Logistics costs consume more than half of the gross profit of export businesses

That was shared by Mr. Phan Minh Thong, Chairman of the Board of Directors of Phuc Sinh Joint Stock Company, at the conference “Logistics costs are increasing, what do businesses need to do?” organized by Ho Chi Minh City Logistics Association (HALA) on the morning of July 4.

According to Mr. Thong, last year, on average, businesses only spent about 7-8 billion VND on ship fares each month. However, in June alone, this amount skyrocketed to 17 billion VND. Adding about 5 billion VND in seaport costs and other surcharges, the total logistics cost reached 22 billion VND, while gross profit reached 41 billion VND.

“Logistics costs account for 55% of the business’s gross profit. This is an unimaginable number,” he said.

In that context, although revenue is still growing, business profits are under great pressure. In 2025, Phuc Sinh will achieve revenue of about 350 million USD. In the first six months of this year, the business earned more than 230 million USD and is expected to reach about 460 million USD for the whole year, an increase of more than 25%.

Not only Phuc Sinh, many export businesses said logistics costs are increasing in many stages, from domestic transportation, warehousing, administrative procedures to international freight.

Mr. Nguyen Dinh Tung, General Director of Vina T&T, said that in order for a batch of fruit exported to the US or Europe to reach the port, the goods must be transported through many means from the raw material area to the factory, then continue to be irradiated, quarantined, complete customs procedures before being exported. “Logistics costs are not just in freight but in all such steps,” he said.

According to Mr. Tung, the price of renting refrigerated containers has increased from about 2,800 USD in early May to 7,800 USD, nearly three times, while businesses have to book a long time in advance to get a container. Sea transport time to New York (USA) also extended from more than 20 days to about 40 days due to changing routes.

The long sea route has forced many businesses to switch to air transport but still depend on foreign airlines. Meanwhile, to proactively deliver goods, Vina T&T has to invest in its own fleet of vehicles, paying about 40 million VND per month to container drivers but still faces the risk of lack of human resources and transportation risks.

From an association perspective, Ms. Dang Minh Phuong, President of Ho Chi Minh City Logistics and Seaport Association (HLA), said that logistics costs are increasingly expensive and have exceeded 20% of product costs, higher than the previous 17-18%. In addition to geopolitical fluctuations and fuel prices, inadequate connection infrastructure, traffic congestion and rapidly increasing labor costs are also pushing up logistics costs.

According to her, the salary of container drivers has increased from about 25 million VND to 45-50 million VND per month but businesses still have difficulty recruiting, creating more pressure on the entire supply chain.

The proposed solutions aim to optimize the entire chain instead of just reducing charges ship. Businesses all believe that logistics costs no longer lie solely in international freight charges but accumulate in the entire supply chain, from infrastructure, domestic transportation, storage to administrative procedures.

According to Mr. Phan Minh Thong, Vietnam needs to reduce dependence on road transport, promote multimodal transport through railway investment connecting industrial parks with seaports, effectively exploit the inland waterway system and research and develop the national container fleet to be more proactive in transporting export goods.

He also said that about 80% of Phuc Sinh’s export containers over the past 20 years have been delivered under CNF/CIF terms, meaning the business proactively charters ships and buys cargo insurance (for CIF), instead of letting foreign buyers decide. Thanks to that, businesses retain the value of logistics services, proactively cash flow and reduce dependence on shipping lines.

Meanwhile, Mr. Nguyen Dinh Tung proposed to soon form integrated logistics centers or free trade zones, where quarantine, irradiation, customs clearance and customs stages are concentrated at one focal point so that goods go straight to the port instead of having to go through many transit points. He also proposed developing infrastructure so that container trucks can directly access raw material areas, while building a container fleet and national transport network to reduce dependence on foreign firms.

Sharing the same opinion, Ms. Dang Minh Phuong said that businesses need to promote the sharing economy, using common warehouses, vehicles and logistics centers for each industry instead of investing individually. Businesses should also focus on core activities, outsourcing logistics services, applying AI, digital transformation, developing multimodal transportation and applying supplier inventory management models to reduce inventory, optimize working capital and improve cash flow.

Representative of the management agency, Mr. Le Van Danh, Deputy Director of Ho Chi Minh City Department of Industry and Trade, said that Vietnam’s logistics costs are currently equivalent to 17-18% of GDP, higher than many countries in the region such as Singapore and Malaysia. Meanwhile, logistics is identified as one of the key service industries, contributing about 23-24% to Ho Chi Minh City’s economic growth target.

According to him, the city aims to bring logistics costs down to 11-14% of GRDP in the period 2026-2030, lower than the general target of the country, through 9 groups of logistics development solutions.

One of the focuses is to develop multi-modal transport infrastructure including roads, railways, inland waterways, aviation and seaports. In particular, the railway connecting industrial parks in Binh Duong area with Cai Mep – Thi Vai port cluster is identified as a strategic project to reduce time and cost of transporting goods.

Ho Chi Minh City also aims to develop Can Gio international transshipment port and an integrated logistics center system associated with major traffic hubs. The city is proposing to include the model of an integrated logistics center and free trade zone in the draft Special Urban Law, with preferential mechanisms for taxes, land rent and administrative procedure reform to attract businesses to invest.