SUGGESTIONS TO IMPROVE CUSTOMER SATISFACTION TOWARDS VAT CACH PORT’S SERVICE QUALITY

VIETNAM MARITIME UNIVERSITYSTUDENT NAME: ĐẶNG TUYẾT MAI DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS SUGGESTIONS TO IMPROVE CUSTOMER SATISFACTION TOWARDS VAT CACH PORT’S SERVICE QUAL

VIETNAM MARITIME UNIVERSITY

STUDENT NAME: ĐẶNG TUYẾT MAI

DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS

SUGGESTIONS TO IMPROVE CUSTOMER SATISFACTION TOWARDS VAT CACH PORT’S SERVICE QUALITY

HAI PHONG – 2015

VIETNAM MARITIME UNIVERSITY

STUDENT NAME: ĐẶNG TUYẾT MAI

CLASS: GMA02

DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS

SUGGESTIONS TO IMPROVE CUSTOMER SATISFACTION TOWARDS VAT CACH PORT’S SERVICE QUALITY

Supervisor: Vu Thi Thu Hang

Division: Global Studies and Maritime Affairs

Faculty: Economics

The work outlined in this dissertation was carried out at VatCach port, where I undertook in internship, over the period fromAugust 2015 to the end of September 2015

I declare that this report is my own unaided work It hasnot been submitted before

If violated, I am solely responsible for and bear thepunishments of the Institution and University

Student Name and Signature

Đặng Tuyết Mai

ACKNOWLEDGEMENT

This internship report would not be completed without thehelp and cooperation of the following people First of all, I wouldlike to express my sincere appreciation and gratitude to Ms Vũ ThịThu Hằng and Mr Vũ Lê Huy for the guidelines given, which werevery helpful for me to understand and prepare the structure of thereport

And I would like to thank all staffs of Vat Cach Port joint stockcompany who gave me necessary help, support and information tocomplete this report successfully

TABLE OF CONTENTS

PREFACE i

ACKNOWLEDGEMENT ii

TABLE OF CONTENTS iii

LIST OF TABLES v

LIST OF FIGURES vi

INTRODUCTION 1

 The importance of research 1

 Target and research scope 2

 Methodology 2

 Research results 2

 Layout of the dissertation 2

CHAPTER 1: LITERATURE REVIEW 3

1.1 Service quality and Port service quality 3

1.2.1 Service quality 3

1.2.2 Port service quality 3

1.2 Customer satisfaction 4

1.3 Relation between customer satisfaction and port service quality 5 1.4 RATER model 6

1.5 Important - Performance matrix 8

CHAPTER 2: CUSTOMER SATISFACTION TOWARDS VAT CACH PORT’S SERVICE QUALITY 11

2.1 Introduction about Vat Cach Joint stock company 11

2.1.1 General information 11

2.1.2 Main services 122.1.3 Facility 12

2.1.4 Organizational structure of Vat Cach Port 142.2 Evaluation of Customer satisfaction towards Vat Cach port’sservice quality 162.2.1 Research method 162.2.2 Analysis of customer satisfaction towards Vat Cach port’sservice quality 19

CHAPTER 3: SUGGESTIONS TO IMPROVE CUSTOMER SATISFACTIONTOWARDS VAT CACH PORT’S SERVICE QUALITY 273.1 Identifying and analyzing prioritized factors that need to beimproved 27

3.1.1 Factor REL3: “The port always provide service in a consistentmanner” 28

3.1.2 Factor REL5: “The port always produces error-free invoice andrelated documents” 283.1.3 Factor A3: “The staff uses the technology quickly and skilfully”

283.1.4 Factor RES2: “The port always provides satisfactory answerstowards any comments” 303.2 Suggestions to improve the service quality of Vat Cach Port 303.2.1 Factor REL3: “The port always provides service in a consistentmanner” 30

3.2.2 Factor REL5: “The port always produces error-free invoice andrelated documents” 313.2.3 Factor A3: “The staff use the technology quickly and skilfully”

