Recommendations to improve freight forwarding procedure for exporting FLC cargoes in dong tai global logistics and trading co ,LTD

MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING VIETNAM MARITIME UNIVERSITY STUDENT NAME: PHAM THI DUNG DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS RECOMMENDATIONS T

MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING

VIETNAM MARITIME UNIVERSITY

STUDENT NAME: PHAM THI DUNG

DISSERTATION

GLOBAL STUDIES AND MARITIME AFFAIRS

RECOMMENDATIONS TO IMPROVE FREIGHT FORWARDING PROCEDURE FOR EXPORTING FCL CARGOES IN DONG TAI

GLOBAL LOGISTICS AND TRADING CO., LTD

MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING

VIETNAM MARITIME UNIVERSITY

STUDENT NAME: PHAM THI DUNG

CLASS: GMA 02

DISSERTATION

GLOBAL STUDIES AND MARITIME AFFAIRS

RECOMMENDATIONS TO IMPROVE FREIGHT FORWARDING PROCEDURE FOR EXPORTING FCL CARGOES IN DONG TAI

GLOBAL LOGISTICS AND TRADING CO., LTD

PREFACE

The trade between a country and other one increasingly leads to the market demands of freight forwarding service of imported and exported cargoes also increasing in the world As a result, Vietnam enterprises which have been operating in this sector have more opportunities to develop and gain benefits Being aware of this high demand of marketDong Tai Global Logistics and Trading Co., Ltd was founded and operated in the field of export and import service The company would like to take this opportunity to be seen as one of the most active forwarder in Vietnam It is diversified total logistics provider with mainstream activities in forwarding, international ocean freight, air freight, warehousing & distribution, Logistics and domestic transportation

Recognizing the importance of freight forwarders services in trading imported and exported goods combine with the learned knowledge in the internship time in the company, I chosen to study the topic “Recommendations to improve freight forwarding procedure for exporting FCL cargoes in Dong Tai Global Logistics and Trading Co., Ltd” From analyzing the strengths and weaknesses of the company, some recommendations are proposed to improve freight forwarding procedures in the company The dissertation is structured as follows:

Chapter I: Literature review

Chapter II: Freight forwarding procedure for exporting FCL cargoes of Dong Tai Global Logistics and Trading Co., Ltd

Chapter III: Recommendations to improve freight forwarding procedures for exporting FCL cargoes in Dong Tai Global Logistics and Trading Co., Ltd

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

Pham Thi Dung

ACKNOWLEDGEMENT

Firstly, I would like to express my sincere gratitude to my supervisor Pham Thi Yen for the continuous support of my dissertation Her 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 dissertation

Secondly, I deeply thank Director – Mr Do Viet Thanh and staffs at Dong Tai Global Logistics and Trading Co., Ltd for the help and guidance during internship

TABLE OF CONTENT

PREFACE i

ACKNOWLEDGEMENT ii

TABLE OF CONTENT iii

LIST OF ABBREVIATIONS v

LIST OF TABLES vi

LIST OF FIGURES vii

INTRODUCTION 1

1 Necessity 1

2 Methodology 1

3 Research scope 1

4 Research findings 2

CHAPTER 1: LITERATURE REVIEW 3

1.1 Definitions of freight forwarding services and freight forwarder 3

1.1.1 Freight forwarding services 3

1.1.2 Freight forwarders 3

1.2 The rights and obligations of the forwarder 5

1.3 The relationship of freight forwarder and related parties 6

1.4 Legal basis 7

1.4.1 Nation law 7

1.4.2 International law 7

1.5 Procedure of freight forwarding for exporting FCL cargoes 8

1.5.1 The role of freight forwarding of cargoes by sea 8

1.5.2 Definition of FCL 8

1.5.3 Process of freight forwarding for exporting FCL cargoes 8

1.5.4 Documentaries in export 8

CHAPTER 2: FREIGHT FORWARDING PROCEDURE FOR EXPORTING FCL CARGOES IN DONG TAI GLOBAL LOGISTICS AND TRADING CO., LTD 11

2.1 Introduction about company 11

2.1.1 General information 11

2.1.2 Organization 13

2.1.3 Personnel 15

2.1.4 Business model 19

2.1.5 Business results in 2012-2014 19

2.2 Freight forwarding procedure for exporting FCL cargoes in Dong Tai Global Co., Ltd 21

2.2.1 Freight forwarding procedure for exporting FCL cargoes at Dong Tai Global Co., Ltd 21

2.2.2 Explain the process 22

CHAPTER 3: RECOMMENDATIONS TO IMPROVE FREIGHT FORWARDING PROCEDURE FOR EXPORTING FCL CARGOES IN DONG TAI GLOBAL LOGISTICS AND TRADING CO., LTD 28

