2 Port Comparison1. Overview2. Description of the port3. Competitive advantageCountry levelFirm levelIndustry levelBoth countries adopt several trade agreements internationally and regionallyPut a high emphasis on regional and bilateral trade agreements Located in the center of ASEAN communities and is neighboring with Korea, China, Japan, and India (MOT 2015)Situated along one of the busiest shipping routes in the world, the Straits of Malacca connects the Pacific and Indian oceans.=> Ideal position as a logistics and transshipment hub for passenger and freight movement in region and beyond (Ramli and Shakir 2021)=> Not affected by USChina trade tension (MIDA 2021)=> Regional gateway of RECEP for Chinese companies to venture into ASEAN (MIDA 2021)4. Comparative advantage5. Operational challenges and recommendations
Trang 1OMGT2321
GLOBAL TRADE OPERATIONS
ASSIGNMENT TWO
Trang 3PTP is strategically located at the southern tip of the Malaysian peninsula, confluent with the busy east-west trade lanes that pass
through the Strait of Malacca
Port of entry to Asean and Asia-Pacific markets for the region.
The port became operational in 1999 and was officially launched in
2000
Within first 571 days, It handled 1M TEUs, creating a world record as the fastest growing port and Malaysia 1st container terminal supassed 1M TEUs.
Received the world's largest container terminal port of
Mediterranean Shipping Company in 2019
Major shipping lines and box operators use the port for reliable,
efficient, and advanced services, enabling shippers in Malaysia to
connect to global markets in a convenient manner
Tanjung Pelepas Port
Location
History evolution
Trang 402
Description of
The Port
Trang 5(OEC 2020)
The top imports are Integrated Circuits, Refined Petroleum, Crude Petroleum, Special Purpose Ships, and Broadcasting Equipment
(OEC 2020)
Invoice, packing list, delivery letter; leaflet, catalog or other related documents, insurance
certificate, Bill of Lading/Airwaletter of credit;
permit (ITA 2022)
Intermodalism capabilities
Required documentation for import
With an annual capacity of 12,500,000 TEU the Port of Tanjung Pelepas (PTP) is Malaysia’s most advanced container terminal.
(APM terminals n.d.)
Trang 6Competitive Advantage
03.
Trang 7Country level
INTERNATIONALIZATION
Both countries adopt several trade agreements internationally and regionally
Put a high emphasis on regional and bilateral trade agreements
Trang 8Country level
SCIENCE AND INNOVATION
Impressive successes over
the past three decades:
primary commodities to
multi-sector economy
(MOSTI and MASTIC 2021)
Production resource shortage and low quality, independent and outdated technology, bureaucratic and corrupt administration, and slow SOEs reform
(Hien 2018)
Trang 9Ranking Malaysia Vietnam
GDP of USD $358.6B ranked
the 37th
$245.2B ranked the 47t
growth of 5.4%
Between 2010
-2022, averaging GDP growth of 3.6%
(World Bank 2022; Georank n.d.)
Trang 10Country level
INFRASTRUCTURE
Prioritize infrastructure
works in rural areas,
including road maintenance
and upgrade works
Budget of US$20.43 billion
for 2023
6% of its GDP on infrastructure while other countries in the region
spend an average 2.3%
Has a gap between its current infrastructure and its aspirations of being a fast-growing economy
Trang 11Country level
INSTITUTIONAL SYSTEM
Over the past years,
Malaysia faced weak and
unstable political system
(Temjenmeren 2021)
Malaysia’s ruling parties
will sign a coalition
Trang 12Malaysia Vietnam
International - Both countries adopt international and regional trade agreements, reflecting the openness to trade
- Vietnam exports performance is greater than Malaysia
Science and
innovation
Updated technology, helping countriesimproving the production and trading
Outdated technology, behind global leaders,
ineffective production and trading
Macroeconomics
soundness
- Strong economy background
- Prospective and stable growth
- Attract FDI
=> generating opportunities for trading
- Weaker economy background
- Less stable growth
- Unstable political system
- Ensuring greater stability
- Stable political system
- Strategic plan for economic growth
SUMMARY
Trang 13Industry level
Malaysia's logistics industry Vietnam's logistics industry
Strategic
Location
Located in the center of ASEAN communities and
is neighboring with Korea, China, Japan, and India (MOT 2015)
Situated along one of the busiest shipping routes
in the world, the Straits of Malacca connects thePacific and Indian oceans
=> Ideal position as a logistics and transshipment hub for passenger and freight movement in region
and beyond (Ramli and Shakir 2021)
