HỌC VIỆN CHÍNH TRỊ QUỐC GIA HỆ THỐNG TRI THỨC VỀ VẬN

BỘ GIÁO DỤC & ĐÀO TẠO

HỒ CHÍ MINH TẢI VÀ LOGISTICS, TRƯỜNG ĐẠI
TRƯỜNG ĐH QUY NHƠN
HỌC VIỆN CHÍNH TRỊ KHU VỰC I HỌC BREMENT CH LB ĐỨC

KỶ YẾU

HỘI THẢO KHOA HỌC QUỐC TẾ

INTERNATIONAL CONFERENCE PROCEEDINGS

THỰC TRẠNG VÀ GIẢI PHÁP PHÁT TRIỂN HỆ THỐNG

LOGISTICS QUỐC GIA VÀ VÙNG KINH TẾ TRỌNG ĐIỂM
MIỀN TRUNG

CURRENT SITUATION AND SOLUTIONS TO THE

DEVELOPMENT OF THE LOGISTICS SYSTEM FOR COUNTRY
AND THE KEY ECONOMIC REGION OF CENTRAL VIETNAM

NHÀ XUẤT BẢN LAO ĐỘNG- XÃ HỘI - 2019

 DEVELOPING LOGISTICS SERVICES IN THE CENTRAL VIETNAM KEY
ECONOMIC REGION DURING THE FOURTH INDUSTRY REVOLUTION

MA. Tran Thi Thanh Nhan, MA. Nguyen Thi Thuy Dung
PhD. Dao Quyet Thang, PhD. Hoang Thi Hoai Duong
Quy Nhon University

ABSTRACT

The fourth Industrial revolution bring opportunities while at the same

time posing challenges to the Vietnam’s logistics services as well as the Central key economic
region. According to World Bank (WB), Vietnam’s logistics costs are equivalent to about
20.9% of GDP. This cost is nearly double the developed countries when compared to other
economies in the world. High logistics costs are a major disadvantage to the economy.
Capturing the opportunities from the Industrial Revolution 4.0 will help Vietnam logistics
industry as well as the Central key economic region become an important service sector in the
overall economy structure. Therefore, in addition to identifying opportunities and challenges
related to the logistics industry by the Industrial Revolution 4.0, the article focuses on
analyzing and assessing the current situation, development potentials and shortcomings of
logistics services in the central key economic region. On that basis, the paper propose
feasible solutions to contribute to the development of logistics services in the Central key
economic region in the 4.0 era.
Keywords: Logistics, Logistics services, The Industrial Revolution 4.0, The Central
key economic region.
1. Introduction
We have been discussing about the fourth Industrial Revolution, the impact of this
revolution to the whole economy and to each sector and field, including logistics services. So
how does the fourth Industrial Revolution affect this sector?
1.1. Logistics and logisticcs services definition
Currently, it has not unified in the meaning of logistics term in the world as well as
Vietnam. There are some academic definitions of logistics terms by world’s organizations.
According to the Council of Supply Chain Management Professionals (CSCMP),
“logistic” is well defined as follows: "Logistics is part of supply chain management including
planning, implementing, controlling the transport and effective storage goods and services as
well as related information from the departure place to the consumption place to meet
customers' requirements”.

