Recommendation to improve business efficiency of shipping agency service at VOSAL

MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING VIETNAM MARITIME UNIVERSITY STUDENT NAME: NGUYỄN TUẤN HIỆP DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS OF SHIPPNG AGEN

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MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING

VIETNAM MARITIME UNIVERSITY

STUDENT NAME: NGUYỄN TUẤN HIỆP

DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS

OF SHIPPNG AGENCY SERVICE AT VOSAL

HAI PHONG – 2015

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MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING

VIETNAM MARITIME UNIVERSITY

CLASS: GMA02

DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS

RECOMMENDATION TO IMPROVE BUSINESS EFFICIENCY

OF SHIPPING AGENCY SERVICE AT VOSAL

Division :BasicEconomics Faculty :Economics Division: Global & Maritime Affairs Faculty: International School of Education

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Nguyễn Tuấn Hiệp – GMA02 Page i

PREFACE

Thanks to the economic development, a large number of companies have

been found and participated in such a competitive market The companies,

therefore, need appropriate policies in operation to develop and make profit It is a

fact that different strategies and flexible business methods are what to evaluate the

strength of a company The more uniqueness a company owns, the more successes

it achieves

Business result is one of the key factors to consider whether it is a good

company or not It expresses the efficient of a company in production including

productivity, capital management and recovering/developing capability That is why

business results are required an exact and objective data collection and analysis in

order to establish plans for later periods

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

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ACKNOWLEDGEMENT

Firstly, I would like to express my sincere gratitude to my advisor MSc

Hoàng Bảo Trung 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

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Nguyễn Tuấn Hiệp – GMA02 Page iii

CONTE NTS

Preface i

Acknowledgement ii

Contents iii

List Abbreviations v

List of Tables vi

List of Firgures vi

INTRODUCTION 1

1 Necessity 1

2 Research object 1

3 Research scope 1

4 Research findings 2

5 Report structure 2

CHAPTER 1: LITERATURE REVIEW 3

1.1 Theoretical basis about shipping agency service 3

1.1.1 Definition of shipping agency service 3

1.1.2 Roles of shipping agency service in maritime sector 4

1.1.3 Features of shipping agency service 4

1.1.4 Functions of a shipping agent 5

1.1.5 Criteria of a shipping agent 7

1.2 Business efficiency of shipping agency service 98

1.2.1 Definition of business efficiency 98

1.2.2 Indicators of business efficiency 109

1.2.3 Factors affect business efficiency of shipping agency service 1211

CHAPTER 2: EVALUATING BUSINESS EFFICIENCY OF SHIPPING AGENCY SERVICE AT VOSAL FROM 2011 TO 2014 1412

2.1 General introduction about VOSCO 1412

2.1.1 Establishment and development process 1412

2.1.2 Functions 1412

2.1.3 Subsidiaries of VOSCO 1513

2.2 Introduction about VOSAL 1513

2.2.1 General information 1513

2.2.2 Business fields 1513

2.2.3 Organization 1614

2.2.4 Facility 1815

2.2.5 Personnel 1816

2.3 Shipping agency service at VOSAL 1816

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2.3.1 Legal basis of shipping agency service at VOSAL 1816

