ESTABLISHING PERFORMANCE STANDARDS OF OCEAN FREIGHT FORWARDING SERVICES FOR IMPORT AT AMITY LOGISTICS CO., LTD.. THIẾT LẬP TIÊU CHUẨN THỰC HIỆN DỊCH VỤ VẬN CHUYỂN ĐƯỜNG BIỂN NHẬP KHẨU TẠI CÔNG TY TNHH AMITY LOGISTICS. THIẾT LẬP TIÊU CHUẨN THỰC HIỆN DỊCH VỤ VẬN CHUYỂN ĐƯỜNG BIỂN NHẬP KHẨU TẠI CÔNG TY TNHH AMITY LOGISTICS.ESTABLISHING PERFORMANCE STANDARDS OF OCEAN FREIGHT FORWARDING SERVICES FOR IMPORT AT AMITY LOGISTICS CO., LTD.
LITERATURE REVIEW
Overview of freight forwarding service
Services are defined as labor products that lack a physical form, characterized by simultaneous production and consumption processes aimed at fulfilling the needs of both production and consumption.
Products and services represent a vital third sector within the national economy, encompassing a wide range of economic activities that extend beyond the primary sectors of agriculture and industry.
In a focused context, products and services represent valuable human endeavors that create intangible offerings, which do not involve ownership or the transfer of ownership Despite this, they effectively address the demands of production and everyday life within society, ensuring needs are met promptly and efficiently.
Services encompass economic products that involve physical labor, management, knowledge, organizational skills, and professional expertise, all aimed at fulfilling the production, business, or consumption needs of individuals and organizations.
In marketing and business, the concept of service is distinct from traditional goods due to its unique characteristics, including intangibility, heterogeneity, inseparability, and non-storability As a result, a comprehensive definition of service remains elusive According to Zeithaml and Bitner (2000), services encompass behaviors, processes, and methods employed to deliver value to customers, ultimately aiming to meet their needs and expectations.
Philip Kotler (2005) defines a service as an intangible activity or benefit offered by one person to another, which does not result in ownership of any physical object The creation of a service can occur independently of a tangible product.
Services are becoming vital to the national economy, with service quality being a key factor that influences their effectiveness and value creation.
The intangibility of a service highlights that it consists of activities carried out by the provider, lacking the sensory attributes that physical products possess Unlike tangible goods, services cannot be seen, tasted, felt, smelled, or heard prior to purchase, meaning potential customers cannot experience them before committing to the transaction.
Services are unique in that they are typically produced and consumed simultaneously, unlike physical goods, which undergo production, distribution through intermediaries, and then consumption This intrinsic connection means that the service provider is an integral part of the service experience.
The perishability of services means they cannot be stored for future sale or use, making it a crucial characteristic that significantly affects a service provider's financial outcomes While steady demand mitigates concerns regarding perishability, fluctuating demand presents challenges that service companies must address effectively.
Changeability is a key characteristic of services, highlighting that service quality can fluctuate significantly based on the provider, timing, location, and delivery method Given the labor-intensive nature of services, variations in quality can occur not only among different providers but also from the same provider at different times.
When determining service pricing, it's essential to consider factors such as perishability, demand fluctuations, and inseparability Unlike products, the quality of services cannot be easily standardized, making pricing strategies complex Ultimately, service prices are influenced by market demand and competitive dynamics, allowing for variable pricing approaches to be implemented.
1.1.2 Overview of freight forwarding service
1.1.2.1 Definition of freight forwarding service
Freight forwarding are activities in the circulation and distribution of goods, an important step linking production with consumption, the two main sides of the social reproduction cycle.
Freight forwarders play a crucial role in logistics by transporting products from production sites to consumption locations They facilitate the physical distribution aspect of the supply chain, complementing the commercial processes involved in distribution.
Forwarding is closely linked to the transportation process, encompassing various operations such as gathering goods, transporting, loading and unloading, storing, conveying, packing, and managing documentation Due to its extensive scope, forwarding is defined in multiple ways.
