Recommendations to improve service quality for imported cargo at CFS warehouse at greenport viconship

MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING VIETNAM MARITIME UNIVERSITY STUDENT NAME: TRAN THI DUC HANH DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS RECOMMENDATIO

MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING

VIETNAM MARITIME UNIVERSITY

STUDENT NAME: TRAN THI DUC HANH

DISSERTATION

GLOBAL STUDIES AND MARITIME AFFAIRS

RECOMMENDATIONS TO IMPROVE SERVICE QUALITY FOR IMPORTED CARGO AT CFS WAREHOUSE

AT GREENPORT - VICONSHIP

HAI PHONG – 2015

MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING

VIETNAM MARITIME UNIVERSITY

STUDENT NAME: TRAN THI DUC HANH

CLASS: GMA02

DISSERTATION

GLOBAL STUDIES AND MARITIME AFFAIRS

RECOMMENDATIONS TO IMPROVE SERVICE QUALITY FOR IMPORTED CARGO AT CFS WAREHOUSE

AT GREENPORT - VICONSHIP

Supervisor: Vu Thi Thu Hang

Division: Global Studies and Maritime Affairs

Faculty: Economics

PREFACE

The work outlined in this dissertation was carried out in the Warehouse Department, Green Port, VICONSHIP, where I undertook my internship, over the period from August 2015 to the end of September 2015

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

Tran ThiDucHanh

ACKNOWLEGEMENT

Firstly, I would like to express my sincere gratitude to my supervisor Ms Vu Thi Thu Hang for her continuous support, patience, motivation, and immense knowledge Her guidance was very helpful for me during the time of research and writing of this thesis

My sincere thanks also go to Ms Tran Phuong Anh, Manager of Warehouse Department at Greenport – VICONSHIP, who provided me an opportunity to join their team as intern, and Ms Nguyen Thi Ngoc Thuy, my instructor at the company, who thoroughly guided me during my internship Without they precious support it would not be possible for me to conduct this research

TABLE OF CONTENTS

Preface i

Acknowledgement ii

Table of Contents iii

List of Symbols, Abbreviations v

List of Tables and Graphs vi

List of Figures vii

INTRODUCTION 1

Necessity 1

Research object 1

Research methodology 1

Research scope 1

Research findings 1

CHAPTER 1: LITERATURE REVIEW 2

1.1 CFS warehouse 2

1.1.1 Definition of CFS warehouse 2

1.1.2 Services at CFS warehouse 2

1.2 Service quality 2

1.2.1 Definition of service quality 2

1.2.2 Tools to evaluate service quality 3

1.2.3 Evaluation methodology 6

CHAPTER2: EVALUATION OF SERVICE QUALITY OF CFS WAREHOUSE AT GREENPORT 9

2.1 Introduction about the company 9

2.1.1 Introduction about VICONSHIP 9

2.1.2 Introduction about the subsidiary of the field trip 13

2.1.3 Business fields of CFS warehouse at GREENPORT 16

2.1.4 Detailed process of unstuffing imported cargo at CFS warehouse 16

2.2 Result of evaluation 22

2.2.1 Overall information about sample 22

2.2.2 Analyzing mean expectation score 22

2.2.3 Analyzing mean perception score 26

2.2.4 Analyzing gap score between expectation and perception 29

CHAPTER 3: RECOMMENDATIONS TO IMPROVE CFS WAREHOUSE SERVICE QUALITY 32

3.1 Identifying factors that need to be improved 32

3.2 Recommendations to improve service quality at Greenport CFS warehouse 33

3.2.1 Important factors that need to be improved instantly 33

3.2.2 Other factors that should be improved in the long-term 36

CONCLUSION 38

Reference 39

Appendices 40

LIST OF ABBREVIATIONS

CFS Container Freight Station

IPA Important – Performance Analysis

D/O Delivery Order

LIST OF TABLES

TABLE 1: List of variables 6

TABLE 2: Greenport Facilities 13

TABLE 3: Distribution of respondent 22

TABLE 4: Summary of the customers‟ expectation score 22

TABLE 5: Summary of the customers‟ perception score 26

TABLE 6: Summary of gap score between expectation and perception 29

LIST OF FIGURES

FIGURE 1: Important – Performance Matrix 6

FIGURE 2: Organization chart of VICONSHIP 10

FIGURE 3: Growth of revenue of VICONSHIP from 2009 to 2014 12

FIGURE 4: Profit after tax of VICONSHIP from 2009 to 2014 12

FIGURE 5: GREENPORT general terminal layout 13

FIGURE 6: Racking system at Greenport CFS warehouse 15

FIGURE 7: General unstuffing process at GREENPORT CFS warehouse 16

FIGURE 9: Distribution of the expectation scores 25

FIGURE 10: Distribution of the perception scores 28

FIGURE 11: Distribution of variables in the I-P matrix 32

INTRODUCTION

Necessity

Together with shipping lines, consolidators and forwarders, CFS warehouses play

the role as an essential part of the transporting network for import and export

cargoes Regarding the service quality of CFS warehouses in the city of Haiphong,

Greenport CFS warehouse is assumed to be in the top positions However, there has

not been any official research before which measured this level of service quality