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 Lambert et al. (1999), "Logistics is the process of delivering the product to the right
place, at the right time with the right conditions and costs for consumer products".
Jacobs and Chase (2014) argue that logistics is a term related to functions that support a
round of raw materials: from purchasing and internal control of production materials; to plan
and control unfinished products; to purchase, transport and distribute finished products.
Besides, in Vietnam, the logistic concept has been mentioned as follows:
According to the definition of the Commercial Law 2005, "Logistics services are
commercial activities, whereby traders organize one or more stages including receiving,
transporting, storing, warehousing, customs decleration, customer consultation, packaging,
marking codes, delivery or other goods related services as agreed with customers for
remuneration”. The Law does not define logistics but only logistics services and does not
consider logistics as a series of continuous activities in the supply chain.
Doan Thi Hong Van and Kim Ngoc Dat (2010) argued that Logistics is the process of
optimizing the location and timing, transporting and storing resources from the first point of
the supply chain through the stages of production, distribution to the consumer, through a
series of economic activities.
Due to different logistic understandings, so building and implementing logistic
development strategies are different in the countries. However, logistic in general is a
continuous process of many services from the stage of importing raw materials, fuel to the
process of goods production and circulation, distribution of goods to consumer.
Looking back at the history of Logistics development from the 60s of the 20th century,
we can see Logistics has developed in the forms of 1PL, 2PL, 3PL, 4PL and 5PL, in which:
First-party logistics (1 PL - First Party Logistics) - self-sufficient logistics, goods
owners themselves organize and implement logistics activities to meet their own needs. In this
form, goods owners must invest in transport means, warehouses, information systems and
labor to manage and operate logistics activities. 1PL enlarges the business apparatus, so for
businesses that do not have the necessary scale, as well as experience and professional skills
to manage and operate logistics operations, this form often reduces business performance.
Second Party Logistics (2PL - Second Party Logistics) - a second-party logistics
provider who provides services for a single operation in a chain of logistics operations
(transport, warehousing, customs decleration, payment, etc) to meet the needs of goods
owners, not integrating logistics activities. This form includes: Shipping companies by sea,
road, air, warehousing companies, payment intermediaries companies, etc.
Third Party Logistics (3PL) - is on behalf of the owner to manage and implement
logistics services for each functional division such as: represent the consignor to carry out
inland export and transport procedures or represent the importer to make customs decleration
and transport the goods to the destination. Therefore 3PL includes many different services,

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closely combine rotation, inventory, information processing, etc and integrate into customers'
supply chains. Companies using 3PL and logistics service providers have a close relationship
to share information, risks, and benefits under a long-term contract.
Fourth Party Logistics (4PL) - is an integrator who unites and aligns its resources,
potentials and scientific and technical facilities with other organizations to set up design, build
and operate logistics chain solutions. 4PL is responsible for managing the flow of materials and
goods, providing supply chain solutions, planning, logistics consulting, transportation
management, etc. 4PL towards managing the logistics process, such as receiving goods from
places production, import and export procedures, delivery of goods to final consumption places.
Fifth Party Logistics (5PL) - is a person who designs and refines supply chains, 3PL,
4PL operations and provides an integrated information system to ensure continuous flow of
information and increase control over the entire supply chain. 5PL manages and coordinates
the activities of 3PLs and 4PLs through information solutions related to supply and demand in
the electronic logistics service market. 5PL works on a complete platform of flows
(materials, information, finance, downstream) across the supply chain in order to applying and
developing flexible supply chains, satisfy the needs of all members of the chain.
Along with the development of society, the trend of outsourcing (2PLs, 3PLs, 4PLs,
5PLs, mainly 3PLs) implements increasingly popular logistics activities, which are logistics
services. Previously, when referring to logistics services, people often think of basic services:
transportation and warehousing. Now, logistics services are abundant: transportation,
warehousing, consolidation, packaging, labeling, assembly, cross-docking, milk run, supplier
management, logistics recovery, support Financial aid, etc. These services can be divided into
4 main groups: Logistics input, Logistics in warehouse, Logistics output, Logistics recovery.
Most enterprises providing Vietnam’s logistics services (LSP - Logistics provider) are
currently 3PLs, providing some integrated services and new types of services will appear in
the fourth industrial revolution. Industry 4.0 will be the core foundation for bringing logistics
to take off in the future. So what is the 4.0 industrial revolution?
1.2. Industrial revolution 4.0 and its impact on logistics services
 The fourth Industrial Revolution
Back to the human kind’s development history, many revolutions has taken place,
helping the human kind to take large progresses. So far, humanity has been witnessing four
industrial revolutions.
- The 1st industrial revolution stared at the end of XVIII century, marked by the birth of
steam engine, internal combustion engine, opening a new era of machinery production and
trading development.
- The 2nd industrial revolution started at the beginning of XX century, with the invention of
electricity generator and electricity engine, opening the era of mass production using electricity.

