VIETNAM MARITIME UNIVERSITYINTERNATIONAL SCHOOL OF EDUCATION INVESTMENT PROJECT LEASING REEFER CONTAINER AS A NEW SERVICE COURSE: SEMINAR II INSTRUCTOR: MSc.. EXECUTIVE SUMMARYCJ Gemadep
COMPANY OVERVIEW
The relation to Gemadept Corporation
Gemadept Corporation, a joint stock company with a registered capital of 2,969,249,570,000 VND, is a leading enterprise in Vietnam's port operation and logistics sectors Employing 1,493 staff, it boasts a large-scale and modern network strategically located across Vietnam and neighboring countries With over 50 subsidiaries and affiliates, Gemadept has earned a spot among the Top 50 Best Vietnamese Listed Companies, as recognized by Forbes.
Since 2017, Gemadept has partnered with CJ Corporation, a leading logistics service provider in Korea Recently, CJ Corporation has exerted significant influence over their joint venture, attempting to gain control over Gemadept despite holding only 50% of the voting rights This has led to CJ frequently obstructing proposals from Gemadept’s board of directors To mitigate CJ's impact, Gemadept's management has decided to transfer operations and control to Gemadept Shipping.
Brief introduction
Name: Gemadept Shipping Limited Company or GMD Shipping
Incorporation date: 6 July 2017 (almost 4 years ago)
Legal form: Limited liability company with one member
Registered Address: 06 Le Thanh Tong, Ben Nghe Ward, District 1, Ho Chi Minh City.
Directors / Officers: Tran Vinh Nguyen Bao, representative
Port Operations: Gemet Corporation's primary business is port operations After
20 years of inception and expansion, Gemadept currently owns and runs a huge port system from North to South, in major cities and significant economic zones.
Gemadept Shipping, a subsidiary of Gemadept Corporation, is a leading liner service provider that connects Vietnamese ports with key destinations such as Singapore, Malaysia, Hong Kong, the Philippines, Thailand, and Cambodia The company also excels in domestic transportation services along the North-Central-South axis and in the Mekong Delta region.
5224: Cargo handling (Viet Nam Standard Industrial Classification (VSIC) 2007)
4669: Wholesale of waste and scrap and other products n.e.c (Viet Nam Standard Industrial Classification (VSIC) 2007)
5012: Sea and coastal freight water transport (Viet Nam Standard Industrial Classification (VSIC) 2007)
4933: Freight transport by road (Viet Nam Standard Industrial Classification (VSIC) 2007)
5022: Inland freight water transport (Viet Nam Standard Industrial Classification (VSIC) 2007)
5222: Service activities incidental to water transportation (Viet Nam Standard Industrial Classification (VSIC) 2007)
5229: Other transportation support activities (Viet Nam Standard Industrial Classification (VSIC) 2007)
7730: Renting and leasing of other machinery, equipment and tangible goods (Viet Nam Standard Industrial Classification (VSIC) 2007)
7020: Management consultancy activities (Viet Nam Standard Industrial Classification (VSIC) 2007)
7490: Other professional, scientific and technical activities n.e.c (Viet Nam Standard Industrial Classification (VSIC) 2007)
5224: Cargo handling (UN ISIC Rev 4)
4669: Wholesale of waste and scrap and other products n.e.c (UN ISIC Rev 4)
5012: Sea and coastal freight water transport (UN ISIC Rev 4)
493: Transport via pipeline (UN ISIC Rev 4)
5022: Inland freight water transport (UN ISIC Rev 4)
5222: Service activities incidental to water transportation (UN ISIC Rev 4)
5229: Other transportation support activities (UN ISIC Rev 4)
7730: Renting and leasing of other machinery, equipment and tangible goods (UN ISIC Rev 4)
7020: Management consultancy activities (UN ISIC Rev 4)
7490: Other professional, scientific and technical activities n.e.c (UN ISIC Rev 4)
Statement of objectives
GSC is a trusted partner for numerous domestic and international businesses, both globally and within Vietnam, due to its extensive experience and a highly skilled management team in the shipping industry Committed to excellence, GSC consistently strives to exceed client expectations.
We are committed to enhancing service quality by continually improving and developing our offerings Our goal is to provide clients with exceptional and diverse services, competitive pricing, and efficient procedures that are timely, concise, and respectful.
