Freight rail – potential to replace road transport

Vietnam’s logistics costs currently account for 16–20% of GDP, significantly higher than the global average of 10–12%. With road transport carrying over 70% of cargo, congestion, rising costs, and environmental pollution have become critical issues. Meanwhile, freight rail accounts for only 1–2% of logistics share. This reveals huge untapped potential for developing freight rail as a sustainable and cost-efficient alternative to road transport.

Current status of freight transport in Vietnam

Road transport

• • Dominates the domestic logistics market.
    
  • High costs, traffic accidents, and congestion are persistent problems.
    
  • Places heavy strain on already aging infrastructure.
    

Maritime transport

• • Plays a key role in imports and exports.
    
  • However, dependence on major ports leads to bottlenecks.
    

Rail transport

• • Holds only a tiny market share.
    
  • Infrastructure is outdated, freight train speeds average just ~50 km/h.
    
  • Poor integration with seaports and inland container depots (ICDs).
    

Development potential

North–south economic corridor

• • Huge demand for container and industrial goods transport.
  • Upgrading the North–South railway could make it the backbone of domestic freight.

ASEAN–China connectivity

• • Key routes such as Hanoi–Lao Cai–Kunming and Hanoi–Dong Dang–Nanning offer cross-border logistics opportunities.
    

See also: Inter regional railway infrastructure – ASEAN connectivity

Bulk and agricultural goods transport

• • Rail is ideal for heavy, bulky cargo such as coal, steel, cement, and agricultural produce.
    

Advantages of freight rail

• • Lower logistics costs: 30–40% cheaper than road transport over long distances.
    
  • Environmentally friendly: 60–70% lower CO₂ emissions compared to trucks.
    
  • Reliable and safe: Less affected by weather, fewer accidents.
    
  • Supply chain stability: Improves predictability for businesses.
    

See also: The impact of railways on logistics & freight transport

Global lessons

• • USA & Canada: Freight rail accounts for 40–50% of domestic transport, a backbone of national logistics.
    
  • China: Heavy investment in the Asia–Europe rail corridor creates a transcontinental trade route.
    
  • Europe: Expanding cross-border freight rail lines to promote green logistics.

See also: High-speed rail: Lessons from Japan and China

Challenges in Vietnam

• • Outdated infrastructure and slow average train speeds.
    
  • Lack of specialized freight wagons for containers.
    
  • Cargo terminals and logistics hubs below international standards.
    
  • Inconsistent policies to encourage rail freight.

Freight rail has the potential to replace part of road transport, cutting logistics costs, easing infrastructure pressure, and promoting sustainable growth. It will be a crucial piece in Vietnam’s national logistics puzzle, bringing the sector closer to international benchmarks.

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