=> Not affected by US-China trade tension (MIDA2021)
=> Regional gateway of RECEP for Chinese
companies to venture into ASEAN (MIDA 2021)
Logistical advantage that comes from being
located at the center of Southeast Asia and its proximity to China (Bhatla 2020)
Long coast line close to many internationalshipping routes (Emerhub 2020)
=> Vietnam is an ideal export hub to reach other
ASEAN markets (Nguyen and Mah 2022)
=> The strategic locations of the two nations are utilized by both to promote trade within the region
and around the globe However, Malaysia takes advantages more than Vietnam, as evidenced by its
prominent position as a transshipment hub in the global logistics sector
Factor conditions
Trang 14Industry level
Malaysia's logistics industry Vietnam's logistics industry
Infrastructure
Existing top-notch infrastructure regarding
extensive and well-linked transportationnetwork: roads, hinterlands, airports, maritimeand railways
Huge investment in developing fully-equipped infrastructure such as East Coast Railway Line
(ECRL) and KLIA Aeropolis (MIDA 2021a)
=> ensure efficient movement of cargoes and
Ranks 71 (out of 201 markets) in transport
network (scored 56.8 /100), with the limited extent and quality of network infrastructure
(Vien Thong 2022)Not all logistics facilities are located near theports and manufacturing hubs
The government is putting funds towards building and improving expressways, airports, and ports such as Long Thanh International
Airport and North-South expressway
=> Heavily congested, hinder movement of goods
Trang 15Industry level
Malaysia's logistics industry Vietnam's logistics industry
Labor
Force
Facing a shortage of qualified workers in logistics
industry that could incorporate technical skills tooperate newly adopted advanced technology (Wahab et
al 2021; MIDA 2021b)
CEMCA strategic plan (2021-2017 conducted upskilling
blue-colour workers in logistics industry (CEMCA n.d.)
=> help employees migrate to new technological skill requirements and assist them feel more secure in IR 4.0
era (Wahab1 et al 2021)
Vietnam’s logistics HR are not only
insufficient in quantity but also weak in quality (expertise and professionals)
Limited HR training improvement =>
logistics enterprises are mainly trained (VIRAC 2019)
self-=> Challenge the logistics industrydevelopement
=> Although both of countries are lack of high-skilled labor needed for logistics industry, Malaysian government put more effort in enhancing and developing labor force than Vietnam => more chance to gain
competitiveness regarding labor
Factor conditions
Trang 16Industry level
Malaysia's logistics industry Vietnam's logistics industry
Competitive
Landscape
Freight and logistics market landscape is
fragmented with a large number of players
(PMI 2022)
Adopting M&A trend to gain significant marketshare and rising demand (PMI 2022)
Operation licence requirements is high,
=> fostering competition and specialisation (
=> Expected to transform into a consolidated state
in the future
=> harmful to competition, high entry cost fornew companies (especially for SMEs), discourageinvestments limited choice for customers
(Bernama 2021)
Transportation is (Nguyen 2022)in natur now
seeing a lot of competition, including numerous SMEs and famous global companies
like DHL, FedEx, and Maersk (Nguyen 2022)
=> Intense competition among domestic logisticscompanies and from foreign players (Nguyen 2022)
=> Adopt and encourage technology research andapplication in logistical activities
=> Leading to bottleneck due to fragmentation(Nguyen 2022)
Both countries experienced high competition due to numerous SMEs in logistics sectors However,Malaysia gains more from competition by adopting more technology from big players
Rivalry and business policy
Trang 17Industry level DEMAND CONDITIONS
Consumer
demand
Nearly 90% of Malaysian consumers have shopped online in the past six months (Global Data 2022)
=> The Malaysian freight and logistics market is expected
to have a growth rate of more than 4% during the forecast
period (2022 - 2027) (Mordor Intelligence 2022)
Vietnam has the highest number of people shopping on commerce platforms in the Southeast Asia region at some
e-49.3 million (VNA 2022)
=> The fast-growing Vietnam e-commerce set high demand for e-logistics development, with an expected growth rate of
42% in 2018 – 2022.
=> Increasing demand for logistics and transportation activities in Malaysia and Vietnam.
=> Compared to Malaysian consumers, delivery speed is a major factor affecting Vietnamese customer satisfaction and
retention
A high level of customer needs is associated with logistics capabilities (Bowersox et al 1999).
