Logistics costs - A record high, unusually high, absurdly high

The CEO of a large private corporation in Vietnam has reflected a story: It is ordering a very small package, and the price is only 88,000 VND. The seller goes to Shenzhen - China, the location is 1,300 km from Mong Cai by road. Buyer in Tay Ho district, Hanoi. However, it only took 3 days for the goods to arrive. The shipping cost is only 15,000 VND.

He tracked and recorded the entire journey of the package as follows: Ordered at 11:58 on October 22. Delivery for logistics: 15h36 on 22.10. At Chinese customs: 07h36 on October 24. Arrival in Hanoi: 15:18 on October 24. At Vietnam Customs: 20:30 on October 24. And the goods are delivered to the buyer at 12:20 on October 25.

The CEO does not randomly "open parentheses" that Shenzhen - Hanoi does not have a direct flight. That is, transportation is entirely by road.

A small package, but fully reflects the logistics chain space from transportation, loading, unloading, collection, and packing classification, to customs clearance operations.

It is impossible not to "admire". Because with that cost of 15 thousand -16 thousand, Grab bike is delivering goods within only 3 km.

Minister of Industry and Trade Nguyen Hong Dien, at the Vietnam Logistics Forum 2022 yesterday, used two words "bottlenecks" that inhibit development when talking about the logistics industry.

Containers because of congestion, sometimes take half a day to reach Cat Lai port.

Because even though the service industry is likened to "the lifeblood of the national economy", logistics has too many shortcomings: limited competitiveness, weak linkages, and lack of quality human resources... And especially, "High cost".

How high is very high? That is equivalent to 20% of the GDP. While in developed countries, the rate is only about 7-9% of GDP. Professor Dr. La Ngoc Khue in 2018 calculated: Every year we spend about 55 billion USD on Logistics. And he almost exclaimed: Very unusual.

Also in 2018, Prime Minister Nguyen Xuan Phuc at that time said: High logistics costs are a big barrier to the whole economy. Saying “High cost” is not true, it is record high, unusually high, absurdly high. And it has existed since 2014 and still accounts for more than 20% of the GDP.

8 years for an unusual and absurd record. In the context of the openness of the economy, it is like... open. We can't just keep looking at one-fifth of GDP wasted so terribly. And if you want to change, perhaps you have to start from the perspective. But now still say that the bad is "room for improvement", it will forever be, as it has been since 2014 until now.