31

3.2.4 Factor RES2: “The port always provide satisfactory answers

towards any comments” 32

CONCLUSION 33

REFERENCE 34

APPENDIX – QUESTIONNAIRES 36

LIST OF TABLES

Table 1 Vat Cach port's wharf system 12 Table 2 Quay system 13 Table 3 The number of equipment of Vat Cach Port JSC 13 Table 4 List of variables 17 Table 5 Summary of the customers’ expectation score 19 Table 6 Summary of the customers’ perception score 22 Table 7 Summary of gap score between expectation and perception 24

LIST OF FIGURES

Figure 1 Importance-Performance Matrix 9 Figure 2 Vat Cach JSC headquarter 11 Figure 3 Organizational Structure of Vat Cach Port JSC 14 Figure 4 Distribution of the expectation score of these variables 21 Figure 5 Distribution of the perception score of these variables 24 Figure 6 Importance-Performance matrix of individual variables 27

INTRODUCTION

 The importance of research

It goes without saying that seaports play a vital role in theregional and national economy They are not only the places ofloading/unloading cargoes onto/from vessels but also thedistribution centers where value-added services take place Withthe advantage of locating near the international maritime route,maritime transportation plays a crucial role in foreign cargotrading of Vietnam In recent years, because of the Government’sopen policies as well as the high growth rate of national economy,the amount of cargoes traded through ports in Vietnam hasincreased dramatically The number of ships docking atVietnamese ports also rose, leading to the high demand forservices supporting for those ships Although the volume ofexporting and importing cargoes through Vietnamese portsincreased rapidly, especially containerized cargoes, majority ofVietnamese ports are still considered not to utilize their capacity.The location of port, quality of equipment and facility as well asthe production management in port and transportation are theelements causing the delay of ships docking at Vietnamese ports,reducing cargo handling capacity, hence reducing the attraction ofVietnamese ports to ships from outside In addition, Vietnameseports also reveal several drawbacks, namely the outdatedequipment and facility which have been used for years withoutbeing invested to upgrade or improve Consequently, thoseequipment and facility are easy to be broken and cost a long timefor repairing Other related factors can be named as the relativelyhigh price and staff with insufficient ability in handling cargoes,causing loss or damage to cargoes and low level of satisfactionamong customers

During the time doing internship at Vat Cach Port Join StockCompany, by interview and through self-observation, I noticed thatthe company is well aware of the importance to improve servicequality in order to acquire higher satisfactory level among their

customers However, there has not been any researches on thisfields before Therefore I decided to choose this issue of improvingcustomer satisfaction towards Vat Cach Port’s service quality to be

my topic for dissertation

Contemporarily, there have already been a number ofresearches looking into topics such as, the importance of seaports

in general or the measurement of port efficiency However,research on the impacts of port service quality’s constituents oncustomer satisfaction has not yet been well-investigated.Therefore, researches on port service quality in general andcustomer satisfaction towards port service quality in particularwhen conducted are significant in both theory as well as practice

 Target and research scope

Target of dissertation: This paper will assess the level ofcustomer satisfaction towards Vat Cach Port’s service quality andoffer some suggestions to improve the situation

Scope of dissertation: This paper focuses only on the portservice in Vat Cach Port, Haiphong city and uses data in 2015

 Research results

The results of the analysis carried out showed that theservices provided by Vat Cach Joint Stock Company has not metthe expectation from their customers as the expectation scoreexceeded perception score And from the I-P matrix, there are 4prioritized factors for improvement

 Layout of the dissertation

Chapter 1: Introduction about Vat Cach port

Chapter 2: Methodology

Chapter 3: Evaluation and suggestions to improve Vat Cachport’s service quality

CHAPTER 1: LITERATURE REVIEW

1.1 Service quality and Port service quality

1.2.1 Service quality

There are various definitions for the concept Service and eachresearcher holds a different perspectives Philip Kotler believesthat service involves the act of performance as well as the resultsthat one party can provide to another but does not lead to theownership of anything The products of this act may or may not berelated to a physical product Glossary of financial economicsdefines ‘service’ as an action or effort performed to satisfy a need

or to fulfill a demand of individuals or collectives but different fromthe exchange of ownership of any material goods [ CITATION Ser \l

1033 ]

