Recommendations to improve CFS warehouse operation at duyen hai transport co , LTD ( TASACO)

Name: Tran QuocThang Class: GMA02 Page vLIST OF ABBREVIATIONS CFS: Container Freight Station ICD: Inland Clearance Depot D/O: Delivery Order ETA: Estimate Time Arrival B/L: Bill of Ladi

Name: Tran QuocThang Class: GMA02 Page i

PREFACE

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

Tran QuocThang

Name: Tran QuocThang Class: GMA02 Page ii

ACKNOWLEDGEMENT

Firstly, I would like to express my sincere gratitude to my supervisor Master DoanTrongHieu for the continuous support my dissertation and related research, for his patience, motivation, and immense knowledge His guidance helped me in all the time of research and writing of this dissertation I could not have imagined having a better advisor and mentor for my study

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TABLE OF CONTENTS

PREFACE i

ACKNOWLEDGEMENT ii

LIST OF ABBREVIATIONS v

LIST OF TABLES vi

LIST OF FIGURES vii

INTRODUCTION 1

CHAPTER 1: LITERATURE REVIEW 4

1.1 Definition and role of CFS 4

1.1.1 Definition 4

1.1.2 Role 5

1.2 The basic operations of CFS 6

1.3 Regulation quality inspection of goods in CFS 7

1.4 The principle of loading, unloading goods at the CFS 7

1.5 Establishing Procedures of CFS warehouse 9

1.6 CFS performance measurement 12

CHAPTER 2: SITUATION OF CFS WAREHOUSE OPERATION AT DUYEN HAI TRANSPORT CO., LTD (TASACO) 14

2.1 Overview about Duyen Hai Transport Co., Ltd (TASACO) 14

2.2 Processes of operating at CFS warehouse 18

2.2.1 Process of operating imported goods 18

2.2.2 Process of operating exported goods 25

2.3 Performance indicators of CFS warehouse at TASACO 28

2.3.1 Cargo volume through CFS warehouse 28

2.3.2 CFS capacity 29

2.3.3 Warehouse cargo/port cargo ratio 30

2.3.4 Warehouse turnaround time 30

2.3.5 Average volume of goods through CFS warehouse per day 30

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OPERATION AT DUYEN HAI TRANSPORT CO., LTD (TASACO) 31

3.1 Evaluation on the CFS of TASACO 31

3.1.1 Strengths 31

3.1.2 Weaknesses 32

3.2 Recommendations 34

CONCLUSION 37

REFERENCES 39

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LIST OF ABBREVIATIONS

CFS: Container Freight Station

ICD: Inland Clearance Depot

D/O: Delivery Order

ETA: Estimate Time Arrival

B/L: Bill of Lading

C/O: Certificates of Origin

VAT: Value-Added Tax

CBM: Cubic Meter

WMS: Warehouse Management System

TEU: Twenty-foot Equivalent Units

P/O: Purchase Order

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LIST OF TABLES

Table 1: Infrastructure, facilities and staffs 15

Table 2: The cargo volumes through CFS warehouse 29

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LIST OF FIGURES

Figure 1: Organizational chart of TASACO 14

Figure 2: The process of operating imported goods 18

Figure 3: The process of customs clearance 19

Figure 4: The process of operating exported goods 255

Figure 5: The cargo volumes through CFS warehouse 29

Name: Tran QuocThang Class: GMA02 Page 1

INTRODUCTION

According to the plan and schedule of advanced program, the intership is considered as a great opportunity for GMA02 students to access the practical environment in companies as well as enterprises For most students of us, this intership is a highly anticipated event It is important to help bridge the gap between education and hands-

on experience, crucial for all students to acquire increased knowledge, business culture and hands-on experience After more than four years of studying, we can compare what we have learned with practical applications in order to choose as well as orientate what’s good and consistent with our ability, help us more confidence to step outside to find the job Personally, I strong believe that intership is a vital opportunity for us to get out of our house and university We meet a number of people and seem to struggle to fit in days in our busy schedules This is a reasonable time to build and widen our relationship, improve our abilities

of communication, working independently as well as adaptation in new professional environment Furthermore, intership helps us become open-minded and outgoing The negative influence of studying at university and college is forming a sedentary and passive lifestyle that reduces the motivation of students New environment at company and enterprise will promote our creativity and thinking Therefore, the intership expands our learning through active hands-on experience with the rich resources of the local community