2.3.2 Level of shipping agent staffs at VOSAL 1816

2.3.3 Procedure of shipping agency service at VOSAL 1917

2.4 Evaluating business results of shipping agency service at VOSAL 2220

2.5 Evaluating business efficiency of shipping agency service at VOSAL 2826

2.5.1 Gross profit coefficient 2826

2.5.2 Profitability ratio 2826

2.5.3 Efficiency of cost 2927

2.6 Evaluating shipping agency service at VOSAL 3028

2.6.1 Strengths 3028

2.6.2 Weaknesses 3129

2.6.3 Opportunities 3129

2.6.4 Threats 3230

CHAPTER 3: RECOMMENDATION TO IMPROVE BUSINESS EFFICIENCY OF SHIPPING AGENCY SERVICE AT VOSAL 3432

3.1 Development strategies of Vietnam maritime sector 3432

3.2 Recommendations to improve business efficiency of shipping agency service at VOSAL 3634

3.2.1 Recommendations to increase revenue 3634

3.2.2 Recommendations to minimize cost 4240

3.2.3 Recommendations to improve recruitment and training activities 4340

3.2.4 Improve facilities and high technology application 4543

CONCLUSION 4644

REFERENCE 4745

APPENDICES 4846

INTRODUCTION 1

1 Necessity 1

2 Research object 1

3 Research scope 1

4 Research findings 1

5 Report structure 2

CHAPTER 1:LITERATURE REVIEW 3

1.1 Theoretical basis about shipping agentagency service 3

1.1.1 Shipping agent agency service definition 3

1.1.2 Roles of shipping agency service in maritime sector 4

1.1.3 Features of a shipping agent 4 1.1.4 Types of shipping agency service 5chuyển lên 1.1.3 5

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1.1.5 Functions of a shipping agent 5

1.1.6 Criteria of a shipping agent 7

1.2 Business efficiency of a shipping agent 8

1.2.1 Definition of business efficiency 8

1.2.2 Indicators of business efficiency 9

1.2.3 Factors affect to business efficiency of a shipping agent 11

CHAPTER 2: EVALUATING BUSINESS EFFICIENCY OF SHIPPING AGENCY SERVICE AT VOSAL FROM 2011 TO 2014 13

2.1 General introduction about VOSCO 13

2.1.1 Establishment and development process 13

2.1.2 Functions 13

2.1.3 Subsidiaries of VOSCO 13

2.2 VOSCO Agency and Logistics One Member LTD Company (VOSAL) 14

2.2.1 General information 14

2.2.2 Business fields 14

2.2.3 Organization 15

2.2.4 Facility 16

2.2.5 Personnel 17

2.3 Shipping agency service at VOSAL 17

2.3.1 Legal basis of shipping agency service at VOSAL 17

2.3.2 Level of shipping agent staffs at VOSAL 17

2.3.3 Procedure of shipping agency service at VOSAL 18

2.4 Business results of shipping agency service at VOSAL 21

2.5 Business efficiency of shipping agency service at VOSAL 27

2.5.1 Gross profit coefficient 27

2.5.2 Profitability ratio 27

2.5.3 Efficiency of cost 28

2.6 Evaluatebusiness efficiency of shipping agency service at VOSAL 29

2.6.1 Strengths 29

2.6.2 Weaknesses 30

2.6.3 Opportunities 30

2.6.4 Threats 31

CHAPTER 3: SOLUTIONS TO IMPROVE BUSINESS EFFICIENCY OF SHIPPING AGENCY SERVICE AT VOSAL 33

3.1 Developing strategies of Vietnam maritime sector 33

3.2 Solutions to improve business efficiency of shipping agency service at VOSAL 35

3.2.1 Solutions to increase the revenue 35

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3.2.2 Solutions to minimize cost 41

3.2.3 Improve recruitment and training activities 41

3.2.4 Improve facilities and high technology application 44

CONCLUSION 45

REFERENCES 46

APPENDICES 47

LIST OF ABBREVIATIONS

VOSCO: Vietnam Ocean Shipping Joint Stock Company

VOSAL: VOSCO Agency and Logistics LTD Company

LTD: Limited

VINALINES: Vietnam National Shipping Lines

UNCTAD: United Nations conference on Trade and Development

ISO: International Standard Organization

VND: Vietnam dong

Dept: Department

F/I: Free in

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F/O: Free out

L/I: Liner in

L/O: Liner out

D/O: Delivery Order

NOR: Notice of readiness

SOF: Statement of Facts

B/L: Bill of Lading

GT: Gross tone

ETA: Estimated time of arrival

WTO: World Trade Organization

TPP: Trans-Pacific Partnership

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LIST OF TABLES

TABLE 1: LEVEL OF SHIPPING AGENT STAFFS AT VOSAL 181617

TABLE 3: GROSS TONE OF CARGO PERFORMED BY VOSAL SHIPPING

AGENCY SERVICE 272526

TABLE 4: GROSS PROFIT COEFFICIENT OF VOSAL SHIPPING AGENCY

SERVICE 282627

TABLE 5: PROFITABILITY OF VOSAL SHIPPING AGENCY SERVICE 292728

LIST OF FIGURES

FIGURE 1: VOSAL ORGANIZATION STRUCTURE 161415

FIGURE 4: GROSS TONE OF CARGO PERFORMED BY VOSAL SHIPPING

AGENCY SERVICE 272526

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Nguyễn Tuấn Hiệp – GMA02 Page 1

