Recommendations to improve the business efficiency of port of hai phong JSC chua ve terminal

Dang ThiThanhNhan – GMA02 Page v LIST OF TABLES AND GRAPHS Table 1: The ratio of profit to cost...6 Table 2: the ratio of profit to revenue ...6 Table 3: The ratio of profit to fixed ca

Dang ThiThanhNhan – GMA02 Page i

As the international trade was motivated, the cargoes flow between countries increased through years; emphasized theimportant role of ports Tomeettheincreasingdemand forcargo transshipments, it is urgent issue to develop and improve the business efficiency of Vietnam port system Is a typical port in HaiPhong, Chua Ve Terminal hascontributed toeconomicdevelopment of Vietnam and HaiPhong city in particular

The internship atChua Ve Terminal provided me a good opportunity to experienced new things as well as reinforce knowledge Regarding to my dessertation, from my points of view, observing things, evaluating the company business efficiency and giving solutions to improve stituation areprimary tendor

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

Dang ThiThanhNhan

TABLE OF CONTENT

Preface i

Table of Content ii

List of Abbreviation iv

List of Tables and Graphs v

List of Figures vi

INTRODUCTION 1

CHAPTER 1: LITERATURE REVIEW 3

1.1 Some definitions 3

1.1.1Revenue 3

1.1.2Cost 3

1.1.3Profit 4

1.1.4Business efficiency 4

1.1.5Factors affecting business efficiency 4

1.2 Some criteria to evaluate business efficiency 6

1.2.1 Profit 6

1.2.3 Labor productivity 7

1.2.4 Salary 8

CHAPTER 2: EVALUATING BUSINESS EFFICIENCY OF CHUA VE TERMINAL 9

2.1 General information about Chua Ve Terminal 9

2.1.1 Introduction of Chua Ve Terminal 9

2.1.1.1 Introduction of Port of Hai Phong 9

2.1.1.2 Introduction of Chua Ve Terminal 10

2.1.2 Map layout and geographical location of Chua Ve Terminal 12

2.1.3 Infrastructure 14

2.1.4 Company main services 15

2.1.5 Organization and functions 15

Dang ThiThanhNhan – GMA02 Page iii

2.1.5.1 Level 1 Managers 17

2.1.5.2 Level 2 Professional Division 17

2.1.5.3 Level 3 Operating teams 18

2.1.6 Personnel 19

2.2 Evaluating the business efficiency of Chua Ve Terminal 19

2.2.1 Evaluating the general situation of the company 19

2.2.2 Evaluating business efficiency by profit 27

2.2.3 Evaluating business efficiency by salary and labor capacity 28

CHAPTER 3: RECOMMENDATIONS TO IMPROVE BUSINESS EFFICIENCY OF CHUA VE TERMINAL 31

3.1 Vietnam port system’s development planning till 2020 and orientation till 2030 according to Decision no.1037/QD-TTg of Vietnam Prime Minister 31

3.2 Orientation of Hai Phong seaport and the opportunities for Chua Ve Terminal 32

3.2.1 Orientation of Hai Phong seaport 32

3.2.2 Opportunities and orientation for Chua Ve Terminal 33

3.3 Recommendation 33

3.3.1 Improve the interaction inside the company 33

3.3.2 Improve the quality of service 34

3.3.3 Improve the quality of labor force 35

3.3.4 Reduce costs 35

3.3.5 Enhance relations with VMU University 36

CONCLUSION 38 BIBLIOGRAPHY Error! Bookmark not defined

Dang ThiThanhNhan – GMA02 Page v

LIST OF TABLES AND GRAPHS

Table 1: The ratio of profit to cost 6

Table 2: the ratio of profit to revenue 6

Table 3: The ratio of profit to fixed capital 7

Table 4: The ratio of handling capacity to labor force 7

Table 5: The ratio of salary to labor force 8

Table 6: Port infrastructure 14

Table 7: Port equipment 14

Table 8: Financial result of Chua Ve Terminal 2011-2014 19

Table 9: Cargo throughput of Chua Ve Terminal 21

Table 10: Revenue of Chua Ve Terminal 2011 – 2014 (million VND) 24

Table 11: Cost of Chua Ve Terminal 2011 – 2014 (million VND) 26

Table 12: Ratio of profit to cost/revenue/ fixed capital 2011 – 2014 27

Table 13: Labor productivity and salary ratio 29

LIST OF FIGURES

Figure 1: Chua Ve Terminal 12

Figure 2: Geographic location of Chua Ve Terminal 12

Figure 3: Map layout of Chua Ve Terminal 13

Figure 4: Company organization Error! Bookmark not defined. Figure 5: Financial result of Chua Ve Terminal 2011-2014 20