It increases our knowledge and understanding of a subject and realism to the topic of study

From my point of view, warehousing and warehouse management are part of a logistics management system, which is itself a component in supply chain management Although viewed by some as simply a place to store goods, it actually plays an important role regarding to inbound and outbound logistics Therefore, I

am really fascinated by warehouse and I decide to engage in topic namely process

of operating receiving goods CFS During one month of field trip, I have had opportunity to practice in Duyen Hai Transport Co., LTD (TASACO) which is one

of Members company TASA DUYEN HAI functioning mainly in warehouse services It must be admitted that I have done my report with amount of challenges because of my inadequate knowledge but no matter how my result, I do hope that the intership would be a good time for improving my understanding and practical experience

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So, in two months of internship, with a wish to study the CFS operation activities, I have chosen this topic: "Recommendations to improve CFS operation at Duyen Hai Transport Co., Ltd (TASACO)" This research will give an insight to the CFS activities at TASACO And from that, Iwill give proper solutions to increase the development of company

Research Object

This study is conducted to study the CFS warehouse operation at TASACO and find the possible ways to improve the services CFS of warehouse

Methodology of the research

For study, this dissertation is gathered information from both primary and secondary sources From primary source, information is gathered by: visiting CFS warehouse at TASACO and learn information about the CFS operation; observing the activities in managing CFS warehouse From secondary source, information is found and gathered in documents related to CFS warehouse operation, especially the exported and imported goods process; dissertations, journals, books related to CFS warehouse operation, services and activities in CFS warehouse

Limitation of the research

During the process of studying this topic, there are some limitations and hindrances in conducting the paper Firstly, studying and evaluating the CFS operation of a particular company need an amount of time Due to the time limitation, this report is conducted with the urgency Information is gathered mostly by the process of observation and studying in the appointed time Therefore, it may lack some information Secondly, there are some problems in observing the real process of operating CFS warehouse at TASACO Because this report is conducted in the busy time of the company, it is not easy to supervise CFS activities and collect data Besides, some information about the company is kept in secret for security

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Research Findings

This dissertation provides the understanding of CFS operation, studying the services and activities at CFS warehouse, especially export and import activities and giving out some recommendations to improve the CFS warehouse operation

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CHAPTER 1: LITERATURE REVIEW

1.1 Definition and role of CFS

1.1.1 Definition

-1According WIKI: Warehouse is the repository containing large amounts products Over field of logistics, warehouse where cargo from the manufacturer before going to the retailer

-According Dictionary of business: Warehouse where facilities have been designed to serve the receipt and temporary storage of goods, and perform other tasks related to the goods

- According to Vietnam Customs Rules 2005 following repository types:

+ Bonded warehouses storing goods as follows:

Goods which have been sent through customs procedures for export

Goods imported from foreign countries into sending for export abroad or imported into Vietnam under the law

+ CFS warehouse is a centralized examination of goods and where you fit more into export goods and exploitation of large batches of imported goods share a single transport of multiple shippers

- CFS is a place where containers are stuffed, de-stuffed and aggregation/ segregation of export/import cargo take place With the growing volume of international trade, the need for expeditious clearance of goods at the port within the minimum possible time has been gaining importance This is more so when the ports are facing congestion at their premises Further, for optimal utilization of existing infrastructure, space, equipment, goods that are landed at ports need to be evacuated straight away without any loss of time Accordingly the concept of Container Freight Stations (CFS) has grown in importance along with the development and growth of ports

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- A CFS is where import/ export goods are kept till completion of their examination and clearance The imported goods can be immediately shifted from the port to CFS which also helps in the reduction of port congestion All the activities related to clearance of goods for home consumption, warehousing, temporary admissions, re-export, temporary storage for onward transit and outright export and transshipments take place from such stations Therefore, clearance of goods from CFS is an important point of consideration for trade in respect of export/ import Cargo as it is the final Customs contact point.1

1.1.2 Role

- 2Warehousing role and important position for production and circulation, to serve for continuous production and normal circulation of goods Warehousing is the infrastructure of the industry, and services for the economy and contributes to raising the efficiency of social production

- Operation of good warehouse or no impacts on the socio-economic activities Economy grows, the more storage systems to meet the needs of the national economy

