Analyzing the reality of the competitiveness of international freight forwarding service in focus shipping corp

In the context of development in freight forwarding market in Vietnam, Focus Shipping is required to improve the international freight forwarding service to catch the trend of market and

TABLE OF CONTENT

1

LIST OF TABLES AND CHARTS

This internship report has been completed with the remarkable helps of manypeople to whom I am grateful I would like to give my sincere thanks to all thosewho put ungrudging efforts in instructing, supporting, and encouraging me to finishthis report I am indebted to all my lecturers at the center of advanced programs

who gave me useful lessons and background throughout my four-year course at

National Economics University

Special mention is given to my supervisor, Ph.D.Bui Huy Nhuong, whocontinuously inspired and offered me valuable suggestions throughout one month tocomplete this report

Especially, I would like to express my gratitude to all officers at FocusShipping Corporation who gave me a lot of useful data and information in myreport I would like to send my thank you to those who had finished some previouspapers on the same topic But for precious sources of references, this work wouldnot have been taken

Finally, my appreciation is to my family and my friends for their supports andencouragements

3

LIST OF ABBREVIATIONS

Focus Shipping Corp Focus Shipping Corporation

VIFFAS Vietnam Freight Forwarders Association

FIATA The International Federation of Freight Forwarders AssociationsCLECAT The European Association for Forwarding, Transport, Logistic and Customs Services

STATUTORY DECLARATION

I herewith formally declare that I myself have written the summited Barchelor’s Thesis independently I did not use any outside support except for the quotes literature and other sources mentioned at the end of this paper.

Hanoi, … /… /2015

Signature

Mai Thi Uyen

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1. Rationale

Freight forwarding service has been one n of the most successful sectors of the Vietnam logistics industry The ongoing efforts of the Government towards international economic intergration have led to further rapid changes in Vietnam’s trade and economic regime This is good news for the freight forwarders acting as the designers of international transportation, which plays

an important role in international transportation Vietnam is currently keen to develop more trade with countries all over the world and freight forwarders are making it easier Inspite of being small-scale freight forwarder in Vietnam, Focus Shipping has strong alliances with a variety of dedicate and professional international transportation that helps Focus Shiping Corp arrange easily the whole transportation from the shipper’s place to the end destination This means that Focus Shipping’s international freight forwarding service would have continuously developed and improved on.

However, with the current fluctuations in the globalization, increases in costs, financial risks, environment pressure and the increasing demand of customers, the requirement to improve and complete freight forwarding service

is more critical and essential than ever In the context of development in freight forwarding market in Vietnam, Focus Shipping is required to improve the international freight forwarding service to catch the trend of market and deliver the best service to customers.

2. Research Objective

The purpose of this study was to analyze the reality of the competitiveness of international freight forwarding service of Focus Shipping Corp, aftert that to propose solutions in order to enhance competitiveness of international freight forwarding service in the company.

To achieve this purpose, the thesis focus on the following research tasks:

- Rationale for competitiveness of service

- Analyzing the reality of the competitiveness of international freight forwarding service in Focus Shipping Corp.

- Proposing solutions to enhance the competitiveness of international freight forwarding service in Focus Shipping Corp.

Data using in this research are collected via 3 methods

- Statistical methods: use appropriate statistical data for analyzing the reality of the competitiveness of international freight forwarding service in Focus Shipping Corp between 2010-2014

- Synthetic analysis method: on the basis of analyzing the reality of the competitiveness, the solutions were proposed to enhance the competitiveness of international freight forwarding service of the company

- Estimated methods: forecasting international freight forwarding activities in Vietnam in the near future to make development plan to enhance international freight forwarding service of the company

6. Research Structure

The research is divided into three parts and can be seen in the following order.

- Chapter 1: Rationale for competitiveness of service

- Chapter 2: Analyzing the reality of the competitiveness of international freight forwarding service in Focus Shipping Corp.

- Chapter 3: Proposing solutions to enhance the competitiveness of international freight forwarding service in Focus Shipping Corp.

CHAPTER 1: RATIONALE FOR COMPETITIVENESS OF SERVICE

1.1 Overview of competition and competitiveness

1.1.1 View of competition

Up to now, there are a lot of views about “competition” caused by the approach and different era We can understand the competition is the process that the parties to fulfill their outstanding ability to overcome from the competitors in a certain field

The term "competition" is used a lot in the economy This is a complex economic category and different ways of expression through the period

socio-According to Karl Marx: "Competition is fierce method of competition between the producers of goods based on different ownership regime of the means of production in order to grab the most favorable conditions for production and consumption the goods" This view is based on private ownership,

in which the competition is an elimination with each other and the destination is earned all profits This view is limited because of an influences of the author's living era

According to modern views: "Competition is a rivalry between economic actors (producers and consumers) to gain the relative position in the production and consumption of goods that get the most benefit" The concepts of modern competition acknowledged and considered as the competition is an environment and the motivation for the development of the economy Where is the economic benefit, then there will be no competition, competition is the driving force to promote market development.