Figure 6: Cargo throughput of Chua Ve Terminal in terms of cargo directions 22

Figure 7: The ratio of profit to cost/revenue/ fixed capital 2011 – 2014 28

Figure 8: the ratio of salary to labor force and labor capacity 29

INTRODUCTION

NECESSITY

In the globalization era, enterprises and firms need to take effective use of all its resources in order to survive and compete in competitive market In other words,

it means company need to run business efficiency

Business efficiency of enterprises is economic indicators reflecting the level

of using elements during production process It also demonstrates the ingenious combination of theory and practice in order to take the best use of the scarce resources Business efficiency has the big impacts on firm, individuals, as well as national economy

Chua Ve Terminal is a subsidiary that has always contributed to the development of Port of HaiPhong JSC, one of the most modern ports in the North Vietnam However, in the recent year, the company was not profitable as it used to

be Being a HaiPhong citizen, I want to try to analyze the company situation and find the solutions to improve the situation the company That is the reason I choose

the topic “Recommendations to improve the business efficiency of Port of

HaiPhong JSC - Chua Ve Terminal”

RESEARCH OBJECT

The research aims to evaluate the business efficiency of the company by some indicators, and suggest some methods to improve the company performance

It was divided into 3 main chapters:

Chapter 1: Literature review

Chapter 2: Evaluate business efficiency of Chua Ve Terminal

Chapter 3: Recommendations to improve business efficiency of Chua Ve Terminal

Basic definitions, theories and indicators to evaluate business efficiency were provided in Chapter 1 Chapter 2 describes the general information about Chua

Ve Terminal and use scientific methods such as analyzingand comparison to evaluate the business performance of the company Finally, the recommendations were given in last chapter

CHAPTER 1: LITERATURE REVIEW 1.1 Some definitions

1.1.1 Revenue

Revenue is the total monetary that the company gain from its business activities during a certain period of time

For a company, revenue includes:

- Revenue is gained from common business activities like selling products or providing services

- Revenue from financial operations which is generated from loan interests, deposit interests, slow payment interests, foreign currency exchange rate differences

- Money from uncommon activities such as fines collected from customers for breach of contract

1.1.2 Cost

Cost is amount of money that firms have to pay in production, including materials cost, wages, repair cost, equipment cost, infrastructure cost, utility cost, financial costs…Total cost is made up of variable cost plus fixed cost:

- Variable costs (VC) are the costs that changes as company varies the quantity of outputs produced (wages, cost of materials…)

- Fixed costs (FC) are the costs that do not vary based on activities or number

of goods produced, for example rental costs, depreciation

Determine costs help company adjust price for products and services appropriately Lower and save costs in production are important tasks of business,

in order to be profitable As the result, analyzing and managing costs effectively are vital for an efficient business

1.1.3 Profit

Profit is the money that remained after total revenue minus total cost It is the final financial traditional aim of business operation and is a basic indicator to evaluate business efficiency.Profit directly impacts all aspects of business operation especially financial situation of companies

1.1.4 Business efficiency

Business efficiency reflects the quality of business performance and how the resources (labor, machinery, materials and capital) are used in production Because resources are scarce but the needs of society are growing, using resources efficiently and effectively is essential for both development and survival of firms Business efficiency is important measure of economic growth and the basis to assess the economic objective of firms in each period

Business efficiency has played an important role to each individual, firms as well as country economy For employees, business efficiency has direct impact on their incomes as well as their spiritual life A company that runs business efficiently will ensure a stable job and high incomes for workers To company, business efficiency mean gained profit, it is not only vital for the survival and development

of enterprises, but also is the fundamental factor for reproduction and enlarging scale of business activities Business efficiency shows how company used its resource, and then company can evaluate and adjust or change the appropriate methods of operating and management if needed To nation, running business efficiently will contribute to the development of country economy and attract foreign investment In short, improve business efficiency will have positive effect for company and individual in particular and for nation in overall

1.1.5 Factors affecting business efficiency

a External factors

Competitive environment: The competition between businesses is vital elements to create opportunities and threats for companies The level of competitiveness directly affects supply, demand; the selling prices and product consumption rates…thus affect business performance

Price and consumers: Price, product quality, income, habits and tastes of consumers are decisive forces in the development or failure of enterprise