- Actually warehousing is not a natural product, abstract It is the physical entity created by man to serve the people So it has always existed in the value and use value production In terms of goods, the warehouse many components must be the product of many goods sectors, should be traded Therefore storage should be prioritized for development investment, encouraging economic sectors invest as planned, come to its organization and operation of an economic-technical branch right towards economy class

- Helping organizations save transport costs, cost savings in production, maintain a stable supply, policy support for customer service

- Helping organizations cope with the changes of the market (due to seasonality, demand change, competition ) and overcome differences in space and time between producers and consumers

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- Helping meet the needs of customers with the lowest logistics costs Support for the program JIT (Just - In - Time) and providing to customers with products in

sync

1.2 The basic operations of CFS

Basic warehouse operations is a shift (short distance) and storage… are divided into four basic groups:

- Receiving: Pickup from the transport system in the warehouse The carrier must deliver the goods on schedule in order to improve productivity Customers are specialized in receiving areas, be inspected for possible damage damaged baggage are reflected on the delivery note of the carrier Warehouse receipts will be made at this stage

- Put-away: delivery to specific locations in the warehouse This period may conduct some business: product identification (scanning of product barcodes), locate stores, bringing goods into the storage location Finally inventory system must be updated to reflect the receipt of goods and their location in the warehouse

Some rules forloading goods: ordinary goods (most in period) placed near more goods and vice versa Goods with a total volume of smaller, smaller size are ranked near the goods

- Order picking: Selection of specific categories of customer orders Forward orders for information worker, optimizing the movement pickup, cargo transport to the waiting area

- Shipping: Loading goods transport to customers When the means to receive goods at delivery, the goods are put up storage facilities and then bring up the vehicles The carrier must present valid documents The last step is to enter data into the system to reflect exported goods excluding from the inventory list, and have been delivered to the recipient is valid

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1.3 Regulation quality inspection of goods in CFS

3

Business proposals are conducting open cargo in each container, use a metal measuring or checking visually for metal Adhesive products or not, check the conformity of the goods quantity, quality cultural and other requirements in accordance with the request of the importer or not

After inspecting the goods, must close to its original crates and boxes of unsatisfactory will be labeled "FAIL", but satisfactory barrels will be labeled PASS This was intended to inform the factory knew and treatment measures before the goods are exported out of Vietnam

The inspection of goods in CFS before export aims to test the goods to ensure the quality and quantity of the goods in accordance with the request of the importer, avoid exports unsatisfactory and are customer returns, it will cause losses for exporters

The inspection of goods in CFS is done in a separate area and subject to inspection and supervision by customs manage CFS warehouse

However, according to the Customs Department, Circular 128/2013 / TT-BTC dated 10-9-2013 of the Ministry of Finance regulations on inspection services in CFS, for exported goods can be effected only service packaging, repacking, sorting and rearranging the goods, while service quality inspection of exported goods in CFS have not been specified

1.4 The principle of loading, unloading goods at the CF S

- Height of stacking goods in stock to suit each type of cargo and its packaging

- Do not be stacked higher than the load capacity of the tire bag bottom package, resulting in piles of spillage

- In case of necessity to the instructions of the consignor stowage

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- One can use the multi-storey shelving system for stowage of the goods which the packaging made of weak materials, blankets as carton boxes

- For perishable goods, fragile as glass, ceramics must be necessarily put in the packaging to make sure wood and dunnage

- For a set of small-sized packages into a big event (close to the pallet) to higher stackable and easy to use motorized equipment Goods loaded on pallets to ensure safety, the row height does not exceed 1.5 per pallet pallet length

- Do not be piled higher at the corner positions of the consignment due to limited visibility of vehicles and equipment and scan disruptive

- Goods stowage at CFS should be split into separate plots for each consignment

- When stacked into multiple layers, between tiers must have padding

- The goods which are soiled, they should be classified separately in a region

It is best to put out in the fields

- Do not put the heavy package onto the light parcels

- Never stowage of liquid cargo, wet above the dry cargo (avoid damp)

- Shipments Kong cumbersome, inconvenient when unloading should be at or near the door space

- Customers have high value to put in a safe location specified and clearly marked

- Use the right products at the CFS to create gaps between the pile in order to ensure ventilation if necessary

- When ranked by hand, workers are only raised to shoulder height parcels, only stepped up piles when really necessary