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 - The 3rd industrial revolution started in the 1960s – 1990s, creating semi-conductor,
electronic appliances, inventing computer and internet, providing the ability of
communication, supervision and adjustment of manufacture procedure.
- The Fourth Industrial Revolution (FIR): Started in Germany in the early years of the
21st century. This industrial revolution is characterized by the connection of virtual-reality
systems (Cyber-Physical Systems - CPS). In some other countries, the industrial revolution
4.0 is called "IP industry", "smart production" or "digital production". The main idea is a
future production brings virtual world (number, network) and reality (people, machines) close
together, through technologies such as Internet connecting everything (IoT - Internet of
Things), Internet connected systems (IoS - Internet of Systems), artificial intelligence (AI -
Artificial Intelligence), virtual reality (VR - Virtual Reality) and augmented reality Enhanced
(AR - Augmented Reality), large-scale data storage (Big Data), virtual reality interaction,
Cloud Computing, social networking, mobile, etc to fully transform the real world into the
digital world. The nature of the industrial revolution 4.0 is based on digital technology
platform and integrates all smart technologies to optimize processes and production methods;
emphasizing the technologies that will have the biggest impact are 3D printing technology,
biotechnology, new material technology, automation technology, robots , etc. According to
the forecasts of the researchers, the industry 4.0 will lead to great changes in human-type
society: The era of mass production of a product will gradually end; The change in the
concept of product design innovation; The world will witness the rise of information
technology enterprises.
 The impact of industry 4.0 on logistics services
Like previous industrial revolutions, the industrial revolution 4.0 will impact social life
on both positive and negative sides. On the positvive side, it is certain that the industrial
revolution 4.0 will help production grow strongly, increasing labor productivity, high income,
new utilities appear to help improve the quality of life for people. On the negative side, those
who are unable to meet the requirements of the industrial revolution 4.0 will be eliminated,
the gap between rich and poor is widening, conflicts in society will increase. Unlike previous
industrial revolutions, the industrial revolution 4.0 with its characteristics will take place very
quickly, drastically, and impact on the stronger and deeper social life. Within the limits of this
article, the authors only mention the impact of industrial revolution 4.0 on logistics services.
Firstly, applying IoT and IoS in logistics services. According to survey results published
in Logistics White Paper 2018, over 30% of IT applications currently used in logistics
enterprises are basic applications such as: delivery management system, warehousing,
electronic data exchange, transport management and customs declaration (most applications
are 75.2% to 100%). In the field of warehouse management, through sensor devices installed
on shelves, pallets and goods, all information about the location, order status, and volume of

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goods will be updated in real time, send to the warehouse management system, thereby
reducing labor and time spent on tallying, tracking import and export goods, while it helps the
warehouse management to be more strict, accurate and simple. Sensors can also be mounted
on conveyor belts, on goods that help to classify goods quickly, accurately and efficiently. In
the field of transport, IoT helps improve fleet management efficiency. Thanks to the sensors
mounted on the vehicles, it is possible to monitor the position, route of operation of each
vehicle, thus programming, optimizing the operation of the vehicles, minimizing free time and
performing maintenance vehicles in the best way.
Secondly, robotics application. In the logistics robotics service has been gradually
applied to minimize errors arising in the process and improve labor productivity. In the
process of working robots combine with humans, thereby forming the concept of cobot
(collobarative robot) - Robot collaborating with humans. It is possible to widely apply cobot
technology in warehouses, with a special structure that is easy to move in warehouses,
equipped with high resolution cameras, sensors and self-study capabilities, be able to
programme to coordinate with warehouse staff in selecting, classifying and packaging goods,
helping to complete e-commerce orders quickly and accurately. In addition, we can use the
machine arm in loading and unloading, transporting goods, bring very positive results.
Thirdly, virtual reality (VR) and augmented reality (AR) applications: In logistics
services, VR and AR technologies can help employees quickly identify shipment information,
thereby saving time for goods.
Along with the above applications, large-scale data storage also proved to be very useful
in forecasting supplies and goods demand and planning logistics development and supply
chains. Besides opportunities, industry 4.0 also puts logistics services ahead of challenges
such as unemployment, high-tech crime. In the near future, if the warehouse, loading and
unloading, documenting staff, etc in the traditional way does not trained, improve the level to
meet the requirements of industry 4.0, they will be eliminated . Therefore, it is not
recommended to develop human resources for logistics services by quantity, but to focus on
training high quality human resources for this service.
2. Current status of logistics service development in the Central key economic region
The Central key economic region was established under the Prime Minister's Decision
No. 1085 / QD-TTg dated August 12, 2008. The Central key economic region consists of 5
provinces, namely Thua Thien Hue, Da Nang, Quang Nam, Quang Ngai and Binh Dinh. In
the regional development plan, the Central key economic region has identified specific
development orientations such as focusing resources on developing mechanical industries;
building and repairing ships, electronics and information technology industry; promoting the
development of supporting industries and processing industries; textile, footwear, etc. At the
same time, the plan focus on financial services, banking services in economic zones and