1.1.2 Roles of competition in the market economy

1.1.2.1 For the economy

The economy would need to have competition Without competition, economies will lose the dynamism and operate inefficiently.

Competition encourages enterprises to apply scientific and technological advances in production Input resources are not infinite, so all businesses need to save thorough exploitation and reasonable use of natural resources Besides, the application of scientific advances in production will improve labor productivity, contributing to economic specialization, promote economic development

The more enterprises compete to each other in one area, the quality and design of the goods will be significantly improved in order to gain the hearts of customers Therefore, the quality of goods and services the economy is increasingly high, consumers have more opportunities to choose their favorite products

Competition is the driving force for economic development, to maximize the interests of enterprises and consumers The enterprises are not strong enough to compete will be removed from the market and make way for other enterprises to meet the demand of the market.

1.1.2.2 For businesses

In the market economy, there is always competition, so no matter whether

or not enterprises still have to accept competition Competition is the condition to help businesses to gain their place in the market

The enterprises producing goods/service with poor quality would be eliminated from the market and make way for the business enterprise having efficiency, quality and reasonable price with needs of consumers Therefore, businesses are always technical innovations to create the best products at the most reasonable prices

In the domestic market, domestic commodities must also compete with numerous domestic goods produced by people thanks easily for imports from many different countries Wanting to compete for domestic manufacturing enterprises, they have to build and grow their brands This is executed by improving the technic, creation or apply new technology to improve quality, reduce production costs, create new designs to attract consumers to create competitive advantage And also thanks to the healthy competition that position our products increasingly advanced and occupied a position in the world.

1.1.3 View of competitiveness

Although the term “competitiveness” is mentioned a lot, do not have a specific definition about it and this is also a controversial issue For business leaders, the competitiveness means that competitiveness on the world market by applying global strategies In the glossary of trade policy: "The competitiveness is the ability of a business, an industry, a country that can not be beaten by other enterprises, other industry about the economic capacity" (University of Adelaide, 1997).

1.1.4 Levels of competiveness

The competitiveness is considered at different aspects such as national competitiveness, industry competitiveness, business competitiveness, products/ services competitiveness

1.1.4.1 National competitiveness

According to the World Economic Forum (WEF), the competitiveness of the nation depends on 12 criteria, which are listed in order: institution, infrastructure system, macroeconomic stability, health systems and primary education, university education level, the efficiency of commodity markets, the effectiveness of the labor market, the development of financial market, the willingness of the technology, market size, growth of business environment and creation levels.

In 2014, Vietnam is ranked 70 th position on global competitiveness index among 148 countries on global, higher than Vietnam position in 2013 (75/144) 1.1.4.2 Industry competitiveness

The industry competitiveness depends on four groups of factor:

- Factor group fully decided by the industry includes industry development strategy, manufactured product, technology selection, staff training and investment in technology research and product development, production costs

- Factor group fully decided by the government, creating the business environment includes taxes, interest rates, exchange rates, expenditures for research and development activities, the legal system regulating the relations between market participants

- Factor groups partially decided by government or industry includes production inputs, consumer demand, international environment.

- Factor group cannot compeletely make decision such as natural environment, economic rules

1.1.4.3 Business competitiveness

Enterprises want to have a solid position and the market increasingly expands, they need to have enough strong potential to be competitive in the market.

The businesses competitiveness is the ability to create a competitive advantage with more productivity and higher quality than competitors’, occupy a large market share, generate higher income and sustainable development To

assess the business competitiveness, they rely on multiple criteria: market share, revenue, profit, average income, management approach, enterprises’ reputation

to society, research and innovation These factors create a competitive advantage for enterprises, in other words, it gives enterprises to have the ability to deploy operations with higher performance than competitors’, create value for the customer based on the difference in quality or low cost, or both.

1.1.4.4 Product/ service competitiveness

According to some authors, product/service competitiveness is the ability those products/services that meet customer demands for quality, price, features, style, more than in comparable direct correlation with the similar products/services competing on the same target market in a determined time period.

According to Professor Ton That Nguyen Thiem at Vietnam Asia – Pacific Economic Center: “Product competitiveness is the ability to maintain and improve the product competition position in the present and in the future compared to competitors in the market to obtain the maximum benefit”.

Thus, product/ service competitiveness is constituted by many factors: product quality, price, uniqueness or the difference.

