RECOMMENDATIONS TO IMPROVE SERVICE QUALITY FOR EXPORT CARGOES AT CONTAINER FREIGHT STATION OF THE TRANSPORT AND CHARTERING CORPORATION HAIPHONG BRANCH

STUDENT NAME: TRAN THI HA MI DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS RECOMMENDATIONS TO IMPROVE SERVICE QUALITY FOR EXPORT CARGOES AT CONTAINER FREIGHT STATION OF THE TRANSPOR

STUDENT NAME: TRAN THI HA MI

DISSERTATION

GLOBAL STUDIES AND MARITIME AFFAIRS

RECOMMENDATIONS TO IMPROVE SERVICE QUALITY FOR EXPORT CARGOES AT CONTAINER FREIGHT STATION OF THE TRANSPORT AND CHARTERING CORPORATION-HAIPHONG

BRANCH

The dissertation is a result of my three-month internship at Vietfracht Transport and Chartering Corporation, Hai Phong branch In this period, I had a chance to observe and learn practical knowledge at Vietfracht CFS warehouse Thus, it helps me to bridge the gap between theory and reality and acquire useful experience for my future career Finally, I decided to do research on how to improve CFS services for exported cargoes During the period, the dissertation would not have been completed if I did not received support of Vietfracht Transport and Chartering Corporation, Hai Phong branch Therefore, I would like to express

my grateful to them Besides, I would like to sincerely thanks to Msc, Vu Thanh Trung for his guidance and support when I wrote this dissertation

My dissertation includes three main chapters:

Chapter 1: Literature Review

Chapter 2: Evaluation of current service quality for export cargoes at CFS of The Transport and Chartering Corporation, Hai Phong branch and assessments

Chapter 3: Recommendations to improve service quality for export cargoes

at CFS of The Transport and Chartering Corporation, Hai Phong branch

I declare that this report is my own unaided work It has not been submitted before If violated, I am solely responsible for and bear the punishments of the Institution and University

Student name and signature

Trần Thị Hà Mi

INTRODUCTION 1

CHAPTER 1: LITERATURE REVIEW 3

1.1 Container freight station 3

1.1.1 Definition 3

1.1.2 The importance of container freight station 3

1.1.3 CFS main activities 3

1.1.4 Types of store cargoes 4

1.1.5 Conditions to CFS establishment 5

1.1.6 CFS functions 5

1.1.7 Customs supervision 6

1.2 Service 6

1.2.1 Definition 6

1.2.2 Service quality 6

1.2.3 Models to measure service for export cargoes in CFS 7

1.3 Research method 10

1.3.1 Research objectives 10

1.3.2 Methods of data collection 10

1.3.3 Sampling 11

1.3.4 Methods of data analysis 11

CHAPTER 2: THE EVALUATION OF SERVICE QUALITY FOR EXPORT CARGOES AT CFS OF VIETFRACHT HAI PHONG 12

2.1 Introduction of the Transport and Chartering Corporation (Vietfracht) 12

2.1.1 General information 12

2.1.2 The history of foundation and development 12

2.1.3 Main services 13

2.1.4 Organization structure of Transport and Chartering Corporation 14

2.2 Introduction of Vietfracht Hai Phong 15

2.2.1 General information 15

2.2.2 Organization Structure of Vietfracht Hai Phong 15

2.2.3 CFS of Hai Phong branch 16

2.2.4 CFS facilities 16

2.2.5 CFS output 19

Chartering Corporation –Hai Phong Branch 20

2.4 The evaluation of current service quality for export cargoes of CFS at The Transportation and Chartering Corporation-Hai Phong Branch 26