Statement of mission
“To promote the economic growth and create added values for the country, the corporation and partners through comprehensive service chain and outstanding solution”
Recognize and meet the requirements of consumers to the greatest extent possible
Creating a welcoming work environment by the use of dynamic and competent human resources
Towards community sharing and sustainable growth.
MARKET RESEARCH
Industry analysis
Identify the trend of the industry:
Commencing at 587.014,2 thousand in 2010, the number of the volumes of goods transported by road was tripled in 2019 Inland waterway and Seaway became increasingly popular at the same time.
Years Road Inland waterway Seaway
G.Shipping Ltc., offers a container leasing service, but it supplies general types only The EU-Vietnam Free Trade Agreement (EVFTA) negotiating rounds were formally reported to be completed on December 1st 2015, and the entire text of the agreement was published after 1 year EVFTA was split into two agreements in terms of trade and investment, and the agreements were completed on June 30, 2019 EVFTA was approved by the Vietnamese National Assembly on June 8, 2020, after being confirmed by the European Parliament on February 12, 2020 This Agreement enters into force on 1 August 2020 upon ratification The Trans-Pacific Partnership (TPP) is a Free Trade Agreement (FTA) between the United States, Canada, Mexico, Peru, Chile, New Zealand, Australia, Japan, Singapore, Brunei, Malaysia, and Vietnam The TPP was formally signed on February 4, 2016, and is set to enter into force in 2018 The CPTPP was formally signed in March 2018 by 11 nations (excluding the United States).This agreement was ratified by seven countries, including Vietnam, and it went into effect on December 30, 2018 and entered into force in Vietnam on January 14, 2019.
Vietnam's trade has significantly surged due to the successful implementation of the EV-FTA and TPP-FTA, resulting in a trade surplus in recent years The EVFTA Agreement's strong market opening commitments enhance Vietnam-EU trade relations, expanding opportunities for Vietnamese exports With nearly 100% of import taxes eliminated, products such as textiles, footwear, agricultural goods, and seafood are poised for substantial export growth A study by the Ministry of Planning and Investment predicts that the EVFTA will boost Vietnam's export turnover to the EU by approximately 20% by 2020, reaching 42.7% in 2025 and 44.37% in 2030 Additionally, the EVFTA is expected to increase Vietnam's GDP by an average of 2.18-3.25% from 2019 to 2023, 4.57-5.30% from 2024 to 2028, and 7.07-7.72% from 2029 to 2033 Furthermore, commitments related to services, investment, and government procurement will facilitate favorable access for EU products and services to the Vietnamese market, creating mutual benefits.
The removal of tariff barriers has led to an increased demand for Vietnam's agricultural products, prompting us to consider the implementation of a reefer container service soon To better understand the market's purchasing power and customer behavior, particularly in Northern Vietnam, we conducted a survey This research aims to provide insights into market demand, enabling us to make informed decisions and deliver optimal service to our customers.
Data collection is a crucial yet time-consuming and costly phase of the research process, serving as the foundation for effective analysis Quantitative methods are commonly employed, necessitating specific data for accurate results Various techniques are utilized, including observation (both direct and indirect), interviews (via mail, telephone, or in-person), panels, surveys (questionnaires), focus groups (full and mini), and social listening.
In our market research for G Shipping Ltd., we utilized questionnaires as our primary data collection method, employing a collective sampling approach by distributing an online survey to random participants The respondents consisted of employees from various companies within the supply chain Our surveys focused on gathering customer feedback regarding reefer container rentals Upon analyzing the results, we identified differences in responses, which we converted into percentages for effective comparison and visualization through charts.
Target market
In a recent survey of 50 participants, 62% reported having utilized the container leasing service of G.Shipping Ltc, while 38% had not Customer feedback indicates that all services provided by the company are perceived as neutral and satisfactory.
Refrigerated containers are equipped with a built-in cooling and ventilation unit that maintains a consistent internal temperature, unlike conventional containers that are affected by external temperatures Proper air circulation is essential to prevent damage to goods, especially for fruits and vegetables that emit gas and moisture; inadequate ventilation can lead to over-ripening and spoilage.
Refrigerated containers rely on an external power source to maintain their internal temperature, despite having their own temperature control mechanisms Consequently, the number of containers that a container ship or train can transport is determined by the amount of energy available for operation.