FIATA defines forwarding services as a comprehensive range of activities associated with the transportation, consolidation, storage, handling, packing, and distribution of goods This definition also encompasses consulting services linked to these activities, including customs, financial, insurance, payment, and document collection services related to goods.
Overview of performance standards in freight forwarding
A performance standard is a management-approved benchmark that defines the performance expectations necessary for evaluation at a specific level Each critical element in an employee's performance plan must have a clearly defined fully successful standard While it's not mandatory to establish standards for other performance levels, doing so is beneficial as it helps employees understand what is required to achieve higher performance standards.
1.2.1.2 The role of performance standard in service provision/quality management
Services are becoming vital to the national economy, with service quality being a key factor that influences their effectiveness and the overall value they contribute.
Service quality varies across cultures, industries, and fields, leading to diverse definitions Understanding service quality is crucial for enterprises aiming to implement effective improvement measures Throughout history, service providers have distinguished themselves from competitors by delivering exceptional service quality, which has become a vital marketing tool for fostering customer loyalty Customers assess service quality post-purchase, making it a subjective concept influenced by their attitudes and perceptions A review of literature reveals multiple interpretations of service quality utilized by various authors.
Service quality is a measure of how well the service delivered to the customer matches the customer's expectations Creating a quality service means meeting customer expectations consistently (Luu Van Nghiem, 2008).
Gronroos (1984) identifies two key dimensions of service quality: technical quality, which pertains to the content of the service, and functional quality, which relates to the delivery method In his 1998 research, he defined perceived service quality as the gap between expected service quality and the actual service experience.
Parasuraman, Zeithaml, and Berry (1985, 1988) define service quality as the gap between customer expectations and their actual perceptions when using a product or service To effectively understand and meet these expectations, businesses must develop systems that identify customer needs and create robust service quality strategies This approach emphasizes the importance of viewing service quality from the customer's perspective, placing the customer at the heart of the service experience.
Although there are many different definitions, in general, service quality includes the following characteristics:
Superiority: For customers, quality service is service that shows its superiority
The superiority of service quality is a key competitive advantage for service providers, as it significantly influences customer satisfaction and marketing research This perception of quality is primarily shaped by the experiences and evaluations of service recipients, highlighting its importance in distinguishing premium services from others.
Service quality encompasses the essential attributes that define products and services, leading to a distinction between high-quality and low-level service offerings High-quality services are characterized by more "outstanding features," which can be either tangible or intangible, allowing customers to assess and compare the service quality of different businesses However, it is important to note that the core characteristics of services are often relative, making it challenging to provide a complete and precise definition of service quality.
Service quality is closely linked to how effectively services are delivered to customers, encompassing aspects such as service implementation, style, and delivery This internal factor relies heavily on the service provider's performance To enhance service quality, providers must focus on improving these intrinsic elements, thereby establishing long-term strengths in their service offerings.
To ensure customer satisfaction, services must be designed to meet specific needs, with service quality directly linked to fulfilling these requirements When customers perceive that their needs are not met, their satisfaction with the service diminishes In today's competitive business landscape, it is essential for service providers to prioritize customer needs and strive diligently to meet them.
In terms of customer service, "demand satisfaction" includes the meaning of
Supplyability plays a crucial role in service quality, beginning with a business's understanding of customer needs and continuing through service implementation Customer satisfaction is primarily determined during the service delivery process, which shapes their perception of service quality While internal factors affect supply, external influences significantly impact demand satisfaction.
Calculating value creation is essential, as service quality directly correlates with the value delivered to customers Providing services deemed poor in quality is ineffective and unproductive Value is created by businesses, but its true assessment lies in the hands of customers They evaluate the value of services against their expectations, making value creation a critical element in developing and enhancing service quality within enterprises.
Standards describe the conditions that must exist before the performance can be rated satisfactory A performance standard should:
Be realistic, in other words, attainable by any qualified, competent, and fully trained person who has the authority and resources to achieve the desired result.
Describe the conditions that exist when performance meets expectations.
Be expressed in terms of quantity, quality, time, cost, effect, manner of performance, or method of doing.
Be measurable, with specified method(s) of gathering performance data and measuring performance against standards.