2.5 Challenges 32

2.5.1 External factors 32

2.5.2 Internal factors 33

CHAPTER 3: RECOMMENDATIONS TO IMPROVE SERVICE QUALITY FOR EXPORT CARGOES AT CFS OF VIETFRACHT HAI PHONG 34

3.1 Recommendations to improve service quality for export cargoes at CFS 34

3.1.1 Updating facility and equipment 34

3.1.2 Calculating productivity and allocating work 34

3.1.3 Focusing on recruiting and training activities 35

3.1.4 Regularly receiving feedbacks and updating services 36

3.1.5 Urging vendors/ factories to delivery cargoes on time 36

3.1.6 Establishing the List of Documents in use 37

3.1.7 Establishing and practicing emergency plan 37

3.1.8 Preparing to deal with customs declaration 37

CONCLUSION 38

REFERENCES 39

APPENDICES 40

CFS Container Freight Station

Figure 2.1: Organization structure of Transport and Chartering Corporation 14

Figure 2.2: Organization Structure of Vietfracht Hai Phong 15

Figure 2.3: Forklift truck 17

Figure 2.4: Reach Stacker 17

Figure 2.5: Hand pallet truck 18

Figure 2.6: Container truck 18

Figure 2.7: Vietfracht CFS output from 2012 to 2015 19

Figure 2.8: The flow of export cargoes 20

Figure 2.10: Shipping Declaration on ECCUS 5-VNACCS system 24

Table 1.1: The model of measuring service quality at CFS. 9 Table 2.1: Basic standard for stuffing each type of container 25 Table 2.2: The ratings of customers to recent performance for export cargoes at

VF CFS 27 Table 2.3: The ratings of customers toward importance of each factors in the measuring model 31

INTRODUCTION

Necessitation

In our date and time, trading between regions by sea continues growing vigorously which leads to the increasingly important role of ports Vietnam is fortunately granted with a long coastline containing more than 200 ports With the development of port in Vietnam, container freight station has become much more important because container freight station is considers as a facility that facilitate port activities Undoubtedly, container freight station helps to the flow of export and import goods through ports Thus, improving services and efficient of CFS is increasingly necessary which helps to lower the cost of all involved parties and contributes to the development of port as well as economy In my dissertation, I have researched the model to measuring the service quality at Vietfracht CFS specifically to export cargoes which uses the knowledge I studied at university and practical experience I learned at Vietfracht CFS Hence, I hope that my research topics “Recommendations to improve service quality of export cargoes at Vietfracht CFS” can contribute for the development of Vietfracht CFS as individual and container freight station as a whole

Research Scope

The internship took place in Vietfracht CFS for export cargoes During this internship, I have chance to learn about services that CFS provides for their

customers The dissertation focuses on evaluation of services quality with strengths and weaknesses of services for export cargoes

The dissertation was carried out from August, 2015 to October, 2015 The work was done in three-month period including with taking an internship, choosing topic of dissertation, collecting information and statistics and writing

Research Methodology

Method of data collection: the dissertation is using the combination of qualitative and quantitative research The qualitative approach is undertaken by interviewing, discussing ideas with staff to gain more perception about the current services of CFS From that, I can report authentically about the current services that CFS provides for export cargoes Quantitative research is applied in assessment of CFS services through sending questionnaires to customers The questionnaire used the most common measurement technique-rating The customers will be asked to rate quality of current services in 5-point scale starting from 1 as “strongly disagree” to 5 as “strongly agree”

Methods of data analysis: because the questionnaires are designed in form of 5-point scale, descriptive statistics can be easily used to analyze the data All steps

of data analysis including editing, coding, data entry and data analysis are carried out by using Excel

Research Result

The dissertation presents the current services for export cargoes that VF CFS provides in Chap 2 In addition, the most appropriate measuring model to assess CFS quality service for export cargoes is set up In order to measure service quality,

I ask customers to judge the current service quality base on these on the proposing model by sending surveys to them Data is collected and analyzed by using descriptive statistics, and then some hidden issues were unclosed As a result, I have come up with some recommendations as remedies for each issue Overall, I believe that, my dissertation has provides useful knowledge which contributes to the development of CFS

CHAPTER 1: LITERATURE REVIEW

1.1 Container freight station

1.1.1 Definition

According to business dictionary, container freight station can be simply defined as “port facility for loading and unloading containerized cargoes from or to ship” (Dictionary)

Another definition is that “Container Freight Station (CFS) means the location designed by the Carrier or his authorized agent for the receiving of goods

to be stuffed into containers or for the delivery of goods stripped from containers by the Carrier or his authorized agent” (OOCL)

CFS locates in the locations where import/ export cargoes can be easily loaded/unloaded, consolidation and deconsolidation for transportation to destinations In order to establish this warehouse, firm need to granted licenses to operation because CFS warehouse is under the strict control and supervision by custom authorities