Refrigerated containers are essential for transporting not only food items but also any perishable goods sensitive to temperature fluctuations and gas emissions These containers help preserve items that deteriorate when exposed to ambient air, ensuring their quality and safety during transit.
The chart indicates that the demand for refrigerated container rentals is led by the rental sector at 36%, followed by exporters at 30%, importers at 20%, and domestic traders making up 14% of the total tenants.
Frequency and percentage of type of reefer container
Table 3:Frequency and percentage of type of reefer container
The 42R1 reefer container is the most utilized, representing 25% of usage, followed by the 42R7 at 18%, the 22R1 at 16%, the 42R9 at 12%, and the 22R9 at 11% The least popular reefer containers are the 22R7 and 45R1, each accounting for 9%.
The demand for 42R1 reefer containers is significant, with one in four customers opting for this choice Consequently, it is essential for our company to prioritize the development and enhancement of this container type.
Diagram 1: Frequency and percentage of type of reefer container
Type of cargo and type of packing
Diagram 2:Type of cargo and type of packing
How much money do customers willing to pay for a reefer container per day?
Table 4:Frequency and percentage of the customerrs willing pay for a reefer container per day
A recent survey reveals that 42 percent of respondents are willing to invest between $250,000 and $350,000, while 34 percent prefer a lower price range of $151,000 to $250,000 Only 16 percent of customers opt for the higher price bracket of $351,000 to $450,000 The least popular choice is the range of $100,000 to $150,000, indicating a clear preference for higher investment options among consumers.
8 percent, which is half of the previous one.
The data indicates that our company should consider adjusting prices based on customer preferences, with the ideal price range being between 251,000 and 450,000 volts, suggesting that our current pricing is reasonable.
Diagram 3: The amount ready to use pay for a reefer container per day
The demand for each service in our company:
Diagram 4: Demand on value - added services
As shown in the chart, the cleaning container service has the highest demand with
In the analysis of service demands, 29 choices represent 58% of the total Other significant demands include container selection at 34%, short-haul transportation at 26%, delivery services at 20%, and stuffing/unstuffing at 18% Additionally, when cargo is combined with integrated services as a package solution, it also accounts for 8%.
Of all the people who did the survey, 36% chose a single service, while the remainder chose package services.
Among the 64% of participants who selected package services, six distinct combinations were identified Combo 1 emerged as the most popular, chosen by five individuals, followed by Combo 2 with four selections and Combo 3 with three Notably, Combos 4, 5, and 6 yielded identical outcomes when utilized by two players.
Diagram 5:Common service package chosen
Data indicates that customers prefer utilizing multiple services rather than a single one, with container cleaning being the most sought-after option Additionally, the most common combination of services is Combo 1, which includes cleaning containers, stuffing/unstuffing, and container selection Therefore, our company should prioritize enhancing services beyond Combo 1 to attract a broader customer base and diversify our service offerings.
The target market should be described as thoroughly as possible.
The demand for 42R1 reefer containers is significant, with one in four customers opting for this choice Additionally, there is a growing interest in 22R1 and 42R7 containers Consequently, our company should prioritize the development and enhancement of these container types to meet market needs effectively.
The data indicates that 42 percent of individuals are willing to pay between $250,000 and $350,000, while 34 percent prefer a lower price range of $151,000 to $250,000 This suggests that the most favored price range lies between $151,000 and $350,000, demonstrating that our pricing is reasonable and aligns with consumer preferences.
Data indicates that customers prefer utilizing multiple services, with container cleaning being the most sought-after option The most common combination is Combo 1, which includes cleaning containers, stuffing/unstuffing, and container selection Therefore, our company should prioritize enhancing services beyond packages 1, 2, and 3 to attract a broader customer base and diversify our service offerings.
Competitors
GSM faces competition from various enterprises in the forward agency and logistics industry, with over 200 companies offering maritime services nationwide, including state-owned, joint-venture, private, and joint-stock firms Notable direct competitors include Vinatrans, Ben Line Agencies, Saigon Newport Corporation, and DHL Supply Chain.
GSM's indirect competitors include familiar partners such as shipping lines, airlines, and couriers, with Viettel Post Joint Stock Corporation and Vietnam Post Corporation being the two primary indirect competitors.