The level of competitiveness has reciprocal relationships, enabling each other and mutual regulation A economy has the competitiveness, so its industry, business also have the competitiveness Also, a business has the competitiveness, its the products / services which it provide also have the competitiveness.

1.2 Service competitiveness

1.2.1 Definition of service competitiveness

Competitiveness is the total of consumption features, is the ability to maintain and perfect the functions of products this business competing to anothers to attract customers towards themselves in the context of market with supply over demand.

According to the economists: “The product competitiveness is its superiority compared to similar products from other competitors offering in the same one market” This means that the superior features of the products/services compared to other ones with the same type is the competitiveness of those services.

Because of the service's invisibility, service competitiveness is also intangible and difficult to determine Evaluating service competitiveness is also based on

criteria set forth by the consumers That is the level of satisfaction compared with how much money consumers spent on that service

In summary, service competitiveness is the ability to maintain and improve the position of the service in this business compared with the same type of services in other enterprises on a market in order to create attraction and attract customers using the product/ service of company

1.2.2 The criteria to evaluate the service competitiveness

To evaluate the competitiveness of the business compared with the competitors, we shall have the following evaluation criteria

1.2.2.1 Indicator group on competition results

• Market

The market is a very important criteria in determining the competition outcome of a business Indicators on the market include: customer size and operating areas of the company.

Customer size was expressed in the number of customers using products and services of the company; how this number changes over the years (increasing or not, what percentage of an increase in ) This is a basic indicator to evaluate the competitiveness of a business compared with competitors in the market A business has a number of loyal customer larger than rivals’, it means that this business has the greatest competitiveness in the market.

In addition, the market size of the company was expressed through geography or area of operation These indicator reflects the level of coverage of a business market based on geographic scope, territory.

• Market share

One of the indicators clearly reflects most the competitiveness of business in general, freight forwarder in particular are the market share The market share

is a criterion presenting competitive position of freight forwarder in the market

as well as the ability to develop the business The larger market share the businesses have, the larger their competitiveness in the market is and vice versa Businesses which have the largest market share is now considered as a leader in the market, competitiveness is also consistent with its position Market share is one of the important indicators to help enterprises obtain high profits, in addition

to helping enterprises build names, create credibility in the market The market share of a business is measured by the formula:

In which:

T p : Market share of the business

D i : Revenues or sales of the business i

∑D: Total market revenue or total market sales

But market share index just evaluates the competitiveness of an enterprise

in a certain time Besides, it's not entirely accurate reflection of the competitiveness of a business For example, an enterprise with a small market share, but not make sure that the competitiveness of such enterprises is weak.

To overcome the weakness in the above, we have a second evaluation The growth rate of market share is an indicator to reflect the growth of business and ability to develop the business It is considered as an effective indicator for assessing the competitiveness of the business in the present and in the future:

In which:

R t : The growth rate of market share of an enterprise

D t : Market share of an enterprise in year t

D t-1 : Market share of an enterprise in the previous year t-1

• The revenue

Revenue of the enterprise is the total amount earned from product sales, service delivery, financing activities and other activities of the enterprise For businesses in general and freight forwarders in particular, the revenue is an important index to reflect the operation situation of the enterprise in a certain time period.

It is shown that the greater the revenue of an enterprise has, the more the competitiveness of an enterprise has in the market and vice versa.

• The profit

Profit is also an important indicator This is a general indicator, represents

an overview of the competitiveness of enterprises An enterprise gains higher and

higher in profit, this is the reason to make higher competitiveness of such enterprises in the market.

1.2.2.2 Indicator group to assess the service competitiveness

• The quality and diversity of service

Quality of service is one of the factors affecting the competitiveness of enterprises In general, the quality of service is understood as the ability to meet customer demand for the service It is considered as an important indicator of the service competitiveness and competitive strategy of enterprises providing such services to the market Today, the quality of service can be viewed as a formidable competitive weapon in helping businesses accomplish other objectives, contributing to improve the image and position of enterprise in the market.

All activities in service business field have to manage following to a certain process A business department will have a quality management process As we have known, the service is an intangible product Customers can only use this intangible product through communication activities, receive information or feelings And customers can only assess the overall quality of the service after they bought and used them.

The indicators used to measure the quality of customer service, such as total time to meet an order, the proportion of perfect orders, the proportion of correct orders for goods/services, the number of clients having complaints about enterprises’ service and the total value of damaged goods by freight forwarding services, the level of customer satisfaction, the number of loyal customers, the number of new customers

Besides the diversity of services is also an important factor in attracting customers, enhance the service competitiveness of enterprises Enterprises increasingly create high differentiation for its services, they can create the high competitiveness and efficiency In spite of applying any competitive strategy, quality of service is als concerned in each business, specially, when the customers needs are increasing.