Performance standards must be clear, objective, measurable, and realistically documented They should focus on specific metrics that will be utilized for performance appraisal To create these specific measures, it is essential to first identify the general metrics relevant to each performance element Key general measures for evaluating employee performance include various performance indicators that reflect overall effectiveness.
Quality address how well the work is performed and/or how accurate or how effective the final product is Quality refers to accuracy, appearance, usefulness, or effectiveness.
Quantity refers to the volume of work produced, which can be quantified through metrics like error rates or specific results to be achieved When establishing quality or quantity standards, the Fully Successful benchmark should be set at a level that is both challenging and realistically attainable.
Timeliness refers to the speed and deadlines for producing work, highlighting the importance of setting realistic standards A common mistake in establishing timeliness standards is failing to account for potential errors Therefore, it's essential to consider other performance requirements and the organization's needs when determining these standards.
Cost-effectiveness focuses on achieving savings for the government while adhering to budget constraints Standards for cost-effectiveness should be grounded in measurable resource levels, such as financial resources, personnel, or time, which are typically reflected in agencies' annual budgets Key performance aspects of cost-effectiveness may involve maintaining or lowering unit costs, minimizing production time for products or services, and reducing waste.
1.2.2 Performance standards in freight forwarding service
1.2.2.1 Review of technical measure in freight forwarding service
OVERVIEW OF AMITY LOGISTICS CO., LTD
History of formation and development
Aide Logistics Co., Ltd., established on October 3, 2016, under Decision No.0401792095 by the Ministry of Planning and Investment of Da Nang City, has experienced significant growth with support from local authorities The company has actively engaged in highway transportation, achieving stable operations and notable improvements since its inception Looking ahead, Aide Logistics aims to enhance service quality and expand its scale, with a focus on entering the international market.
Aide Logistics Co., Ltd is dedicated to fostering social and economic growth in Da Nang and across the nation, leveraging the expertise of Renyong Group Amity Logistics, a new player in the logistics and transportation sector, unites top professionals with experience from renowned companies such as Nippon Express (Japan), SDV/Bollore (France), and Vietranstimex (Vietnam) As logistics partners, we specialize in service provision and supply chain management, offering integrated solutions that encompass planning, testing, and operations Our goal is to design effective logistics strategies that streamline processes from production to consumption, turning logistical challenges into sustainable competitive advantages.
Become part of the customer's business We are committed to understanding our customers' business lines, enabling them to fully implement their requirements and respond quickly and effectively
Guide stable development through process standardization
Ensure information-driven supply chain by formulating global vision and management methods.
The company always listens carefully to challenges, analyzes customer needs, and then designs and formulates comprehensive solutions to reduce costs and meet requirements.
Organizational structure
Aide Logistics Co., Ltd has implemented a well-structured organizational management approach, focusing on responsible departmental arrangements and scientific logic This strategic framework enhances the company's ability to manage technology and economic factors effectively, leading to improved labor productivity, higher product quality, reduced costs, and a strengthened competitive position in the market, ultimately driving high efficiency.
The Director of Aide Logistics Co., Ltd is the key leader overseeing all company operations and is accountable for its business activities under legal and governmental regulations As the most authoritative figure, the Director ensures effective management and compliance within the organization.
Sales department Document department Delivery department
Company directors are responsible for reviewing and formulating short-term and long- term plans
The Finance-Accounting Department oversees the financial relationships involved in capital circulation and production operations It organizes accounting for purchases, sales, debt settlements, and the payment of state-owned goods while coordinating profits and other business activities Additionally, the department manages capital, assets, goods, and costs by meticulously tracking and reflecting changes in these areas It ensures compliance with regulations by instructing individuals on payment processes and monitoring account books.
The Administrative Organization Department plays a crucial role in the executive branch by overseeing employee management, recruitment, and policy enforcement It is responsible for managing administrative tasks, monitoring records, and ensuring compliance with regulations Additionally, the department supervises production work and medical care for employees, formulates management plans, and handles equipment procurement It also provides recommendations to directors and consults on recruitment policies, ensuring efficient organizational operations.
