Vietnam is working on a number of measures to reduce logistics costs and improve competitiveness amid increasingly international economic integration. Nguyen Tuong, deputy secretary general of the Vietnam Logistics Business Association, writes about how important freight development by air is to increase competitiveness for agricultural products.
|Nguyen Tuong, deputy secretary general of the Vietnam Logistics Business Association |
At the Vietnam Logistics Forum in Hanoi on November 26, the Vietnam Logistics Business Association (VLA) held a presentation on measures to reduce costs of logistics services and improve competitiveness, in which certain measures were proposed to develop freight by air and open direct international freight routes. This recommendation has been highly regarded for its feasibility.
The VLA’s proposal is also consistent with the direction of the prime minister in the official Document No.7709/VPCP-CN dated September 15 on the study of an airline (Cargo Airlines) with a separate cargo fleet for Vietnamese agricultural products, for separate routes.
Currently, Vietnam has a great potential for exporting agricultural and aquatic products. In 2019, the total export turnover of Vietnam’s agricultural and fishery products reached nearly $25.5 billion.
Vietnam’s air freights accounted for about 0.2 per cent of the total volume, but accounted for 25 per cent of the country’s total export value due to high value commodities. Vietnamese agricultural products have been present in many major markets such as the US, China, the EU, Japan, South Korea, and others.
However, due to the specific nature of agricultural products, the use cycle is short, easily damaged, and seasonal, so air transport is an important solution to maintain markets and raise competitiveness.
Although the Vietnamese airlines are in the development process, they are still small in scale compared to other airlines elsewhere. Air freight is mainly focused on exploiting the belly of the passenger plane but has not yet invested in freighter aircraft.
Therefore, to develop air freight transportation and agricultural products in particular, we must have an airline with a separate cargo fleet for Vietnamese agricultural products, thereby contributing to cutting logistics costs.
According to statistics over the past 20 years, aviation growth has been closely linked with GDP growth. For every 1 per cent increase in GDP, aviation will increase by 1.5-2 per cent. Vietnam’s GDP is forecasted to grow at least 6.7-6.8 per cent per year. Therefore, the aviation industry has great potential for growth and is one of the fastest-growing markets in Asia-Pacific.
In 2019, Vietnam’s aviation market continues to have a high growth, reaching 1.5 million tonnes of cargo, an increase of 11 per cent compared to 2018. However, the pandemic has increased the pressure on aviation services.
Stemming from this, a number of leading VLA members established ASEAN Cargo Gateway JSC (ACG) in October. ACG is an air services company based in Ho Chi Minh City that provides loads, initially operating a consolidation service for charter freighters on the Ho Chi Minh City-Tokyo Narita route by A321CEO aircraft. Cargo capacity will be about 6,000kg in compartments and about 9,000kg in passenger cabins.
ACG will exploit other routes if successful. This is a breakthrough in face of today’s difficult conditions. It is a need of the support from the business community importing and exporting agricultural products and seafood as well as logistics service businesses.
Working together and advancing together, we will definitely succeed in service of trade promotion for import and export of agricultural products and reducing logistics costs.