• Service price

Customers pay attention to not only quality of service but the service price

as well The products and services with lower prices are usually able to dominate the market because then it's highly attracted consumers’ attention One of the

effective competitive strategy is the low-cost strategy and price is considered an effective competitive tool in many situations.

Products and services with lower prices mean that it has an active ability to compete on price, and those products will be have high competitiveness, gain the position in the market It is one of the decisive factors in competitive success of the enterprise In fact, assuming both of enterprises sell one type of product with equivalent quality One enterprise providing goods or services at a lower price, the customer will naturally prefer fixes using its products more, thereby increasing its competitiveness compared to other one.

• Promotion ability

Trade promotion are activities to promote, find out the opportunity to purchase goods and provide services, including promotional activities, advertising activities, display and introduction of goods and services and trade shows, sales activities, customer support service

Promotion ability reflects the extent to which an enterprise provides the necessary information about the product and our service to customers and specific measures to promote the co nsumption of products and services If this promotion activity is frequently conducted with highly effective, it will give businesses greater possibilities in recording their mark in customers’ minds It may be evaluated through forms of communication which the enterprises apply (frequency, robustness and impact scope) There are some criteria such as: the cost of promotion and advertising; the growth rate of costs for the communication and promotion; revenue growth rate after and before implementation of promotional campaigns and advertising; customer care systems of the enterprise; satisfaction levels of customers for freight forwarding services that enterprises provide,

1.3 The factors affecting the service competiveness

1.3.1 Internal environment factors

Internal environmental factors are events that occur within an organization, that affect the improvement and the enhacement of the competitiveness of enterprises in the market These factors are also known as the decisive factors

1.3.1.1 Finance

Finance is considered as a resource has a huge influence on the competitiveness of an enterprise As to an enterprise, all activities of production are business investment activities to get profits In the market economy, enterprises must have their capital in cash or by the financial resources to carry out the business and production activities With these financial resources, enterprises will spend on new investments, purchase facilities, pay salaries for employees The financial capacity of a enterprise is reflected in the size of own capital resources, capital structure, mobilizing capital ability, the return on capital ratio and capital efficiency

With strong financial resources, the enterprise will get a big advantage in the competition This is critical factor in making businesses competitive strategies

as well as timely response to the opponents An enterprise has strong financial potential, reasonable capital structure, effective operation in the market will have high competitiveness.

1.3.1.2 Technology and infrastructure resources

Technology is the foundation of the product In other words, technology is

a combination of a lot of technical means, skills, methods used to transform resources into a certain type of product or service An innovative and modern technology always create products with better quality, thereby bringing value to the business To enhance the competitiveness in the market, the enterprises need

to focus on investing in its technology.

For freight forwarders in particular, machinery, infrastructure, storage, are considered as main parts in the fixed assets of enterprises It is a measure of technical proficiency, an expression of existing capacity and is also an important factor contributing to the competitiveness of businesses in the market.

It is usually expressed through aspects such as it is sufficient the number of necessary machines and equipment for production and business or not; modernity of machinery and technology

1.3.1.3 Human resources and human resources management

In any organization, human resources have always been regarded as the most precious resources of the enterprise, especially in the era of knowledge economy today In other words, the man make the remaining resources (financial, marketing, research and development ) and decide to success in the competitiveness of an enterprise Human resources management includes some

activities such as recruitment, training and development, job assignment, compensation Qualified human resources, flexible organization will facilitate businesses to obtain sustainable competitiveness A company with strong workforce represented by: the number of employees, the quality of employees, human structures and human resources management activities Specifically:

- Number of employees: average number of employees, the number of employees recruited and dismissed in each year or annual leave.

- The quality of the employees.

- Employment structure: by level, by gender, by age

- The process of recruitment.

- Development and training human resources system: the number of employees are trained, training costs

1.3.1.4 Marketing activities

In the process of production and business, marketing is a competitive tool plays an important role in expanding the market, increasing revenue and efficiency of a business If an enterprise knows how to build an effective marketing strategy and apply it in appropriate situations and time, it will contribute significantly to make their businesses dominant on the market compared with competitors.

Marketing activity is a process via analysing market, identifying target market (measuring and forecasting demand, market segmentation, target market selection market positioning), planning marketing strategy, implementing marketing mix and testing marketing activities Because the market is changing over time and not only can an enterprise survive based products on the market but also need to conduct customer research, analyze environmental changes, consumer trends and customers’ attitudes Enterprises need to measure the current demand and forecast future needs of the market for products, after that the enterprise makes a decision on business scale, and methods to enter the market.