INTRODUCTION

1 Necessity

In the context of economic integration, the shipping sector plays an

important role in providing a strong supply chain, contributing to general cargo

transportation In which, shipping agency service is considered indispensable for the

connection between transport and port/vessel operation Nowadays, it is obvious

that agency service observed significant changes, both in quantity and quality Not

only state-owned but also private and joint venture companies are taking part in this

field At the first place, it encourages the development of agency service to satisfy

the high demand of current transportation; on the other hand, a strict competition is

actually inevitable

VOSAL, – a subsidiary of VOSCO, is one of the leading company in

shipping agency service of Vietnam Moreover, VOSAL agency service is also

considered animportantvital activity, contributing to the general business results of

the corporation therefore, business efficiency of shipping agency service in VOSAL

is such a major concern That is why I decide to follow the topic

“RecommendationSuggestions to improve the business efficiency of shipping

agency service at VOSCO”.V OSALosal”

2 Research object

In this dissertation, the core target is to evaluate business efficiency of

VOSAL shipping agency service through business results in a period of four years

(2011-2014) and indicate relateding factors contributing to the business efficiency

Based on this, suggestions wouldill be proposed to enhance the business

efficiencyoperation of VOSAL shipping agency servicet

3 Research scope

This topiciswas researched at VOSAL, – No 215 Lach Tray Street, Dang

Giang Precinct, Ngo Quyen District, Hai Phong City All the Materialsdata in this

study were collected from the Finance & Aaccounting, Administration and Shipping

Agency ServiceDdepartment of VOSAL Haiphong The studywasis carried out

from 10 September until 14 November with the 2011-2014 statistics

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4 Research findings

During the dissertation, statistics and materials wereare collected from

VOSAL financial report meanwhile internet and books are the origins of data TAll

these sources are shown in referencesappendix Moreover, it can be concluded that

despite the fluctuations during the analyzed period, business efficiencyresults of

VOSAL shipping agency servicet followed an upward trend from the beginning

until the end in this period

5 Report structure

This dissertationreport is divided into three chapters:

Chapter I: Literature review Theoretical basis about business efficiency of a

shipping agent

Chapter II: Evaluating business efficiency of shipping agency service at VOSAL

from 2011 to 2014The business result of VOSAL shipping agent

Chapter III: RecommendationSolutions to improve the business efficiency of

shipping agency service at VOSALs results of VOSAL shipping agent

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CHAPTER 1:LITERATURE REVIEW

1.1 Theoretical basis about shipping agen cy servicet

1.1.1 Definition of sS hipping agen cy servicet definition

According to Article 158, Section 1, Chapter VIII, Vietnam Maritime Code

promulgated on June,14th, 2005 and has become effective since November, 1st,

2006 “ Shipping agency is a service whereby the shipping agent provides, in the

name of the shipowner or operator of the vessel, services in connection with

vessel’s operation at the port, including the arrangement of formalities for the

seagoing vessel to enter and depart the port; conclusion of contracts of carriage,

marine insurance contracts, contracts for handling, charter parties, and crew

employment contracts; issuance of bills of lading or similar carriage documents,

furnishment of supplies, fuel and food for the seagoing vessel, submission of sea

protests, communication with the shipowner or operator of the vessel; provision of

services related to crew; receipt and payment of all amounts related to the vessel’s

operation; and settlement of disputes over contracts of carriage or maritime

accidents, and other services related to seagoing vessels” This definition is partly

revealed the concept of a shipping agent In which,Aa shipping agent is fully

recognized as an agent in maritime sector with: the authorizer is the shipowner, the

person authorized is the shipping agent – the representative to perform the shipping

agency service, the third parties who are supported by the shipping agent in legal

co-operationly connectingwithto the shipowner in shipping activities However, the