3.1 Strengths and weaknesses 28

3.1.2 Strengths 28

3.1.2 Weaknesses 29

3.2 Recommendations to improve freight forwarding procedure for exporting FCL cargoes in Dong Tai Logistics and Trading Co., Ltd 30

CONCLUSION 33

REFERENCES 34

ANNEX 35

LIST OF ABBREVIATIONS

B/L Bill of Lading

C/O Certificate of Origin

CFS Container Freight Station

CY Container Yard

FCL Full container load

FIATA International Federation of Freight Forwarders Associations

THC Terminal Handling Charge

VCCI Vietnam Chamber of Commerce and Industry

VIFFAS Vietnam Freight Forwarders Association

VLA Vietnamese Logistics Association

LIST OF TABLES

TABLE 2.1: The classification of employees by education level………… ……….15

TABLE 2.2 Business result in 2012-2014 and estimated in 2015……… 20

LIST OF FIGURES

FIGURE 1.1: The relationship between forwarder and related parties………… ……7

FIGURE 2.1: Organizational chart………… ….……… ……….13

FIGURE 2.2: The classification of employees by gender……… … 16

FIGURE 2.3: The procedure of freight forwarding for exporting FCL cargoes…… 21

on how to move cargoes in the most efficient way from one place to another place Freight forwarding is diversified with participation of various economic sectors and services It is the fact that freight forwarding is still new concept in Vietnam Freight forwarding companies find some difficulties because of lacking extensive knowledge of documentation requirements, regulations, transportation costs and banking practices that lead to in efficiency in exporting process Therefore, researching to enhance forwarding procedure for exporting FCL cargoes is

necessary for company to create competition in domestic as well as global market

2 Methodology

The internship at Dong Tai Global Logistics and Trading Co., Ltd has given

me a chance to practice the process of freight forwarding for exporting FCL cargoes Also, I have gained the experiences and valuable knowledge related to freight forwarding In order to do this dissertation, I use the following research methods:

- Observation: this method was used to scrutinize things that cannot be easily sported out such as the activities and attitude of staff

- Participation: in order to understanding the freight forwarding procedure of exported cargoes, I participated in the daily activities of the company Particularly, I had chances to go to shipping lines such as SITC, Nam Sung, NYK, VICONSHIP; customs departments, for example, border-gate customs sub-department; ports; depots and related institution as Phytosanytary sub- department area I

3 Research scope

Dong Tai Global Logistics and Trading Co., Ltd provides various services of freight forwarding However, the main scope of this dissertation is research on the

freight forwarding procedure for exporting FCL cargoes in Dong Tai Global Logistics and Trading Co., Ltd

CHAPTER 1: LITERATURE REVIEW

1.1 Definitions of freight forwarding services and freight forwarder

1.1.1 Freight forwarding services

Freight forwarding carries with it a broader sense; it is the organization of transport, care of goods to be shipped, then unloading, warehousing, transport, packaging, procedures, and documents Therefore, there are many definitions of forwarding According to International Federation of Freight Forwarders Associations (FIATA, 2004), Freight Forwarding Services means

“services of any kind relating to the carriage, consolidation, storage, handling, packing or distribution of the goods as well as ancillary and advisory services in connection therewith, including but not limited to customs and fiscal matters, declaring the goods for official purposes, procuring insurance of the goods and collecting or procuring payment or documents relating to the goods”

Vietnam Commercial Law in 2005 (from article 233 to article 240) regulating Freight Forwarding and Logistics services are “commercial activities whereby traders organize the performance of one or many jobs including reception, transportation, warehousing, yard storage of cargoes, completion of customs procedures and other formalities and paperwork, provision of consultancy to customers, services of packaging, marking, delivery of goods, or other services related to goods according to agreements with customers in order to enjoy service charges.”