In freight forwarding area, because of the specific industry, this industry products are not able to be marketed for customers to choose as other industries that primarily rely on reputation, brand and service quality that enterprise has provided to the customers Therefore, advertising and marketing activities to enhance the level of customer confidence to freight forwarding services of the enterprise is extremely important.

1.3.2 External environment factors

1.3.2.1 Macro environment

• Political and legal environment

Each country will have the political institutions and private law that regulates the behavior of an enterprise This means that it can restraint or promote the growth of an enterprise, thereby enhancing the competitiveness Because of the importance that businesses need to pay attention to grasp timely and accurately legal provisions and the trends of politics, trade and diplomacy For example, the enterprise has to understand the investment policies, the provisions on the business establishment or bankruptcy, the salary regime, the existing regulations on fair competition Besides, a stable political background also significantly affects on the competitiveness of businesses and vice versa This also affects the investment decisions of an enterprise.

• Economic environment

In terms of economic impact to an enterprise in general and freight forwarders in particular, the economic factors such as the growth rate of GDP, GNP, average income, interest rates, exchange rates, balance of payments, inflation rate, unemployment rate, often affects the operation of the business These indexes not only express economic situation of a country at the present but help enterprises to forecast the trends in the future as well Doing this can have ability to create opportunities and challenges for enterprises If enterprises capture these information, clearly and properly evaluate their impacts, enterprises will be able to react in time before the changes, thereby improving the competitiveness available of enterprise.

With a strong growth of the economy in recent years, the needs of the exchange and distribution has become increasingly urgent That explains partly the reason that the logistics industry has become one of the sectors with the highest growth rate of Vietnam, contributing nearly 15% to the total GDP of the country.

• Cultural – Social environment

Culture - Society is considered as one of the factors having rapid and sensitive impact on the enterprise Every country in the world owns its cultural values and social characteristics Along with the existence of the representative benchmark for a country and ethnicity, in fact, there is also existing norms of

each region or locality If the enterprises know how to handle this well, they are entirely possible to create a competitive advantage for themselves compared with competitors in the market and also avoids undesired impacts from the market These include some important cultural - social factors as: aesthetic perspectives, lifestyles, morality, the traditional customs, education and awareness,

• Technological environment

Technological environment is considered as one of the influential factors in improving competitiveness for enterprise Through technological factors, enterprises may have a competitive advantage in providing high quality products

at low cost with many superior features compared to competitors Thereby, enterprises can implement competitive strategies on cost or differentiation in services such as competitive advantages.

In cases, a enterprise can not catch up with a certain technology trends, while competitors have applied the developed, this enterprise will easily go to the brink of bankruptcy in the future Because of that importance, enterprises have to constantly improve and develop technology and capture the trend of advanced technology today and consider as the core competitiveness in enhancing the competitiveness of an enterprise in the market.

Supply chain management systems and customer service as RFID, CRM, ERP , now booming in the world, are widely applied by logistics companies However, this is quite new in Vietnam,so, in the future, we should build advanced information systems, robust database to connect between companies with logistics services to their customers.

• Other factors

- Weather factor

Freight forwarding activities is transportation activities and services relating to tranfer goods from the senders to the recipients, so it is influenced significantly by weather conditions During commodities at sea, if the sea wave is calm that means nice weather, the goods will be safer Conversely, if having the sea storms, earthquakes, volcanoes, tsunamis, even just heavy rain, the risk of commodities to be damaged, losen are huge.

Disasters as well as only the temperature changes between two different geographical areas can influence, such as making the steaming rows, to

preservate goods requires suitable measures as using special containers FVC (Fully Ventilated Containers) That increases the transportation costs significantly.

- International context

It is engaged in international freight forwarding by sea, so it bear a huge impact from the international situation Just a small change in the import-export policy of one country may also affect production and business activities of enterprises operating in logistics field In freight forwarding activities, the most important thing is the liberalization situation of sea freight forwarding service in the World Trade Organization (WTO) In multilateral cooperation, sea freight forwarding services is one of the sensitive service sectors and is interested by nation, but the liberalization process of this services is difficult because some countries always put the objections, they want to apply their own laws with the aim of protecting the domestic freight forwarding industry

1.3.2.2 Industry environment

• Industry competitors

Competitors have significantly affected the business activities of a company,

it direct impact on the company's market share in the market In the market economy at the present, competition is regarded as a rule bringing objectivity of commodity production In fact, the more commodity production activity is developed , the more goods are sold; the number of suppliers in the market is increasingly crowded, the competition is fiercer.