SWOT analysis
Gemadept Shipping is a unit of Gemadept Group and is one of the top three leading companies in the country for container transportation on domestic and international routes.
It was the first company in Vietnam to give birth to a container shipping service by sea.
Owning a large fleet, transporting on routes: North - Central - South, Ho Chi Minh - Can Tho and connecting Vietnam's ports with Singapore, Malaysia, Thailand, Hongkong, Campuchia.
Many companies are making substantial investments in anticipation of future demand, which can lead to a temporary oversupply and intense competition among businesses, particularly in terms of pricing and services The introduction of Lach Huyen port, along with other new ports, has contributed to a more fragmented market landscape.
The GMD share price of Gemadept Joint Stock Company has significantly fallen from 33,000 dong per share on July 4, 2018, to approximately 24,700 dong per share, reflecting a decline of over 30% Consequently, GMD Shipping experienced a similar decrease in value.
Vietnam is increasingly reaching out to the global supply chain with large import and export growth in 2019-2021.
The US-China trade war may promote a trade shift from China to Vietnam.
Commodity prices will rise as the US-China trade conflict drags on, global consumption demand will fall, and export output will fall.
As HICT phase 2 opens with a large capacity, competition will rise
BUSINESS MODEL
Introducing the new refrigerated container rental business model
Refrigeration rental services offer significant profits and attract a large customer base With this potential, we aim to launch a nationwide refrigeration rental project spanning from North to South Although container rentals are not a new concept, having been in practice for several decades, the clientele remains diverse, primarily consisting of construction companies, transportation firms, and storage facilities.
Refrigerated containers are essential thermal containers widely used for transporting frozen goods, fresh produce, and medical supplies These containers circulate cold air throughout, ensuring optimal refrigeration efficiency for all items inside We offer a diverse range of refrigerated containers in various sizes to meet the unique needs of our customers.
Our business leverages local logistics expertise and global information to provide significant advantages to customers We continuously enhance our distribution services, optimizing operations to reduce costs and ensure visibility throughout the supply chain GMD has invested in key warehousing locations and service packages within our strategic network in Vietnam, forming a nationwide facility network that supports our world-class Import and Export Logistics and Consolidation services Our state-of-the-art, CCTV-monitored facilities utilize RF-assisted barcode labeling for efficient loading and unloading, while maintaining strong relationships with Customs and adhering to SOLAS-VGM certification standards With a comprehensive network, we offer best-in-class EDI/API tracking across our facilities Additionally, our new reefer container rental service, along with discounted refrigeration services, is backed by a team of professionals and modern equipment, ensuring high quality, competitive pricing, and exceptional expertise.
GMD has established itself as a leading service delivery system in Vietnam, largely due to its effective marketing strategy However, it faces significant challenges, including intense competition from well-established companies in the market Despite having a strong presence, GMD encounters limitations in operational scale, capital, and human resources To navigate these challenges, GMD focuses on minimizing costs through strategic hiring, leasing space, and investing in essential equipment like refrigerated containers This approach is part of their core strategy to develop a prefabricated house system that offers luxurious and unique amenities.
Business model goals
The Canvas business model integrates essential pillars to enhance featured solutions, focusing on nine key components crucial for a refrigerated container rental business plan: Customer Segment, Value Proposition, Distribution Channels, Revenue Streams, Customer Relationships, Key Activities, Key Resources, Key Partners, and Structural Costs GMD employs this model to effectively present information about the components that shape the value chain of an enterprise, facilitating the planning of new directions and analyzing the current business image Through long-term partnerships and commercial agreements with suppliers, GMD successfully markets their products and services across e-commerce platforms and social networks, while also leveraging corporate affiliates to better understand customer psychology and adapt to the evolving market demands.
Analyze the basic elements in the new refrigerated container service
In today's competitive commercial landscape, collaboration with partners is essential for business success and growth Our company is committed to guiding our partners, such as Pacific Marine Equipment & Services Co., Ltd., which specializes in the supply, repair, and warranty of container-shaped refraction, and Gemadept Logistics Company, known for transporting refrigerated containers to customer-specified locations We maintain a robust statistical system and warehouse operations in the North, always prioritizing the respect and satisfaction of our customers and partners Our corporate culture embodies the philosophy that the success of our partners and customers is synonymous with our own success.