1.1.2 Freight forwarders

According to FIATA, Freight Forwarder means the person concluding a contract of Freight Forwarding Services with a Customer According to Vietnam Commercial Law (2005), people doing freight forwarding service as traders who have certified business registration of freight forwarding service

From the above definitions we can draw comments: The forwarding activities under the contract signed with shippers entrusted, to protect the interests of shippers The delivery care about transport, but not exactly be the carriers They can use or hire transport and also have means of transportation, can participate transportation, but for trustee shippers Along with the organization of transport, forwarding people also do many other things in scope mandated by shippers to take the goods from one place to another under the terms already committed Although

in different countries, the name of the delivery people may be different, however we all carry a common name in international transactions as international freight forwarder, and do a similar service, which is service delivery

 The scope of main activities of freight forwarders

A Operating on behalf of the exporter - the shipper

- Selecting means of transport, monitoring entry plan and scheduling receive and deliver cargoes

- Sorting and packing of goods for transport with the most beneficial effects

- Delivering cargoes to the carrier, on yards of the carrier (CY)

- Preparing documents

- Research the basic content of the L/C, the conditions of carriage, research policies in managing import and export goods in order to establish a bill of lading and related documents

- Undertake some other works include: Storage, sorting packaged goods and goods weighing measurement, type the code symbol marks

- Advising people to buy insurance or export under the entrusted of the export insurance

- Taking certificates and insurance policies

- Doing the work related to transportation of customs procedures, logistics, loading, finance, cost, and currency exchange

- Monitoring the transport process through the relationship with the carrier and promptly notify damage to the shipper

B, Operating on behalf of the importer - consignee

- Monitoring and supervising the ship schedules and is expected time to entry ports

- Supervising the transport of goods

- Receiving and checking the related documents

- Arrange the customs formalities, to pay the fee

- Organizations receiving cargoes

- Understand custom produces to advise importers

C, Operations as the carrier

The forwarders may operate as a carrier, which means that they are responsible for receipt, supervision and preservation of goods and responsible for delivering goods

to the consignee on time Given the role of the carrier, the forwarders, after taking responsibility for goods transport, the forwarder is obliged to provide to the shipper

a bill of lading perfect, responsible for goods when the goods are under the responsibility of the carrier

D, Ensure some tasks and other services

- Paying attention to ensure of the transport of goods from a place to another place, mainly as: caring for the transport of oversize and overweight, the transportation of live animals and ensure the safety of epidemic prevention

- Organizing transport of dangerous goods in accordance with the international conventions on transport of dangerous goods

- Apart from the services mentioned above, the delivers can take on other services that may arise during transport and import and export activities such

as inform their customers about consumer demand, competitive situation, the situation changes in the policies of the Government on goods imported and exported

1.2 The rights and obligations of the forwarder

 The rights of the forwarder

- The forwarders have rights to claime wages and reasonable expenses arise under the contract for the benefit of customers on prices and payment

methods for the two sides agreed

- The forwarders have the right to retain or reclaim brokerage commissions

- The forwarders has the right to hold the shipment and documents related to

the goods to ensure that the customer's debt until paid

 The obligations of the forwarder

- Forwarders will perform the tasks completely and accurately as required on

the agreements with their customers in a reasonable time

- In case of not implementing follow the request of customers but perform the tasks in the aim of customer interests, the forwarders do not incur any

liability as well as other costs

- Forwarders are responsible if they do not used all reasonable measures in the implementation of freight forwarding service In this case, the forwarders

have to compensate the customer for the loss and damage goods as well as

for the direct financial losses

- Forwarders are not responsible for acts and shortcomings of third parties, such as the carrier, warehousing, port authorities, unless the freight forwarders are not really carefully in selecting, guiding or monitoring of the

third party

1.3 The relationship of freight forwarder and related parties

As mentioned above, the freight forwarder is a receiver shippers mandate to care of the transportation of goods from one place to another place However, the process of transporting cargoes is controlled many authorities through several stages Therefore, the freight forwarder undertakes the tasks related to multiple parties