57% growth of the Asian e-Logistics market in 2020-2025 due to the rapid increase in e-commerce
=> E-commerce is driving consumer demand => increasing demand for logistics
Trang 18Malaysia's logistics industry Vietnam's logistics industry
=> Revenues for these companies have grown 14%
per year (Simply Wall 2022)
High consumer demand encourages traditional postal service providers such as VN Post, EMS, and Viettel Post to respond to the market by offering solutions for an online retailer and high
operational capacity
Many e-commerce focused delivery start-ups obtained significant financial support from investors like Giao Hang Nhanh (GHN); Giao Hang Tiet Kiem (GHTK); NinjaVan.
(Bhatla 2020)
=> Increasing port container capability and replacement for better port equipment (quay cranes + container handlers) to
fulfill the high demand of customers and logistics firms from e-commerce platforms
=> However, Vietnamese logistics firms suffer higher logistics costs (6-12%) than Malaysian firms since e-commerce
firms are forced to rely on cash on delivery (Bhatla 2020).
=> Compared to Malaysian e-commerce logistics, especially Vietnamese last-mile delivery firms have still been in the early stage of development; thus, haven’t met online retailers’ requirements for timely, reliable, and cost-efficient
delivery
Trang 19Malaysia's logistics industry Vietnam's logistics industry
stand‐by rate (Bagchi & Paik 2001)
Most Vietnamese businesses are still not fully aware of the need to invest in good logistics management compared to
Malaysian businesses
Vietnam has the poorest freight infrastructure since most of
the seaports are not suited for loading and unloading because of lacking adequate technological equipment for loading and unloading products and telecommunications.
(Lang 2022)
=>Vietnam’s poorer application of information technology to logistics infrastructure.
Trang 20AI technology
& machine learning
Smartrail System, Vessel Clearance Systems (VCS)
Automatic fee collection system
e-Port model Operating SystemTerminal
(TOS) software
The super post panamax quayside cranes
A scanner that can tell the delivery truck the
location and time to stop
Deploy artificial intelligence to boost efficiency
and optimise scheduling Improving the quality of corporate governance
Reviewing and arranging of the use the workforce
appropriately
E- Port helps reduce many types of
paperwork
Advanced training with top GE engineers and
exchanges overseas at GE centres
PTP has expanded terminal development plans and is building a new berth to add 3.5
million TEUs by 2025.
Plan to achieve a cargo clearance target of at least 1 billion tons by 2020 and 1.2 to 1.6 billion tons by 2030 The development plan for the 2021-2025 period calls for an expansion of Quy Nhon Port to nearly 90
hectares (Lloyd's List 2022; Finn 2022) (Binh Dinh province 2022;
Vietnam Economic news 2022)
Trang 21Comparative advantage
Trang 22HECKSCHER-OHLIN MODEL
VIETNAM MALAYSIA
Based on H-O model, Malaysia has more comparative advantage to produce Parts and
Accessories of office and auto data-processing machines
Highly-skilled laborforce with enough expertise andworking seniority: 11%
Trained laborforce with degrees and certificates: 26%Low-skilled labor force: 63%
=> Vietnam is an unskilled labor-abundant country.
Manufacturing parts and accessories for machines require high tolerance of precision in both quantity and quality toassemble machines accurately
The labor need to manage part complexity in machine, and strict tolerances so require the labor have knowledge, andhigh skills to use tools and technologies to finish complicated parts => Ensuring right size, right shape, and materialfor separate parts and accessories of machine
=> Parts and accessories for office and auto data-processing is highly skilled-labor-intensive product
According to the H-O theory, countries will export goods that heavily rely on their abundant factor because of
differences in their factor endowments
High-skilled labor force with tertiary education: 24.9%
Semi-skilled laborforce : 62%
Low-skilled labor force: 13.1%
=> Malaysia is a skilled labor -abundant country
(HRM Asia 2022)
Trang 23Operational challenges
& recommendations
Trang 24and allowing access to international players.
=> increase shipping lines and transportation service , expand global liners
to operate in city-state (Azhar 2019)
Enhance infrastructure (road, railway), a range of modal options (Acciaro and
McKinnon 2013)
Lack of network connectivity
between ports in Malaysia (Chen et al 2016)
Lack of national strategy to coordinate the
ports (Azhar 2019)
Lack of Effective Coordination
Trang 25Challenges Recommendations
Reason: ports adapt with new digital
technologies, but people is the biggest
asset for the port
Develop various digitalization platforms
Empower and develop employees towards becoming a high performing, especially for the blue-collar staff to boost their performance and
productivity workforce
Low digitalization process
=> Lack of skilled employees is the
difficulty for port in digitalization
process
=> High technology goes with high
risk of security
Digitize people as well as technology
=> Consistent productivity whilst improving the Port’s current
performance