Recommendations to improve the freight forwarding services for importing FCL cargoes at GOODTRANS – haiphong

VIETNAM MARITIME UNIVERSITY STUDENT NAME: NGUYỄN THỊ THU HẰNG DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS RECOMMENDATIONS TO IMPROVE THE FREIGHT FORWARDING SERVICES FOR IMPORTING

VIETNAM MARITIME UNIVERSITY

STUDENT NAME: NGUYỄN THỊ THU HẰNG

DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS

RECOMMENDATIONS TO IMPROVE THE FREIGHT

FORWARDING SERVICES FOR IMPORTING FCL CARGOES

AT GOODTRANS – HAIPHONG

HAI PHONG – 2015

VIETNAM MARITIME UNIVERSITY

STUDENT NAME: NGUYỄN THỊ THU HẰNG CLASS : GMA02

DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS

RECOMMENDATIONS TO IMPROVE THE FREIGHT

FORWARDING SERVICES FOR IMPORTING FCL CARGOES

AT GOODTRANS – HAIPHONG

Supervisor: Mr Doan Trong Hieu

Division: Economics of International Trade

Faculty: Faculty of Economics

HAI PHONG – 2015

This dissertation is a description of my 2-month-internship which occurs from 15th August to 15th October in 2015 During this period, I have chance to work in a logistic company named GOODTRANS overseas services Co.,Ltd The works in here help me enhance my knowledge about freight forwarding services in general and importing services for FCL cargoes in particular Moreover, this is an opportunity for

me to take part in professional working environment

My topic is “Recommendations to improve the freight forwarding services for importing FCL cargoes at GOODTRANS – Haiphong” including three major chapters

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

Nguyễn Thị Thu Hằng

Nguyễn Thị Thu Hằng – GMA02 Page ii

ACKNOWLEGEMENT

I would like to express my sincere gratitude to my advisor Mr Doan Trong Hieu for the continuous support of my study and related research, for his patience, motivation, and immense knowledge His guidance helped me in all the time of research and writing of this thesis I could not have imagined having a better advisor and mentor for my study.

In addition, I am also very grateful to Mr Nguyen Manh Cuong - Chief of Representative Office in Haiphong, who always guides, encourages and supports me when I have internship in company Last but not least, I am very appreciate and would like to thank all the GOODTRANS staffs who help me complete all of works

TABLE OF CONTENTS

Preface i

Acknowledge ii

Table of Contents iii

List of Symbols & Abbreviations vi

List of Pictures vii

List of Tables vii

List of Graphs vii

INTRODUCTION 1

1 Reason for selecting research topic 1

2 Objectives of research 1

3 Subject and scope of research 1

4 Methods of research 1

5 Structure of research 2

CHAPTER 1: LITERATURE REVIEWS ABOUT FREIGHT FORWARDING SERVICES 3

1.1 Freight forwarding service 3

1.1.1 Definition 3

1.1.2 Classification of freight forwarding services 3

1.1.3 Function of freight forwarding services 4

1.2 Freight forwarder 4

1.2.1 Definition 4

1.2.2 Rights and obligations of freight forwarder 5

1.2.3 Responsibilities of freight forwarder 5

1.3 Process of providing freight forwarding services for importing FCL cargoes 6 1.3.1 Signing delivery contract and receiving the imported documents 7

1.3.2 Registration of customs declaration 8

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1.3.3 Checking the goods 10

1.3.4 Paying tax, paying customs fees and retaking customs declaration 11

1.3.5 Delivering the goods to the imported business 12

1.3.6 Final settlement 13

1.4 Criteria to evaluate the freight forwarding service 13

1.5 Advantages and disadvantages of freight forwarding services in Haiphong city 15

CHAPTER 2: SITUATION OF FREIGHT FORWARDING SERVICES FOR IMPORTING FCL CARGOES AT GOODTRANS – HAIPHONG 19

2.1 Overview of GOODTRANS and Haiphong branch 19

2.1.1 History of foundation and development 19

2.1.2 Overview of Haiphong branch of GOODTRANS 20

2.1.3 Main services 21

2.1.4 Personnel structure 23

2.1.5 Situation of business operation in recent years 24

2.2 Freight forwarding services for importing FCL cargoes 29

2.2.1 Freight forwarding process for importing FCL cargoes 29

2.2.1.1 Signing delivery contract and receiving the imported documents 30

2.2.1.2 Transmitting the electronic customs declaration 31

2.2.1.3 Paying tax 34

2.2.1.4 Printing the barcode declaration and registration of customs declaration 36

2.2.1.5 Checking the goods; retaking customs declaration and barcode declaration 38 2.2.1.6 Delivering the goods to the imported business 39