Forwarders not only work with the shipper and the consignee but also transactions with third parties in the service process our customers

a The Government and the other department parties

- The Customs office for customs declarations

- Port Authority for carrying out procedures through the Port

- The central bank for exchange

- Ministry of Health for health permits, phytosanitary

- Consular officials to obtain a certificate of origin

- Import Authority controls

- The transport license

b The private party

+ The carrier or other agents, such as:

- Ship owner

- People supplying road, rail, air transportation

- The inland transportation business in terms of schedule and save shipping charges

+ The warehouse to store goods

+ The insurance for goods

+ Organizating packed goods

+ Commercial banks to carry out documentary credit

The diagram below shows the relationship of the forwarding and related parties

Figure 1.1: The relationship between forwarder and related parties

(Source: Collected by author)

1.4.2 International law

The system of international law relating to transportation of goods by sea concluding: Hague Rule 1924, Humburg Rule 1978 and Rotterdam 2010 Another international regulation is Incoterms 2010 standard interpretation of trade terms of

The government and competent authorities

Port authority

Export-import control, Exchange control, Transportation, licesing

Customs authority

Consignor/consignee Forwarder Ship ownerThe carrier and other agents

People supplying road, rail air transportation

Warehouseman Organized packing Bank

the International Chamber of Commerce This basis defines clearly the rights, the obligations and the risk of the buyer and seller in international trade Besides, each nation may build its own law to adjust duties and responsibilities of the parties However, in case of having a conflict, international law would be applied to resolve disputes

1.5 Procedure of freight forwarding for exporting FCL cargoes

1.5.1 The role of freight forwarding of cargoes by sea

Sea transport is essential to the world’s economy as over 90% of the world’s trade is carried by sea and it is, by far, the most cost-effective way to move a large quantity of goods and raw materials around the world Sea transportation plays an important role in transaction of cargoes Without shipping the export of goods on the scale necessary for the modern world would not be possible Seaborne trade continues to expand, bringing benefits for consumers across the world through competitive freight costs Thanks to the growing efficiency of shipping as a mode of transport and increased economic liberalization, the prospects for the industry's further growth continue to be strong

1.5.2 Definition of FCL

FCL stands for Full container load FCL term is used in ocean freight services describing full container shipping from one place to another place Shipments whose volume and weight are close the limits of a container or for which the shipper requests that it be the only cargo in a container

1.5.3 Process of freight forwarding for exporting FCL cargoes

Shipper or person who is entrusted by shipper send Booking request to shipping line Shipping line sends back shipper a booking confirmation Shipper bring the booking confirmation to shipping line to receive seal and take empty containers out of container depot and deliver to their place for cargo packing Shipper invites representative of customs, check and monitors the process of stuffing cargoes to containers then seal container Shipper deliver container to CY before closing time

1.5.4 Documentaries in export

Exporters should seriously consider having the freight forwarder handle the formidable number of documentary that export requires; freight forwarders are

specialists in this process The following documents are commonly used in exporting; which of them are actually used in each case depends on the requirements of both our government and the government of the importing country

* Sale contract: A legal documentary that being signed and agreed officially

between buyer and seller and would become the legal arrangement for both parties when cargoes are transported

* Commercial invoice: Commercial invoice is a bill for goods from the buyer

to the seller A commercial invoice should include basic information about the transaction, including a description of the goods, the address of the shipper and seller, and the delivery and payment terms The buyer needs the invoice to prove ownership and to arrange payment Some governments use the commercial invoice

to assess customs duties

* Bill of lading: A bill of lading is a required document to move a freight

shipment It works as a receipt of freight services, a contract between a freight carrier and shipper The B/L is a legally binding document providing the driver and the carrier all the details needed to process the freight shipment and invoice it correctly

* Certificate of origin: Certain nations require a signed statement as to the

origin of the export item Such certificates are usually obtained through a semiofficial organization such as a local chamber of commerce A certificate may

be required even though the commercial invoice contains the information

* Inspection certification: Some purchasers and countries may require a

certificate of inspection attesting to the specifications of the goods shipped, usually performed by a third party Inspection certificates are often obtained from independent testing organizations

* Insurance certificate: If the seller provides insurance, the insurance

certificate states the type and amount of coverage This instrument is negotiable between the seller and the buyers