Therefore, this research was conducted in order to find out how the Greenport CFS

warehouse is actually providing its service and what the warehouse manager board

can do to further improve the warehouse service

Research object

The focus of this dissertation is to evaluate the quality of service provided at CFS

warehouse at Greenport – VICONSHIP and then figure out several possible

recommendations to improve the situation

Research methodology

Questionnaires were sent out to customers to collect data for evaluation Then,

RATER model and Importance – Performance matrix, along with data analysis,

were used to measure service quality at Greenport CFS warehouse

Research scope

The research was carried out at Greenport CFS warehouse in a period of more than

one month from August 2015 to the end of September 2015 The data used for

evaluating the service quality of the warehouse was also collected in this period of

time

Research findings

It was found that the service quality at Greenport CFS warehouse has not met the

expectation of the customers, since the overall perception score is lower than the

overall expectation score Through evaluation process, five factors that need to be

improved have been determined At the end of the research, several

recommendations for each of the abovementioned five factors were given

CHAPTER 1: LITERATURE REVIEW

1.1 CFS warehouse

1.1.1 Definition of CFS warehouse

In general, CFS (Container Freight Station) warehouse is the location designated to handle consolidated shipments for both export and import cargo As the global trading and transportation are becoming more convenient, nowadays, small-scale merchants can also easily take part in export and import activities Because of the growing demand for consolidated shipments, CFS services were born to facilitate the process and also help those small shippers save transportation

1.2.1 Service quality definition

Service quality has long been an attractive issue with researchers, as countless studies have been done about this topic The 25-year history of quality movement has been summarized in an article by Dahlgaard-Park el al (2013), covering all published under the subject of Total Quality Management (TQM), Business Excellence (BE), quality tools, techniques as well as core values/principles

Understanding the concept of service quality is essential for companies; because it enables them to improve their service and therefore become more competitive However, most services are intangible as they are performance, not physical objects, so it is difficult to measure the service quality precisely Due to the lack of tangible cues on which to evaluate quality, it is necessary to apply a new

concept of “customers‟ satisfaction” Customer satisfaction is a measure of how well a product or service provided by a company can satisfy their customers‟ expectation (Nigel Hill, 2003) In order to satisfy the customers, companies need to figure out what requirements their customers are looking for, and find the way to meet those requirements Therefore, it can be said that customer satisfaction is a relative concept, not a fixed one To measure the level of satisfaction, it is necessary

to calculate both sides of the equation It is necessary to determine customers‟ expectation through a set of specific criteria, together with evaluating companies‟ performance, and then compare these two factors to see how well they match

There are several models used to measure service quality, in which the most common one is SERVQUAL (Parasuraman et al, 1985, 1988) Theoretically, SERVQUAL is based on analyzing the gap between customers‟ expectations and their perceptions of provided service In other words, this model is a tool to measure satisfaction level of customers towards a specific service

1.2.2 Tools to evaluate service quality

a) RATER model

RATER is a model for measuring service quality developed by A Parasuraman, Valarie ZeithamI, and Leonard Berry Actually, RATER is the shorten form of the SERVQUAL model

Initially, SERVQUAL was introduced in 1988 with 10 quality criteria (Parasuraman et al, 1988), namely:

 Reliability: involves consistency of performance and dependability

 Responsiveness: concern the willingness and readiness of employees to provide service and involves timeliness of service

 Competence: means possession of the required skills and knowledge to perform the knowledge

 Accessibility: involves approachability and ease of contact

 Courtesy: involves politeness, respect, consideration and friendliness of contact personnel

 Communication: means keeping customers informed in language they can understand and listening to them

 Credibility: involves trustworthiness, believability, honesty

 Security: is the freedom from danger, risk or doubt

 Understanding/ knowing the customer: involves making the effort to understand the customers‟ needs

 Tangibility: includes the physical evidence of the service

Later on, researchers have integrated the above-mentioned ten dimensions into only five ones – or RATER model which includes:

 Reliability: Reliability refers to the ability to perform the promised service dependably and accurately, including

- Probity and confidentiality

- Safety and security

 Tangibles: involves the physical representations or images of your service, including:

- Access (to staff, services, information)

- Communication (clear, appropriate, timely)

- Understanding the stakeholder

- Services appropriate for stakeholders‟ needs

- Individualized attention

 Responsiveness: Your willingness to help customers and to provide prompt service Responsiveness refers to:

- Willingness to help

- Prompt attention to requests, questions

b) Important – Performance matrix

Important – Performance Analysis (IPA), introduced by Martilla and James (1977) is a well-known tool which has been applied widely to measure client satisfaction with a product or service IPA provides service managers with valuable information for both satisfaction measurement and the efficient allocation of resources, since IPA examines not only the performance of an item, but also the importance of that item as a determining factor in satisfaction to the respondent

The two dimensional IPA model is divided into four quadrants with performance on the x-axis and importance on the y-axis As a result of this, four quadrants namely Concentrate Here, Keep up the Good Work, Low Priority, and Possible Overkill are created

 Quadrant I (High Importance/Low Performance) is labeled Concentrate Here Attributes that fall into this quadrant represent key areas that need to

be improved with top priority

 Quadrant II (High Importance/High Performance) is labeled Keep up the good work All attributes that fall into this quadrant are the strength and pillar of the organizations, and they should be the pride of the organizations

 Quadrant III (Low Importance/Low Performance) is labeled Low Priority Thus, any of the attributes that fall into this quadrant are not important and pose no threat to the organizations

 Quadrant IV (Low Importance/High Performance) is labeled as Possible Overkill It denotes attributes that are overly emphasized by the organizations; therefore, organizations should reflect on these attributes, instead of continuing to focus in this quadrant, they should allocate more resources to deal with attributes that reside in quadrant I

Figure 1: Important – Performance Matrix

(Source: J Martilla and J James, Importance-performance analysis,

Journal of Marketing, vol 41, no 1, pp 77-79, 1977)

With this matrix, warehouse managers are able to determine which factors need to be concentrated on the most, and therefore can re-allocate the resources more effectively

1.2.3 Evaluation methodology

a) Method of data collection

This research used quantitative method for data collection Two questionnaire surveys were conducted for the customers to evaluate the quality of the service they received at CFS warehouse of Greenport The first questionnaire involves the expectation of customers towards the services offered by Greenport CFS warehouse, while the other questionnaire aims to assess their perception toward performance of the warehouse The questionnaires were pre-tested within a small group of respondents to ensure clarity before officially sent out to warehouse‟s customers

All the variables of the questionnaire are coded for later analysis, and are

shown in the following table:

Table 1 List of variables

No Research

variables Measurement items Code

1

Reliabilities The warehouse always provide fast service REL1

2 The warehouse always provide services on time REL2

3 The warehouse always provide service in a

4 The warehouse always ensure safety and security

5 The warehouse always produces error-free

invoice and related documents REL5

6 The warehouse always offers competitive price

10 Information of customers is always kept

confidential by Greenport CFS warehouse A4

11

The level of Information Communications Technology applications in customer service at the warehouse is comprehensive

A5

12

Tangibles

The warehouse has sufficient equipments and

14 The employees get sufficient support from

company to do their jobs well T3

15 Costs of warehouse service are satisfactory T4

E2

18 The warehouse always take good care of every

customers without being partial E3

19

Responsiveness

The staff in the warehouse always respond

20 Warehouse staffs can flexibly solve unexpected

problems for the benefits of the customers RES2

21 The warehouse always provide satisfactory

answers towards any complaint RES3

22 The warehouse always collect feedbacks about

their services and reflect on their improvement RES4

(Source: author)

Respondents were asked to assess the quality of provided services by rating from 1 to 5 for each statement describing the service quality factors The point scale being used to measure the attitude of respondent ranges from 1: „Totally disagree‟

to 5: „Totally agree‟

The target population of this research included freight forwarders, shipping lines and cargo owners which are all the frequent clients at Greenport CFS warehouse The questionnaires were directly given to a variety of individuals from different companies who came to the warehouse to do business

b) Method of data analysis

This research applied RATER model to measure the service quality that Greenport CFS warehouse provided To be more specific, after collecting back all the survey questionnaires, mean score of each variable was calculated, and by subtracting the expectation scores from the perception scores, the gap scores were obtained

Service Quality (Q) = Mean score of Perception (P) – Mean score of Expectation (E)

If Q is a positive number, the warehouse is providing their service at higher quality than being expected by the customers In contrasts, in case Q is a negative number, it means the expectation of the customers is not satisfied, and the warehouse needs to improve their service quality

Then, the research continued with Important – Performance matrix to determine which factors need to be improved Factors which fall into the Quadrant

1 of the matrix will be prioritized, as they are important factors and have decisive influence on the satisfaction level of customers

CHAPTER 2: EVALUATION OF SERVICE QUALITY OF

CFS WAREHOUSE AT GREENPORT

2.1 Introduction about the company

2.1.1 Introduction about VICONSHIP

a) General information:

VIETNAM CONTAINER SHIPPING CORPORATION (VICONSHIP) is one

of leading Freight Forwarders and Shipping Agency Companies in Vietnam and has been actively providing its services since 1985

VICONSHIP has its own container terminal, warehouse, trucking lines for container and conventional cargo moving services in the North, in the Central and

in the South of Vietnam It provides complete facilities for all modes of cargo service Linking Shippers and Consignees with Owners is what they do best

With well trained and experienced Management at Staff in shipping and logistics, VICONSHIP has successfully applied Quality Management Systems under International Standard ISO 9001-2000 and certified by SGS-UKAS since May 2001

With experience and good reputation in warehousing and terminal management, VICONSHIP‟S Container Terminal has been licensed as Custom Clearance Depot

by Vietnamese Government Since September 10th, 1999 Customs House has been located and operating in VICONSHIP‟S terminal This Customs House controls customs clearance for all kind of export and import goods via Haiphong

b) Organization and Personnel

Figure 2: Organization chart of VICONSHIP

(Source: viconship.com)

 Supervisory Board:

Chief of Department Ms Nguyen Thi Kim Nha

Members Mr Nguyen Thi Minh Lan

Ms Nguyen Thi Yen Ha

 Board of management:

Chairman of Board Mr Nguyen Viet Hoa

Member of Board Mr Nguyen Van Tien

Mr Tran XuanBao

Mr Nguyen Viet Trung

Mr Hoang TrongGiang

Ms Hoang Thi Ha

Mr Nguyen The Trong

Mr Nghiem Tuan Anh

Mr Hoang Tien Luc

Mr Nguyen The Trong

c) Business status analysis

During the recent years, the business of VICONSHIP has always been improved According to the official website of the company, the business status is showed in the following two charts

Figure 3: Growth of revenue of VICONSHIP from 2009 to 2014

still increased by more than three percent, while the figure for revenue was more than 14 percent

Given the fierce competition of other companies working in the same field and the difficulties of not only national but also international economies in the recent years, these improvements are considered remarkable achievements of the company

2.1.2 Introduction about the subsidiary of the field trip

a) VICONSHIP Port Enterprise – GREENPORT

Figure 5: GREENPORT general terminal layout

(Source: viconship.com)

GREENPORT is a subsidiary of Vietnam Container Shipping Corporation (VICONSHIP) It is located at 20º51‟ lat N, 106º43‟ long E, 20 nautical miles distance to zero buoy (next to Chua Ve Terminal at lower section of Cam river) GREEN PORT was established on 24/09/2014

Table 2.GREENPORT facilities

Load ( Berth ) ton/m2 4 4

Tons per

Slewing gantry crane Units 1( With capacity 40 T ) 1( With capacity 40 T )

- LIBEBHERR crane Units 1( With capacity 40 T ) 1( With capacity 40 T ) Tug boat Units 1 (With capacity 70 T )

Straddle Carriers Units 3( With capacity 40 T ) 4( With capacity 40 T )

of the warehouse mainly come from unstuffing import cargo Import cargo accounts for approximately 75% of the total amount of goods handled by the warehouse Regarding the facility, CFS warehouse at Greenport is among the most modern warehouses in this field The warehouse is equipped with an up-to-date ranking system There are 15 new electric forklift trucks operate inside the house while the old-fashioned diesel forklifts are moved out to the yard

Figure 6: Racking system at Greenport CFS warehouse

(Source: author)

 Organization:

The total number of staff at the warehouse is about 70, including:

- 1 Warehouse Department Manager: Ms Tran Thi Phuong Anh

- 1 Customer Service staff : Ms Nguyen Thi Ngoc Thuy

- 1 Procedure Personnel for export cargo

- 3 Procedure Personnel for import cargo

- 1 Warehouse Operation Manager

- 8 Warehouse Keepers

- Workers and forklift drivers

2.1.3 Business fields of CFS warehouse at GREENPORT

At Greenport, the CFS warehouse provides two services, namely stuffing service for exported cargo and unstuffing service for imported cargo Between these two, unstuffing is the main service of the warehouse as the majority of cargoes handled here is imported cargo Therefore, during the internship, the author chose unstuffing service as the subject of the research

2.1.4 Detailed process of unstuffing imported cargo at CFS warehouse

Basically, the process is divided into 4 main stages which are illustrated in the following chart

Figure 7: General unstuffing process at GREENPORT CFS warehouse

a) Receiving documents

Procedure staff is responsible for receiving the document set from Freight

Forwarders which includes:

 Arrival notice: this is a document issued by shipping lines or carriers to inform the consignee about the expected arrival time of the vessel and the description of goods Other information such as voyage number, container number, seal number, number of packages, gross weight and measurement of goods are also shown in this document This information is important for

Receiving documents

Customs procedures

Unstuffing container Delivering cargoes to the owners