In general, products of a service are characterized by beingintangible, cannot be measured precisely, difficult to controlquality and vary according to customers’ needs Customersreceive products of a service through communicative activities,information and feelings More importantly, customers can onlyassess a service after having bought and used its products;therefore, validating service quality is perceived as subjective anddependent on attitudes and ability to identify According to thestudy of Parasurman, Zeithaml and Berry, service quality isperceived as the conclusion of a comparison between customer’sexpectations and the actual service performance [CITATION Aco85

\l 1033 ] This perception shows that service quality is related tocustomers’ expectations and awareness about the service

1.2.2 Port service quality

It is commonly accepted that the main duty of ports ishandling cargoes However, nowadays, the business areas of portshave been expanded Apart from handling cargoes, ports canrepresent ship owners and cargo owners to carry out other works

relating to cargoes, such as, distributing and monitoring the cargotransportation process

It is hard to find a specific definition for port service, eitherinternationally or within Vietnam Due to the characteristics of thisservice in general as well as the diversity and complexity of portservice in particular, it is quite challenging to give a generaldefinition for this type of service During the implementationprocess of European Union’s General Agreement on Trade inServices (GATS), the Union sent requests to members in which thesupport services for maritime transportation were defined in detail

In this document, port service includes cargo handling service,cargo warehousing service, custom clearance service, containeryard service, maritime agency service

On 11th December, 2001, Chinese government issued Decree

No 335 - Regulations of the People's Republic of China onInternational Maritime Transportation to adjust legal relationshipsrelated to international maritime shipping business as well asservices provided by Chinese ports In Article 2 of this decree, portservices include international maritime agency service, shipmanagement, cargo handling, warehousing services for exportingcargoes, bulk cargoes and containerized cargoes forwardingservices, non-vessel-operating service and some other services.[CITATION Placeholder1 \l 1033 ]

According to Vietnamese government’s Decree No.30/2014/ND-CP on conditions for sea shipping sea shippingsupport service business of April 14th, 2014 regarding businessconditions for maritime service provisions, port services includeshipping agency service, sea transport agency service, maritimebrokerage service, ship supply service, cargo tallying services,towage service, ship repairing at port service, ship cleaningservice, cargo handling at ports service, international containertransshipment service, logistics service, non-vessel-operatingservice and maritime cargo warehousing service

1.2 Customer satisfaction

Customer satisfaction is essential for business success intoday's marketplace There are many ways to define customersatisfaction, depending on the characteristics of the market inwhich a firm is operating in However, there are several ways todefine customer satisfaction generally According to the Businessdictionary, customer satisfaction is the satisfactory degree of thegoods or services provided by a company as measured by thenumber of repeat customers [ CITATION Bus \l 1033 ]

Customer satisfaction is a measure showing how products orservices provided by a business can meet or surpass theexpectation of their customers Customer satisfaction isconsidered as the number or the proportion of total customers whohave perception towards a company together with its products, orservices exceeds satisfaction goals [CITATION Far10 \l 1033 ]

Customer satisfaction is an abstract concept involving manyfactors which can be named as product/service quality,atmosphere of the location where the product or service ispurchased, and the price of the product or service Businessowners often carry out surveys to gauge customer satisfaction.Customer satisfaction is considered an important factor to anyfirm because it provides business owners with a metric used tomanage and improve their businesses It is generally admitted bymarketing managers that a customer satisfaction metric is veryuseful in managing and monitoring businesses Customersatisfaction can be seen as a key performance indicator in anybusiness, and sometimes it is considered as a key differentiatorwhen it comes to a competitive marketplace

1.3 Relation between customer satisfaction and port service quality

It can be said that the primary target of service providers is tosatisfy their customers’ needs in order to generate profits

Customers will continue using the services if their requirementsand expectations can be met There are a force of serviceproviders assume that service quality and customer satisfactionare the same concepts The opponents of this idea, however, hold

a strong belief which has been proven through several researchesthat service quality and customer satisfaction are two separatedconcepts Customer satisfaction is an extensive concept revealingcustomers’ feeling and assessment while using the service.Meanwhile, service quality only focuses on particular elements ofservice [ CITATION Zei00 \l 1033 ] In order to measure howsatisfied the customers are, both customer’s expectation andcompany’s performance should be taken into account [ CITATIONNig03 \l 1033 ] Specific requirements of customers, which are thecriterias influencing their satisfaction, need to be determined.Subsequently, the performance of the company when providingthe services should be evaluated in order to see to what extendthe service satisfies the expectation of customers