Nature resources: also affects the business efficiency If a country has abundant of resource, the cost of raw materials will cheap, lead to the cost of production decrease, thus increase the profit; improve the competitiveness and efficiency of business On the other hand, sometimes natural resource also has bad impact to a business For example, the price of material is high because the country has no resource

Government policy: government policies ensure a fair environment for every business models The companies are responsible for follow the nation as well as international regulations and laws

Science - Technology: Technology and science level of company directly affect its productivity as well as quality of goods, affect the saving of materials Technology helps firms eliminate the production cost, thus lower the products price However, modern technologies require a huge investment

Infrastructure: including transportation networks, communication systems, electricity, water… The firms that located in area has convenient transport systems, utilities service stable will easier to develop and expand production, lower the cost and improve business efficiency

b Internal factors

Workforce: Labor force is determinant factor for success and failure of enterprise They create new products suit consumer tastes and affect the service quality of firms, thus have directly impact to business performance

Organization structure: organization structure of a firm is considered as brain in the body because the impact of organization to business results is enormous It is the factor that helps companies overcome others bad elements and impacts A inappropriate organization will waste human resources, takes time to make decisions In order to running business efficiently, personnel should be well arranged

Finance: Enterprise with strong financial capability will ensure the stability business activities Besides, firm will be able to invest on modern equipment as well as

technology, thus improve the productivity and quality of products/services Financial capability also helps company become more active while running business

1.2 Some criteria to evaluate business efficiency

1.2.1 Profit

Table 1: The ratio of profit to cost

The ratio of profit to cost (U)

Table 2: the ratio of profit to revenue

The ratio of profit to revenue

𝑅

Meaning

This ratio shows how much profit a unit of revenue can generate

If the value of the ratio is higher than previous year’s, then the company operating more efficiently compared to earlier years and vice versa

Table 3: The ratio of profit to fixed capital

The ratio of profit to fixed capital (U)

1.2.3 Labor productivity

Table 4: The ratio of handling capacity to labor force

The ratio of handling capacity to labor force (U)

1.2.4 Salary

Table 5: The ratio of salary to labor force

The ratio of salary to labor force (U)

CHAPTER 2: EVALUATING BUSINESS EFFICIENCY OF

CHUA VE TERMINAL 2.1 General information about Chua Ve Terminal

2.1.1 Introduction ofChua Ve Terminal

2.1.1.1 Introduction of Port of HaiPhong

Trading name: PORT OF HAI PHONG JSC (so-called PORT OF HAI PHONG)

21 piers with total length of 3,546 meters; the output reached 19.6 million tons, revenue was 1.390 billion VND At the moment, Port of HaiPhong has over 250 modern cargo handling equipment for serving container operation such as floating cranes, gantry cranes, portal cranes, rubber-tired gantry cranes, forklifts, reach stackers… and is capable for ships of 40000DWT

Along with the development of Vietnam economy and society, especially the development of maritime services; Port of HaiPhong not only has expanded in terms of operating scale and technology, but also changed the organization model

In 2007, Port of HaiPhong became a limited liability company one member, July

2014, it became the first enterprise of Vietnam Maritime sector perform equitization, entitled “Port of HaiPhong Joint-stock Company”

Nowadays, Port of HaiPhong is the port that has highest cargo volume in North Vietnam; its subsidies include: Hoang Dieu Handling Enterprise (Hoang

DieuTerminal), Tan Vu Handling Enterprise (Tan Vu Terminal), Bach Dang Terminal, and Chua Ve Handling Enterprise (Chua Ve Terminal)

2.1.1.2 Introduction of Chua Ve Terminal

Enterprise name: CHUA VE HANDLING ENTERPRISE (also CHUA VE TERMINAL)

Address: 5 –Chua Ve Street, Dong Hai ward, HaiAn district, Haiphong City Tel: (+84-31) 3827102

Fax: (+84-31) 3629544

Director: Vu Nam Thang

Chua Ve Terminal (CVT) is a subsidiary of Port of HaiPhong, it was built in

1977 and the main purpose was receiving aids from the Socialist countries.When just established, CVT included two regions:

- Region 1(main area) where working departments were constructed, it also was the place for making transactions and port operation investigation It located at the junction of BinhHai, May Chai Ward, next to Cam port

- Region 2 (Doan Xa area) located far away region 1 a distance of about 1000m to the Dinh Vu This is a large area but only was used a small part of about 350m quay and 15000m2 of yard for storing sand stone (construction) and receiving military goods in wartime