2.2.1.7 Final settlement 41

2.2.2 Result of freight forwarding process for importing FCL cargoes 42

CHAPTER 3: RECOMMENDATIONS TO IMPROVE THE FREIGHT FORWARDING SERVICES FOR IMPORTING FCL CARGOES AT GOODTRANS – HAIPHONG BRANCH 43 3.1 SWOT analysis of freight forwarding services for importing FCL cargoes 43

3.2 Objectives and orientations for business operations 46

3.3 Recommendations to improve freight forwarding services for importing FCL cargoes 47

3.3.1 Build the specific diagram of freight forwarding process for importing FCL cargoes 47

3.3.2 Research to develop and expand the market 49

3.3.3 Improve the quality of service, create the proactive position and the reputation in the business operation of the branch and maintain the trust with customers 49

3.3.4 Improve the level of professionalism and the sense of responsibility of employees 50

3.3.5 Modernize the available technical facilities to meet the new demands of the market 51

3.3.6 Limit the impact of seasonality 51

3.3.7 Maintain the low costs 52

CONCLUSION 53

REFERENCE 54

APPENDICES 55

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LIST OF SYMBOLS & ABBREVIATIONS FCL Full container load

FIATA International Federation of Freight Forwarders Associations

THC Terminal Handling Charge

D/O Delivery Order

ICD Inland Containers Depot

VIFFAS Vietnam Freight Forwarders Association

EIR Equipment Interchange Receipt

HS CODE Harmonized Commodity Description and Coding System Code

LIST OF PICTURES

PICTURE 1.1: Freight forwarding process for importing FCL cargoes 6

PICTURE 1.2: ROPMIS model to evaluate the freight forwarding service 14

PICTURE 1.3: Position of ports in Haiphong city 16

PICTURE 2.1: Personnel structure of Haiphong Branch of GOODTRANS 23

PICTURE 2.2: Freight forwarding process for importing FCL cargoes of GOODTRANS - Haiphong branch 29

PICTURE 2.3: Login the electronic declaration software 32

PICTURE 2.4: Enter the information of importing enterprise 32

PICTURE 2.5: Enter the information into the import declaration 33

PICTURE 2.6 Enter the list of imported goods 33

PICTURE 2.7: Access homepage of Vietnam Customs 36

PICTURE 2.8: Enter the requested contents 37

PICTURE 3.1: Suggestion diagram of freight forwarding process for importing FCL cargoes in Haiphong branch 48

LIST OF TABLES TABLE 2.1: Overview of Haiphong branch 20

TABLE 2.2: Result of business operation in GOODTRANS – Haiphong branch from 2011 to first 9 months in 2015 25

TABLE 2.3: Business operation of the freight forwarding services for importing FCL cargoes at GOODTRANS – Haiphong branch from 2011 to first 9 months in 2015 28

TABLE 3.1: SWOT analysis of freight forwarding services for importing FCL cargoes at GOODTRANS – Haiphong branch 43

LIST OF GRAPHS GRAPH 1.1: Volume of goods through the Haiphong port 16

GRAPH 2.1: Business operation in GOODTRANS – Haiphong branch from 2011 to first 9 months in 2015 25

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INTRODUCTION

1 Reason for selecting research topic:

The trend of the internationalization of trade has linked countries with different political systems into a single market; the development of economy in the world has reached level that the borders of nations are only meaningful in terms of administration It is undeniable that transportation is a catalyst to promote the development of national economy and expand the cooperation in term of economics, political relations and socio-cultural exchanges In particular, although the freight forwarding service for importing and exporting FCL cargoes was still very young, it has proven to be important in promoting international trade between nations in the world Perfection of the freight forwarding service for importing and exporting cargoes is an important factor in economic and social development of Vietnam and countries in the Southeast Asian region and the world

From above reality, GOODTRANS Overseas Services Company Limited was founded Company provides services of customs procedures; forwarding services of import and export goods in domestic and international by sea, air, road; maritime brokerage and agency services Freight forwarding activities for importing and exporting cargoes at the company is a series of professional process steps and each different mode of transportation has a different delivery process However, this report focuses on the status of the freight forwarding services for importing FCL cargoes at GOODTRANS – Haiphong branch to propose some recommendations to improve these services at this branch

2 Objectives of research:

- Present literature reviews related to freight forwarding services

- Research about Haiphong Branch of GOODTRANS Overseas Services Company Limited

- Research the current status of the freight forwarding services for importing FCL cargoes at GOODTRANS – Haiphong branch to determine the strengths and limitations of the service Also propose some solutions and recommendations to improve freight forwarding services for importing FCL cargoes at this branch

3 Subject and scope of research:

- Subject of research: the current status and operational process of the freight forwarding services for importing FCL cargoes at GOODTRANS – Haiphong branch