It is considered as regular pressure and directly compete with the company

to gain the competitive edge in the market In fact, companies often use the competition strategy on price, the advertisement, the product introduction as well as improving the quality of customer care.

The main competitors of the company are the most important competitive forces that company has to confront Therefore, along with improving the competitiveness, enterprises also need to pay attention to the ongoing activities

of competitors to promptly react in every situation.

• Customers

In fact, the customer is a factor affecting the success or failure of the enterprise in the market Therefore, the essential requirement is to carefully analyze and understand customer needs through doing market research, forecasting of customer customers’ needs.

• Potential competitors

Potential competitors have not competed to each other in the same industry

in the present time, but likely in the future will join industry and to compete directly with the enterprise The potential competitors entering the market often bring new resources such as strong financial resources, high-level human resources and advanced manufacturing technology, This makes the competition

in this industry taken place with intense levels and also makes market share and profitability of the enterprise to slump.

1.4 Overview of freight forwarding service

1.4.1 Definition of freight forwarding service

In broad terms, a freight forwarding service is any services relating to transportation, consolidation, storage, handling, packing or distribution of goods and services or relating to the payment service, bill collection.

According to Vietnam Commercial Law under 163: “Freight forwarding service is commercial practices whereby people make freight forwarding services from senders, the organization of the transportation, storage, do the documents and other services related to delivery goods to the recipient under the mandate of shippers, carriers or the person doing other forwarding services (referred to customers)".

According to FIATA Model Rules for Freight Forwarding Services and CLECAT-the European Association for Forwarding, Transport, Logistic and Customs Services have adpoted an official description of :freight forwarding and logistics services”: “Freight Forwarding and Logistics Services means services of any relating to the carriage (performed by single mode or multimodal transport means), consolidation, storeage, handling, packing or distribution of the Goods as well as ancillary and advisory services in connection therewith, including but not limited to customs and fiscal matters, declaring the Goods for official purposes, procuring insurance to the Goods and collecting or procuring payment or documents relating to the Goods Freight Forwarding Services also include logistical services with modern information and communication technology in connection with the carriage, handling or strorage of the Goods, and de facto total supply chain management These services can be tailored to meet the flexible application of the services provided”.

Nowadays, with the development of international trade and transportation industry, the concept of "freight forwarding service" has been interpreted in a broader sense as "Logistics Services" "Logistics" is a system of supply and material distribution consisting of four elements: transportation, marketing, distribution and management; in which, transportation accounts for the most important role In other words, "logistics" is the art of managing the flow of goods and materials from the procurement process through the storage, production and distribution and coming to consumers.

Freight forwarding activity, with its most basic role, is an indispensable stage in the process of import and export goods It is the part of the work

undertaken during the circulation of goods It carries and performs some other operations to bring goods from the shipper to the consignee Therefore, freight forwarding activities are important bridge between the consignor and the consignee.

1.4.2 Role of freight forwarding service

1.4.2.1 To economy

Freight forwarding services development will contribute to cost reduction in distribution, improvement and standardization of documents in international business.

Transportation costs account for a significant proportion constituting up commodity’s prices in the market The more freight forwarding services increasingly develop and improve, the more transportation cost will be saved Besides, to perform any transaction in international trade activities, the cost of the papers and documents is not small Also, freight forwarding services also help

to upgrade and standardize types of documents and reduce office workload during the circulation of goods, thereby contributing significantly to improving the efficiency of international trade operations

- If a country developing a freight forwarding services efficiently will contribute to increasing the competitiveness of the economy as well as the country in the international arena.

Nowadays, in the trend of globalization, the competition among the nations

in the world is becoming more and more intense This made freight forwarding services to become one of the competitive advantages of the country Logistics costs and the level of country development is considered as an important base for companies, multinational corporations build investment strategies as well as market penetration A country with the good infrastructure system will attract attention of everyone, after that, the enterprise can receive investment from th countries around the world.

- Development of freight forwarding services will both bring an enormous boon to the economy and contribute to improving economic- social efficiency The efficiency of freight forwarding service has an important influence on the competitiveness of other industry and trade of each country The development

of freight forwarding services have great role in ensuring the operation of the production activities and other services in terms of time and quality If a country knowing how to develop freight forwarding services will contribute to reducing costs and improving the quality of products and services.

1.4.2.2 To enterprise

Freight forwarding service’s developement allows good/services bring to customers effectively A product/service can only satisfy the customer when it is transferred to the consumer the right time and the right place Adopting the management model, the reservation, shipping, purchasing activities and applying

a system of modern information technology has created good conditions for the quickly goods transportation to the customers with at low cost, helping the enterprises achieve efficiency in their operations.