Renting refrigerated container services to store or transport goods Our products,
We offer a range of specialized services for renting refrigerated containers, including container picking, consolidation, stuffing, dunnage, birth container, short-distance transportation, and air conditioner repair Our refrigerated containers can maintain deep temperatures between -20°C and -25°C, ensuring optimal preservation of fresh produce and fruits They are user-friendly, with technical support for installation and operation, and feature indirect cooling, an automatic power-off system, and fan cooling These containers are effective in any weather condition, preventing water penetration and external environmental impacts Additionally, they can be combined to create larger cold storage solutions and can function as general warehouses when refrigeration is not required.
Financial resources are crucial for maintaining production and business activities, as they encompass capital, cash, bonds, and stocks; stronger financial backing increases a business's chances of survival and growth, especially during challenging times Additionally, people are essential in ensuring smooth operations, with a strong workforce being key to performance Customers are another vital element for business survival; companies must focus on attracting, retaining, and satisfying customers to thrive Lastly, resources such as computers and machinery play a significant role in production activities, supporting the workforce and enhancing overall productivity.
Customer relationship management is essential for businesses to thrive, as it involves engaging with service users effectively In the personal support sector, consultants play a crucial role by assisting customers throughout their purchasing journey and ensuring transparent pricing through clear contracts When negative feedback arises, the company prioritizes finding optimal solutions to maintain customer satisfaction Additionally, loyal customers who utilize multiple services are rewarded with gifts or discount vouchers for future use Ultimately, a strong customer system is vital for a company's growth and development.
Our company seamlessly links the northern and southern port systems while connecting Vietnam to commercial ports in Inner Asia, ensuring timely port arrivals GMD is dedicated to offering a comprehensive range of products and services tailored to the North Central South Cai Mep container shipping segment This includes essential support services such as shipping agency, full container transport from warehouse to warehouse, logistics for dry and refractory goods, and efficient customs clearance We also facilitate the transportation of goods via domestic and international vessels, along with expert package handling services at ports.
Gemadept Shipping is equipped with modern facilities and specialized containers designed for the transportation of refrigerated and oversized goods (OOG) This ensures timely arrival at destination ports and seamless transshipment connections with mother ships bound for Europe and America.
Our company utilizes three primary distribution channels for selling services: e-commerce, Facebook, and our branch agencies We are committed to enhancing customer support by continually investing in the development of advanced management platforms, solutions, and tools that offer high application features for our products.
E-commerce channels, including websites and applications, enable quick access to customers by eliminating barriers of space and time, allowing them to engage in trading activities and search for services anytime, anywhere With a vast array of products and services available, customers can easily compare prices and find the best deals, often at lower prices due to the abundance of accessible information Additionally, e-commerce facilitates rapid information retrieval through search engines, enhanced by realistic images and sounds This online business environment fosters collaboration among participants, enabling effective and swift sharing of information and experiences.
Reaching the right target customers is crucial for businesses, and Facebook offers an effective solution A Fanpage serves as a business's social media presence, facilitating connections with both potential and loyal customers The synergy between a Fanpage and a website can significantly enhance sales and brand visibility Facebook provides substantial benefits, including reduced marketing costs, rapid information dissemination, and efficient customer communication Additionally, its data analysis capabilities allow businesses to utilize paid advertising to precisely target their audience.
The direct sales channel through company branches enables customers and consultants to engage in direct exchanges and negotiations, ensuring optimal service and pricing This approach encourages customers to make informed decisions Additionally, the company provides integrated consulting on essential product and service information, along with post-sale follow-up to nurture customer relationships and foster ongoing development.
Customer segmentation significantly enhances administrative efficiency by categorizing clients based on demographics, sectors, and purchasing behavior This strategic division enables timely responses to shopping requests across various fields, including education, government, and business Market research and surveys provide insights into customer professions, experiences, and desired services, allowing for more precise budget allocation Ultimately, this approach fosters a deeper understanding of customer needs, leading to improved service quality.