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regional cities; focus on developing logistics services, seaports activities, airports, marine
exploitation, etc. In particular, logistics services are considered as an important industry aim
to take advantages of the Central key economic region (transport infrastructure, port
infrastructure) to develop and contribute to economic growth. However, logistics activities in
the central key economic region still exist some shortcomings, not adequate to the
development potential of the region.
2.1. Potential and advantages
One of the decisive factors to the success of logistics services is the geographical
advantage, which is one of the biggest advantages of the central key economic region
compared to other economic regions. The central key economic region has a particularly
important position in the socio-economic development strategy and ensuring national defense
and security for the Central Coast region. The Central key economic region which located in
the middle of the country along the coast of 609km and located on the North-South transport
axis, having national highways connecting seaports of the region to the Central Highlands and
with Laos, Northeast Cambodia, Northeast Thailand and Myanmar. There are 4 airports with
2 international airports are Phu Bai and Da Nang; have advantages in marine economic
development and port services, international transshipment, aquaculture; with seaport system
including Chan May, Lien Chieu, Tien Sa, Ky Ha, Dung Quat and Quy Nhon. Most of these
ports are deep-water ports, capable of receiving large vessels, located near international
waters that create the Central key economic region to become an important leading exchange
in international economic between countries in the region and the world. These are important
prerequisites for logistics development, an excellent opportunity for the central key economic
region to build a sustainable development logistics system.
The central key economic region has many opportunities for logistics development in
terms of both policies and development conditions, especially after the Prime Minister
approved for nationwide logistics center system development planning by 2020 and
orientation towards 2030; in which, the Central - Highlands region has been established and
developed six logistics centers 1st and 2nd level and an aviation logistics center in regions,
subregions and economic corridors. Da Nang city has 01 logistics center at 1st level, 01
specialized logistics center at Da Nang International Airport. In addition, Da Nang has
approved the project "Development logistics service in Danang by 2015, vision to 2020”
according to Decision No. 1890 / QD / UBND dated March 27, 2014. Although its
incomplete, synchronize and not catch up with practical logistics activities in the Industry 4.0
but has created a certain legal basis to regulate logistics activities in the market.
The most precious and the strength of the Central region as well as the Central key
economic region is a hardworking, intelligent person who has the will to overcome difficulties
to rise up, have a sense of discipline, have enthusiasm for labor and passion for creativity.