The Sales Department focuses on establishing partnerships to expand the distribution network and penetrate both domestic and international markets It engages in business positioning alongside company management, executes marketing initiatives, develops strategic growth plans, and enhances trade promotion efforts Additionally, the department collaborates with the driver team to effectively implement the company's objectives.
The refinement of departmental functions enhances the efficiency of the company's production and operations Each team member, while sharing a common goal, maintains distinct roles that foster collaboration within the organization The performance of individual departments directly influences the overall operational effectiveness of the company.
Functions-Tasks
Aide Logistics Co., Ltd has the functions of coordinating the transportation and agency of import and export goods with domestic and foreign institutions
The company offers comprehensive cargo consulting and freight forwarding services, specializing in import and export operations Additionally, it serves as an agent for international carriers, providing expertise in transportation, chartering, and warehousing solutions.
The company offers a comprehensive range of services, including transportation tools such as cars, ships, aircraft, and barges, alongside freight forwarding, logistics, warehouse leasing, and freight trading Additionally, it provides essential services related to these offerings, including handling import and export formalities, managing customs procedures, purchasing cargo insurance, and ensuring the timely delivery of goods to designated carriers.
The company's main responsibility is to strategically plan and organize the execution of its business strategy while adhering to current regulations This includes ensuring the preservation and growth of funds through self-financing, providing financial support, and utilizing resources efficiently Additionally, the company is committed to fulfilling its obligations to the national budget.
The Company enhances its logistics operations by collaborating with both domestic and international partners, utilizing advanced and efficient methods for transporting goods across various waterways and routes This commitment ensures the safe and reliable delivery of goods, continuously improving warehousing and distribution processes within its operational framework.
The company prioritizes the strict adherence to financial and asset management systems, particularly in line with state regulations regarding employee welfare It is dedicated to enhancing employee quality through ongoing training and development while fulfilling all tax obligations, including enterprise income tax, import tax, and export tax.
Business performance of the Company in the period from 2019 to 2021
According to Table 2.1 of Operating Performance of Aide Logistics Co., Ltd., on the whole, there have been many good changes in the company in the past three years from
2019 to 2021 Income, cost and profit are all on the rise and are expected to continue to grow in the future
The company's revenue and profits increased slightly in 2020 and soared in 2021 This is a positive result for the initial stage of the company.
Table 2 1 Operating Performance Report of Aide Logistics Co., Ltd in 2019-2021
Unit: Thousands of Vietnamese dong
According to the operating performance report of Aide Logistics Company from 2019 to
In 2021, the company experienced consistent growth in total revenue and profits over several years, achieving a revenue of 7,828,496,640 VND in its inaugural year, with profits representing 15.64% of this figure.
In 2020, the company achieved a revenue of 8,563,381,212 VND, marking a 22.13% increase in profit compared to the previous year, totaling 1,894,845,300 VND By 2021, revenue surged by 25.253% to reach 10,725,921,055 VND, representing the highest growth in three years of operation Profits also reached a record high of 25.46%, amounting to 2,731,151,570 VND However, operating costs rose significantly from 2019 to 2020, totaling 7,994,769,490 VND.
More and more shipments lead to increased costs, and companies have to pay more than one cost for the goods they sell in their business activities
In 2021, the cost of international transportation services offered by shipping companies experienced significant fluctuations due to a shortage of vessels and congestion in global cargo As a result, sea freight became increasingly expensive The company actively worked to negotiate with shipping providers to secure the most competitive service rates during this challenging period.
Despite its relatively small income compared to the average logistics industry, the company's dedicated and hardworking team is continually enhancing their efforts With a focus on ongoing improvement, the company is actively developing effective strategies to maximize its potential for growth.
Business situation by service structure from 2019 to 2021
Unit: Thousands of Vietnamese dong
Value Proportio n (%) Value Proportio n (%) Value Proportion
From 2019 to 2021, the service structure divided by indicators fluctuated in a good growth direction Under the background that CPTCP Agreement will come into effect in
In 2018, the trade tensions between the United States and China positively impacted export volumes, particularly for companies importing goods from Vietnam to the American market The structure of freight forwarding services emerged as a critical indicator, generating significant revenue that constituted over two-thirds of the total value Specifically, in 2019, revenue reached 5,270,143,940 Vietnamese dong, representing 67.32% of total revenue This figure saw a slight increase in 2020, rising to 6,175,910,530 Vietnamese dong and accounting for 72.12% of the service structure.