1.1.2 The importance of container freight station

We have lived in global village where trading between countries and regions grow exponentially A great volume of goods transported to ports have caused bad congestion in ports Another justification is a long waiting time for customs clearance This delay time will add up the cost of sea transportation

Container freight station is established as convenient location to consolidation and deconsolidation, temporary storage, customs inspections…hence CFS helps to accelerate the flow of containers and cargoes, facilitate the port operation, increase productivity and reduce port congestion

cargoes after cargoes are accepted which is quality control The receipt was issued and cargoes are marked traditionally or with bar code Cargo information is registered into warehouse management system (if any) after being put away

Put away is implemented when cargoes are categorized and palletized after moving to storage locations Normally, CFS determines storage locations in advance and after putting away, locations are recorded properly in a preparation for subsequent steps

Storing not only includes proper preservation of cargoes but also other activities like cycle counting, replenishment, stock rotation and space planning Cycle counting is audit-practice which specific portions of goods are physically counted and checked on schedule Replenishments and stock rotation refer to refill and switch cargo location in rational way Storage space also is planned to utilize resource and increase productivity

Picking is a process based on customer‟s orders; cargoes are picked manually

or automatically from storage locations

Packing is considered as value-added service and is provided in some CFS According the demand of customers, cargoes are packing carefully to avoid damage

or losses in transportation

Shipping is considered as final process in CFS which includes shipping confirmation, invoicing, sealing, staging and loading Cargoes are gathered together, checking, invoicing, and loaded to customers‟ vehicles by using handling equipments

1.1.4 Types of store cargoes

According to Article 61 in 2014 Customs Law, there are two main types of cargoes which are allowed to store in CFS (Container Freight Station) Firstly, it is imported cargoes which have not yet finished customs clearance Secondly, it is exported cargoes which have completed customs clearance or registered custom declaration but have not been under custom inspection

However, Container Freight Station often refers as a place dealing with LCL cargoes which stands for Less Than Container Load LCL cargoes are cargoes

which are not enough to full a container so it can be joined with other LCL cargoes

in order to save transportation cost

- Cargoes in warehouse are managed by computer systems and are connected

to the monitoring system of the customs authorities

1.1.6 CFS functions

CFS primarily carries out some following functions:

- Receipt and delivery of cargo

- Stuffing and unstuffing of containers

- Transit operations to and from serving ports

- Customs clearance

- Consolidation and break-bulk of LCL cargo

- Temporary storage of cargo and containers

- Maintenance and repair of container units

1.2 Service

1.2.1 Definition

First of all, it should be noted that there are many different ideas and definitions about services General, service is often referred as intangibility According to (Kotler, 2003), service can be defined as any behavior or act in a contact between two parties: the provider and the receiver Walfried (Walfried M Lasser, 2000) saw service as a set of characteristics that meet the clients' needs, reinforce the links between the organization and them, and improve the clients' value as well

1.2.2 Service quality

Measuring service quality has been one of the most heated topics to many scholars over decades due to the prevalence and developments of service in a wide

range of businesses According to (Parasuraman, 1985), service quality is a gap between customer„s expectation and the perception of current services that are provided Gronroos (Gronross, 1984) argued that service quality can be measured

by the comparison between value that customers expect before using service and value that customers receive after using service

1.2.3 Models to measure service for export cargoes in CFS

Gronroos also proposed a model including three dimensions (technical, functional and image) to measure service quality Technical quality referred to what are services and value customers received while functional quality related to how services are provided Image which is quite important to company is mainly build

up based on technical quality and functional quality However, the model widely used to measure service quality is the model that was proposed by Parasuraman (Parasuraman, 1985) This model also is considered as foundation to measure service quality in many service fields like banks, insurance, education…In this model, Parasuraman indicate ten criteria to assess the quality of every service including reliability, responsiveness, competence, accessibility, courtesy, communication, credibility, security, understanding the customer, tangibility In

1988, this model was named as SERVQUAL which the merger of two words service and quality Ten criteria were integrated into 5 criteria as following:

- Tangibility: Physical facilities, equipment, and the physical appearance of employees

- Reliability: The ability to provide the exact required service dependably and accurately

- Responsiveness: Willingness of the employees to serve clients promptly and properly

- Assurance: The ability conveys trust and confidence This reflects the employees' knowledge and experience