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However, there should be appropriate development policies to promote the strength and
become the high quality supply of human resources in logistics.
The regional logistics service providers have strongly applied management technology
in the spirit of the Industrial Revolution 4.0, supply chain management with information
technology systems integrated with information of shipping lines, seaports, airports, customs
and connected transport system to help customers update goods information quickly and
accurately. Enterprises are constantly invested in upgrading the scale, technology and service
quality. With the application of advanced technology, quality management system ISO 9001-
2008; Management method "Specialized to effective, combined to create advantages" and
motto of service "Constantly completing the supply chain and improving service quality,
meeting the diverse requirements of customers in the spirit of increasing service value ”.
Logistics enterprises have been bringing the most optimal and effective logistics solutions to
customers, helping businesses and investors reduce transportation costs, reduce product costs,
focusing on core business, improving competitiveness and production and business efficiency.
International integration also brings many development opportunities to logistics
industry in Vietnam as well as central key economic region. This is an opportunity for
regional logistics businesses to access larger markets. Besides, the central key economic
region have many opportunities to develop international cooperation and expand export
markets, create conditions to attract foreign investment, promote the transformation of growth
model, restructure the economy.
2.2. Disadvantages
While logistics services in the central key economic region have many strengths, there
are also many shortcomings.
With the system of legal framework in the current Central key economic region in
logistics, there are still many shortcomings: it has not strategy and overall plan for logistics
development at national, regional and local levels.
Logistics infrastructure has not been properly invested, the quality of the national
highways is still limited, there are no regional centers planned and invested in construction
sites that connect various types of transport means and connect economic corridors in the
central key economic region such as the lack of a railway system connecting with regional
ports has limited the development of logistics activities, causing congestion, traffic accidents,
environmental pollution and stagnant goods, limited the development of production and
circulation of goods in localities in the region, hindering consumption of products and trading
of goods, causing inadequacies in trade promotion.
Logistics enterprises in Vietnam as well as the central coastal provinces are still weak.
The number of logistics enterprises is large, but most of them only perform a few separate and
independent stages, is not knowledgeable about logistics service and the relevant legal

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provisions of each country, each region in the world, is not connected to the international
network. Therefore, it is not enough to organize the entire supply chain or have a global
connection to provide package logistics services for goods. Some enterprises have signed a
cooperation agreement in logistics services exploitation in the region as PORTSERCO Joint
Stock Company in Da Nang signed with ACUTECH logistics company Thailand - Lao PDR
Logistics Company - Myanmar Global Transport Logistics Company to link exploitation of
package logistics services on the East-West Economic Corridor but so far the implementation
of linkage cooperation still has limitations such as: the procedure is still slow, the transport in
the territory of Vietnam is low, but the high cost along the road. Logistics Company Da Nang
Port, Danatrans, Viconship Da Nang and some other companies still remain forwarding
activities mainly.
Enterprises providing logistics services in the central key economic region have applied
information technology to their work but still at a low level, mainly using electronic customs
declaration software, car navigation, email and basic internet technology, etc. The main
reason is that these enterprises are now small and medium-sized so they are limited in
investment capital, and the human resources in information technology are inadequate. This
is a weak point in the development of the logistics system in the central key economic region
in the 4.0 era.
Human resources in the logistics industry in Vietnam as well as the Central key
economic region are still weak and inadequate in both quantity and quality. In fact, it has
more than 80% of people self-knowledge about logistics in the logistics human resources.
Supply of logistics human resources at university level in this region is very limited. Both
Central coastal area currently only University of Economics - Danang University specialized
training Logistics with enrollment scale of 100-150 students / year. Training and human
resource planning issues have been interested in several years, but can not meet the
requirements in reality. This leads to the lack of experienced professionals in the field of
logistics who be able to work with international partners.
3. Solutions to develop logistics in the Central key economic regions
3.1. Solutions on policies and roles of the Government
Legal basis plays a very important role, is the foundation to create conditions for the
logistics service to take off, because it is necessary to soon build the logistics development
master plan of the central key economic region to 2030 , vision to 2050. On that basis, to
adjust and supplement existing plannings, plans and schemes of localities in the region, in
which industry-related regulations must be taken into account to create a favorable legal basis
for logistics development in the new era.
It is necessary to have policies to prioritize investment in developing logistics
infrastructure in the central key economic region, to prioritize investment in building a

