VN TEXTILE FIRMS NEED TO UP TIES

[27-12-2016] Domestic textile enterprises and logistics service providers should work together to reduce costs and improve their competitiveness, according to experts. Nguyễn Tường, Vice Chairman of the Việt Nam Logistics Association, said the textile industry needs to import raw materials from abroad and export products to foreign markets.

Working together, many enterprises could purchase raw materials by combining their orders to create a large shipment, which will help significantly reduce transportation costs, he said.

The costs of logistics currently account for nearly one-third of the costs of each textile product exported, so the Vietnamese garment sector could save more than US$1 billion per year by reducing this cost.

Additionally, Trương Văn Cầm, Vice Chairman of the Việt Nam Textile and Apparel Association, said most textile companies currently perform outsourcing jobs, causing them to depend on the supply of raw materials and transportation services of providers assigned by their partners.

Most of these providers are foreign companies, thus the market share for local logistics companies has been narrowed, Cầm said.

Further, high transportation costs are undermining the competitiveness of Vietnamese goods in international markets, he added.

Director of the Nam Việt Co Ltd, Nguyễn Đức Chương, said that during peak seasons, textile firms have to pay the container imbalance charge (CIC) – a kind of sea freight charge which a carrier requires to offset costs arising from the transfer of a large amount of empty containers from one place to another.

This charge is only affordable to enterprises with large-scale import-export orders, such as Nhà Bè Corporation or Việt Tiến Garment Joint Stock Corporation, but is a heavy burden on small and medium-sized textile firms.

Meanwhile, there is a lack of confidence between the owners of goods and Vietnamese logistics service providers due to low-quality and high prices, said representative of the Đam San joint stock company, which specialises in producing fibers.

Located in the northern province of Thái Bình, the firm has to spend $3 billion to $4 billion every year on logistics costs.

Self-services

To improve the quality of the supply chain and reduce logistics costs, many textile enterprises have turned towards "self-service".

A representative of the Nhà Bè Corporation said the corporation has established the NBC logistics company to carry and load goods, and to export and import procedures for its shipments.

To facilitate the transaction, NBC logistics firms also opened a representative office in China’s Shanghai, and many textile enterprises are seeking to hire it to perform export and import services.

So far, conducting self-logistics services for approximately 70 per cent of their goods has helped the corporation save $2 billion per year. Previously, it had to pay $6 billion for import-export of goods annually.

However, self-service is still not a solution for small and medium-sized firms.

Therefore, business leaders in the two sectors agreed that it was necessary for the Ministry of Industry and Trade and the Ministry of Transport to assist the coordination and connection between shippers and the owners of goods.

Source: VNS