Recommendations to improve the efficiency of fleet operation in binh minh international sunrise shipping joint stock company

VIETNAM MARITIME UNIVERSITY STUDENT NAME: NGUYEN THI THU HUONG DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS RECOMMENDATION TO IMPROVE THE EFFICIENCY OF FLEET OPERATION IN BINH MIN

VIETNAM MARITIME UNIVERSITY

STUDENT NAME: NGUYEN THI THU HUONG

DISSERTATION

GLOBAL STUDIES AND MARITIME AFFAIRS

RECOMMENDATION TO IMPROVE THE EFFICIENCY OF FLEET OPERATION IN BINH MINH INTERNATIONAL SUNRISE SHIPPING JOINT STOCK COMPANY

HAI PHONG – 2015

VIETNAM MARITIME UNIVERSITY

STUDENT NAME: NGUYEN THI THU HUONG

CLASS: GMA 02

DISSERTATION

GLOBAL STUDIES AND MARITIME AFFAIRS

RECOMMENDATION TO IMPROVE THE EFFICIENCY OF FLEET OPERATION IN BINH MINH INTERNATIONAL SUNRISE SHIPPING JOINT STOCK COMPANY

Supervisor : Vu Thi Thu Hang

HAI PHONG – 2015

PREFACE

The dissertation was undertaken as the report of my internship at Binh Minh international sunrise Shipping Joint stock Company The research was difficult, but conducting extensive investigation has allowed me to complete the target that I identified Fortunately, Ms Vu Thi Thu Hang- my supervisor was always available and willing to answer my questions I would like to give a huge thank for her excellent guidance and support during this process

During the work with this thesis, I was fortunate to get help from the staff of operating department in particular and all of employees at Binh Minh Company in general for creating a friendly and supportive working environment I would like to thank you for your wonderful cooperation as well Especially, I would like to thank

Mr Nguyen Truong Giang- employee of operating department for his enthusiasm providing practical knowledge and answering my questions in work during my internships at company I also give my thank for Mr Vu Le Huy, who support and have comment to me during this period

The work outlined in this dissertation was carried out in the Binh Minh Shipping Joint Stock Company, over the period from 10 August 2015 to 20 September 2015 This dissertation is the result of my work and the material included in this thesis was taken from company's business figures in the period from

2012 to 2014

Student Name and Signature

Nguyen Thi Thu Huong

TABLE OF CONTENTS

PREFACE i

TABLE OF CONTENTS ii

LIST OF TABLES iv

LIST OF FIGURES iv

INTRODUCTION 1

CHAPTER I: LITERATURE REVIEW 3

1.1 Concepts of fleet and fleet operation 3

1.1.1 Concept of shipping vessels 3

1.1.2 Types of ship operation 3

1.1.3 Basic organizational process of shipping operation 4

1.2 Indicators to assess the efficiency of fleet operations of shipping enterprises .6

1.2.1 The concept of the operation efficiency 6

1.2.2 Indicators to assess the efficiency of fleet operations 7

1.3 Orientations to improve the efficiency of fleet operations of shipping enterprises 12

1.3.1 Increasing the number of running days of ship 12

1.3.2 Reducing the voyage time of ship 13

1.3.3 Increasing indicators of ship operation in each trip 13

1.3.4 Cost savings in trip 14

1.3.5 Increasing revenues of trip 14

1.3.6 Other measure 15

CHAPTER II: EVALUATION ABOUT THE EFFICIENCY OF FLEET OPERATION AT BINH MINH COMPANY IN THE PERIOD FROM 2012 TO 2014 16

2.1 Introduction about Binh Minh International Sunrise Shipping Joint Stock Company 16

2.1.1 History of development 16

2.1.2 Organizational structure of the company and main duties of departments 18

2.1.3 The situation of business and production activities of the company in the period from 2012 to 2014 20

7.201 22

2.2 Evaluations about the efficiency of fleet operation at the company in the period from 2012 to 2014 24

2.2.1 Introduction about the fleet of BMC Company 24

2.2.2 Evaluations about the efficiency of fleet operation of the company in the period from 2012 to 2014 25

CHAPTER III: RECOMMENDATIONS FOR IMPROVING THE EFFICIENCY OF FLEET OPERATION IN BINH MINH INTERNATIONAL SUNRISE SHIPPING JSC 34