Costs play a crucial role in an effective business model, encompassing various expenses such as investments in new or used refrigerated containers, upgrades to tracking systems, maintenance and repair costs, inspections, storage fees, operating and marketing expenses, staff salaries, and overheads While new refrigerated containers offer superior quality and performance, their investment cost is significantly higher—up to twice that of used containers, which, despite being cheaper, still incur substantial maintenance and repair expenses Additionally, the challenges associated with equipment replacement and longer maintenance times can further escalate costs Consequently, for businesses that do not regularly transport large volumes of goods, investing in refrigerated containers may prove to be prohibitively expensive.
The company generates revenue through container rental services, particularly by offering refrigerated containers in various sizes and price options Additionally, it provides value-added services, container repairs, and the sale of transport vehicles This revenue model involves granting customers exclusive rights to use assets for a fixed period in exchange for a fee, benefiting both the company and the lessee Customers enjoy the flexibility of renting containers by the hour across various provinces, making the service appealing Furthermore, the asset sales revenue stream arises from selling ownership rights to high-quality products, contributing significantly to the company's overall revenue.
PROJECT PLANNING
Project life cycle
Vietnam stands out as a top global producer and exporter of agricultural products, supported by a vibrant consumer market of over 100 million people Consequently, the demand for effective preservation methods during transportation has surged significantly in recent years.
Gemadept should seize the opportunity to enhance its business by introducing reefer containers as a new service to meet customer demands This strategic expansion could not only attract more clients but also establish a dedicated customer base for this service.
Market research indicates that the 42R1 and 42R7 models are the most preferred options, capturing 25% and 18% of preferences, respectively The 22R1 type follows closely with 16% Consequently, the company plans to invest in these three models for the upcoming service.
Our company focuses on the 3 types to satisfy customer’s needs as well as diversify the options
Gemadept is committed to delivering internationally quality products that prioritize customer satisfaction and responsibility We offer a diverse range of products and services, ensuring safety and hygiene at competitive prices Our survey indicates that a price range of 151,000 to 350,000 is optimal for both customers and our company Pricing varies based on route distance, with shorter routes being more affordable and longer routes priced higher Additionally, fluctuations in fuel prices may lead to slight adjustments in our pricing.
To compete, our company will sell wholesale prices to longtime customers, who have worked with us more than 3 times
We decided the price range for each type in the Northern region is :
Effective advertising is crucial for a new company, and Facebook advertising stands out as the most effective strategy due to its vast user base This platform enables rapid and strong connections between businesses and consumers, facilitating quicker brand recognition and widespread distribution across the country By leveraging Facebook ads, the company can manage its budget effectively while ensuring sustainable brand development To maximize this approach, we will prioritize our Facebook presence by hiring dedicated personnel to create engaging content and visuals for daily posts, as well as to provide customer consultation and support.
To enhance customer engagement, we will distribute leaflets to clients booking services, introducing our new offerings Customers can easily access information and reach out for more details To attract initial interest, we will host a discount event during the first month of operation.
GMD can leverage its extensive network of corporate partners for indirect promotion, allowing these organizations to act as advocates By utilizing various promoting branches, GMD can effectively disseminate information about its new services to a diverse range of customers within the industry, thereby broadening its customer base.
The General Director oversees all business operations and personnel within the company, focusing on enhancing the growth and profitability of the new reefer service This role involves developing and executing strategies related to investment opportunities, corporate planning, product development, and brand expansion.
The Chief Marketing Officer is in charge of the company's whole marketing strategy Create a marketing strategy that is appropriate for this new reefer container service
A marketing director is responsible for staying updated on the latest news and market trends to effectively manage the company's marketing initiatives Additionally, they must generate adaptable marketing strategy suggestions aligned with the company's objectives Ultimately, the director oversees campaign development and innovation to drive company growth.
The Chief Production Officer is responsible for overseeing workload, quality, and progress in alignment with the company's strategic plan This role involves managing the production process and product quality management, ensuring efficient operation of machinery, equipment, and supplies Additionally, the Chief Production Officer supervises finished products and warehouse operations, while also inspecting and controlling production staff to adhere to established processes, maintain the required quantity, and meet deadlines Currently, there are seventeen employees in this position.
The Chief Financial Officer (CFO) is responsible for overseeing research, analysis, and the development of financial plans This role involves optimizing the use of capital resources, identifying potential risks through financial analysis, and generating accurate forecasts for the future.
We choose 3 types of containers 22R1, 42R1 and 42R7 to invest in.