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1.5 Establishing Procedures of CFS warehouse

+ 4Conditions established CFS under paragraph 5 of Article 63 of Circular 128/2013 / TT-BTC dated 10/09/2013 of the Ministry of Finance regulations:

- Enterprises with registered business of freight forwarding, transport of goods export, import, warehousing;

- In areas with exports and imports regularly, convenient transportation, suitable for transporting goods by container; a customs sub-department managers do not exceed 20 km

- Ensure that the working conditions for customs authorities as office buildings, where the examination of goods, where the installation of equipment for customs inspection, storage of material evidences of violations;

- Warehouse must have a minimum area of 1,000m2, with fences surrounding area, are equipped with surveillance cameras

- Goods into and out of the warehouse has to managed by computer systems and are connected to the monitoring system of the customs authorities

+ Profile Established LCL collection location (CFS) under paragraph 5 of Article 64 of Circular 128/2013 / TT-BTC dated 10/09/2013 of the Ministry of Finance regulations:

- A written request for the establishment of enterprises: 01 original;

- Economic feasibility, construction techniques: submit 01 copy;

- Regulation of operation: 01 original;

- Papers evidencing that lawful land use rights: 01 copy;

- Certificate of business registration with occupations forwarding, transport of goods import and export and (or) business warehouse: submit 01 copy;

+ The order established under paragraph 2 of Article 65 of Circular 128/2013 / TT-BTC dated 09/10/2013 of the Ministry of Finance regulations:

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- Enterprises need to establish locations in writing to request the General Department of Customs (through the provincial, city), in which specify the expected contents include: the need to establish, location places are planned to be established, the area, the condition of infrastructure, engineering, infrastructure

- Within 05 working days from receipt of the written request of the enterprise, the provincial, city inspection records, based on operation of the venue has been established in the province , assess the need and matching requirements management, private bonded warehouse if they meet the monitoring requirements

of the customs officers, the report recommended the General Department of Customs

- Within 05 working days from receipt of the report proposed by the provincial, city, General Administration of Customs has written replies and specific guidance to implement the content, if not the same reviews the written reply of the reason

- After reaching undertakings with the General Customs Department, conducting business investment and construction stores and sites meet the filing conditions stipulated in this Circular to the General Department of Customs

- Within 10 working days from the date of receipt of its application, the provincial, city performed: Check the file; survey and inspection of the actual warehouse; assess the satisfaction of the conditions to establish the location, send a report and recommendation to the General Department of Customs

- Within 07 working days from receipt of the report of the provincial, city founded together records of checkpoints, the General Customs Directorate of the decision to establish sites or documents the answer if now not meet the conditions prescribed

+ Customs procedures for goods brought into the retail collection sites (called CFS - Container Freight Station) under Article 51 of Circular 128/2013 / TT-BTC dated 10/09/2013 of Ministry Financial regulation:

- Goods brought into CFS include:

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Imported goods included in the CFS is unfinished goods customs procedures, are subject to the supervision and management of the customs authorities

Goods exported goods included in the CFS was done customs procedures or registered cargo customs declaration at the customs sub-department outside the gate but the actual inspection of goods made in the CFS

- The service is performed in CFS

For export goods: Packing, repacking, sorting and rearranging of goods

For goods in transit or transshipment be included in the CFS in port to mergers, joint transplantation closed container or closed melding exporter with exports of Vietnam

For imports: Allowed splitting to carrying out import procedures or coupled with other goods container to export shipments to third countries

- The time for keeping goods in CFS:

Goods brought into CFS stored up within 90 days of the warehousing

Beyond this time limit, the customs sub-departments managing CFS require warehouse owners to do procedures that take the goods out of the CFS or treated as imported goods are abandoned, lost, confused, overdue customs declaration as provided for in Article 45 of the Customs Act

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- Goods from CFS brought inland has to take customs procedures in accordance with the respective type

1 Cargo throughput: is the total volume of goods going through warehouse in

a period (usually a year) For CFS warehouse, cargo throughput can be calculated

by total import and export cargo that CFS operators handled in a certain time

2 Warehouse capacity: is the total volume of goods can be stored in the warehouse

3 Warehouse storage rate: is the ratio between the volume of goods through warehouse and the total volume of goods through port

