Air freight costs stymie fruit exports

High air freight costs stymie VN efforts to export fruits. (Source: nld.com.vn)

“We mostly export fresh mango, logan, litchi and dragon fruit to demanding markets like Australia, Japan and the Republic of Korea by air because such fruits cannot be sent by sea,” Dam Quang Thang, General Director of Agrice Vietnam company, told Thanh Nien (Youth) newspaper.

Thang said his company has to use Thai, Malaysian and Singaporean airlines because their cost “is half or one third their Vietnamese counterparts”. Thang said.

For each kilogramme of fruit worth US$1, his company pays US$2-3 in freight, he revealed.

“We pay US$2.9-3.2 for a kilogramme [if the consignment is] less than 1,000kg when shipping to Europe by Vietnamese carriers but only US$1.2 – 1.8 with Thai carriers.”

His company had lost several orders from the RoK to Thai rivals because of price, he said.

Nguyen Manh Hung, General Director of Nafoods Group, said: “The high air freight cost is the biggest hurdle to the development of Vietnamese fruit exports.”

Due to the high cost, his company can only export around 1,000 tonnes of passion fruit, he said.

“If we can reduce transportation costs, we can sharply increase our quantity.”

The issue was raised by Ta Duc Minh, Vietnamese commercial counsellor in Japan, at a ministry meeting held last February to discuss boosting fruit exports.

Vietnamese fruits cost more in Japan than those from faraway Thailand and Ecuador because their freight costs are much lower, Minh said.

Due to the high logistics costs, Vietnamese fruits are now exported only to Japan, the RoK and China.

Even large companies can only export a few thousand tonnes of fruits a year to more distant markets like America and Europe, according to a senior official in the Ministry of Industry and Trade’s American and European markets department.

“Fresh fruits can only be exported by air, and logistics account for a big chunk of their price,” Nguyen Quoc Toan, head of the Ministry of Agriculture and Rural Development’s agricultural product processing and market development department, said.

“High air freight costs are limiting the competitiveness of Vietnamese fruits in the international market.”