- Empathy: knowing the customers' personal needs, taking care of customers individually and showing sympathy and affection

Based on SERVQUAL model, Cronin and Taylor (J.J Cronin, 1992) proposed new model SERVPER (Service performance) to simplify the measurement of service quality Cronin and Taylor claim that service quality can be measured by the actual performance of service instead of the gap in customer

expectation of customers and level of current service in Servqual Cronin argued that Servqual model of Parasuaraman easily misleads between satisfaction and attitude of customers It is undeniable that SERVPER is easier to implement ranging from collecting to analyzing data SERVPER is also suitable for research which limits in time and cost SERVPER uses exact 5 criteria of SERVQUAL which is listed above

However, due to the distinct features and characteristics, each type of business or industry will require different measuring model Chowdhary and Saraswat (Chowdhary, 2003) also said that different dimension or criteria should be applied based on characteristics and purposes of services Therefore, when measuring the quality of CFS, I have to take an account of characteristics of CFS warehouse As a critical part in logistics system, CFS warehouse has unique features of logistics providers

According to textbook about Multimodal transportation and logistics (Department, 2015), time is one of the most important criteria to judge the competiveness of logistics service providers With the development of modern life, the accuracy of time is increasingly gaining its importance Punctuality can directly affect the productivity and competitiveness of any industries Punctuality is more ever important and considered as key criteria to the success of logistics services In today fierce competition, warehouse should set out strict timetable to each step in warehouse operation due to of its time-sensitive activities like consolidation, shipping…Just in time represents in following activities: receiving and shipping on time, declare customs clearance on time, finish stuffing and unstuffing on time, finish documents and send to related parties on time Accuracy is another criterion

to judge operation of warehouse Every step ranging from receiving, putting away, picking, packing and shipping should be ensured the accuracy of product, quantity, time and place…Mistakes will result in the serve damage for all involved parties like exporters or importers and can adversely affects warehouse‟s reliability and productivity Therefore, mistakes are unacceptable and should be reduced at the minimum levels By using SERVPER model, time and accuracy of CFS service can

be presented as reliability dimension

In addition, equipments and facility reflects the CFS capacity to handle cargoes and have implication on judging CFS services These factors are merged into intangibility dimension of SERVPER model As aforementioned analysis,

using 5 criteria in SERVPER model is quite appropriate to assess the services quality of CFS warehouse Furthermore, two criteria, time and cost will be added in order to adequately judge all service aspects that CFS provided After revising, new conceptual model for this study is shown in table 1.1

Table 1.1: The model of measuring service quality at CFS

Tangibility CFS‟s facilities are adequate to provide good services

for export cargoes (including warehouse, depot, office ,)

TAN 1

Equipment of CFS is adequate and up-to-date (handling equipment, container trucks )

TAN 2

CFS uses the up-to-date technology in management TAN 3

Reliability Cargoes are stored in appropriate condition and do

not have any damage

REL 1

Tasks like receiving, picking, packing and shipping are performed accurately, safely (which is right in product, quantity, time, place)

Empathy Company regularly receives feedbacks and updates

services according to customer‟s demand

EMP 1

Furthermore, in order to gain more insight into CFS services, Importance- Performance Analysis (James, 1977) should be applied Importance-Performance

Analysis (IPA) may ask customers about level of importance and performance of each measuring criteria of service quality Applying IPA with criteria derived from above model is actually an effective tool to assess CFS services Because, it helps to recommend areas in which company can strategic redeploy resource to improve service quality according to the suggestion of importance of customers For example, company can prioritize to develop dimensions which are more important

to customers Company can allocate resource more effectively and create its comparative advantages

1.3 Research method

1.3.1 Research objectives

The research is aim to find out the real quality service at Vietfracht CFS by using questionnaires The questionnaires were designed by using SERVPERF model with 5 dimensions (tangibility, reliability, responsiveness, assurance, empathy) Furthermore, in order to enhance the reliability of research, I also use Importance-Performance Analysis (IPA) which asks customers about the importance of each factor in the measuring model By rating the importance, customers can help to point out the expectation to services that CFS provide However, I focus on study service quality at CFS for export cargoes only due to some following reasons Because of time shortage, I decided to study deeply about CFS for export cargoes Furthermore, CFS services for export and import cargoes are quite different If I want to study service quality for all, it means that I have to deal with very large target population which I cannot define the exact quantity of them Therefore, it may cause the problem in choosing sampling proportion and collect the adequate quantity of questionnaire to analyze In addition, by only chose the smaller part, I can provide more feasible solutions to improve the service quality After analyzing the collected data, I will have a general outlook about service quality at Vietfracht CFS From what I have been found, some recommendation will be proposed to improve service quality at CFS