- Statistical method: Analyze the data, jump and drop of statistics

- Description method: Describe the processes and the steps

- Analysis method: Analyze, synthesize and compare the statistics from the annual business report of the branch to make some comments on the operational status of the branch and the results that the branch has achieved

as well as unfinished

- Logic method: Combine the theoretical and practical foundation in freight forwarding to synthesize and evaluate the operational status of the branch as well as propose some solutions and recommendations to improve freight forwarding services for importing FCL cargoes at the branch

5 Structure of research:

Content of the report consists of three chapters:

- Chapter 1: Literature reviews about freight forwarding services

- Chapter 2: Situation of freight forwarding services for importing FCL cargoes at GOODTRANS – Haiphong

- Chapter 3: Recommendations to improve the freight forwarding services for importing FCL cargoes at GOODTRANS – Haiphong

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CHAPTER 1: LITERATURE REVIEWS ABOUT FREIGHT

According to Vietnam Commercial Law, freight forwarding services are commercial operations; forwarders have responsibilities to carriage, storage, carrying out procedures and other services to transport goods from an owner to other owners or organizations (referred collectively to as customer).2

In short, freight forwarding services are collection of behaviors and procedures related to transporting process in order to deliver goods from a place (or sender) to destination (or recipient) Forwarder can do their services directly or by using 3rd parties (outsource)

1.1.2 Classification of freight forwarding services:

1.1.2.1 Based on the scope of activities:

- Domestic freight forwarding services

- International freight forwarding services

1.1.2.2 Based on the means of freight forwarding service:

- Freight forwarding services by sea

- Freight forwarding services by air

- Freight forwarding services by rail

- Freight forwarding services by road

1.1.3 Function of freight forwarding service:

- Contribute to improve the efficiency of management, reduce the cost of production process and strengthen the competitiveness of business

- Save and reduce the cost of circulation and distribution

- Contribute to expand the international trade market

- Reduce the cost; improve and standardize the documentation in international business

- Increase the business value of freight forwarding business

According to Vietnam Commercial Law, freight forwarder is a trader who has the certificate of business registration of freight forwarding services.4

In short, people who provide freight forwarding services are called as

"Forwarder, Freight Forwarder or Forwarding agent" Freight forwarder may be goods owner, ship owner, handling company or warehouse, professional freight forwarder or another person

Forwarders have professional qualifications such as:

- Know how to combine different modes of transportation

- Thank to the consolidation service, know how to take advantage of capacity and tonnage of shipping tools maximally

- Know how to combine transport - logistics - import and export, have good relationships with organizations related to the process of goods transportation such as Customs, Shipping Agency, Station and Port

- Create favorable conditions for the import and export business to help them operate efficiently with freight forwarding services

- The import and export business can use the forwarder's warehouses to reduce the construction costs of warehousing

- The import and export business can reduce the costs of administrative management; and organizational structure is simple Also they have conditions to focus on import and export business

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1.2.2 Rights and obligations of freight forwarder:

According to Vietnam Commercial Law, freight forwarder has the following rights and obligations5:

- Forwarders receive remuneration and other reasonable incomes

- Implement fully their obligations according to the contract

- During the contract performance, if there are justifiable reasons for the benefit of customers, forwarder can implement works which are different from the customer's instructions and notify immediately to them

- After signing the contract, if there is any issue which could lead to the failure

in the implementation of whole or part of the customer's instructions, forwarder must notify immediately to customers and ask additional instructions

In the case that the contract does not have agreement on specific deadline to fulfill the obligations to customers, freight forwarders must implement their obligations in a reasonable period

1.2.3 Responsibilities of freight forwarder:

1.2.3.1 When freight forwarder is the forwarding agent:

Depending on the functions of forwarder, the forwarder must to implement fully their obligations according to the contract which is signed and must be responsible for the following:

- Shortcoming in buying insurance for the goods although there were instructions

- Shortcoming in the customs procedures

- Transport goods to wrong specified location

- Transport goods to wrong consignee

- Deliver without collecting money from the consignee

- Do not republish according to the necessary procedures or non-refundable tax

- The loss of assets and people of a third person whom forwarder caused However, the forwarder does not take responsibility for mistakes of the third person if company demonstrates that the select is needed

When freight forwarders are the forwarding agents, they must follow the

“Standard Trading Conditions”

1.2.3.2 When freight forwarder is the carrier:

When being the carrier, freight forwarders have role as independent contractors to provide the services that customers require They must be responsible for the acts and mistakes of the carriers and other forwarders who are hired to

5

“Vietnam Commercial Law”, 2005, Article 167

perform transportation contracts Their rights, obligations and responsibilities are regulated by the rules of the transport modes Carriers collect payments from customers whom they provide services according to the price of service without commissions

When freight forwarders provide services related to transportation such as packaging, storage, handling or distribution they will be responsible as the carrier if:

- They perform these services by their own means of transportation (performing carrier)