3.1 Recommendations to improve the indicators of transport volume of fleet 34 3.1.1 Recommendations on market expansion and strengthening relations with customers 35

3.1.2 Recommendations on improving the quality and focusing on product prices 36

3.1.3 Recommendations on management of the fleet activities 36

3.2 Recommendations to improve the indicators of operation and use of fleet vehicles 37

3.2.1 Recommendations to increase transport capacity of the vessel 37

3.2.2 Recommendations to increase using time indicators of the vessel 38

3.3 Recommendations to increase economic indicators 40

3.3.1 Recommendations for increasing revenues of the fleet 40

3.3.2 Recommendations for reducing the costs of the fleet 40

3.4 Recommendations on human resources 42

3.4.1 Recommendations for training and retraining of human resources 42

3.4.2 Recommendations on remuneration and attracting talent 43

3.4.3 Recommendations on coordinating work of crew members 44

CONCLUSIONS 45

REFERENCE 46

LIST OF TABLES

Table 2.1: Registered business lines of Binh Minh Company 16

Table 2.2: Production and business results from 2012-2014 21

Table 2.3: The fleet of Binh Minh Companyto 2014 24

Table 2.4: Indicators of transport volume of BMC fleet from 2012-2014 25

Table 2.5: Indicators of operation and use of fleet vehicles of BMC fleet from 2012-2014 28

Table 2.6: The indicators of financial results of fleet 30

LIST OF FIGURES Figure 2.1: Line graph of the Baltic Dry Index over the recent 5 years 32

INTRODUCTION

1 Necessity

Vietnam is a country with a favorable geographical position in international maritime traffic Consequently, maritime sector has many advantages to develop in order to serve the cause of national industrialization and modernization, contributing to the country's rapid economic integration in the region and the world

One of the essential socio-economic strategies of the Party and the state in the early years of the 21st century is to develop the marine economy, which mainly maritime transport Therefore, Vietnam maritime industry is facing a tremendous task

is to build a national fleet that being capable of transport 30% of the volume of goods import and export and over 90% of domestic cargo volume by 2015

Fleet of Vietnam has joined the international market for several years but has not achieved the significant position in the region area The pace of development and business management skills have not kept pace market mechanisms that leads to bad impacts on the position and brand of national fleet More worrying, current maritime transport market in Vietnam also has been entered by the participation of dozens of shipping companies around the world, so the challenges of competition always is a raising question not only on international routes but also within the domestic market

Binh Minh international sunrise shipping Joint Stock Company has established

in 2006 Since its establishment, the company's fleet has engaged in transportation on international routes and achieved business efficiency in fleet operations However, due

to the direct impacts of the economic slowdown on maritime transport, along with the intense competition from foreign businesses having potential and reputation, it is necessary to analyze and assess the advantages and drawbacks of the company to propose effective means to improve the efficiency of ship operation in the future

Therefore, I have chosen the subject:” Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company”

for my dissertation

2 Research Object

Research object of this dissertation is the efficiency of the fleet operation of Binh Minh Joint Stock Company

3 Research Scope

This research used data and figures on business as well as fleet operation results

of Binh Minh Joint Stock Company in the period time from 2012-2014

5 Research Methods

The method of this dissertation is based on the study of economic and techniques, combined with a systematic study about some theoretical issues and practices related to effective fleet operation of the Binh Minh Company These results are considered through a variety of indicators to assess the efficiency of operationwith

a series of comparative and quantified method

CHAPTER I: LITERATURE REVIEW

1.1 Concepts of fleet and fleet operation

1.1.1 Concept of shipping vessels

According to Curriculum of operating fleet subject of Dr Nguyen Huu Hung, shipping vessels (also known as merchant ships), in order to be entitled to the national and international regulations in the process of exploitation, are defined as follows:

- According to The Hague Rule 1924: "Ship" means any vessel used for the

carriage of goods by sea.(Convention, 1924)

- According to The HNS Convention (Hazardous and Noxious Substances by Sea

Convention) 3/5/1996: Ship means any seagoing vessel and seaborne craft, of any type whatsoever.(GUIDE TO THE IMPLEMENTATION OF THE HNS CONVENTION, 2005)

- According to The Vietnam Maritime Law 2005: Ship is a vessel or other

floating mobile structure that is specialized in maritime operations (Nam, 1990)

1.1.2 Types of ship operation

a Direct exploitation: Ship owners organize the shipping by their own vessel to take the freight transport

Today, in sea transport in the world, there are two types of shipping organization:

- Liner shipping: A cargo liner is a type of merchant ship which carries general

cargo and often passengers Operator will organize liner shipping under the loop between trips on the same fixed routes A ship will transport many kinds

of good for many cargo owners in the same trip This service requires the connections between Feeders and Liner Hauls, runs between the Hub ports

- Tramp shipping: As opposed to freight liners, tramp ships trade on the spot

market with no fixed schedule or published ports of call Operator must provide the right ship in the right place at the best possible time for cargo owners A

ship usually transports only one kind of good for a cargo owner during a trip following the contracts

b Indirect exploitation: Charterer agrees to hire a ship from its owner and the hire money for this transaction is known as “freight” to the ship owner for the use of his vessel

There are two types of chartering ship according Vietnam Maritime Law 2005:

- Bare Boat Charter: A bareboat charter is an arrangement for the chartering or

hiring of a ship or boat, whereby no crew or provisions are included as part of the agreement; instead, the people who rent the vessel from the owner are responsible for taking care of such things

- Time Charter: Charterer hires a vessel for a specific period of time; the owner

still manages the vessel but the charterer selects the ports and directs the vessel where to go The charterer pays for all fuel the vessel consumes, port charges, and a daily hire to the owner of the vessel

1.1.3 Basic organizational process of shipping operation

a Tonnage offer and receiving cargo offers

In order to promote their services, operators will send tonnage offers to Ship Brokers, Ship Agencies, and Cargo Owners through with the details of the ship as: Technical parameters, insurance organizations of ship, the last port (at ship has finished unloading), estimated time free…

Ship operators will collect cargo offers from Cargo Owners or Ship Brokers through email, fax or website and select business opportunities that being consistent with exploitation conditions Cargo offers usually contain the following: name of cargo, volumes need to be transported, departure and destination ports, freight transport, laycan (period of time vessels must be at the loading port for the charterer loading good and the time of cancellation of the contract)…

b Making preliminary plans for arrange ships following cargo offers

After choosing the appropriate cargo offerings, ship operators must make layout shipping plans satisfying the following conditions:

- Ship suits transportation route of cargo offer

- Characteristics of ship exploitation must match to goods

- Ship can arrive loading port in accordance with the requirements of the laytime

(the permitted period the charterer used for handling cargo) of the charterparty

c Mapping the cargo flow diagram, the ship flow diagram and the technological diagram of trip

When more than one or more transportation needs appear, the ship operator base

on volume, transport distance between the port of loading and port of discharge of each consignment to establish diagrams:

- Cargo flows: are defined by names of cargoes, volume, and transport distance

between ports as required by cargo offers

- Ship flow show vessel names, voyage from the port free to loading and

unloading port It is the basis for selecting the appropriate ship for the trip

- Technological diagram represents the operational process of the ship on the

way and in ports according to the each layout plan It is the basis for determining wasted time and cost of exploitation for each boat trip on each route

d Estimating the economic efficiency trip and selecting reasonable plan

The sailing cost includes 2 main groups of fixed costs and variable costs The purposes of calculating the total cost is to build reasonable rates when the ship owner is entitled to freight

e Contracting voyage charter party

Ship owners negotiate with charterers all key provisions of the voyage charter party, such as freight, handling costs and payment After all the terms are agreed by two parties, the transportation contract will be signed in two formats: fixture note or official contract

f Contract performance

To perform signed voyage charter party, ship operator implements the following major works:

- Looking for ship’s agent serving ship at the ports

- Making sailing instruction

- Sending note of arrival at the loading and unloading ports

- Sending notice of readiness

- Take the cargo in his charge for carriage

- Issuing Mate’s receipt

- Issuing bill of lading for shipper

- Making cargo manifest at loading and unloading ports

- Issuing the delivery order at unloading port and delivery cargoes to recipient

- Voyage final settlement

- Making freight invoice

1.2.1 The concept of the operation efficiency

Conceptual operation efficiency has many different understandings, depending

on the perspective of study The most common point and the most correctly understanding the nature is that the economic efficiency would be the basis for determining the criteria and indicators to assess performance, also identifying the requirement for setting out targets and measures to improve exploitation efficiency

Operation efficiency can be understood in two ways:

- The quantity used to measure: Operation efficiency = Revenue- Cost

- The quantity used to compare: Operation efficiency =( Revenue/Cost) or

(Profit/Cost)

In the two interpretations, bigger the quantity is, better production and business situation get

1.2.2 Indicators to assess the efficiency of fleet operations

a Assessment of the implementation of transport volume indicators of fleet

- The volume of freight: the volume of goods that was transported in the period (

regardless of how much the length of shipping distances are) are the actual weight of goods transported, including packing if have (the unit: Ton) The volume of goods transported is counted only after the end of the transport process, were transported to the place of delivery according to the provisions in the contract of carriage and completed the actual procedures in order to calculate the volume of goods transported

Q = 𝑄𝑖(T)

𝑚

𝑖=1

Q: The volume of freight of ship (T)

𝑄𝑖: The volume of freight that ship carried in the ist hydraulic road section (T)

- The volume of freight traffic: Cargo volume is calculated by both factors: the

volume of goods transported and the actual transport distance The unit is kilometer (T.Km)

ton-QL = (𝑄𝐿)𝑖(TKm)

𝑚

𝑖=1

QL: The volume of freight traffic of ship (T.Km)

𝑄𝑖: The volume of freight that ship carried in the ist hydraulic road section (T)

𝐿𝑖: The transport distance of ship in the ist hydraulic road section (Km)

- The average transport distance (Km)

𝑡 = 𝑄𝑖𝐿𝑖

𝑚 𝑖=1

𝑄𝑖

𝑚 𝑖=1

(Km)

𝑄𝑖: The volume of freight that ship carried in the ist hydraulic road section (T)

𝐿𝑖: The transport distance of ship in the ist hydraulic road section (Km)

b Assessment of operating and using fleet vehicles indicators

- Coefficient of taking advantage of Deadweight cargo carrying capacity when

the ship began to depart:

0 ≤ 𝛼 =𝑄𝑥

𝐷𝑖 ≤ 1

𝑄𝑥: Volume of cargo loaded onto ships to carry at port of departure (T)

𝐷𝑖: Deadweight cargo carrying capacity in the ist trip (T.Km) (the volume of goods that ship can load in accordance with transportation signs, operating regions and seasonally regulations)

𝐷𝑖= DWT - total weight of fuel, fresh water, crew members…, which ships carry

- Coefficient of taking advantage of Deadweight cargo carrying capacity over the

distance of ship:

0 ≤ 𝛼 = 𝛼1𝑙ℎ𝑖

𝑚 𝑖=1

𝑙ℎ𝑖

𝑚 𝑖=1 + 𝑛𝑗 =1𝑙𝑘ℎ𝑗 ≤ 1 𝛼: Coefficient of taking advantage of Deadweight cargo carrying capacity when the ship began to depart in the ist hydraulic road

i: Index of distance that the train runs carrying cargoes

j: Index of distance that the train runs empty

n: The number of distance that the train runs empty

m: The number of distance that the train runs carrying cargoes

𝑙ℎ𝑖: The distance that train runs empty in the ist hydraulic road section

𝑙𝑘ℎ𝑗: The distance that train runs carrying cargoes in the ist hydraulic road section

- Coefficient of utilization:

𝜀𝑣𝑑 = 𝐷𝑡𝑖𝑇𝑘𝑡𝑖

𝑛 𝑖=1

𝐷𝑡𝑖𝑇𝑐ó𝑖

𝑛 𝑖=1

𝐷𝑡: Deadweight cargo carrying capacity of the ist ship

𝑇𝑘𝑡: The utilization time of the ist ship in the fleet

n: The number of available ships in the fleet

𝑇𝑐ó: The available time of the ist ship in the fleet

- Coefficient of performance:

𝜀 =𝑣ℎ 𝐷𝑡𝑖𝑇𝑐𝑖

𝑛 𝑖=1

𝐷𝑡𝑖𝑇𝑘𝑡𝑖

𝑛 𝑖=1

𝐷𝑡: Deadweight cargo carrying capacity of the ist ship

n: The number of available ships in the fleet

𝑇𝑘𝑡: The utilization time of the ist ship in the fleet

𝑇𝑐: The performance time of the ist ship in the fleet

- The average operating speed:

𝑣𝑘𝑡 = 𝐷𝑡𝑖𝐿𝑐𝑖

𝑛 𝑖=1

𝐷𝑡𝑖𝑇𝑘𝑡𝑖

𝑛 𝑖=1

𝐷𝑡: Deadweight cargo carrying capacity of the ist ship

n: The number of available ships in the fleet

𝐿𝑐: The running distance of the ist ship in the fleet

𝑇𝑐𝑖: The running time of the ist ship in the fleet

- The productivity of the transport ship includes two indicators:

The productivity of one ship ton in the operation day:

𝑛 𝑖=1

𝐷𝑡𝑡𝑐𝑑 (T.Km/ship ton- operation day)

And the productivity date of one ship ton in the running day:

𝜇𝐾𝑇 = 𝑄𝑖𝑙ℎ 𝑖

𝑛 𝑖=1

𝐷𝑡( 𝑛𝑖=1𝑡𝑐ℎ 𝑖+ 𝑛 𝑡𝑐𝑘𝑗

𝑗=1 )(T.Km/ship ton- running day)

𝑡𝑐𝑘𝑗: The running time that trains run empty in the jst hydraulic road section

𝑡𝑐ℎ𝑖: The running time that trains run carrying cargoes in the ist hydraulic road section

𝑡𝑐𝑑: The voyage time of ships

i: Index of distance that the trains run carrying cargoes

j: Index of distance that the trains run empty

m: The number of hydraulic road section that ships run empty

n: The number of hydraulic road section that ships run carrying cargoes

𝑙ℎ𝑖: The distance that trains run carrying cargoes in the jst road section

c Assessment of the financial results of vessel operation activities

Revenues (F or F′), cots (C or C′ ) and financial results (∆𝐹 or ∆𝐹′) of the ship operations are the economic indicators in quantity It reflects the results of ship production activities in one trip or in a calculation period

- Cost of fleet operation usually consists of 2 groups: Vietnamese currency costs

(R) and foreign currency costs (R′) It is determined by the following formula:

R, R′: The costs of ship operation by Vietnamese and foreign currency

i, j: Indicators of the cost items of the Vietnamese and foreign currencies

m, n: The number ofthecost items by the Vietnamese and foreign currencies

ri, rntj: The costs by Vietnamese and foreign currencies of the i, j items

It can be converted mining costs for sea transport fleet in a money unit to calculate, using the following formula:

C=R+JR’ (VNĐ)

C′ = R′ +RJ (USD) J: The exchange rate at the time of calculation (VND/USD)

- The revenues of ship operation on domestic and international routes are

calculated by following formula:

F, F’: The revenues of ship operation by Vietnamese and foreign currencies

i, j: Indicators of the revenue items of the Vietnamese and foreign currencies

fi, fntj: The freight by Vietnamese and foreign currencies of the i, j items

m, n: The number of the revenue items by the Vietnamese and foreign currencies

Qi, Qj: The volume of transported cargoes according i, j revenue items

- The financial results of ship operation on domestic and international routes are

calculated by following formula:

∆F = F − C (VNĐ)

∆F′ = F ′ − C′ (USD)

F = F + F J(VNĐ)

F′ = F′ +F′

J (USD) These indicators are used to assess the effectiveness of the ship, used to compare and find the most profitable way in the business With an operating fleet, these indicators are the most accurate assessments for effective exploitation or not, or how high efficiency is optimal However, there is also other way to evaluate the effectiveness of exploitation:

The effectiveness of exploitation = F

1.3.1 Increasing the number of running days of ship

Running days are referred to the days at which the ship is operated effectively and without interruption by activities of ship as: anchoring for waiting cargoes, procedure work, sheltering monsoon or storm, waiting for changing crew plan or technical repairs

In order to increasing the number of running days in operation, shipping enterprises have to limit day off times by implementing accurately and rationally transportation plans Logistics plans (as supplying fuel, food, fresh water, changing crews, cleaning cargo holds or repairing plan) must be implemented concurrently at the times cargo to be loaded and unloaded or ship waits for free berths or procedure work

It needs to be searched good and reputable local ship’s agents in serving ship at

departure and destination ports Plans for the loading and unloading works and the other required services should be projected explicitly and specifically before the ship arrives with the fastest time possible

Officials and ship operators also need to plan the voyages exactly with the less risk; officers and crew members implement on board plans on the loading and unloading cargoes efficiently and quickly

1.3.2 Reducing the voyage time of ship

Voyage time of ship depends on numerous factors and effects to the efficiency

of fleet operation On the same route, knowing how to organize the way well will decline sailing time; organizing cargo handling work well will reduce the time ship at port; organizing agent work well will reduce waiting time service

Thus, to reduce the voyage time required to plan trips specifically and explicitly and implement exactly schedule set out Utilizing the skilled team of Sailor and crew members is for purpose operating ship under the shortest path, maximizing speed train and taking advantage of wave and wind power for trip It needs to be calculated exploitation seasons to take advantage of cargo and weather, while avoiding areas with bad weather and sea monsoon

1.3.3 Increasing indicators of ship operation in each trip

Maximizing coefficient taking advantage of Deadweight Cargo Carrying Capacity (α): selecting plan has α = 1 for 𝑄ℎ=𝐷𝑡 Meanwhile the volume of goods transported on board (𝑄ℎ ) will be equal to Deadweight Cargo Carrying Capacity of ship (α) Ship owners will gain maximum transport freight of trip

Limited the number of changes in cargo turn at voyage (β) in order to take advantage of the continuous operation of ship: selecting plan has β = 1 for limiting the time ship docked other ports to stevedoring In the case of ship have to dock many ports in the same voyage, waiting time will increase because of waiting for the loading

or unloading plan of port, incurred more risks than normal trip

Maximizing the transport productivity is purpose to maximize the volume shipped in the transit time and distance Operator also should restrict the train runs empty during exploitation time

1.3.4 Cost savings in trip

During each trip, the large amounts of money are used to pay for a lot of charges as: crew wages, fuel and food procurement, insurance coverage, port costs To ensure profitability targets, ship owners have to save costs at a minimum This business requires good management in cost items through the collection and analysis of the causes of fluctuations in costs, from which to draw reasonable measures to save