authorizer is not only the shipowner but the charterer, operator or shipper They

may ownhave the same nationality with the shipping agent or not To some extent, a

shipping agent who is legally found as a state-owned company, a joint stock

company or a private company

According to Article 159, Section 1, Chapter VIII (2006) “a shipping agent is

a person authorized to act as a representative to perform within the scope of

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authority designated by the authorizer shipping agency services at the

seaport”.”“The shipping agency may, after obtaining the consent of the shipowner

or operator of the vessel, perform shipping agency services for the shipper, the

charterer and other persons having contractual relations with the shipowner or the

operator of the vessel”

1.1.2 RThe r ole s of shipping agency service in maritime sector

It must be conceded that the shipping agency service plays an important role

in maritime sector This business witnessed a growth day by day thanks to the

development of maritime sector in recent years ConcurrentlyConversely, each

shipping agency servicet exerts a positive impact to the maritimeshipping sector in

the world

- Each shipping agent contributes to the efficiency of foreign trade by supporting

the shipowner in optimizing the shipping process and maximizing the profits As

known, shipping is a process of many steps related to receipts, cargoes, staffs and

other involved parties Thanks totheo the shipping agent, the cargoes are transported

smoothly, on time and safely and the co-operations between shipper, shipowner,

Port Authority and other parties are strictly legal

- Thanks to the role ofthe shipping agents, the task of shipowner would be

minimizedreduced, just concentrating to the vessel management The specialization,

therefore, may increase the business efficiency

- Performing on-spot service, a shipping agent may facilitate survey of government

and supports authorities in managing import-export business and supervising

foreign trade Based on data surveyed, appropriate strategies are proposed to

enhance the maritime sector such as fleet upgrading, port construction and

employment education

1.1.3 Features of a shipping agen cy servicet

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In the maritime sector, the shipping agency service is different from other

industries because of low demand in capital, assets or personal quantity However,

this job strictly requires the high level of education level, knowledge and the

majority of experience Here are some features of the shipping agency service:

- Running a shipping agent does not demand huge capital (in comparison with port

or vessel operation), high technology and a large number of staff Because of the

high profit achieved, many countries prohibit the operation of foreign companies in

this business Nevertheless, the main partners of the shipping agents are foreign

companies or shipowners soo the maritime security needs to be highly

appreciatedfeatured In recent years, the shipping agency business has been

increasingly popular in many port cities, which creates a potential and competitive

market

- A shipping agent is required to strictly follow contracts or legal orders of

authorizers In addition, the diligence and cleverness are indispensable to a shipping

agency staff in performing services

1.1.4 Types of shipping agency service

- Shipping agents are divided into two types:

+- Main agent (AAgent level 1): the person who is authorized by the authorizer

(shipowner, operator or charterer) in the form of a shipping agency contract or an

appointment to perform service for ships, cargoes, crews of seagoing vessels

+- Sub agent (AAgent level 2): the person who is authorized by the main agent to

perform the shipping agency service

1.1 45 Function s of a shipping agen tt

Nowadays, almost shipping agents perform service of transportation of

import/export goods and transit goods in Vietnam territory, advisory for domestic

and foreign companies about shipping, tally and import/export Therefore, functions

of a shipping agents include:

- Carrying out procedures with competent state agencies for arrival and departure of

vessels under the law

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- Arranging towing vessels, pilots and berth, area for anchorage to load/discharge cargoes and passenger transportation

- Performing services relating to cargo: cargoes loading/discharge, tally and lighterage; cargoes collection and division; cargoes test, supervision and scale; cargoes transporting to the warehouse; cargoes preservation; damaged packaging repair and packing; implementing damaged, lost cargoes indemnity

- Signing contracts relating to shipping, vessel rent, loading/discharge, tally procedures, rent, cargoes delivery, cabin storage, cargoes insurance

- Carrying out customs procedures relating to vessel and loading/discharge procedures

- Collecting and paying charges, indemnity, loading/discharge tips and other fees