- Or they release their transport documents and commit clearly that they are responsible as a carrier (contracting carrier)

When acting as a carrier, the standard business conditions often do not apply, instead of international conventions or the rules which are issued by the International Chamber of Commerce However, freight forwarders are not responsible for loss or damage of goods which arise from the following cases:

- Due to the fault of the customer or customer's trustee

- Customers pack and mark the inconsistent codes

- Due to the nature of the goods

- Due to the war or strike

- Due to the majeure cases

1.3 Process of providing freight forwarding services for importing FCL cargoes:

Picture 1.1: Freight forwarding process for importing FCL cargoes

Paying tax, paying customs fees and retaking customs declaration

Checking the goods

Delivering the goods to the imported business Final settlement

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1.3.1 Signing delivery contract and receiving the imported documents:

1.3.1.1 Signing a delivery contract for importing FCL cargoes with the imported company:

Company signs a delivery contract for importing FCL cargoe with the partner (imported company) The purpose of the signing is the best agreement which is beneficial for both sides When signing the contract, they should note some following issues:

- There is agreement and consistent with each other about all the essential terms

- Before signing, the contract must be considered and collated carefully the agreements which have been agreed

- The contract should be presented all the issue clearly Also it reflects accurately the contents of agreement and avoid dilemma

- The terms of the contract must be derived from the characteristics of the commodity, natural and social situations in the country of the buyer, the seller, the characteristics and relationships between both sides

- The contract does not contain terms which are contrary to the existing laws

in the country of the buyer and seller

1.3.1.2 Receiving and checking the imported documents:

Freight forwarding company will receive an original set of documents from partner (import business) including: Sale Contract, Commercial Invoice, Packing

List, Bill of lading and Arrival Notice

When receiving complete set of documents from partner, employee of the freight forwarding company are responsible for checking the set of documents before making the declaration for customs procedures To ensure accuracy, consistent and valid for set of documents, this employee have to check carefully and ensure that all documents fit together, especially with contract During the checking,

if finding out mistakes of the documents, they must notify immediately to the customer in order to adjust promptly

Checking the Sales Contract

Check name of the importer, number and date of contract, name of goods, quantity, unit, unit price, value, foreign currency payment, terms of payment, terms

of delivery, delivery deadline and payment deadline

Checking the Commercial Invoice

Check number and date of invoice, other details: name of goods, quantity of goods, unit price, value and unit All of them must be same on the sales contract

Checking the Packing list

Check the name of the consignee and the consignor (they must be same on the invoice), unit, number of carton or package, net weight, gross weight, packing

specifications and kind of packages

Checking the Bill of lading

Check the name of the consignee and the consignor, name of vessel, number

of voyage, port of loading, port of discharge, name of goods, net weight, volume, number of packages, date of loading on board, departure date, date of arrival and the number of container and seal

1.3.2 Registration of customs declaration:

1.3.2.1 Registration of customs declaration:

The mission of good owners or legal representatives is declaring fully and exactly all the contents on customs declaration which are required by the customs authority, customs employees do not declare on behalf of goods owners

Customs declarations are the compulsory legal documents to declare the objects of customs procedures They are made in the standard form which are provided by General Department of Customs

For imported goods, documents must be submitted including:

- Customs declaration (2 originals)

- Appendices of declaration (2 originals)

- Letter of recommendation (1 original)

- Contract (1 copy)

- Commercial Invoice (1 original)

- Packing list (1 original)

- Bill of lading (1 original)

- Other documents (if applicable)

After the declaration of imported goods are certified that it completed the customs procedures, a set of documents will be returned to people who declare goods to conduct the clearance of goods; goods owners are responsible for keeping the set of documents by the period of 5 years The remaining set in the customs authority is reexamined and stored in accordance with the laws of the General Department of Customs

The duration of customs procedures for imported shipments:

In the period of 30 consecutive days, when ship comes the port of discharge which is recorded on the bill of lading; "Customs declaration of imported goods have to be made before or within 30 days from date when the goods comes the port

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of discharge; the customs declaration has the value of customs procedures within 15 days from the date of registration".6

Location to carry out the customs procedures:

Location to carry out the customs procedures is place to complete the declaration procedures, present the issues which need to check and conduct the obligation to pay customs taxes Customs procedures can be made in any place which is the most convenient for goods owners

1.3.2.2 Calculating the tax:

The dutiable value of imported goods: is the actual price which the importer

must pay, it is accounted from the first imported gate Also it is determined by applying sequentially six determining methods of dutiable value The checking purpose of the dutiable value declaration is to determine the dutiable value, inspect the compliance with laws in the declaration of the customs declarer, ensure correct value and method in the declaration and collect correct and sufficient taxes for the state budget

There are six determining methods of the dutiable value of imported goods, including:

- Determine by the transaction value method

- Determine by the transaction value method of identical goods

- Determine by the transaction value method of similar goods

- Determine by the method of deduction

- Determine by the method of calculation

- Determine by the method of inference

The process of checking the dutiable value includes three steps:

Step 1: Checking the set of documents

Step 2: Checking the goods

Step 3: Performing other works related to the price

In particular, the result of the actual inspection is to identify the violations of businesses in the incorrect declarations with actual goods (wrong names, wrong type and origin ) which affect the determination of dutiable value

Time for calculating the import and export taxes:

This is date that goods owner submits customs declaration for customs authority, and the import and export taxes are calculated according to tax rates, tax calculation prices and exchange rates at the time of the filing declaration Exceeding

15 days from the date of filing the declaration but goods owner does not have real

6

“Law of Customs”, 2005, Article 18

imported goods, customs declaration must be reworked and submitted to the customs authorities Time for tax calculation is the date of filing the declaration later

Deadline for the tax notice:

- This is based on the principle that goods owners declare tax and pay taxes themselves

- Within a period of 8 hours from the time that customs authority has finished the checking of real imported goods, if there are differences in the original tax declaration, customs authority must notify the insufficient or excess tax compared with a tax announced according to declaration for goods owner

- Goods are required following by the rules of technical and quality standards

to ensure the accuracy of the tax calculation Deadline for the tax notice is a maximum of 15 working days from the date that declaration is registered by goods owner

1.3.3 Checking the goods:

With FCL imported goods, when the goods in the container arrive at inspection location, customs employees who are responsible for goods inspection must to check the number of container, the seal number of ship owner and the seal number of Customs If the number of container and the number of seal are incorrect (or the seal of Customs is lost), customs employees must to make a written record and report immediately to the leadership If the number of container and the number

of seal are correct, customs employees open container to check the goods

For the goods which need to check the details, customs employees check all goods in container

For the goods which are allowed to check the representative goods, three requirements must to ensure when checking:

- Check the goods at the bottom and the top of the container

- Check the goods on both sides of the container

- Check the goods at both ends of the container

Goods will be divided in order to check on the extent of priority Based on the form of order, checking level of customs authority are divided into three main flows:

In the green flow:

Exempting from checking the detail of documents and the checking the actual goods Time of checking the goods is not exceed three hours This is the flow

of goods which have tax being zero or are exempted from tax Also this is the flow

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of the businesses which abide strictly by law, declaration procedures are registered quickly, the rate of checking is low, the goods are released immediately after the checking goods is finish (in a period of one year which is accounted from the date

on the declaration, business has not been handled behaviors related to the fraud and evasion of tax)

In the yellow flow:

Check the details of documents, exempt from checking the actual goods Time of checking the goods is 5-6 hours, maximum of 8 hours This is the flow of goods which have export and import tax Also this is the flow of the businesses which often violate the law, the rate of checking is high or must to check the whole, businesses must to calculate and make tax notices before releasing the goods

In the red flow:

Check the detail of documents and the actual goods Time of checking the goods depends on the complexity of each case This is the flow of goods which have complex documents Also this is the flow of the businesses which have many serious violations of law, must be controlled and monitored closely, businesses must to complete all customs procedures before releasing the goods

Responsibilities of employees who make the customs procedures:

- Show all the goods to customs authority to check by specified time and place

- Arrange vehicles and employees to serve the checking the goods of customs authority

- Always being available during the checking of goods

In the case that employees who make the customs procedures do not agree with the checking results of customs authority, they have the right to ask for assessment in the inspection organization which was permitted by the State If the customs authority do not agree with the assessment results, the customs authority requests the Ministry of Science and Technology or the Ministry of specialized management to solve Conclusion of the Ministry of Science and Technology or the Ministry of specialized management is the final determination

1.3.4 Paying tax, paying customs fees and retaking customs declaration:

Paying tax:

If imported goods are the materials for production:

Must pay tax in the nine months (calculated as 275 consecutive days) from the date which customs declaration is registered Conditions for application:

- Having a contract

- Taxpayers do not owe tax exceeding the time stipulated by the import and export tax (at the time that the goods are imported)

- Having the registration of imported materials

Exceeding the period of nine months, businesses will be fined for late tax payment (after the 31st day from the date of customs declaration registration to the date of submission)

If imported goods are the consumer goods:

Imported goods in the category of consumer goods which are regulated by the Ministry of Trade must be paid tax before the goods are imported, not including some following cases:

If there is a guarantee on the amount of tax, deadline for tax payment is 30 days from the date of customs declaration registration

If exceeding the deadline, businesses have not paid imported tax, guarantor must pay on behalf of business Also businesses are fined due to delay the tax payment

Paying the customs fees:

When exporting and importing the goods, organizations and individuals in Vietnam as well as foreign organizations and individuals must pay customs fees in the following cases:

- Make customs procedures for exported and imported goods

- The goods are consigned or stored in customs warehouses

- Escort and seal for goods

- Reissue the customs documents and licenses for the service activities under the jurisdiction of customs authority

- Goods, luggages and vehicles in transit

1.3.5 Delivering the goods to the imported business:

1.3.5.1 Receiving the goods at port:

With FCL imported goods, when receiving Arrival notice, goods owner brings Bill of lading (1 original) and Letter of recommendation (1 original) to ship owner to take the Delivery order (D/O) Goods owner brings D/O to customs authority to make procedures and register the checking of goods (goods owners can bring the container to their own warehouse or ICD (Inland Container Depot) to check the goods, but they must return the container box on time, if not, they can be fined)

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After completing the customs procedures, goods owner must bring all documents of receiving goods and D/O to ship management office at port to confirm the D/O Last is getting Goods delivery note and receiving goods

1.3.5.2 Dispatching the means of transportation:

Frieght forwarding company prepares mean of transportation to take goods

in the Port Depending on the contract signed with imported business, company will arrange suitable mean of transportation In the case that there is any change about mean of transportation, company must notify to customer

1.3.5.3 Liquidation of goods at the customs gateway:

Goods and mean of transportation will be clearance after completing the customs procedures During the waiting time for the results of assessment to determine that goods are allowed to import or not, if goods need to be preserved, the Head of Customs will accept in the case that goods meet the requirements of customs supervision

1.3.5.4 Delivering to the imported business:

After completing the customs procedures and receiving goods, freight forwarding company is responsible for delivery the goods to the imported business Not only that, on delivery, both sides should provide receipts and ensure that always fulfill obligations

1.3.6 Final settlement:

Paying the costs related to freight forwarding works After that, gathering the necessary documents, complain to the relevant authorities about the loss of the goods (if applicable) and following the results of complaint

1.4 Criteria to evaluate the freight forwarding service:

There are numerous research models about the freight forwarding service in the world Among them, the models including SERVQUAL (Parasuraman & partner, 1988), SERVPERF (Cronin & Taylor, 1992) and technical quality/functional quality (Gronroos, 1983) are more popular However, this dissertation uses the ROPMIS model (Thai Van Vinh and Devinder Grewal, 2007) which was established recently, being a new and suitable model for the evaluating

of the freight forwarding service According to this model, the freight forwarding services are assessed by six components: Resources, Outcomes, Process, Management, Image and Social Responsibility These six components evaluate satisfaction of customers when they use the freight forwarding services of company After that, company can assess their freight forwarding services easily

Picture 1.2: ROPMIS model to evaluate the freight forwarding service

Source: Thai Van Vinh & Devinder Grewal (2007), “ROPMIS model”

Resources:

Staffs need to have professional qualifications, experience and dynamism They organize all the stages of freight forwarding activities such as transaction activities with customers, checking documents and customs procedures Works are completed as soon as possible Also they know to limit the stagnant documents which waste time of customer as well as delay the work

Outcomes:

- Deliver on time that were committed

- Make sure all the factors: Safe - Saving - Quick - Accurate to bring the highest efficiency in the work of delivery

- Limit the cost with the package freight forwarding services by providing transportation services

- Make sure that the delivery of goods to customers perfectly

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- Accuracy is a major factor which decides the quality and the completion level of work, including the accuracy in the quantity, quality, actual extent, goods owner and brand

- Create a good image in the eyes of customers about style of service

- Create the trust and the reputation with customers

Social Responsibility:

Take responsibility in contributing to the social construction and sense of responsibility to the nation

Satisfaction:

- Satisfaction of customers with services which are provided

- Customers continue to use these products and services

- Customers advertise for everyone to use

1.5 Advantages and disadvantages of freight forwarding services in Haiphong city:

Haiphong city is located in the most dynamic region of Vietnam currently (the northern key economic) Not only that, it is located in a favorable position where can exchange easily with all provinces in the country and all nations in the world by sea, rail, road and air This can make Haiphong become the country's leading province in the exchange of goods, services and receiving the technical and scientific achievements of the world

Haiphong has 125 kilometers of coastline, with five districts bordered the sea namely Do Son, Thuy Nguyen, Kien Thuy, Hai An, Tien Lang and two island districts namely Cat Hai and Bach Long Vi If taking the sea area with a depth of less than 20 meters, Haiphong has 4,000 km2 of sea area which is about 2.6 times of the land area Haiphong is port city with developed port system and this system has contributed to create jobs for thousands of workers, contributing significantly in the development of Haiphong in particular and Vietnam in general

