Vietnamese sellers are expressing concerns over high logistics costs, which account for approximately 17 percent of the country’s GDP, significantly higher than the global average of 10.6 percent, according to the Vietnam Logistics Business Association. This situation is particularly striking when comparing shipping expenses; for instance, products shipped from China to Vietnam via the e-commerce platform Temu often have low shipping fees, while domestic deliveries from Ho Chi Minh City to Hanoi cost around VND30,000 (US$1.20).
Orders from China are often divided into low-value packages to benefit from the exemption of value-added tax (VAT) on imports. In contrast, Vietnamese goods face all local taxes and charges. Under the prime minister’s Decision 78 from 2010, imports valued at less than VND1 million ($39.5) sent via express delivery services are exempt from both import tax and VAT, further complicating the competitiveness of Vietnamese products.
A representative from Express Delivery Services Corporation highlighted that shipping fees in China have plummeted to as low as three Chinese yuan ($0.4) per order. In Vietnam, shipping fees have also decreased but remain higher at VND25,000 ($0.98) per order over the past decade. To attract customers, many Vietnamese vendors are covering 10 percent of these shipping costs. Khuu Kim Ngan from Binh Minh Garment JSC noted that domestic companies face challenges in competing with Chinese goods due to elevated logistics costs and taxes. She pointed out that Vietnam’s logistics system lacks the high levels of automation found in China, contributing to both high logistics charges and prolonged delivery times.
The efficiency observed in China can be attributed to standardization and large warehouses, allowing for quicker handling of orders. In some cases, products from China reach Vietnam faster than those transported within the country. Than Duc Viet, general director at Garment 10 Corporation – JSC, emphasized that high logistics costs serve as a significant barrier for local firms in competing against foreign exporters.
To address these challenges, several economic experts and businesses have suggested that Vietnam enhance its logistics system and implement favorable tax policies to support local firms against the influx of low-cost Chinese goods. Nguyen Xuan Hung from the Vietnam Logistics Business Association proposed establishing bonded warehouses to reduce intermediary costs and delivery times, thereby improving the competitiveness of domestic products. He also advocated for investments in satellite warehouse systems and logistics automation to expedite the packaging process and shorten shipping times.
Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association, recommended that the government consider reducing VAT and import taxes on strategic commodities while providing land and financial support for warehouse projects.
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