So far there have been a number of studies developing andvalidating the relationship between service quality and satisfactionlevel of customers in many service sectors Nonetheless, thenumber of research examining the explanatory level of servicequality’s factors for Customer satisfaction, especially in themaritime sector, is still scant and deserves further investigations

1.4 RATER model

Currently, there are several research models about Servicequality, among which the SERVQUAL (Parasuraman, 1985),SERVPERF are two of the most popular In the field of maritimetransport and logistics, researchers prefer the SERVQUAL andROPMIS, a measurement model developed and validated by Thai(2008), consisting of six dimensions: ‘resources’, ‘outcomes’,

‘processes’, ‘management’, ‘image’ and ‘social responsibility’.Apart from the aforementioned models, the RATER is anothermodel that can be applied to measure customer satisfactiontowards port service quality In this study, the RATER model is

adopted with measurement items revised specifically to the portsector.

The RATER Model was created by professors Valarie Zeithaml,

A Parasuraman, and Leonard Berry, and published in their 1990book, "Delivering Quality Service." The model is a simplifiedversion of the SERVQUAL Model, which was first created in 1988.The RATER Model highlights five areas that customers generallyconsider to be important when they use a service, includingReliability, Assurance, Tangibles, Empathy and Responsiveness.Focusing on these five areas can help an organization analyze andimprove the service it offers to customers

It is suggested that there are ten criteria and dimensionsthrough which service quality can be measured (Anber & Shireen,2011), namely the followings:

 Reliability: relates to the ability of an organization toaccurately perform the services which it promises to itsclients in the proper time

 Responsiveness: refers to the tendency and willingness ofservices providers to meet the needs of customers,immediately reply to their questions, and solve theirproblems as quickly as possible

 Competence: means that the employees of the organizationshould have adequate skills and knowledge in order toachieve their service properly

 Accessibility: Company should provide easy access to aservice in terms of location and any other means ofcommunication

 Courtesy involves the respectful, friendly and polite treating

of employees to the clients, the well-understandings of theirfeelings,etc

 Communication: includes listening to clients, conveyinginformation to them clearly, and facilitating externalcommunication with workers

 Credibility: can be achieved through full trust and confidence

in the service provider as well as his honesty and straightforwardness

 Security: depends on whether the service is free from risksand hazards, defects or doubts so that it provides bodilysafety, financial security as well as privacy

 Understanding/ knowing the customer: can be achievablethrough the ability to pinpoint the customers' needs as well

as understanding their individual problems

 Tangibility: includes physical aspects connected with servicesuch as instruments and equipment, persons, physicalfacilities like buildings and nice decoration and otherobservable service facilities

Tangibility, reliability and responsiveness are consideredconstant dimensions, whereas; the criterion of 'Assurance' canincludes courtesy and security As for as 'Empathy', it includeselements like providing service in terms of place, time,communication, and to some extent the service provider shouldunderstanding the customers

Later on, researchers have integrated the aforementioned tendimensions into only five These five dimensions is the RATERmodel including the followings [ CITATION MindToolsEditorialTeam \l

- Probity and confidentiality

- Safety and security

 Tangibles: is the physical representations or images of yourservice involving:

- Access (to staff, services, information)

- Communication (clear, appropriate, timely)

- Understanding the stakeholder

- Services appropriate for stakeholders’ needs

be conducted Gap Analysis is useful to help researchers identifythe gap between the current situation and the future state thatthey want to reach The current situation of the company refers tothe perception scores while the future state that a service providerwants to reach to is related to the expectation scores Both ofthese scores are assessed by the customers through a surveyconducted by the service providers By subtracting the expectationscores from the perception scores, the service quality gap scorescan be obtained Positive gap scores indicate that customers’perception exceeds their expectation Negative gap scores implythat customers’ expectation is not met by provided services