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railway system linking seaports in the region with logistics centers, connecting means of
transport with these centers, applying a suitable and effective management model for these
center.
The government needs to strengthen and adopt funds to support small and medium
enterprises or through the Logistics Association to organize training programs, raise
awareness, support businesses to access and apply international solutions.
3.2. Solutions for investment in infrastructure development
Whether logistics services meet the requirements of Industry 4.0, it depends very much
on logistics infrastructure. Meanwhile, logistics infrastructure of the key economic region in
the Central region are lack and weak, and the biggest weakness is asynchronous. Therefore, it
is necessary to review the plan, if unreasonable, it need to adjust the plan to ensure the
consistency of transportation infrastructure, warehouse and the goal of developing logistics
services to meet the requirements of Industry 4.0. Besides, creating favorable conditions to
attract domestic and foreign investment to build and develop logistics information technology
infrastructure in the central key economic region. It should be strived to have an international
port of this region belong the "search" list of the global container management system
(whereby shippers, wherever possible in the world can know where the goods are located, at
which ports and which ships are transported), effectively and widely use the GPS navigation
system in the region.
Developing logistics system in the central key economic region need to aim at realizing
economic links between sectors, localities and enterprises, economic corridors to effectively
exploit the regional potentials and advantages.
3.3. Solution on human resources strategy
Development of logistics human resources does not based on the quantity, train massively,
it should focus on training high quality human resources, meeting the development requirements
of the logistics industry in the 4.0 era. It is necessary to have policies to attract high quality
logistics human resources and accelerate logistics human resource training for the central key
economic region and logistics centers at first.
Regional universities such as Da Nang University, Hue University and Quy Nhon
University should create the best conditions to accelerate the training of logistics human
resources for the central key economic region through improving the quality of logistics
professors; associated with advanced logistics training universities in the world. It is
necessary to build and complete intensive Logistics training programs for major levels of
study, to bring Logistics subjects into compulsory modules in the undergraduate and graduate
programs in economics, management and business administration at universities in the central
key economic region that to improve the quality of human resources for businesses in the
region. In order to be able to train qualified human resources in logistics industry to meet the

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needs of the economy, it is necessary to consolidate the training in a more suitable way for
each different level of management and operation.
The demand for human resources in Industry 4.0 is getting higher, logistics services
need to have high quality human resources in terms of practical skills, professional knowledge
and English proficiency in logistics. Therefore, it is necessary to strengthen research and
learning experiences of countries with developed logistics industries such as Germany,
Netherlands, Sweden, Denmark, America, Japan and Singapore, etc.
3.4. Solutions on logistics businesses
Logistics businesses in the central key economic region need to have breakthroughs and
further promote the application of modern technology, improve governance capacity, enhance
cooperation, local, regional and global connectivity, good supply chain management, cost
reduction, shortening of goods circulation time. Specifically, logistics enterprises in the region
need to strengthen the application of modern science and technology in the trend of forming
Logistics industry in the industrial revolution 4.0 to enhance competitiveness, improve service
quality and reduce fees for services. Therefore, solutions on logistics businesses need to focus:
- Proactively approaching and researching their activities to identify areas of
possible application of science and technology, thereby building their own master plan step by
step to bring technology into practice.
- Actively improve and build new information technology infrastructure to gradually
transfer data and digitize data. A part of the budget for business operations should be used to
invest in this area to effectively apply the new software needed for logistics operations.
- Logistics service providers, manufacturers, distributors, logistics managers ... need
to organize associations that exchanging experience initiatives, skills training under ToT
(Training of Trainers) method to improve logistics for staff. Companies need to pay attention
to recruitment, training and coaching specialized personnel in the areas of machine learning
and big data, combined with human resource training centers or universities to train staff with
knowledge of logistics. On-site training courses can be used to ensure that employees are
trained according to the typical job.
- Proposing to the management agency on infrastructure investment and having
incentive policies as well as financial support to be able to invest in the application of science
and technology.
Conclusion
The logistics industry is an industry with potential for development in Vietnam
especially during the period of Industry 4.0. The industrial revolution 4.0 has been mentioned
widely, so the logistics industry is not an exception in taking advantage of opportunities and
anticipating the challenges of the industry to continue to develop in the future. It can be seen
that technology trend 4.0 will be the core foundation for bringing logistics to take off in the

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future, and not only solve logistics problems but also offer breakthrough solutions in each
stage of the supply chain in general and logistics in particular.

REFERENCES

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