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Logistics costs turn Vietnam's garment firms uncompetitive

12
Sep '18
High logistics costs for exports have made Vietnamese garment and textile firms uncompetitive, experts caution. Textile and garments export value in 2017 was $31 billion, an increase of 19.2 per cent compared to 2016 figures, according to statistics from the Vietnam Textile and Apparel Association (VITAS), which is also lamenting over the high logistics costs.

Of the $31 billion, the industry spent nearly $18 billion to import raw materials, including cloth, fibre and cotton. However, the logistics cost accounted for 9.1 per cent of total export turnover, around $2.79 billion.

Logistics costs in the country are 6 per cent higher than in Thailand, 7 per cent more than in China, 12 per cent higher than in Malaysia and three times more than in Singapore, says a report in a Vietnamese news portal.

Despite reasonable labour costs, competitiveness has been affected by transport costs, surcharges at seaports, and limited seaport infrastructure. The surcharges of shipping lines also contribute to that cost.

Experts have urged the Vietnamese Government to come out with a roadmap to improve the quality of logistics services to meet the demand of many sectors, including the garment and textile industry.

According to the Vietnam Logistics Business Association, the country’s logistics costs in 2016 totalled $41.26 billion, equivalent to 20.8 per cent of its gross domestic product (GDP). (DS)

Fibre2Fashion News Desk – India


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