Railways lose out to road transport in cross border exports

Nguyen Dinh Tung, CEO of HCMC-based fruit exporter Vina T&T, said at a logistics forum Tuesday that the company prefers road transport over railways in delivering goods across the border because the former is more convenient and ensures product quality.

To deliver a container from the southern province of Long An, where many fruit varieties are grown, to China using the railway, the company would have to use a truck to move it to the Song Than Railway Station in the southern Binh Duong Province.

The train will then carry the container to the Dong Dang Railway Station in Lang Son Province, from where it has to be taken across the border to China by another truck.

These transitions between different types of transport make it difficult to maintain the right temperature inside the container and this could damage the fruits, he said.

Therefore, his company chooses to transfer the containers directly from Long An to China using container trucks, he added.

Other exporters mentioned similar challenges. Hoang Van Hoan, CEO of Hanoi-based TMS Trading, said during the harvest season his company sometimes needs to export 300 containers of fruits a day, but cannot deliver all of them because enough trucks are not available.

Transporting the containers by train costs 50 percent less than by road, but the company still needs to use trucks to deliver the containers to and from railway stations, he said.

Roads remain the preferred mode of transportation though transport costs could go up as high as 56 percent of a container’s value during peak demand, compared to the regular 33 percent, he added.

High logistics costs

Tran Thanh Hai, deputy director of the Agency of Foreign Trade under the Ministry of Industry and Trade, said although agriculture was a major export category, high logistics costs were making Vietnamese produce less competitive compared to other markets.

While most produce exporters prefer to use roads as their main transport mode because of the speed and flexibility involved, "road transport costs are high and traffic congestion at border gates are frequent when there is high demand," Hai said.

In the first six months of this year, 864,000 tonnes of fruit passed through the Lao Cai and Dong Dang border gates (two main gates connecting Vietnam with China), but only 1.8 percent of this was transported by train, according to the Vietnam Railways Corporation (VNR).

Officials said the corporation has been working to improve its services to meet specific demands of exporters.

Nguyen Chinh Nam, head of VNR’s business planning department, said they have invested in cold storage containers and connected with international railways to transfer goods to South Korea, Russia and Europe with less time compared to sea shipments.

Vietnam currently has over 3,000 kilometers of railway tracks, none of them high-speed. In the first eight months, railways accounted for 0.3 percent of total cargo transport, compared to 76.4 percent on roads, according to the General Statistics Office.