* Packing list: Considerably more detailed and informative than a standard

domestic packing list, an packing list itemizes the material in each individual package and indicates the type of package: box, crate, drum, carton, and so on It shows the individual net, legal, tare, and gross weights and measurements for each

package Package markings should be shown along with the shipper's and buyer's references

Documentation must be precise Slight discrepancies or omissions may prevent merchandise from being exported, result in exporting firms not getting paid,

or even result in the seizure of the exporter's goods by local or foreign government customs Collection documents are subject to precise time limits and may not be honored by a bank if out of date The documentation is routine for freight forwarders or customs brokers acting on the firm's behalf, but the exporter is ultimately responsible for the accuracy of the documentation

The number of documents the exporter must deal with varies depending on the destination of the shipment Because each country has different import regulations, the exporter must be careful to provide proper documentation

CHAPTER 2: FREIGHT FORWARDING PROCEDURE FOR EXPORTING FCL CARGOES IN DONG TAI GLOBAL

LOGISTICS AND TRADING CO., LTD

2.1 Introduction about company

2.1.1 General information

- Name of company: Dong Tai Global Logistics and Trading Co., Ltd

- Operational headquarter: 104+200, Nguyen Binh Khiem, Hai An, Hai Phong

- Tel: (84) 313 979356/ 357/ 595/ 351 - Fax: (84) 313 979 494

- Director: Mr Do Viet Thanh

- Tax ID: 0200438841

- Logo:

- Slogan: “One call, all services”

- Main activities: supplying air freight, sea freight, warehousing, inland trucking, project cargoes, customs clearance, supervisor, packing/ lasing/loading service

 History and development

Dong Tai Global Logistics and Trading Co., Ltd is known as a member of Dongsue Logistics Korea The company is officially founded on December 21,

2009 has been operated in accordance with current regulations of the Government The director is Mr Do Viet Thanh

In 2009, the company was officially established, and became an agent of Dongsue After three years of operation, the company has opened an office in Hanoi with the functions of the business office and handling cargo air transport through Noi Bai airports In 2014, with the development of forwarding services, the company oriented to Asian and international markets With world trends and future

vision correctness, the company has been extended to most of port and depot at Hai Phong, international gateway of Vietnam, coordinate partners around the world

From the first operation in 2009 with more than 29 employees, currently, the company has about over 45 employees The company expands not only in scale but also in business operation Therefore, the annual revenue has been rising Although there are many difficulties such as capital and competitors in the market, the company still tries its best to overcome and supply the best service for customers

Until now, the company has only operated over 6 years, this enterprise has successfully demonstrated its business abilities and has met market needs This company has step by step to strengthened and reoriented services and business strategies to suit the situation of country

 Achievements

Some achievements Dong Tai Global Logistics and Trading Co., Ltd gained:

- Become a member of Vietnam Freight - Forwarders Association (VIFFAS)

- Become a member of Vietnam Chamber of Commerce and Industry (VCCI)

- Become a member of International Federation of Freight Forwarders

Association (FIATA)

- Become a member of International Chamber of Commerce

- Become a member of Vietnam Logistics Association (VLA)

 Vision and orientation

Dong Tai Global Logistics and Trading Co., Ltd has oriented to provide the comprehensive solutions about the logistics field during business processes of customers Besides that, the company can increase the competitiveness to ensuring operational, saving cost and improving the quality of services

- Become a diversified company in the logistics field, warehousing and transportation meet all the needs of customers in a more professional manner

- Become a company that provides the optimal logistics solutions to have confidence in customer to become leading enterprises in Vietnam That is premised to support for the company on the way of development, expansion and integration with the economy world

- Human resources work in internationalization criteria to meet the needs of domestic and overseas market

- Completing the supply chain to provide customers the most effective logistics solutions with competitive quality services on the market

- Meet the increasing needs of the business with reasonable cost

- Development professional staff and skilled qualified for logistics

2.1.2 Organization

Dong Tai Global Logistics and Trading Co., Ltd which has organization by functions are presented as the figure 2.1 below

Figure 2.1 Organizational chart

(Source: Dong Tai Global Logistics and Trading Co., Ltd)

Director

Export

Department

Accounting Department

Import Department

Sale Department

Logistics Department

Export

Manager

Import Manager

Chief Accountant