WASHINGTON, DC: Two new reports by the World Bank says logistics can play a critical role in resolving Vietnam's exposure to climate change if the country moves to a less carbon-intense economy.
According to Luis Blancas, the lead author for the reports: "The research we have conducted over the past 2-3 years, including numerous conversations with freight logistics stakeholders in Vietnam, reveals that unpredictability in supply chains is the main driver of logistics costs for Vietnam. "
The bank says the country's logistics operations are more expensive than China, Malaysia, and Thailand with shippers spending US$100 million annually in extra inventory carrying costs due to clearance delays.
In a bid to spur low carbon-based economic growth, the bank says the government should adopt e-freight and apply transparency and consistency to the facilitation of international trade.
This will lead to more international players in the country's freight forwarding and third-party logistics service-provider market and encourage collaboration between foreign and domestic players.
Other bank recommendations include the definition and management of "multimodal logistics corridors" where containerized flows on trucks and barges can move on adequate infrastructure and with minimal regulatory delays; the improvement of hinterland connections to deep-water ports in the north and south of the country; the development and execution of a plan to match supply and demand in container terminal handling at these gateways and the promotion of a more sustainable supply-demand balance in the trucking industry.
A second report on Vietnam's inland and coastal waterways says more investment will bring significant economic benefits as the sector offers attractive economies of ship size. Larger barges not only result in lower unit transport costs but also lower emissions of pollutants and greenhouse gases — a major benefit given the country's exposure to climate change.
The bank recommends capacity expansion for the inland waterway corridor linking Vinh Long and Ho Chi Minh City and more investment in the northern corridor from Quang Ninh to Viet Tri as well as a dedicated coastal shipping terminal at Haiphong port.
Victoria Kwakwa, the World Bank's country director for Vietnam comments: "Many of the country's past sources of economic growth—such as a shift in economic activity towards higher-productivity manufacturing and a rapidly growing labor force—are quickly depleting and need to be replaced with new sources of productivity growth.
"Moreover, Vietnam's exposure to the risks caused by climate change—such as sea level rise and increasingly unpredictable severe-weather events—make it imperative for Vietnam to find less carbon-intense development trajectories. We believe that more efficient transport and freight logistics can play a critical role in meeting both these challenges," she adds.