Service Quality (Q) = Mean score of Perception (P) – Mean score ofExpectation (E)

1.5 Important - Performance matrix

Importance-Performance Analysis (IPA) is a part of marketingresearch techniques that involve the analysis of customerattitudes toward a product or service and has been applied inseveral markets Importance-Performance Analysis was firstproposed and introduced by Martilla and James (1977) as a mean

to measure client satisfaction with a product or service The IPAapproach recognizes satisfaction as the function of twocomponents: the importance of a product or service to a client andthe performance of a business in providing that service or product[ CITATION Mar77 \l 1033 ] In this way, IPA examines not only theperformance of an item, but also the importance of that item as adetermining factor in satisfaction to the respondent (Silva &Fernandes, 2010) The combined client ratings for those twocomponents then provide an overall view of satisfaction with cleardirectives for management and where to focus agency resources.This method was considered to be a generally applicable toolwhich is relatively easy to administer and interpret resulting inextensive use among researchers and managers in various fields,and is a way to promote the development of effective marketingprograms, because it facilitates the interpretation of data andincreases usefulness in making strategic decisions [ CITATIONSla94 \l 1033 ][ CITATION Mat03 \l 1033 ] [ CITATION Aba07 \l

Figure 1 Importance-Performance Matrix

(Source: Adapted from Martilla & James, 1977, p 78)

The IPA consists of a pair of coordinate axis where the

‘importance’ (y-axis) and the ‘performance’ (x-axis) of the differentelements involved in the service are compared Each of thequadrants combines the importance and the performanceassigned by the customers/user given element of the service andpossesses a different value in terms of management and therespective mean of self-stated raw importance and attributeperformance data is the original point of this IPA matrix (Martilla &James, 1977) Each quadrant suggests a different marketingstrategy

The four quadrants in importance-performance analysis arecharacterized as (Martilla & James, 1977, p 78):

- “Quadrant A Concentrate here - high importance, lowperformance: requires immediate attention for improvementand are major weaknesses;

- Quadrant B Keep up with the good work - high importance,high performance: indicate opportunities for achieving ormaintaining competitive advantage and are major strengths;

- Quadrant C Low priority - low importance, low performance:are minor weaknesses and do not require additional effort;

- Quadrant D Possible overkill - low importance, highperformance: indicate that business resources committed tothese attributes would be overkill and should be deployedelsewhere”

CHAPTER 2: CUSTOMER SATISFACTION

TOWARDS VAT CACH PORT’S SERVICE QUALITY

2.1 Introduction about Vat Cach Joint stock company

2.1.1 General information

Implementing Govenrment’s policies of transitting theeconomy from centrally-planned economy to market economy, HaiPhong Port has splitted Vat Cach Stevedoring Enterprise fromHaiphong Port On March 07th, 2002 by Decision No.2080/2002/QD-BGTVT of the Minister of Transport, Vat CachStevedoring Enterprise officially became Vat Cach Port Joint StockCompany The company was founded with an initial capital ofapproximately 12 billion VND with 30% of the capital was from thegovernment, while the remaining 70% was owned by theshareholders who are leaderships and employees in company VatCach port joint-stock company is a company under VietnamNational Shipping Lines The company’s headquarter is at 9th Km,National Road No.5, Quan Toan ward, Hong Bang district, HaiPhong city The port is located far from the city center, on the rightbank of Cua Cam River, 12 km to the upstream side of Haiphong.The highest water level of the port is 4m and the lowest tide level

is 0,48m Vat Cach port’s waterways are limited due to large silt,therefore, the port has to dredge annually to unfreeze the flow sothat ships can go in and out easily

Figure 2 Vat Cach JSC headquarter

Vat Cach Stevedoring Enterprise began constructing in 1968.The Port used to be under control of Hai Phong Port and located faraway from the center of city Thus, in the renewal process, theEnterprise had some difficulties and the technical facilities werebackward Thanks to the attempts of leaders and staffs, theEnterprise was successfully renovated The Enterprise startedbuying more equipment and upgrading the technical facilities inorder to make the handling cargoes service more effective andmeet the demand of market and customers

- Warehouse and yard for lease

- Shipping agency and forwarding services through the port

- Multimodal transport

- Trading in construction materials, petroleum and mechanicalrepair service

The main business operations of the port are cargo handlingservice, transporting and storing; inspection of goods and othershipping services upon request of customers.