α = ∑𝐴

∑𝐵

In which: ∑𝐴 is the volume of goods through warehouse

∑𝐵 is the volume of goods through port

4 Warehouse turnaround time: is the ratio between total warehouse volume

of goods going through warehouse and the warehouse capacity in a specific time (usually in one year)

n = ∑𝐴𝐶

In which: ∑𝐴 is the volume of goods through warehouse

C: is the capacity of warehouse

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5 Average volume of goods through warehouse per day:

a = ∑𝐴𝑡

In which:∑𝐴: is the volume of goods through warehouse

t: is the time warehouse run in a year

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CHAPTER 2: SITUATION OF CFS WAREHOUSE OPERATION AT DUYEN HAITRANSPORT CO., LTD

(TASACO)

2.1Overview aboutDuyen Hai Transport Co., Ltd(TASACO)

TASACO is a subsidiary of DUYENHAI MULTIMODAL TRANSPORT JOINT STOCK COMPANY (TASA DUYEN HAI) which was founded in 1997 as

a precursor In March 2008, TASACO was merged with three other companies into TASA DUYEN HAI, specializing in warehouse and road transport

Address: Km 104+200 Nguyen BinhKhiem, Dong Hai 2 ward, HaiAn district, HP

Tel: 031.3825120 Fax: 031.3629993

Email: tasaco@tasagroup.com.vn

Director: Le Thai Cuong (Mr) ĐT: 0903.408.642

Deputy Director: Nguyen ThiBichThuy (Mrs) ĐT: 0936.995.468

Deputy Director: Le DucVinh (Mr) ĐT: 0936.593.169

Chief accountant: Nguyen Thu Hoan (Ms) ĐT: 0906.124.07

 Organization

Figure 1: Organizational chart of TASACO

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 Introduction about CFS warehouse at TASACO

The total area inside the CFS is 2500m2 CFS at TASACO is built in modern standards and has the ability to store much kind of cargoes It is equipped with fire prevention system, flood prevention system, modern lighting system to protect cargoes, prevent accidents as well as ensure the safety of staff inside CFS

CFS system at TASACO consists of two warehouses called respectively

as imported warehouse and exported warehouse CFS area is divided into two main areas: the area for imported cargo and area for exported cargo Area for imported cargo is used to store and handle imported cargoes Cargoes is repacked from containers, sorted, stored and delivered to different cargo owners

Area for exported cargo is smaller than import area because the exported cargo volume in here is usually less than the volume of imported cargo

A part of fixed area inside CFS warehouse, CFS at TASACO can use the ground in front of and beside CFS warehouses to load and unload cargo This area can be the ground for cargo owner’s trucks park and wait for delivering goods from

warehouses

 Infrastructure, facilities and staff at CFS warehouse

Table 1: Infrastructure, facilities and staffs

Infrastructure -2 CFS warehouse, total area 2500 m2

- 1 office building, 1000 m2

Facilities - 4 cameras, 4 emergency lights, 6 fire alarms, 4 ladders

- 2 reach stackers(45 tonnes), 1 crane truck (36 tonnes), 6 counterbalanced fork-lift trucks (5 tonnes), 10 tractor

Staff - 20 staff, 3 warehouse-keepers

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 Main services

 Road transport: TASACO performs transportation of goods by road

Company has 10 tractors and exclusive trailers which can meet increasing demand in Haiphong as well as the whole country The company is focusing on controlling and reducing the multiple costs of road transport, together with increasing the number of vehicles and equipment

 Warehouse services: Company has three business types with three separate

warehouse systems:

o CFS warehouse: Warehouse for preservation and delivery of goods for export and import, for collection of sea and aviation cargoes The company specifically focuses on improving the operations of customs procedures, import and export goods forwarding, paying special attention to exploitation and management of CFS and successful implementation of the signed contract

o The storage in the form of three parties signing a contract with your bank: preserve goods for businesses that need bank capital, facilitate the strength of the business of customers

o Domestic Storage: preserve, operate groceries to retail agents

 Repair services: Company provides repair services, vehicle maintenance and

lifting equipment for customers, container repair to meet IICL standard of the ship owner With the large and systematic investment, scientific management methods with a team of skilled and constantly learning staff, container repair services of the company has enhanced the quality as well as increasing turnover and business efficiency regularly Technical standards for container repair of the company is issued with IICL 5 certificate – currently considered the highest standard in the world, by the Association of International Container So companies are trusted and