The current status of human resources in Logistics industry: Lack of high quality manpower, human capital on course to decline post Covid-19 

Vietnam’s logistics industry is expanding rapidly 

Positive Logistics Performance Index reported in 2019

According to World Bank, EuroMonitor in 2019, Vietnam’s position in the Logistics Performance Index (LPI) published in 2019 remained at 39th among 160 surveyed countries. There is no change compared to 2018, which is also the highest ranking of Vietnam. Among emerging markets for logistics activities, Vietnam is the leading and highest ranked country in the group of low middle income countries. 

Source: VIRAC, World Bank

In Southeast Asia, Vietnam’s LPI ranked third, just following Singapore (ranked 7) and Thailand (ranked 32). Compared to the average levels of the two major regions, East Asia – Pacific and Europe, the LPI of Vietnam is shown at a high level of approximately these two regions, especially in capacity, service quality and tracking time.


Source: VIRAC

Logistics industry revenue with many positive signals

In 2018, the revenue of the logistics industry of Vietnam reached about 712.51 trillion VND, an increase of about 18.45% compared to 2017. In the period 2010-2018, the revenue of the logistics industry tends to continuously grow with CAGR (Compound Annual Growth Rate) = 23%. Vietnam’s logistics industry is currently at a positive growth rate, which is forecast to maintain double-digit growth for at least the next 5 to 10 years.

Source: VIRAC, GSO

Regarding the revenue structure of the logistics industry, warehousing and transport support activities accounted for the highest proportion with 51% in 2018. Transportation was ranked second with 46%, and the rest was from postal and shipping activities. It can be seen that logistics has become a promising industry in recent years, recording an increasing amount of capital investment in the industry.

A shortage of high quality, skilled labours and low staff training investment

In the context of the developing logistics market in recent years, Vietnam’s logistics manpower has strengths: young, dynamic, adventurous, and willing to take on challenges. However, the problem that Vietnam is facing is the lack of human resources logistics in terms of quantity, expertise and professionals.

Employees working in small and micro enterprises

The number of logistics enterprises tends to increase over the years, with more than 36,000 enterprises operating in the industry by the end of 2018. However, the majority of human resources work in small domestic logistics enterprises with small financial capacity, limited management skills.

Source: Statistical Yearbook 2018

Currently, employees working in railway, road and pipeline transport enterprises account for the highest proportion with more than 60% of total employees in the logistics industry. Workers in the warehouse and transport support activities sectors accounted for more than 32%. Labor in the air transport sector accounts for the lowest proportion, less than 1%.

Source: Ministry of Industry and Trade

In the international logistics industry, road and rail freight transport accounts for a small proportion, mainly by sea and by air because they are highly profitable transportation modes. However, about 70% of the logistics enterprises in Vietnam are in the 1PL and 2PL chains that are considered to generate little value-added in logistics services.

Labour shortage and employability in logistics industry

Vietnam’s logistics human resources are not only insufficient in quantity but also weak in quality, especially highly qualified human resources at the managerial level, good specialists. 

Among domestic enterprises, 93-95% of workers are not trained in logistics due to not many opportunities for staff to update their skills and professional knowledge. This has a great impact on the quality of service as well as increasing the company’s profit.  According to respondents from businesses surveyed, more than 63% considered the shortage of quality human resources as a development challenge for the industry.

The preparation of knowledge, skills, attitudes to be ready for the wave of labor movement among ASEAN countries is not high. Labor discipline, legal compliance awareness as well as low labor intensity are also limitations for Vietnam’s logistics manpower.

On one hand, most managers are specialists with business experience and  strong business relationships, always trained and re-trained to meet the needs of enterprises. However, this group lacks specialized knowledge due to the accumulation of knowledge from practical business experiences or insufficient vision to expand different business areas.

On the other hand, the management and supervisors are those with practical operating experience, solid expertise. However, most of them lack in-depth knowledge through complete training. According to statistics, only less than 10% of those are trained in the right industry with basic knowledge to become creative and sharp in the market. Additionally, modern working style, skills, and labor discipline will be a big challenge for the group of employees and labour workers.

Source: VIRAC

It can be seen from the figure that about 60-80% of enterprises surveyed reported the availability of skilled manpower at a low average level from direct workers to administrators in Vietnamese enterprises.

Challenges with Logistics industry movement and  developing Logistics human resources

Challenges post Covid-19 pandemic

Due to the influence of Covid-19, the commercial activities, import and export activities were interrupted, mostly the warehouse and logistics enterprises. Therefore, many businesses have had to cut down on personnel and reduce costs after the epidemic.

Limited human resources training improvement

Currently, there are not many professional training institutions in Vietnam. Human resources in Vietnamese logistics enterprises are mainly self-trained according to practical experience. Due to the fact that it is difficult to seek and retain professionals, most businesses have to train themselves to supplement knowledge and skills for employees.

In general, the training of logistics manpower in Vietnamese enterprises faces the lack of initiative in investment in developing human resources. This is reflected in the fact that businesses do not have annual and long-term recruitment plans. Recruitment time of many enterprises only occurs when it comes to immediate human needs. As a result of the booming market, businesses will have to face the shortage of skilled human resources due to the foreign businesses attraction.

Leave a Reply

Your email address will not be published.