- Ship brokerage (rent and purchase): ship supplies at port; ship repair and checking; cabin checking for loading/discharge process; cargo hold antiseptic and cleaning;food, beverage, material, petroleum, and equipment supplies for crews; ticket selling for passengers, implementing procedures for passengers and importing/exporting cargoes

- Services for crews: carrying out procedures for landing (visiting, healing); carrying out procedures to repatriation, title replacing and crew dispatch; sending letter, telegram, parcel, gift to crews

- Supporting maritime rescue for vessel and

- cCarrying out procedures for maritime disputes

-Supporting trade between ship and port and shipper when anchoring

- Representing for the shipowner to trade with shipper, authority and port to settle issues

- Completing door to door contracts relating to the multimodal transportation

- Authorized to do import/export business with the agreement of Vietnam shipping agent manager

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- Cooperating with domestic and foreign companies in transportation, tallying,

warehousing and ship rent

-Doing other tasks on agreement with the authorizers

Nowadays, the shipping agents tend to expanddiversify their services, for

instance, whenthey carrying out all the procedures for the shipowners from arrival

to departure Not only being a shipping agent, they also perform as a cargo’s agent,

ship rent’s agent, ship purchase’s agent

Authorized by the shipowner, the shipping agent also is responsiblehas

responsibility for of solving legal issuesoffor the shipowner and follows all

demands of them In addition, an agent is required to announcenotifyto the

shipowner all the worke work progress tothe shipowner and calculate related

expenditures

In a nutshell, the development of a shipping agent needscessarilyto

corresponds with the whole shipping sector Thanks to the development of

information technology, the shipping agency service is significantly contributing to

the foreign trade Not demanding a large amount of capital, the shipping agency

service is having advantage of developing more and more in the future

1.1 56The Cc riteria of a shipping agent

1.1 56 1 Decree 30/2014/NĐ-CP of the Government: On conditions for sea

shipping and sea shipping support service business

Article 10: Conditions for sea shipping agency service business

1 Organizations, individuals providing sea shipping agency service in Vietnam will have to

establish enterprises in accordance with legal provisions

2 Having registered the business of sea shipping agency service

3 Enterprises must have professional cadres conducting provision of sea shipping agency service

and legal affairs for enterprises

4 Persons who are appointed to hold positions in charge of sea shipping agency field must have at

least 02 (two) years of experience in sea shipping agency operation

5 Staff of sea shipping agencies must be Vietnamese citizens, having their bachelor degrees in one

of maritime, foreign trade, commercial or economic specialties

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6 Persons who are appointed to hold positions in charge of legal affairs in enterprises must have

bachelor degrees in law specialty and must have working experience at least 02 (two) years in legal

2 Having a shipping agency contract for each specific shipment or in a specific time limit

Article 12: Conditions in term of capital for foreign organizations,

individuals providing sea shipping agency service

1 Foreign organizations, individuals are entitled to establish joint venture enterprises to provide

sea shipping agency service, in which the percentage of capital contribution of foreign investors

must not exceed 49% of the charter capital of joint venture enterprises.

1.1 56 2 United Nations conference on Trade and Development (UNCTAD) :

According to UNCTAD, the minimum standards for a shipping agent:

- Have obtained the necessary experience in the profession by working for at least

three years in a responsible capacity with a qualified shipping agent

- Be a good standing and be able to demonstrate his good reputation and

competence For example by positive vetting and signified approval of at least two

agents of good repute who are also in his business and his geographical area of

activity

- Have passed such profession examination(s) as required by the relevant national

authorities/ professional associations The scope and details of such examination(s)

shall be determined by the said authorities/ professional associations

- In case of a corporate entity, employ such persons professionally qualified as

above to ensure the proper performance of the entity’s functions as an agent

1.1 56 3 International Standard Organization (ISO 9002)