Fuel cost is the main type of cost accounting in operation Therefore, if tightly controlled, it will increase the revenue and profit of trip This cost is lost mainly by crew members taking advantage of lax management of the business, declaring journey dishonestly, giving the level is too high compared with the fact for private profiteers Measures for shipping enterprises are making use of crew members are qualified and professional ethics to operate the ship under the shortest schedule, right route and being honesty in work

In addition, enterprises should look for agencies and ports with the reasonable cost to serve ships It requires exploiting staff must have certain knowledge, understanding and capability to seek the services of good quality in their price class

Furthermore, reducing waiting time, stevedore time along with effective usage

of cargo handling equipment also contribute to reducing costs of berth, mooring, anchoring It requires crew members must work diligently in loading and unloading work, arrange exactly plans, maintenance and take care of lifting equipment is always ready to operate

1.3.5 Increasing revenues of trip

Revenue of voyage is the entire amount money enterprises obtained from providing transportation services for customers in a certain time period To increase sales efficiency, businesses need to take full advantage of carrying capacity and Coefficient of utilization of ship In addition, they can focus on operating into the

original goods owners and cargo orders have good freight rates as well as low percent commission to brokers, quick loading and unloading time, and the low level of risk Qualifications of ship's officers must satisfy the arrangement cargo diagram to load cargo as much as possible if permitted (even loaded on deck)

Other measure to increase sales during the trip is enterprises need to focus on calculating specifically and definitely dispatch money following the contract It requires the complete collection relevant documents to calculate and prove as Notice of readiness, Timesheet, Statement of Facts…

1.3.6 Other measure

- Organization and management measures: organization of production under the

optimize plan; enhancing the effectiveness of management in all three elements: basic level of management staff, technical equipment level to management and management methods

- Measures to strengthen the extraction: it should be well done in three issues:

staff qualifications exploitation, investment in technology innovation and technical team - technical workers innovation

CHAPTER II: EVALUATION ABOUT THE EFFICIENCY OF FLEET OPERATION AT BINH MINH COMPANY IN THE

PERIOD FROM 2012 TO 2014

2.1 Introduction about Binh Minh International Sunrise S hipping

Joint Stock Company

2.1.1 History of development

Name: Binh Minh International Sunrise Shipping Joint stock Company (BMC) Head office: No 9.9 HoangDieu Street, MinhKhai Quarter, HongBang District, HaiPhong City, Vietnam

E-mail: bmc@binhminhship.vn

Telephone number: (031).3569 586

Fax: 0313 569 587

 Line of business

Table 2.1: Registered business lines of Binh Minh Company

- Management and exploitation of marine vessels

- Shipping agency service

- Trade in metal, material, machine, equipment for

maritime, means of transport of waterway

3 Wholesaler of spare part of automobile and other motor

5 Wholesaler of machine, equipment, spare part of

machine of exploitation and construction

46591

6 Wholesaler of coal and other hard fuel 46611

7 Wholesaler of petroleum and relevant products 46613

8 Wholesaler of gas and relevant products 46614

Source: FromBinh Minh Company

 The main fields of activity today:

- Contract management and exploitation of marine transport vessels inland and

international routes

- Imports of machinery and equipment for shipbuilding

- Exports of clinker volumes of 500,000 tons / year to countries as China,

Bangladesh

 Charter capital: 20,000,000,000 VND (in words: Twenty billion VND) Share nominal value: 1,000,000 VND

Number of share and value of share that has been contributed:

Number of share: 20,000 shares

Share value: 20,000,000,000 VND

Binh Minh International Sunrise Shipping Joint Stock Company was founded in

2006, with a team of experienced and professional competence staff in the field of ship management has gradually established relationships and created long-term partnership with many prestigious partners in the countries of the region, thereby creating a firm premise for the Company can provide ship management services comprehensively include technical management, crew management, accounting and financial

management, chartering The company could serve all those owners wishing to ship management as bareboat charter, time charter vessels, and demand for imported shipbuilding equipment package with the motto “cooperation for development”