1.3.2 Methods of data collection

The research mainly uses the quantitative method because in order to assess quality service of CFS, questionnaires were sent to customers However, to gain more general ideas in advance, I also interview some employees who are seniors at Vietfracht CFS Therefore, they would demonstrate the deep knowledge and

experience After carry out the most importance step- sending questionnaires, I have to define the target population for the research Target population is respondents who I can send questionnaires to Due to the distinct characteristics of CFS for export cargoes, customers are forwarders who work directly with CFS on behalf of cargoes owners Forwarders will take charges of consolidate LCL cargoes and rent CFS to stuff these cargoes into containers At Vietfracht CFS, it has only

20 forwarders, so I intend to send questionnaires to all of them Furthermore, I strive to send some questionnaires to some cargoes owners but I may require more effort In the questionnaire, I ask customers rating the current performance and importance of each factor in the questionnaire in 5-point scale With rating performance, it starts from 1 as “strongly disagree” to 5 as “strongly agree” With rating importance, it starts from 1 as “not important” to 5 as “very importance” with 3 as middle point Method of sending question is sending directly to forwarders supervising at CFS or sending through email

1.3.3 Sampling

The population is defined as 20 forwarders/ companies who directly working with CFS likes APL logistics, ASAP, Shipco, Dolphin logistics, one world logistics… As the rule of thumb, with the population under 100, I should strive to receive from 80 to 100 % of respondent rate

1.3.4 Methods of data analysis

Excel is used to analyzing the collected data More specifically, descriptive statistic is properly suitable to analyzing data which has the form from 1 to 5 By using descriptive statistic, excel will automatically implement some calculations like calculating medium, mode, mean, standard deviation Mean and standard deviation is the most important indicators that I will use to assess performance and importance of each factors in the measuring model

CHAPTER 2: THE EVALUATION OF SERVICE QUALITY FOR EXPORT CARGOES AT CFS OF VIETFRACHT HAI

PHONG

2.1 Introduction of the Transport and Chartering Corporation (Vietfracht)

2.1.1 General information

Name: The Transport and Chartering Corporation

Abbreviated name: VIETFRACHT

Head quarter: 74 Nguyen Du Street, Ha Ba Trung District, Ha Noi

Tel :( 84.4)38228915

Fax: (84.4)38228916

2.1.2 The history of foundation and development

Transport and Chartering Corporation was established on January 18th, 1963 and formerly named as Foreign Trade Transportation Corporation At the beginning, Vietfracht was a state owned company and transformed into a joint stock company in 2006

Vietfracht ís a member of a wide range of prestigious international organizations like BIMCO (Baltic and International Maritime Council), FIATA (International Federation of Freight Forwarder Associations), FONASBA (The Federation of national associations of shipbrokers and agents), FASA (The Federation of Asean Shipowners‟ Associations) Vietfracht is also one of founding members of VSA( Vietnam Shipowners Association), VISABA (Vietnam Ship Agents and Brokers Association),VIFFAS (Vietnam Freight Forwarder Association), VCCI (Vietnam Chamber of Commerce and Industry)…With more than 50 years of experience and growth, Vietfracht was known as one of the most Vietnam maritime companies locally and internationally As the acknowledgement

of Vietfracht‟s dedication, the state and government awarded the company with honor titles like First Class Labour Medal, Third Class Independent Medal and Labour Heroic Unit

In 2005-2015 periods, Vietfracht defines its objective “to boost company to higher level” Vierfracht strives to expand its businesses, diversify of services, focus

on human resource and upgrade the means of transportation, improve infrastructure and information systems and participate in contributing capital for the establishment

of joint stock and subsidiary companies

2.1.3 Main services

 Ship owning

Vietfracht has owned and exploited the dry cargo fleet with the capacity of about 20000 DWT operating in Asian Pacific routes Vietfracht has over 40 years of experience in managing and operating the fleet, the company ensures to provide high quality services with qualified staff and crew In the future, the company will continue to invest to develop the fleet in order to improve the capacity to above