In 2021, the share of freight services in Vietnam's transportation structure decreased to 66.84%, amounting to approximately 7.17 trillion Vietnamese dong This decline is primarily attributed to the overcapacity issues faced by most seaports and airports in the country, which significantly impede cargo operations.
The Shipping Agency Service prioritizes an open environment and maintains reputable business relationships with renowned shipping companies Despite lacking direct carrier connections, the company remains adaptive in its service offerings While the sales volume is modest, it has shown a steady increase in contribution, with transportation agency services generating 2,198,241,860 VND in revenue in 2019, representing 28.08% of total revenue Following market fluctuations, this revenue dipped to 1,949,025,560 VND but rebounded to 2,897,071,280 VND in 2021, accounting for 27.01% of the company's overall revenue, second only to freight services.
The company is expanding into warehousing and logistics services, although this investment is currently limited due to a lack of direct transportation and infrastructure The growth of this sector heavily relies on the development of relevant partnerships Despite these challenges, the logistics services have significantly contributed to the company's annual growth, generating over 360 million VND, or 4.6% of total revenue in 2019, with an increase to 659,644,150 VND in subsequent years.
Aide Logistics Co., Ltd specializes in import and export services, with a strong emphasis on imports, which represent a significant competitive advantage for the company Although the share of export earnings has slightly decreased from 48.4% to 42.99%, revenue from export services has risen from 3,788,992,370 VND to 4,611,073,460 VND Meanwhile, the import volume has consistently increased, peaking at 57.01% in 2019, with a total value of 6,114,847,600 VND.
Table 2 3 Delivery structure by delivery type of import/export goods
Unit: Thousands of Vietnamese dong
Công ty hiện đang phát triển mạnh mẽ trong lĩnh vực xuất nhập khẩu, với xu hướng gia tăng rõ rệt, góp phần tạo ra doanh thu ngày càng cao.
ESTABLISHING PERFORMANCE STANDARD OF SEA FREIGHT
Actual situation of providing sea freight forwarding services at Amity Logistics Co.,
The company's business strategy is: focus on improving service quality and diversifying business lines
Currently, the company lacks a systematic approach to market segmentation and target market selection, relying instead on reactive strategies to navigate the market Insufficient attention has been given to market research, hindering the company's ability to proactively identify and engage with target markets for effective penetration, maintenance, or expansion Presently, ED's international freight forwarding operations are primarily focused on Southeast Asia, Japan, Western Europe, and the United States, with an emphasis on marketing both import and export products within these regions.
The freight forwarding market consists of two segments: international and domestic freight forwarding Currently, the company primarily operates in the international freight forwarding sector, concentrating on key major routes Domestic freight forwarding receives less focus and often serves as a supplementary activity to international operations Notably, revenue from international freight forwarding represents over 80% of the company's total earnings.
To assess the competitiveness of enterprises in the market, it is essential to compare them with their industry rivals and identify comparative advantages These advantages enable businesses to better satisfy the needs of their target customers and draw clients away from competitors Various factors influence competitiveness across different industries, including price, quality, brand reputation, market share, distribution channels, services, promotional activities, and R&D capabilities In the freight forwarding sector, which significantly contributes to a company's revenue, evaluating competitiveness is crucial, with the volume of freight forwarding serving as a key indicator of an enterprise's standing in this field.
Figure 3 1 Volume of the company in recent 6 years
The company's goods delivery volume has shown a consistent year-on-year increase, rising from 22,100 tons in 2017, the year of its business expansion, to an impressive 30,421 tons by 2021 This growth reflects a significant upward trend in the company's shipping capabilities.
2017 to 2021 was 24.1% Continuing to increase the volume of goods is the company's goal for a period of time in the future.