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ISO 9002 promulgated regulations in servicescing, including shipping

agency service A shipping agent accredited for the quality standard ISO 9002 must

demonstrate to own a good automatic quality assessment system in operation and

management This system is required to satisfy governmental and international

regulations and fully recognized by quality control standards committee This

committee periodically periodically inspectssupervises the proceduresquality

systemcarried outundertakingbyof company staffs and evaluates in detail In

addition,nd extend the recognition for the satisfying company Moreover,

appropriate ideas are recommended to enhance the quality system of the company

Therefore, it is evident thatIthe standard is established by the company itself, not

any external organizations In conclusion, ISO 9002 is considered a vital assessment

whether that company is good or not and customers may rely on it to select the

cooperator a guarantee for customers about a credible company to cooperate

1.2 BThe b usiness efficiency of a shipping agen cy servicet

1.2.1 Definition of business efficiency

In a business context, the business efficiency is defined as the reflection of

the level and capability of using available resources to achieve the highest output

from the lowest input when running a business operation Therefore, the business

efficiency of shipping agency service is to take full advantage of the human

resources and facilities to gain the highest business efficiency from the lowest

expenses

In general, the business efficiency can be illustrated as the ratio between the

input to run a business operation and the output gained from the business The

output to input ratio increases when the efficiency is improved

The business efficiency is measured as the relative efficiency with the

following equation:

The absolute efficiencyreflects efficiency of each business method in each

period of each company:

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C: input cost

The relative efficiencyreflects the level of using producing factors of a

company:

H = KCInput cost: Operational expenditure (OPEX), capital expenditure (CAPEX),

headcount (including headcount of partners)

Results achieved: Revenue, customer numbers/distribution of each segment,

quality, growth, customer satisfaction

1.2.2 Indicators of business efficiency

1.2.2.1 Definitions relating to business performance

- Revenue is the total amount a company receives for the sale of its output (good,

product, service) to the customer Revenue is also called sales or turnover The total

revenue may be originated from:

+ Sales revenue;

+ Financial activities: money from equity contribution, lending rate, interest of

deposits, trading security;

+ Other income: infrequent activities such as asset liquidation

- Cost is considered the market value of the inputs a company uses in production

Cost is what a business must pay to take results (product, service) and depicted as

the loss of money in raw material, equipment and facility use The cost in business

includes:

+ Cost of production is the expense a business spend to create product or service

+ Cost of sales is related to the product or service consumption, including warranty

cost

+ Cost of business management includes cost for the managing system of a business

and costs relating to the business activity

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- Profitis gained when the amount of revenue exceeds that of cost, expense and

taxes in business activity The profit is calculated:

Profit = Total Revenue – Total Expenses

 + Gross profit is the disparity between the total revenues or sales of products

or services and the direct cost in producing or selling products or services in a

company Gross profit is also referred as gross income or gross margin

 + Net profit (profit after tax)is a company’s total income after subtracting the

total expenses from total revenue, showing the earnings of a company in a period of

time (after minus sales cost, business management cost or tax)

1.2.2.2 Indicators of business efficiency

- Gross profit coefficient is an indicator which reflects the relationship between the

pre-tax profit achieved and total revenue in a period of time It is calculated:

Gross profit coefficient = 𝑝𝑟𝑒 −𝑡𝑎𝑥 𝑝𝑟𝑜𝑓𝑖𝑡

𝑡𝑜𝑡𝑎𝑙 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 𝑥 100 (%)

- Ratio ofnet profit to net revenue (profitability ratio) is an indicator which reflects

the relationship between the net profit achieved and netnet revenue in a period of

time It is calculated:

Ratio of profit to net revenue = 𝑛𝑒𝑡 𝑛𝑒𝑡𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 𝑥 100(%)

Ratio or profit to revenue illustrates with each VND of revenue, how much

VND or profit is created If the current figure is higher than that of previous time, it

means the company gains high productivity and cost-saving, which means high

business efficiency

- Ratio of profit to cost is an indicator which reflects the relationship between the

net profit achieved and total cost a company spends in a period of time It is

calculated:

Ratio of profit to cost = 𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡𝑡𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡 𝑥 100(%)

Ratio of profit to cost illustrates with each VND of cost, how much VND of

profit is obtained If the current figure is higher than that of previous time, it means

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the company achieves high profit with the low cost, meaning high business

efficiency

- Ratio of revenue to cost is an indicator which reflects the relationship between the

total cost spent and the netnet revenue a company gains in a period of time It is

calculated:

Ratio of revenue to cost = 𝑛𝑒𝑡 𝑛𝑒𝑡𝑡𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 𝑥 100(%)