Freight forwarding service plays an important role in helping managers make the right decisions in production - business activities, regarded as a potential source of enterprises Freight forwarding service helps to optimize transportation process of materials, goods and services, to help enterprises reduce costs incurred during operation, thereby enhancing the competitiveness in the market

CHAPTER 2: ANALYZING REALITY OF

COMPETITIVENESS OF FREIGHT FORWARDING

SERVICE IN FOCUS SHIPPING CORP.

2.1 Understanding Focus Shipping Corp.

2.1.1 Overview of Focus Shipping Corp.

2.1.1.1 Formation and Development of Focus Shipping Corp

• Formation of Focus Shipping Corp.

The company was established via the business license No 4103006544 dated 27 th , April, 2007 by Ho Chi Minh Department of Planning and Investment Registered of 1st change on 10 th , March, 2008 Company name is FOCUS SHIPPING CORPORATION (FOCUSSHIP CORP.)

List of shareholders:

The company consists of five shareholders:

1 Dang Thi Minh Tam

2 Nguyen Xuan Huu

3 Nguyen Thi Thanh Diep

4 Tran Thi Thu Trang

- In Thua Thien Hue:

Thuy Duong Village, Huong Thuy, Thua Thien Hue, Vietnam

Tel / Fax: 84-054-3954556

Email: hue@focusshipping.com.vn

• Development of Focus Shipping Corp.

In the first period after establishment, the company has faced difficulties due to competitive pressures of the market economy and the involvement of many companies in the industry However, Focus Shipping Corp is the dynamic and young company, has also persisted to create a foothold in the industry After a period of operation, the company has increasingly asserted its name, can master the techniques of shipping agents, forwarding import-export goods, customs procedures for import-export goods The company is always loyal to the motto

"always being conscientious to serve customers, timely and quick and always improving service efficiency, maximum cost savings for customers"

The company provides freight forwarding services for many customers at local and abroad, namely: AAFI Co., Ltd.; A.N.C Co., Ltd.; Interlink Ho Chi Minh City; Sea & Air Freight International (SFI); VINAFREIGHT; International Freight Forwarders Vietrans; T&M Forwarding Ltd.; and a lot of other potential customers.

Focus Shipping Corp always strive to provide the best services to its customers, with the aim of helping its customers gain a competitive advantage and the most profitable in their business.

2.1.1.2 Function and tasks of Focus Shipping Corp.

Focus Shipping Corp is the company doing international functional tasks on import-export goods freight forwarding service, consultancy works, agents, for domestic and overseas business operations in the field of transport, forwarding and import-export of goods Therefore the company has the following functions:

- Organizing appropriately with other organizations at domestic and abroad for transporting, forwarding import-export goods.

- Getting consignment of freight forwarding, logistics and warehousing On the other hand, implementing services related to the goods as collection and fractionation of goods, storage of goods, customs procedures, cargo insurance, import and export procedures and delivery for the carrier to move to the specified place.

- Implementing advisory services on issues of logistics, transportation and other related issues at the request of the domestic and international organizations.

- Jointing venture with economic organiztions at domestic and abroad

in the fields of transportation, logistics, warehousing, chartering.

With these functions, Focus Shipping Corp has to perform the following major tasks:

- Developing a plan and implementing business service of company in accordance with the current regulations in order to execute the purpose and functions of the company.

- Purchasing and building supplementary things and often completely improving and upgrading the material and technical facilities of the company.

- Implementing the freight forwarding service fairly and safely and improving transportation, storage, warehousing and delivery of goods and ensuring safety of goods within the company’s responsibility area.

- Researching the freight forwarding market to attract customers; consolidating and enhancing the company's reputation in the market at domestic and abroad.

- Strictly implementing financial management regime, assets, and personnel policies and labor rights of self-control mechanism, care staffs’ lives and training staffs in order to improve the management level, professional foreign language to employees of the company to meet the requirements of increasing business tasks

- Expanding the market to participate in the logistics organizations in the world prestige to learn.

2.1.1.3 The organization chart and functions of the departments

Focus Shipping Corp has line organizational management structure, ensuring the implementation of an unified command principles - an important principle of management In companies, the information is transmitted quickly, timely and accurately, and responsibilities shall be clearly demarcated, always have the consistency and concentration.

Board of Management

General Manager

Diagram 2.1: The organization chart of Focus Shipping Corp.

The functions, duties and powers of the parts

• Board of Management Focus Shipping Corp., company management agency, has full authority to represent the company to decide all matters related to the objectives and

interests of the company, except for matters within the jurisdiction of the General

Meeting of Shareholders

• General Manager Taking responsibility on matters relating to the daily business of the company Organizating and implementing business plans and investment plans of

the company Manager has the right to assign, appoint subordinate (except for

the positions appointed by Board of Management); decide wages and allowances,

reward or discipline for all employees of the company.

