink of collapse, meaning workersare losing their jobs.
In Vietnam, infection cases were detected at large-scale industrial parks of BacNinh and Bac Giang, causing many disturbances in the production lines ofenterprises, which inevitably placed a direct impact on logistics enterprises.
A report summarising recommendations of businesses and associations in April-May2021 has been submitted to the Prime Minister by the Private Sector DevelopmentResearch Board (Board IV), under the government’s Advisory Council forAdministrative Procedure Reform and Young Presidents’ Organisation (YPO).
In the report, Board IV said amid the pandemic, manufacturing enterprises inindustrial parks, logistics and transportation businesses suffered, causingeconomic hardship and supply chain disruption.
Exporting enterprises confronted great challenges due to worsening shortages ofcontainers and merchant ships on a global scale, as well as skyrocketing fees.
Board IV, therefore, recommended the Government consider and direct ministries,branches and localities to simplify administrative processes or consideraccording to priority for import and export processes, as in the priority justapplied to the export of Bac Giang lychee.
This would help businesses optimise time and costs in the domestic stages tospeed up the import procedures for essential goods or accelerate the export ofagricultural products and other key export commodities.
Le Duy Hiep, Chairman of the Vietnam Logistics Service Association (VLA), saidin light of COVID-19 developments, in order to support logistics businesses,VLA proposed the Government grant a reduction of 50 percent on corporate incometax for 2020 as a way to support businesses to overcome hardships.
It also proposed the extension and postponement for employers’ tax payment,their contributions to the Social Insurance Fund, Unemployment Insurance and HealthInsurance Fund, he said.
VLA's recommendations on tax payment extension have been approved by theGovernment. However, "this takes time and many procedures are required bythe banks," Hiep said.
Decisions on petrol retail price reduction benefited both businesses andthe whole economy, he said.
The Vietnam Maritime Administration in May last year decided to reduce thepilotage fee by 10 percent for Vietnamese shipping enterprises operating ondomestic routes, as a support measure amid the COVID-19 pandemic.
Hiep said Vietnam’s logistics costs were still higher than the regional andglobal averages of 16-20 percent.
“We are trying to reduce the cost to equal other countries in the region, suchas Thailand at 14-15 percent and Singapore at 8-10 percent,” he said.
The government targets that by 2025, the contribution of logistics services to Vietnam’sGDP will touch 5-6 percent, with the growth rate of logistics industry reaching15-20 percent, the rate of outsourced logistics services at 50-60 percent,achieving Global Logistics Performance Index at 50 or higher.
Logistics enterprisesshould urgently apply IT solutions, modernising management and operationmethods, use software systems and logistics optimisation platforms to cut costsand improve service quality, Hiep said.
They should promotelinkages with other logistics providers and with manufacturing enterprises inorder to create competitive advantages in negotiation and improve serviceprovision capacity.
VLA would actively coordinate with localities and manufacturing companiesto devise solutions promoting the transportation and circulation of goods,ensuring safety amid the pandemic, at the same time applying supportivemeasures such as reducing freight, storage and warehousing costs.
Trade centres and supermarkets should consider augmenting the purchase ofagricultural products from farmers in pandemic-hit localities such as BacGiang, he said./.
VNA