2.1.3 Facility

2.1.3.1 Wharf system L= 375 m (Used for barges and

vessels from more than 2.000 to 3.500 DWT)

Table 1 Vat Cach port's wharf system

Name/Column Length Depth Category/Cargo type

 Yard: 130,000 m2 (Container yard: 12,000 m2)

 Total capacity: 35,000 Metric Tons (MT)

2.1.3.3 Navigation channel

 Length: 12 nautical miles Depth: -3.9m to -4.1m

 Tidal model: Diurnal

 Average tidal range: 1.2 m

 Maximum size of vessel accepted: 4,500 DWT

2.1.3.4 Quay system:

Table 2 Quay system

Quay/Numbe

r Length (m) Depth (m) ships/products Types of

Quay No.4 63 -3,5 General

(Source: General Coordinate Department – Vat Cach Port JSC 2009)

2.1.3.5 Equipment:

Table 3 The number of equipment of Vat Cach Port JSC

Types Quantity Lifting/loading capacity

The structure of company is organized according to the directstructure from director to the departments, workshops, and teams

Thereby, the management function is specialized and the ability ofthe leader in each field is maximized

Đặng Tuyết Mai – GMA02 Page 16

Deputy Technical Director

Deputy Internal Affairs Director

Shareholders’ Meeting

Chairman of the Managing Board – Director

Deputy Operating Director

Board of Supervisors

Planning

Departme

nt

Bureau of Administration

Finance and Accounting

Technical Department

Constructio

n Department

Moderatio

n room Warehouse Security room

(Source: General Coordinate Department – Vat Cach Port JSC)

2.1.4.2 Functions and duties of each department

General meeting of shareholders is the highest decision organ

of the company including the shareholders with voting rights.General meeting of shareholders meets at least once a year,within no more than 120 days after the fiscal year end

Board of Supervisors is elected by Shareholders’ Meeting On

be half of the shareholders, the board of supervisors is in charge ofcontroling all operations, administration and management of thecompany in order to guarantee the legitimate benefits of theshareholders

Chairman of the Managing Board – Director is the leader of thecompany who bears the full responsibility in front of VietnamNational Shipping Lines and the government about all businessactivities of the company Director also bears responsibility in front

of the company about plans, targets, business and productionstrategies, and checking the operation of the company

Deputy Directors are appointed and dismissed by the board ofdirectors The deputy directors are assistants of the director, are

Figure 3 Organizational Structure of Vat Cach Port JSC

authorized or responsible in some areas of professionalmanagement.

Deputy Internal Affairs Director is the person who undertakespersonnel of the company, policies and salary of staffs,administers administrative documents, synthesizes and reportsabout personnel, security to Director

Deputy Technical Director represents Director to monitortechnical issues of the company when Director leaves DeputyTechnical Director is in charge of improving the technique andutilizing technical scientific achievements to enhance theproductivity Another duty of Deputy Technical Director is checkthe equipment and maintain it frequently

Deputy Operating Director is a person who is in charge ofsteering handling cargo, and managing forwarding cargo at thePort Deputy Operating Director also carries out signed contractswith shipper and ship owner

Warehouse: Chief warehouse manager is the personresponsible before the Director, manages directly the staff atwarehouse area to receive and arrange cargoes safely andaccurately; deliver enough cargoes to their owners in principle andcurrent procedures within the unit of a specific warehouse Chiefwarehouse manager is also responsible for organizing shifts duringthe day, guiding teams of workers to unload cargo arranged inbatches and according to shippers in the right technologicalprocess and plan of the warehoue Warehouse manager shouldactively propose proactive protection plans and cooperate withself-defense force to build and conduct fire protection plan,industrial hygiene and storage rules

2.2 Evaluation of Customer satisfaction towards Vat Cach

port’s service quality

2.2.1.1 Description of the data