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Vietnam: Air freight costs hinder fruit exports

Air freight costs in Vietnam are much higher than the regional average; this is believed to be one of the main reasons hindering Vietnam’s fruit exports. “We mostly export fresh mango, longan, 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,” said Dam Quang Thang, General Director of the Agrice Vietnam company.

Thang explained how his company has to use Thai, Malaysian and Singaporean airlines because they cost “half or one third their of Vietnamese counterparts”.
For each kilogram of fruit worth $1, his company pays $2-3 in freight. “We pay $2.90-3.20 per kilogram for consignments under 1,000 kg when shipping to Europe by Vietnamese carriers, but only $1.20-1.80 with Thai carriers.” His company had lost several orders from the Republic of South Korea to Thai rivals because of the pricing.

Nguyen Manh Hung, General Director of Nafoods Group: “The high air freight cost is the biggest hurdle to the development of Vietnamese fruit exports.” Due to the costs, his company can only export around 1,000 tons of passion fruit, he said. “If we can reduce transportation costs, we can sharply increase our quantity.”

En.vietnamplus.vn describes how even large companies can only export a few thousand tons of fruits a year to more distant markets like America and Europe. Thus, high air freight tariffs are limiting the competitiveness of Vietnamese fruits in the international market.

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