50000 DWT, focus on training skilled seafarers to meet the increasing requirements

of customers

 Chartering and shipbroking

Chartering and shipbrobing is one the traditional business of company With long experience and extensive relationship with other shipowners and charterers, Vietfracht has succeeded in broking a number of shipments (dry cargo, refrigerated cargo, liquid bulk) Besides, for customers who want to export or import cargoes, company will introduce supplier or purchasers

 Frieght forwarding and logistics

Forwarding is considered as strong points of Vietfracht With a network of offices across the country, warehouse systems and modern transportation means, Vietfracht is willing to provide the following services:

 Freight forwarding and multimodal transport

- Documentation, insurance management and customs clearance

- Stevedoring and tallying

- Hiring transport vehicles to move cargoes

- Storage facilities (long-term and short-term)

- Pre-inspection for reefer cargoes

- Packing and marking

- Freight forwarding of special cargoes like dangerous cargoes, oversized cargoes, fragile and valuable cargoes

 Freight forwarding and assembling equipments for projects and factories

 Consolidation and distribution services

 Warehousing and trucking

Vietfracht has network of modern warehouses in the several cities of Vietnam such as Hai Phong, Binh Duong province; Ho Chi Minh City… Transportation fleet operates on time and safety which helps to move containers from container yards to warehouses and vice verse

 Shipping agency

Vietfracht is operating as ship agency for many shipping lines all over the world The company has dealt with many types of vessels such as bulkers, dry carriers, reefers, tankers, ro-ro, cruide oil carrier and containerships Vietfracht provides a wide range of services including inward and outward procedures for vessels, stevedoring, ship repair and maintenance, crewing, food and equipments provider for ships Company also offers package services in protecting agency, local husbandry, cargo canvassing, information agency system, booking and marketing

2.1.4 Organization structure of Transport and Chartering Corporation

Figure 2.1: Organization structure of Transport and Chartering Corporation

2.2 Introduction of Vietfracht Hai Phong

2.2.1 General information

Name: Vietfracht Hai Phong

Address: 35 Minh Khai Street, Hai Phong, Viet Nam

2.2.2 Organization Structure of Vietfracht Hai Phong

Figure 2.2: Organization Structure of Vietfracht Hai Phong

Director

Vice Director

Forwarding Department

Ship Agent Department

Human Resource Department

Accounting Department

Vice Director

Inbound and outbound warehousing

Depot

Trucking

Procedure Team

2.2.2.1 CFS employees

a Vice Director is the highest position in VF CFS who takes charges of controlling entire activities at CFS He will receive daily reports from all departments and give direct guidance to each department In addition, he will make the importation decision related to development of CFS

b Warehouse manager takes charge of managing all activities in CFS for export and import cargoes like receiving; storing, stuffing, unstuffing, shipping…He will receive direct guidance of Vice Director

c Depot Manager is responsible for activities in depot like lifting on/off containers, storing empty containers…He will directly receive the commands

of Vice Director

d Trucking fleet is including 8 containers trucks and drivers The trucking fleet

is responsible for shipping containers from other depots to VF CFS and vice verse

e Procedure team will in charge of dealing with all kinds of documents for export and import cargoes at VF CFS Hence, they keep the close relationship with other parties like forwarders or shipping lines They also receive the direct commands of Vice Director

f Storekeepers play their roles as supervisors and record some documents at warehouse They also dive instruction to worker, tallymen and forklift drivers

g Forklift drivers are workers who specialize in control forklift truckers They can work in depot or at warehouse

h Tally men are workers who take charge of recording all cargoes information

in receiving and shipping operation by establishing Tally sheets

i Workers work in the warehouse They will take charge of handing cargoes like unloading, loading, putting away, picking cargoes

2.2.3 CFS of Hai Phong branch

 Position: located in No.5 national high way, near Chua Ve port

 Warehouse area: 5760 m2

 Workshop area: 400 m2

 Depot: 20000 m2

with capacity of more than 1000 containers

 Camera system operating 24/24

 Modern and synchronous handling equipments

2.2.4 CFS facilities

2.2.4.1 Handling equipment