• Sales Department:

Subject to the direct authority of the manager, monitor business situations, company’s services, research sources of goods and answer customers' questions.

Sales department can be considered a critical part of keeping prestige, creating

trust in long-term business relationships with customers beacuse the their needs

of the customer always requires to response quickly, safely and minimize

transportation costs Regularly updating informations on the latest domestic and

foreign markets in order to offer appropriate competitive strategy to serve

customers in the best way.

• Customer Service Department Asking price carriers (in case no contract of a foreign agent) or other service companies in the case needing better prices and quotation for sales department,

also directly to customers , and supporting sales department or documents

Accounting Department

Documents Department

Freight Forwarding Department

Sales

Department

Customer Service Department

department in providing customer information about a shipment to be transported by sea or air, contacting the shipping company to booking, send booking for its customers.

• Freight Forwarding Department

This is the department making freight forwarding contracts brought by sales department Freight forwarding department includes freight forwawrding staffs trained good professional knowledge in order to perform freight forwarding activities on time such as import-export customs procedures, customs declaration, freight forwarding and cargo documents

• Document Department

From the information about the customer's cargo provided by sales department or customer service department or freight forwarding department, document department makes lading documents and other documents relating to the consignment and handle documents relating to the consignment, update informations, accurate data into the system for import-export consignment, storage and careful documents preservation.

- For export cargo: Documents will get information from the sales department, then contact the customers to obtain detailed information on export cargo, and to make master bill of lading and house bill of lading; AMS (automatic manifest system) or ISF (importer security filling) for cargo moving to US or ACI (advanced commercial information) for cargo moving to Canada After the consignments loaded onto ships to the port of destination or the port of transshipment, the document staffs send entire cargo's documents to foreign agents in port of destination (Pre alert).

- For import cargo: After receiving documents from dealers, department documents open files and save files, do the work steps involving import cargo documents: presenting manifest, receiving notification from carriers or co-loader, making notification to the customers, asking accounting department for bringing money in advanced for sfaffs to get delivery order, and when the customers pay money for consignment, they have to present their company's order and the order

of carrier or co-loader.

• Accounting Department

Based on the plan, the accounting department is responsible for planning financial plans; implementing the accounting regime, reporting, storing, counting

revenues and expenses under current regulations; reviewing, analyzing and evaluating the company’s financial performance monthly, quarterly, annually; having a full accounting of arising economic operations, reporting accurate complete data on time; mastering customer liabilities, urging debt collection to avoid being misappropriated funds by customers

In addition, due to the characteristics of import-export freight forwarding activities, accounting department continually has to give payment in advance for the freight forwarding staffs Next to the basic functions, the accounting department is also responsible for advising the manager on the financial management of the company (chief accountant).

2.1.1.4 Result of business operations of the company between 2010 and 2014

Through the table, we can realize that the business situation of Focus Shipping Corporation in 5-year period from 2010 to 2014 was generally more fluctuated Between 2010 and 2012, the business indicators had a trend to rise, which is consistent with the overall development situation of the world economy and of Vietnam economy in economic integration periods; extending exchange of goods, transportation of goods by sea were thriving; domestic and foreign business activities and foreign business development bustled Therefore, the business activities of Focus Shipping Corp was growing Its profit increased the most during this time period This indicator in 2012 reached the peak at 3,343,244,269 VND, equivalent to the increase of 3.4% compared with 2011 The year of 2012 was considered the peak years of the agent in both import and export goods volume Along with freight forwarding activities, Focus Shipping Corp always fully implemented the obligations to the goverment, labor indicators and increase in salary showed that the living standard of company employees had been increasingly high and improving.

Table 2.1: Table evaluating business activities of Focus Shipping Corp in 5-year period 2010-2014

II LABORS-SALARY

2 Salary Budget VND 1,346,400,000 1,346,400,000 1,380,720,000 1,346,400,000 1,200,000,00 0 100. 0 102. 5 97.5

III FINANCIAL CRITERIA

1 Total Revenue VND 15,689,183,49 3 16,325,893,33 3 16,970,783,09 0 15,344,288,50 9 15,037,402,7 38 104. 1 104. 0 90.4

2 Total Cost VND 12,551,346,79 4 13,093,366,45 3 13,067,502,98 0 12,352,152,24 9 12,095,996,9 96 104. 3 99.8 94.5

3 Earnings Before Tax VND 3,137,836,699 3,232,526,880 3,903,280,111 2,992,136,259 2,977,405,74 2 103. 0 120. 8 76.7