Ratio of revenue to cost reflects with each VND of revenue, how much VND

in cost is spent If the current figure is higher than that of previous time, it means

the company achieves the cost-saving in business activity, illustrating the business

efficiency

1.2.3 Factors impacting toaffectthe to business efficiency of a shipping agen cy

servicet

1.2.3.1 Internal factors

The internal factors are factors inside the company/enterprise and are born

when performing service They, which are controllable, include human resources,

financial management, science-technology, service process, management style of

leaders In which, human resources is the most important factor because the other

ones are actually originated from people’ activities In addition, other factors such

as financial management, technology, service process, marketing and management

also play important roles because they directly influence to the profit of a company

To some extent, these factors affect strategies such as competition, market growth,

and service process and management style of leaders Facility is the fundamental

factor to evaluate the efficiency of the service and it seems that the more money a

company spends upgrading facility, the more efficient the business can achieve

1.2.3.2 External factors

Thanks to the globalization and integration, shipping companies have many

chances to achieve success but also face numerous threats In general, each

company is impacted by the factors from macroeconomic and micromaritime

transportation factors MThe macroeconomic factors outside a company includeare

economy, culture, politics, law, technology development MicroMaritime

transportation factors attached with activities of athe company are competitors,

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maritime national and international law Competition is an important factor which

directly affects to the success of a company meanwhile a company would make

developing strategies to satisfy the law promulgated

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CHAPTER 2: EVALUATING BUSINESS EFFICIENCY

OF SHIPPING AGENCY SERVICE AT VOSAL FROM

2011 TO 2014 2.1 General introduction about VOSCO

2.1.1 Establishment and development process

Vietnam Ocean Shipping Joint Stock Company (VOSCO), whose former

name was Vietnam Ocean Shipping Company, was established on 1st July 1970 At

that time, the main business fields of the company were shipping business, ship

brokerage, shipping agent, import-export activities, and furnishment of supplies

In 1993, The Vietnam Ocean Shipping Company was re-established and

operated according to Decision 29-TTg adopted on January 26th 1993 by the Prime

Minister At that time, the company entity was state-owned and managed by

Vietnam National Shipping Lines (VINALINES)

In 2007, under the Decision 1367 QĐ/BGTVT on June 26th 2006 adopted by

the Minister of Ministry of Transport, state-owned companies of VINALINES

conversed into a joint stock company The official name of the company is Vietnam

Ocean Shipping Joint Stock Company (VOSCO)

2.1.2 Function ss

Since founding in 1970, VOSCO has continuously developed and improve

its fleet Currently, VOSCO owns a fleet of modern ships including general cargo,

bulk carriers, tankers and container vessels

Shipping is the core business of the company Aside from being shipowners,

ship managers and ship operators, VOSCO is engaged in the chartering, sale &

purchase and related services through subsided companies/branch office such as

agency, freight forwarding & logistic; ship repair service; supplying lube oil and

store; supply seafarers as well as shipping co-operation & joint ventures (VOSCO,

n.d.) VOSCO fleet is operated in the wide range of area in the world, especially

South East Asia, North East Asia, West Africa, Australia, and South America

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2.1.3 Subsidiaries of VOSCO

VOSCO currently owns aof chain of subsidiaries which are responsible for

different business activities including:

- VOSCO Shipping Agency and Logistics Company One-Member Limited Liability

Company (VOSAL)

- VOSCO Commercial and Service Joint Stock Company (VTSC)

- VOSCO Repairing and Service One-Member Limited Liability Company

VOSCO Agency and Logistics LTD Company (VOSAL), a subsidiary of

VOSCO, was commenced operation on November, 16th 2010 The initial capital

was 15 billion VND, 100% owned by VOSCO

- Address: 215 Lach Tray Street, Ngo Quyen, Hai Phong

- Business License No.0201130601 by the Department of Planning and Investment

Currently, VOSAL is performing various shipping services including cargo

storage and warehouse, cargo stevedoring, shipping agency service, supplies

service, forwarding service, logistics service

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2.2.3 Organization

FIGURE 1: VOSAL ORGANIZATION STRUCTURE

(Source: VOSAL Administration Department)

