How resilient are Asia's transportation and logistics sectors?

QBE Asia and Oxford Economics have assessed the resilience of Asia’s workforce across the transportation and logistics sector in five major countries.

In a joint report, titled Building Workforce Resilience in the Transportation and Logistics Sector,  the duo delved into the current labour market situations as well as challenges faced by firms in Singapore, Malaysia, Vietnam, Hong Kong, and Macau. They also shared insights as to how companies in both fields can survive the worker shortages that affects all industries, in addition to future planning for future manpower and leadership.

Covid 19, job vacancies, and labour shortages

The report noted that the onset of the Covid-19 pandemic and the resulting health restrictions had a detrimental impact on employment in the transport and logistics sectors in across four of the five countries. During this period, the decline in employment ranged from 2.6% of pre-Covid levels in Singapore to a more significant 10.9% in Macau.

Notably, Malaysia was the exception among the countries examined, as it did not experience a decline in transport and logistics employment. This resilience was attributed to the sector's heavy reliance on the freight segment, which continued to transport inputs and outputs for Malaysia's rapidly growing manufacturing sector.

Post-pandemic, both Malaysia and Singapore's transport and logistics sectors saw robust recoveries in employment, surpassing pre-pandemic levels by early 2023. This resurgence was driven by the increased global demand for goods, benefiting the industrial bases of both countries.

Singapore benefited from its status as a global trade hub. However, Macau and Hong Kong faced substantial challenges due to prolonged lockdowns and the halt in regional and international travel. Only recently have these economies begun to reopen, and as a result, employment levels in these regions have yet to fully recover from the pandemic's impact.

The post-pandemic recovery also coincided with increased challenges for employers in their search for suitable personnel. Vacancies spiked when the pandemic began and, in general, have not returned to pre-pandemic levels. Malaysia, for instance, where sectoral growth has been particularly robust during the pandemic, vacancies in transport, logistics, and communications as of Q1 2023 are 12.8 times higher than the average in 2019. In contrast, vacancies in the entire economy, which have been decreasing, are only 2.8 times higher than the 2019 average.

In Singapore, the vacancy rate is 2.4 times higher than it was before the pandemic, surpassing the economy-wide ratio of 1.8. In Hong Kong, where a surge in vacancies only became apparent in mid-2022, vacancies in transport and logistics stand at 1.9 times the 2019 average, while vacancies in the overall economy are only 1.2 times higher.

Key points for five major countries

The industry report from QBE Asia also gave insights regarding key things to watch for all five countries:

• Singapore – labour shortages will persist as a significant issue impacting the transport and logistics sectors. Specific shortages, such as bus drivers, will continue to drive up operating costs, exacerbated by the rising demand for such workers due to border reopenings and tourism sector recovery. Additionally, there is an ongoing shortage of skilled labour in supply chain management, further complicating the situation.
• Hong Kong – labour shortages in the transportation and logistics sector are aggravated by an aging population and the outflow of local youth. This shortage is particularly pronounced in public transport and civil aviation, a concern given the expected surge in international personnel and cargo through 2023 to 2024. The government plans to introduce over 8,000 skilled foreign workers for positions like bus drivers and airport staff, but potential pushback from local labour organizations may limit the government's ability to significantly increase foreign worker numbers in the short term.
• Macau – as Macau reopens to international travel and experiences a surge in tourists from mainland China, the transportation and logistics sector faces labour shortages, particularly in tourism-related roles such as tour bus drivers. As Macau diversifies its economy beyond gaming and strengthens its role as a regional logistics hub, the demand for skilled labour in sectors like port operations and cross-border transportation will rise. More flexible regulations on hiring foreign labour, including from mainland China, may help alleviate labour shortages.
• Malaysia – companies in the transportation and logistics sectors in Malaysia will continue to grapple with acute labour shortages affecting their operations. These shortages apply to both skilled and unskilled labour. For instance, the water transport sector faces a shortage of captains and crew for barges, often filled by foreign workers. The trucking industry also struggles to attract manpower despite relatively competitive pay, due to gruelling schedules and the risks associated with poor road conditions in rural areas.
• Vietnam – Vietnam's labour pool, which has traditionally been abundant and affordable, is undergoing rapid changes that affect the transport and logistics sectors. An outflow of internal migrants from southern economic centres is increasing the availability of manual labour in northern, central coastal, and Mekong Delta provinces. However, workers in these sectors often lack technical and management skills, according to a majority of surveyed firms. While the legalization of independent labour organizations has the potential to increase collective bargaining, the absence of guidelines facilitating such bargaining has hindered the establishment of these entities.

“The easiest way to attract and retain talent is by offering them higher compensation and benefits. However, in many cases this may be prohibitively expensive or only part of the solution. Therefore, it is important to understand alternative ways to recruit and motivate workers to stay, even in periods where labour availably is limited,” QBE Asia said in the report.

On the side of health and wellbeing, another QBE study revealed that Hong Kong small and medium enterprises (SMEs) are deprioritising employee health and wellbeing, with those saying it is their most relevant environmental, social and governance (ESG) issue dropping from 50% in 2022 to 43% in 2022.

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