Looking back at the development history of over 100 years, can say that the urbanization of Haiphong city associated with the ups and downs steps of Haiphong port It is one of the two largest port system in Vietnam, including more than 40

different ports with many different functions, such as shipping of bulk, materials, iron, liquid chemicals (petrol, oil, gas) and container; harbor for shipbuilding; harbor for cargo ships by small river Haiphong port is gradually built to a seaport which has modern and advanced handling technology Imported and exported goods

of 17 northern provinces and transit goods of northern Laos and southern China are passed Haiphong port to foreign markets and opposite

Picture 1.3: Position of ports in Haiphong city

Thus, with the above outstanding advantage, sea and coastal of Haiphong city have role as the center of marine economic development and international cooperation in the north and in the country Also it is the largest gateway to help key economic regions and the North integrate with regional and international areas

Besides, the marine economy of Haiphong developed rapidly, contributing significantly to the city and the coastal areas of Tokin Gulf There are many marine economic sectors which are the motivation for the development of the city, the northern region and the country; attracting increasingly the resources and investors

However, the marine economy development of Hai Phong is not commensurate with the potential and advantages of the city, and now the city is facing big challenges from many social problems Firstly, infrastructure is poor and insufficient to meet the economic growth and the quick population growth.Traffic jam, flooding and environmental pollution are increasingly becoming popular, being the obsession of people Moreover, transportation infrastructure for logistics services in Haiphong port is lack of synchronization Port infrastructure is weak, while transportation infrastructure which links the port to the outside are difficult, especially for the super weight trucks

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In the situation that the amount of goods increases faster compared to the forecast; progress of investment and development can not follow the demands of the market, in recent years, Haiphong port has continually faced with overload operation status Also not only the ports, transportation system of water, road and rail which attach to the port are affected by heavy pressures from the increase of port operations Because of the seasonality of the goods flow to the port and the imbalance between imported and exported volume of goods, the operation of ports and transportation activities have faced to many difficulties in the peak period

Many foreign investors expressed particular concern about the overload situation of Haiphong port and infrastructure in the area around Haiphong The overloading at ports is expressed through the total volume of goods which are passed to Haiphong port

Graph 1.1: Volume of goods through the Haiphong port

Source: Statistical yearbook of Haiphong city over the years

As can be seen from the chart, in the period of eight years, the volume of goods through Haiphong port increased continually and rapidly to reach a peak of 55.5 million tones in 2013, rising three times compared to 2006 This is reason why Haiphong port is experiencing the serious overload situation

Beside to the above objective realities, the marine economy of Haiphong still has a large gap in the level of development of the region and the world; especially

in terms of scale and competitiveness The scale of enterprises are small with low competitiveness They are also not strong enough to invest and exploit maximally marine resources Thus the city's ports are behind many competitors of the region in many aspects The limitations of seaport services are presented such as high cost of transportation, weak accessibility to ports, lack of inland container depot (ICD),

weak wareness of logistics, and poor services exploitation of logistics, warehousing, road transportation and freight transportation In addition, legal procedures in trade and customs procedures affect to the transport companies and import and export enterprises

Therefore, in order to the seaport system of city continues to achieve strong development and contributes more to the economy of the city, urgent requirement in

2015 and the future is that port services should take steps to change and improve competitiveness

Recently, the Prime Minister approved the development plan of international gateway port in Haiphong from now to until 2020 and orientations of the Ministry

of Transportation until 2030 With the construction of the first two berths (Haiphong's international gateway port in Lach Huyen), the building of ship channel, turning basin which use the capital of state budget will be conducted simultaneously In addition, the investment project for the construction of the port

in the area of Vinashin - Pha Rung, and the project for investment and exploitation

of international gateway port in Lach Huyen - Haiphong was assigned to Vietnam Maritime Corporation

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CHAPTER 2: SITUATION OF FREIGHT FORWARDING SERVICES FOR IMPORTING FCL CARGOES AT

GOODTRANS – HAIPHONG2.1 Overview of GOODTRANS and Haiphong branch:

2.1.1 History of foundation and development:

GOODTRANS was established in 2000, being a professional logistics company with more than 10 years of international experience in worldwide shipping and value added services Company’s head office is located in Hanoi, Vietnam In addition, company has three other branches in Haiphong city, Ho Chi Minh City and Da Nang city

- 2006: GOODTRANS – Haiphong Branch is established

- 2009: GOODTRANS – Ho Chi Minh Branch is established

- 2012: GOODTRANS – Da Nang Branch is established

GOODTRANS offers the wide range of forwarding and logistics services through experienced and dedicated team, global network and customer-oriented culture Scope of GOODTRANS's activity is fairly wide, growing to meet the increasing demands of customers Today, GOODTRANS's global network spreads over 50 countries and territories specialized in Europe, Asia, America, Ocean, and Africa Company has been able to cater to the specific needs of clients at the specified time frame, providing wide coverage and comprehensive logistics transportation services Company is also having Agents and Associates in almost all parts of the world and they are able to handle consignments from anywhere in the world