Being a subsidiary of VOSCO, VOSAL is managed by a system of superiors

from VOSCO the shareholders’ assembly to the Vice General Director who is

responsible for VOSCO branches and subsidiaries

Shareholders' Assembly

Board of Supervisors

Board of Management

Chief Executive Officer

Vice General Director

Chua Ve Container Depot Dept

Finance &

Accounting Dept

Administration Dept

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VOSAL’s Board of Directors include 3 members, one Director and two Vice Director, who are legally responsible for the whole operation of the company in accordance with its rules and under the official law

There are four departments managed by the Board of Directors, including:

- VOSAL Shipping Agency Department is responsible for performing shipping agency services in the whole process of vessel operation Specifically:

+ Carry out procedures for vessel arrival/departure in a port through working with involved parties (Port Authority, Port, Pilot, tugboat, Border Guard, Department of Quarantine)

+ Implement tasks authorized by the shipowner or vessel’s master

+ Sign contract with shipowner or shipping lines for the shipping agency service + Search for and contact to shipowner who demands the shipping agency service to reach into a contract

- VOSAL Forwarding Agency Department is responsible for:

+ Cargo-handling at port including stevedoring supervision and container checking (quantity, volume, relateding information)

+ Cargo transport from/to the warehouse to/from the port

- Chua Ve Container Depot Department is responsible for the storage of VOSCO empty containers and the management of container outbound/inbound

- Administration Department is responsible for tasks relating to administration including personnel organization, staff appointment, management consultancy and other internal policies of the company

- Finance & Accounting Departmentcovers budgets, accounting and finance of the company

+ Summarizing data, announcing business results and analyzing financial efficiency

in performing operation

+ Supervising the financial affairs of the whole company and suggesting methods to control and dealt with errors in business activities, especially financial management

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2.2.4 Facilit yies

Currently, VOSAL’s office is inside VOSCO headquarter, equipped modern

equipment such as air-condition, fans, computers, projectors, fax machine,

photocopy machine, scan machine All the computers of the company are connected

into internet to satisfy the demand of performing tasks

2.2.5 Personnel

So far, VOSAL has 26 staffs including 1 Director, 2 Vice Director, 4

Shipping Agency staffs, 5 Forwarding Agency staffs, 12 Container Depot staffs and

2 Finance and Accounting staffs In which, two has postgraduate degrees, 18 owns

bachelor degrees and others graduating from college or under education levels

2.3 Shipping agency service at VOSAL

2.3.1 Legal basis of shipping agency service at VOSAL

Currently, many maritime regulations and policies are indicated in the

official documents based on the Vietnam Maritime Law and Vietnam Law:

- Vietnam Maritime Law (2005), Chapter III, Section 1: Shipping agent; includes 8

articles from Article 158 to 165

- Decree 21/2012/NĐ-CP about the port and waterway management, chapter III

regulates the arrival and departure procedures of vessels

- Decree 30/2014/NĐ-CP about the conditions of shipping business and logistics

service

In which, the most important law is the Vietnam Maritime Law which was

adopted by the Congress on June, 14th, 2005 and has become effective since

January 1st 2006

2.3.2 LThe l evel of shipping agent staffs at VOSAL

TABLE 1: LEVEL OF SHIPPING AGENT STAFFS AT VOSAL

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Level

Qualifications Bachelor of Maritime Transportation Economy at

Vietnam Maritime University

Characteristic Energetic, Enthusiastic, Good communication

(Source: VOAL Administration Department)

2.3.3 Procedure s of shipping agency service at VOSAL

FIGURE 2: PROCEDURE OF VOSAL SHIPPING AGENCY SERVICE

(Source: VOSAL Shipping Agency Service Department)

2.3.3.1 Before vessel arrival

- Informing to the involved parties:

Before vessel

arrival

• Informing to the involved parties

• Notifying to the master

• Preparing cargo documents

• Notifying the mooring plan

Vessels at

the berth

• Completing procedures before cargo-handling process

• Supervising loading/discharge process

• Implementing procedures after cargo loading/discharge

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