Vietnam's Logistics Costs Paradox: Causes and Optimal Solutions

Abstract

Logistics cost in Vietnamese agricultural and seafood sectors accounted for 40-60 % of the price, which was considered high. At the same time, transporting costs of goods within the country was 2-3 times more expensive than exporting. That kind of paradox prevented Vietnamese businesses from competing in their market. This thesis studied logistics cost components, then analyzed and proposed optimal approaches in cutting costs of logistics in Vietnam. The primary purposes of the study were to figure out a comprehensive explanation of what causes the incongruity situation and build ideal resolutions. Different definitions of logistics and logistics cost were used to support the thesis. Data were collected by using the qualitative method. The narrative approach was the main method for rallying information from books, articles, conferences, interviews, and newspapers. The thesis had two exclusive interviews with two leaders from two big companies: Le Van Quang - CEO from Minh Phu Corp., and Nguyen Thi Hoai from Vinafood II. The target group studied was the current logistic facility and big players and the government's role in improving the internal logistic system. The research results unveiled different aspects and the real root of the logistics costs paradox in Vietnam, especially in the agriculture sector. The solutions were also proposed. Further research for how to apply it might improve the logistics system. The companies operating in the agriculture and seafood sector would benefit from this study especially.