- ASIA: Bangladesh, Cambodia, China, India, Indonesia, Iran, Japan, Jordan, Korea (South), Malaysia, Myanmar, Pakistan, Philippines, Singapore, Taiwan, Thailand, UAE, Yemen …

- EUROPE: Austria, Belgium, Croatia, France, Germany, Greece, Iceland, Ireland, Italia, Netherlands, Poland, Portugal, Russia, Spain, Sweden, Turkey, UK, Ukraine …

- AMERICA: Brazil, Canada, Chile, Mexico, USA …

- OCEAN: Australia, New Zealand…

- AFRICA: South Africa…

Besides, GOODTRANS has participated in International Federation of Freight Forwarders Associations – FIATA and has issued conjugated bill of lading Not only that, GOODTRANS is also a member of Vietnam Freight Forwarders Association - VIFFAS, often participating in activities of Association to grasp the market situation and learn many experience Company has contributed to Vietnam transport agent increasingly progressive and competitive on the international market

GOODTRANS's mission is to be a Professional “GLOCAL” Logistics Company in Vietnam that is coordinate between LOCAL and GLOBAL elements to create competitive services All is to bring more benefits to customers and partners Company believes in designing and customizing solutions to suit specified needs of customers and helps them to get more benefits from their advantages With philosophy “Care Your Cargoes, Share Your Success” and self-improving, GOODTRANS brings the satisfaction and success to customers and partners

2.1.2 Overview of Haiphong branch of GOODTRANS:

Table 2.1: Overview of Haiphong Branch

Office Name

GOODTRANS OVERSEAS SERVICES COMPANY LIMITED – HAIPHONG BRANCH

Company’s logo

Address

3rd Floor, Machinco Building, 5A Vo Thi Sau Road, Ngo Quyen District, Haiphong City

Tax Identification Number (TIN) 0101448849

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GOODTRANS operates regular import and export air freight consolidation

to and from cities throughout the world using their network With professional team

of staff, comprehensive heavyweight air freight transport and distribution systems, they are able to provide effective solutions with consistent transit time for any destinations at the lowest cost They ensure that all consignments are delivered and received within fixed time period Besides, they follow international standards in carrying out air freight forwarding services and ensure that the best airlines are made available for the task

2.1.3.2 Sea Freight:

With a strong network of agents, GOODTRANS sea-freight service has continuously developed and improved on Company handled thousands of inbound/outbound shipments through Saigon port, Haiphong port from/to various destinations Services are provided:

- Ocean freight service (import and export)

- Consolidation/group age service from Vietnam to worldwide

- Import de-consolidation service

- Door-to-door delivery service

- Marine cargo insurance service

- Ocean freight service (import and export)

- Consolidation/group age service from Vietnam to worldwide & Import consolidation service

- Reduced need for personnel

- Reduced transportation and distribution cost

- Improved customer services

- Improved cycle time

- Freed-up capital in areas of manufacturers & marketers

Company supplies transit trading services through the availability of free zone stores and offers complete services namely: finishing customs procedures operations on transit goods and preparing transportation means to the near – by countries and handling the needed documents to make the re-export operation

2.1.3.5 Warehousing & Distribution:

GOODTRANS offers full warehousing and distribution services:

- General storage (short & long term)

- Pick & pack services

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2.1.3.7 Extra Services:

GOODTRANS supports and provides legal documents which are issued by State about the operation of import and export business for various types; cargo insurance; setting up the C/O; contacting the specialized management agencies for registration and licensing

However, Haiphong branch include only four main services:

Haiphong branch of GOODTRANS has 10 employees, including the Chief

of Representative Office Staffs in Haiphong branch have a university or college degree and they are methodically trained in the forwarding sector Because it is a branch so personnel structure is relatively simple, using correct positions and the organization is divided into three main divisions according to the following diagram:

Picture 2.1: Personnel structure of Haiphong Branch of GOODTRANS

- Business division: is responsible for finding customers who needs to the freight forwarding services, looking for charge of shipping lines, building and maintaining relationships with agents, shipping lines and planning for branch's business

- Document division: is responsible for setting up the necessary documents for shipments of freight forwarding such as bills of lading, customs declaration, tracking orders since customer signed transportation contract until they have been delivered to the recipient, caring, answering questions and consultation

Personnel arrangement of branch is quite reasonable Being a branch, business division has only two employees to ensure the number of customers and finding new customers, each of them undertakes an array of international freight charge In the document division, because amount of documents which need to be processed are quite large so this division has the largest number of staff, including three employees who undertake export documents and other three employees who undertake import documents Lastly, there is only one employee who undertakes in the accounting division

2.1.5 Situation of business operation of GOODTRANS – Haiphong branch in

recent years:

2.1.5.1 Business operation of GOODTRANS – Haiphong branch from 2011 to

first 9 months in 2015:

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