Table 3 1 Goods delivered by some companies in Ho Chi Minh City and Da Nang
Mien Son Transportation Company (Mison Trans) 31.207 28.171 30.387
Ed Yun Company currently holds a limited market share of approximately 12.7% in the logistics industry, significantly lower than its competitors In comparison, Mien Son Transport Company (Mison Trans) has a market share of 13.8%, Knight Logistics Company at 14.7%, Vinalink Logistics with 21.5%, Goldwell Quoc Logistics at 19.8%, and Real Logistics at 17.5% The company's stagnant growth can be attributed to its lack of focus on market expansion, insufficient equipment upgrades, a shortage of distribution personnel, and a failure to diversify its distribution services to meet customer demands effectively.
Aide Logistics has implemented a strategic price policy aimed at rebuilding its brand and attracting customers by offering reasonable prices while ensuring service quality Initially, the focus was on low-cost services, but as the Aide brand gained recognition, the company shifted its emphasis to high-priced, high-quality offerings In the freight forwarding industry, Maerk Sealand stands out as a premier logistics enterprise known for its exceptional service quality, which allows it to retain traditional customers despite its higher pricing.
Currently, some customers are leaving the company due to high service prices; therefore, it is essential to maintain a reasonable pricing policy while ensuring service quality to retain clients Moving forward, the company aims to establish a top-tier brand to differentiate itself in the market.
The company has prioritized communication and promotion by actively participating in the Vietnam Exhibition, which has enhanced its management skills and international qualifications, ultimately benefiting its growth Beyond exhibitions, the company boosts its brand visibility through publications, professional magazines, and websites Additionally, the production of brochures and business cards serves as effective promotional tools Joining industry associations has further improved the company's competitiveness in the market.
However, due to weak financial resources, the company has not invested much in the above-mentioned promotional activities The nominal cost of this activity is still very low.
0 Print brochures and business cards
4 Advertise in professional publications and magazines
In 2020, the company's total expenditure on information dissemination and promotional activities was 180 million VND, which rose by 22.33% to 220.2 million VND in 2021 Although the company did not participate in exhibitions in 2021, it focused on advertising in professional journals and magazines, leading to a significant increase of 57.3% in related costs compared to the previous year.
To enhance partner satisfaction and foster customer trust, the company views brochures as essential marketing tools By investing in beautifully designed brochures that highlight key information, the company effectively showcases its brand image and values to customers.
In business operations, having machinery and equipment is essential, but human resources are equally crucial, as people are the key to successful enterprise management The effectiveness of a company largely depends on the capabilities of its personnel, which are vital for achieving organizational goals.
Construction companies need skilled staff who can quickly adapt to market demands while demonstrating responsibility and a cooperative spirit Continuous innovation, technological advancement, and product quality improvement are essential for these companies, necessitating employees who can swiftly adjust to changes.
The company's human resources capabilities are as follows:
+ Chairman of the Board: 1 people
+ Deputy directors of the company: 3 people
+ Department heads and deputy heads of the company: 8 people
The efficiency of the freight forwarding process in delivering goods to customers promptly largely hinges on the qualifications of the personnel involved Skilled and experienced staff can process information swiftly, ensuring timely deliveries Additionally, their familiarity with various types of goods enhances the overall quality assurance of the freight being handled.
The qualifications of process participants are crucial, as they significantly impact the quality of business processes delivered, ultimately influencing customer trust and reputation.
The competitiveness of enterprises is significantly influenced by mechanical equipment and technology, which are crucial for determining production capacity Advanced technology directly impacts costs, selling prices, and product quality, ensuring that companies with modern machinery produce high-quality products Conversely, enterprises relying on outdated equipment and production methods cannot achieve strong competitiveness The mechanical equipment capabilities of a company can be assessed through the accompanying data table.
9 Pipe cutting grinder BOCHE 12 2007 2,8KW
10 Dump truck transport vehicle NISSAN 10 2007 10 tons
12 Self-propelled crane ISUZU 2 2007 5-12 tons
15 Elevation control grid table NI004, 0025 1 2008
Source: Aide Logistics Co., Ltd.