The company focuses on expanding the investment scale of operations, business lines, enhancing competitiveness in the market in the areas of machinery and equipment import multiple categories, chartering, leasing of ship, customs brokerage, strengthening import and export activities

Director of the company towards new construction work environment includes dynamic working, solidarity and jointly developed people

As a company specializing in Ship Management, company has advocated building security and safety management systems according to the ISM system to provide maritime transport services with high efficiency, safety and environmental protection, to minimize the risks and ensure the interests of customers

2.1.2 Organizational structure of the company and main duties of departments

Mr Vu Xuan Binh- director is considered the legal representation in all activities of the company, responsible for the company's charter and the law on the operation of the company Director performs the rights and duties as follows:

- Formulating development strategy and annual and long-term plans of the

company

- Holding operation activities of the company under the charter and regulations

of organization and production activities of the company

- Promulgating economic and technical norms and standards of products, unit

wage of the company

- Reporting to the competent authority on the results of operations and business

of the company

a Operation – import-export department

- Advising director on commercial work and fleet business in order to bring the

highest economic efficiency for company

- Organizing marketing network to source for the company's fleet following

- Monitoring and researching the issues related to techniques and material

management as well as repair and maintenance of the fleet from 8,821 DWT to 56,320 DWT

- Managing the security and safety system for ships and company under the

ISM Code and ISPS Law

c Human resource department

- Managing documents, papers, books administration and the seal

;implementation of the archive normal and important documents

- Arranging personnel suitable and for operational requirements and business

development of the Company

- Labor management, staff wages - employees with accounting department

- Managing records of staff throughout the company, handling procedures and

policies related to personnel issues - labor - wages

d Safety and legislation department

- Responsible for Legal work for all activities of the company

- Responsible for updating the legal information , reviewing and evaluating the

legal risks of internal regulations and the latest documents and regulations of the state related to business activities of the Company to directly advise the Company Board of Directors and the relevant parts

- Join the settlement of disputes in order to protect the legitimate rights and

interests of the Company; join the inspection rationality and legality of the contracts signed with economic agencies and other partners, the documentation consistent with current law

e Accounting department

- Advising the director on financial operations management and economic

accounting in company; ensure safety capital - assets for production and business activities of the company under the current regulations of government

- Aggregating reported production and business results of the vessel and the

company

- Implementing periodic reporting regimes servicing audit request, financial

inspection and examination of superiors

2.1.3 The situation of business and production activities of the company in the

period from 2012 to 2014

In recent years, the volume of goods transported by sea between the regional economic center of the world and the volume of import and export goods of Vietnam have increased rapidly

Evaluation of the competitiveness of the maritime transport market today, in Vietnam, the shipping market has been dominated by foreign carriers from 80 to 85% majority The domestic business accounts for only a small portion remaining; mainly serving the Chinese and ASEAN markets There is a noticeable concern of Vietnam the next time, requires the government and related departments must have a strategic orientation for domestic enterprises to regain market share and reaching the international level

For the BMC Company, items that fleet companies have been shipped in recent years primarily include: Clay (25 %), cement (28 %), clinker (23%), rice (8%), stone (5%) and other items- corn, packing fertilizer, saw logs, round wood, Urea, sliced cassava (11%) Because shipped cargoes are usually in large amount (dry cargoes, bulk cargoes) and ship is filled up with cargoes, the company mainly operates in the form of tramp shipping that signed contracts with source of customer is largely regular customers with sufficient quantity of goods under the tonnage of ships

To assess the situation of production and business operations of the company, it

is necessary tobased on business indicators system Here are the general indicators reflect the most common and most general situation of production and business of the