We decided to buy container from CIMC (China International Marine
Name Amount Price/unit Total
Total investment including the transportation fee of these equipment : 15,46 bil VND
The company will set out a recruitment plan to enhance the human resource for this new section
Drivers: ~ 15 people/ seasonal hiring with a salary of about 3 mil VND/ one shipment from the place of discharge to the place of destination
Workers : who will be in charge of unloading and loading, cleaning containers, about 20 people more with the salary of 4 mil VND each month
Staff in Reefer section, who are in charge of operating this section only : 15 people witht the salary range from 5- 8 mil VND/ month
Once the company has successfully recruited all necessary personnel, it proceeds to the training phase to enhance their skills This phase requires a significant financial investment, totaling approximately 700 million VND.
Start the promotion as planned Build a promotion combo by adding a few services in a pack to offer a lower price for customers
Trials of new containers to check to avoid flaws If any, we need to contact the manufacturer right away
After everything is ready to be operated, the company needs an opening day to promote the new service so everyone can find this event online.
Financial appraisal
Quantity Price per unit Total Puchase of assets
Title Number of people Salary (per Tet holiday bonus Other occasional bonus Extra time a
Number of operating time Reve
Total Revenue in leasing reefer container
Normal season (270 days) Peak season
Average leasing cycle Number of cycle Average leasing cycle Number of cycl
Container type Leasing price (VND/day)
Price Choosing rate Estimated number of chosen Revenu
Total revenue in value-added services 3,933,69
Year of Project Total Revenue Total expense Net Profit
The Payback Period method indicates that the break-even point is reached in approximately 1 year and 2 months In contrast, the Discounted Payback Period method shows that it will take about 1 year, 3 months, and 19 days to recover the initial investment, which is a reasonable timeframe The Net Present Value (NPV) calculation reveals a net profit of 5.43 million VND at the project's conclusion, surpassing the initial investment with a 10% annual discount rate This suggests that the Leasing Reefer Container Project will yield significant profits for the company over a 10-year period Additionally, the Internal Rate of Return (IRR) is calculated to be approximately 19% using a discount rate of 20%, which is considerably higher than the established interest rate.
To wrap up, we use the BCR formula and find the rate, that higher than 1, is 1.4 Thus, the Leasing Reefer Container reliable and definitely can be take into account.
Risk assessment
Every business venture carries inherent risks, which can arise from both subjective and objective factors during the investment and production phases Accurate financial viability calculations depend on minimizing these risks Thus, it is crucial to assess, analyze, and predict potential risks to enhance the feasibility of the project and implement proactive preventive and mitigation strategies.
The growing number of companies renting reefer containers significantly impacts project operations and business income Increased consumer demand, particularly in the US, European, and Australian markets, driven by remote work and a surge in household appliance purchases, has boosted import and export activities This surge has led to a notable rise in container demand, resulting in higher rental costs per available container Additionally, ongoing complexities due to the pandemic have hindered air freight operations, leaving much of the global fleet inactive and affecting overall freight activities.
The maritime route is currently facing a significant challenge as many booking departments for empty container shipping lines have surpassed their capacity limits, exacerbating the container shortage Consequently, the risk of market unavailability is minimal and nearly non-existent in the current landscape.
2 Purchase risk: The company advances money but the container supplier does not deliver the goods, or delivers the goods with the wrong quality, quantity, etc., which affects the other plans of the company.
3 Contract risks: When signing a contract with a customer, the terms of the contract are not tight, causing disadvantages in terms of acceptance, payment or collection of money, etc., even if the contract is invalidated.
4 Customer risk: The company is delayed, cheated by customers, refuses to pay the container rental, leading to improper use of cash flows
5 Transaction risks: There are mistakes, errors in financial transactions, causing damage to the company and the project
6 Risk of loss: the company is taken advantage of trust by employees from which fraud, embezzlement, loss of assets
7 Human risk: occurs due to insufficient human resources to operate and maintain the company's containers when damage occurs or workers make mistakes during the management and maintenance process, leading to container damage thereby causing damage to the company
8 Political risk: Tax increases affect the cash flow of the project
9 Product risk: Containers are damaged a lot after being used, causing maintenance costs, thereby affecting project progress
10 Competitor risk: Many competitors appear in the same field and lease with lower prices for services in order to suppress prices, thereby affecting the price offered,the number of customers as well as the project progress.