In 1995, due to requirements for better production, the Terminal split into two firms: Chua Ve Handling Enterprise and Doan Xa Handling enterprises Chua

Ve Handling enterprise receivedDoan Xaareaand main facilities

July 1996, Port of HaiPhongborrowed ODA Capital to expand and reconstruct CVT for containerized cargoes operation; the total investment cost 40 million USD Under the Transportation, Vietnam Maritime Administration, and Port of HaiPhong’s care, CVT expanding follows 2 stages:

- Stage 1: from 1996-2000: 150m pier, old yard and 40000m2 new yard were improved and built for operating containerized cargoes, some 3200m2 CFS

warehouse and new constructions serving producing and daily operating also were erected

- Stage 2: from 2001 to 2006, CVT built 2 350m piers, 60000m2 yard, invested specialized equipment including: 4 quayside crane, 12RTG, information technology system to serve the handling and management of container on the yard; improve in port shipping channel

As the result, in 2008 cargo volume of the Terminal reached nearly 14 million tons, more than 10 million tons compared to 1995’s ChuaVe Terminal has been and will continue to contribute to the development and production of Port of HaiPhong as well as Vietnam economy

(A)

(B)

(C)

Figure 1: Chua Ve Terminal

(Source: Port of HaiPhong website)

2.1.2 Map layout and geographical location of Chua Ve Terminal

Figure 2: Geographic location of Chua Ve Terminal

(Source: Port of HaiPhong)

Chua Ve Terminal: 20°52’N - 106°43’E

Chua Ve Terminal is located next to Cam River, 4km from the city center to the east of Haiphong and 20 nautical miles from zero buoys To access the Terminal, ships need to go via stream Nam Trieu, Dinh Vu Channel then enter Cam River The stream is shallow; the depth is only -8.4, -7.8 or even some area just reach -5.5m The depth in front of Quays is -8.5m; however the speed of sediment has limited the accessibility of CVT The Terminal can only capable for maximum 10,000 DWT ships

The layout of Chua Ve Terminal

Figure 3: Map layout of Chua Ve Terminal

(Source: Port of HaiPhong website)

From the map layout, it can be seen that there are 5 wharfs on the terminal namely Quay 1, Quay2, Quay 3, Quay 4, Quay 5 from left to right Quay 1 and Quay 2 uses 5 portal cranes while Quay3, Quay 4 and Quay 5 each has 2 gantry cranes However in 2014, 2 Gantry crane were moved out With 5 piers, Chua Ve terminal can operate maximum 5 ships at the same time Lay in the center is the yard divided into 5 main areas: A, B, C, D and E Each area divided into blocks and each block is for different purpose; for example are A includes block AA, AB, AC and AD Block AA, AB used to store bulk cargoes while AC stores exporting cargoes and AD for dangerous and importing cargoes that left in a long time Area

B and C each has 5 blocks, while D and E has 6 each Beside area A is reefer

station(approximately 3000m2)for reefer cargoes There are also military area, CFS warehouse, workshops and control center

2.1.3Infrastructure

Duringthe development process, because thevolume of goodshas been increasing, the Terminal needs to invest on both portinfrastructure and loading & unloading equipment

At the moment, the Terminal has 5 quays with total lengthof about848meters; the surfacepressureonwharf is8to16ton/m2 There is alsoa CFSwarehousewith3300m2area usetoexploitimport and exportgoods in the port

Table 6: Port infrastructure

(Source: Port of HaiPhong website)

About equipment, CVT has 4 quayside gantry cranes, 5 portal cranes, 10 rubber-tyred gantries (RTG), 2 Truck cranes, 2 reach stackers, 9 folk lifts, 26 tractor chassis, 1 E-Weighing machine

Table 7: Port equipment

Reach stacker 2 5-45MT

(Source: Port of HaiPhong website)

2.1.4 Company main services

Chua Ve Terminal provides number of services, including:

 Container handling

 Yard leasing; tallying, container stuffing and unstuffing; reefer storage, cargoes inspection and quarantine

 Container Freight Station services

 120 ton Electronic Weighing for containerized bulk cargoes

 Handling equipment and trucks maintenance and repairing

 Container cleaning and minor repairs

 Trucking service

2.1.5 Organization and functions

Figure 4: Company organization

(Source: Organization – Wage Division of Chua Ve Terminal)

DIRECTOR

Operartion Deputy Director

Warehouse Deputy Director

Techniques Materials Division

-Crane Team

Mechanized Team

Industrial Hygiene Team

Organization Wage Division

Finance Accounting Division

Administration Health Division