Rising gasoline prices spell trouble for logistics companies

The sharp increase in gasoline prices is putting pressure on the logistics industry, forcing businesses to increase service prices; It is forecast that manufacturing enterprises will face many difficulties. When the price of fuel goes up, carriers are required to increase their prices or take some losses.
Rising gasoline prices spell trouble for logistics companies ảnh 1 Rising gasoline prices spell trouble for logistics companies
The rising costs of fuel affect the whole industry in that if it costs more for the freight carrier to transport goods, the shipper is charged more to transport those goods to make up for the increased costs.
Analyzing the increase in gasoline prices, which has a strong impact on logistics service prices, Director of VIJAI Logistics Vietnam International Company Le Dang Tam said that fuel prices contribute to 35-40 percent in the operational cost in individual transporters.
Therefore, when the price of petrol is adjusted, it immediately affects the operation of enterprises. The operational cost has increased forcing transport companies ought to increase their prices of services to retain margin; however, they had signed contracts to provide logistics services partners for the whole year; consequently, the prices of services can’t be adjusted immediately. Many logistics enterprises; therefore, have fallen into a state of loss.
Difficulties related to logistics activities are even more serious when most domestic enterprises depend on foreign logistics services.
Deputy General Secretary of the Vietnam Association of Seafood Exporters and Producers Nguyen Hoai Nam said that currently, the price of logistics services has increased by US$5,000-US$10,000 per container to Europe or the United States, 4-10 times higher compared to 2020.
Moreover, transport companies have delayed in exports of group consignments of seafood from 10-30 days without reason. As a result, businesses have to pay extra costs and compensate partners for late delivery. Seafood exporters have been becoming increasingly worried about the delays for fear of spoilage
Another reason mentioned by many logistics enterprises is that the connectivity is still limited between types of road, rail, and waterway transport. In particular, the synchronization between the road connection and the main ports has not kept pace with the development, increasing the cargo output of the ports, leading to traffic congestion on the connecting road to the port.
Last but not least, businesses still face difficulties from administrative procedures that are not clear. Some regulations such as not allowing household inspection for export goods also make it difficult for businesses hurting domestic logistics enterprises’ competitiveness in the world market.
Vice Chairman of Ho Chi Minh City Logistics Association Huynh Van Cuong said that authorities need to implement many synchronous solutions to supplement logistics enterprises’ internal strength by reducing the cost of seaport infrastructure for transshipment and transit goods, goods stored in bonded warehouses, and smooth administrative procedures.
According to logistics enterprises, it is necessary to quickly build a synchronous infrastructure system, speeding up the progress of transport infrastructure connection projects.
Along with that, responsible agencies should provide integrated and seamless connectivity for the movement of people, goods and services from one mode of transport to another. It will facilitate the development of logistics services, increase investment in logistics and warehousing infrastructure to promote the logistics ecosystem, connect the region, helping to strengthen Vietnam's trade competition globally.
Additionally, related agencies should have solutions to encourage people to use transportation services provided by Vietnamese companies. For example, businesses need to prioritize choosing Vietnamese logistics enterprises that are capable of designing logistics solutions, infrastructure, and financial potential.
In the long term, there should be a special mechanism to support the formation of large logistics enterprises, contribute to improving the competitiveness of Vietnamese products and goods, meet the increasing demand for logistics in the domestic market and attract the attention of FDI enterprises.

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