VietNamNet Bridge – Twenty five foreign logistics service providers have been present in Vietnam, a modest number if compared with the 1000 operational Vietnamese companies in the field. However, the minority of companies are holding the biggest pieces of the logistics cake.

The small boats on the open sea with strong waves

Vietnam began opening its logistics market in early 2012 and expects to fully open the market to foreigners by 2014. This means that the domestic logistics industry only has two more years to improve themselves, and grow up enough to survive the competition to occur when foreigners flock to Vietnam.

However, Vietnamese logistics firms are still like the small boats which are going to the open sea, where there are strong waves.

According to the Vietnam Freight Forwarders Association (VIFFAS), 70 percent of the 800 freight forwarding companies are private companies with small operation scale. The companies only can provide simple logistics services, such as customs declaration, cargo transport with trucks and container vehicles. Meanwhile, none of them can provide package services to clients.

Dr Khuat Viet Hung from the Hanoi Transport University said that Vietnam’s logistics, with the annual growth of 20 percent per annum, ranks the 53rd in the world and the fifth in ASEAN in the logistics performance index LPI.

However, the achievements have been mostly made by the foreign companies which have been present in Vietnam since the day Vietnam opened its market. Meanwhile, Vietnamese firms remain small and weak, meeting a lot of difficulties due to the lack of a perfect legal framework and the poor infrastructure.

Tran Quoc Bao, Deputy Director of Vinafco, said that since Vietnam has been relying on foreign shipping firms, logistics still cannot closely cooperate with domestic production companies.

What logistics companies now can do is to act as the representative of the shipping firms to inform to import-export companies about the situation of the goods carried from the departure to the destination ports; or, on behalf of the carriers, issue the orders of deliver goods to import-export companies after the goods arrive and fees are paid to shipping firms.

Therefore, in Vietnam, logistics service providers are understood as the companies that freight and forward goods on mainland with trucks. Meanwhile, other links of the logistics chain like the logistics network design, inventory management, supply/demand planning have not been familiar.

Dr Hoang Thanh Minh, an IT expert from Germany, also said Vietnamese cargo carrier service providers are mostly small transport companies with low competitiveness, primitive means of communication, the lack of scientific data storage method. These have led to high expenses, high transportation costs, high production costs – the factors that make Vietnamese goods less competitive.

Vietnam gears up in preparing labor force for logistics industry

The lack of qualified workforce has also been cited as a reason behind the weak logistics industry.

According to the Logistics Research and Development Institute, logistics firms would need 18,000 workers over the next three years, while production, service and trade companies would need one million workers with logistics qualification.

Meanwhile, only 40 percent of the demand can be satisfied, not enough for the rapidly developing industry with the annual growth rate of 20-25 percent.

However, enterprises now find it very difficult to find the workers in the field. It is estimated that 1.5 million laborers are working in the logistics industry, 40 percent of them (600,000) are in HCM City.

Tran Chi Dung from the institute said that 53.3 percent of businesses reportedly lack the workers with knowledge and qualification in logistics, 30 percent have to retrain workers during their works, and only 6.7 percent are satisfactory with their staff qualification.

Nam Phong