RECOMMENDATIONS TO PORT SERVICE PRICING FOR CONTAINER CARGOESIN THE PORT OF HAI PHONG JOINT STOCK COMPANY

VIETNAM MARITIME UNIVERSITYSTUDENT NAME: VU THI TUYET DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS RECOMMENDATIONS TO PORT SERVICE PRICING FOR CONTAINER CARGOES IN THE PORT OF HAI PH

VIETNAM MARITIME UNIVERSITY

STUDENT NAME: VU THI TUYET

DISSERTATION

GLOBAL STUDIES AND MARITIME AFFAIRS

RECOMMENDATIONS TO PORT SERVICE PRICING FOR CONTAINER CARGOES IN THE PORT OF HAI

PHONG JOINT STOCK COMPANY

HAI PHONG – 2015

VIETNAM MARITIME UNIVERSITY

DISSERTATION

GLOBAL STUDIES AND MARITIME AFFAIRS

RECOMMENDATIONS TO PORT SERVICE PRICING FOR CONTAINER CARGOES IN THE PORT OF HAI PHONG

JOINT STOCK COMPANY

Supervisor : MSc Hoang Thi Lich

Division : Global Studies and Maritime Affairs

HAI PHONG – 2015

Port not only plays an important role in the circulation of goods but also becomesthe gateway connecting nation with the world Thanks to the economic developmentand the increasing trade of goods among regions and countries, the port providesdifferent types of services to meet the increasing demand of the international andnational economy Port service price is one of the most essential nodes of port toattract more customers and enhance competitive ability, and port’s attractiondepends significantly on not only service quality but also port service price Portservice price is one of the concerned criteria which impacts to the satisfaction ofcustomers who use the port services Therefore, port pricing is associated with theprediction of demand, investment decisions and developed strategies of port Thisdissertation will present and the price system and pricing method of the Port of HaiPhong joint stock company to meliorate the price system of the Port of Hai PhongJoint stock Company to strengthen competitive ability I am responsible for myreport and ensure that this is my own If I violated about copyright infringement, Iwill be punished by university and department

Student

Vu Thi Tuyet

During the period of practicing time in the Port of Hai Phong Joint Stock Company,

I received the guidance from Master of art Hoang Thi Lich, leader and all the staffs

of the Port of Hai Phong Therefore I acquired more knowledge for my dissertationand future job

First of all, I would like to thank to instructor “Master of Art Hoang Thi Lich” whohelped me and guide me a lot to complete this report I am looking forward toassessing and commenting from teachers for my report This helps my dissertationbecome better

I would like to express my sincere gratitude to the leader and all the staffs of thePort of Hai Phong for the helps to my research, for their patience, motivation, andimmense knowledge Their guidance helped me in all the time of research andwriting of this dissertation

TABLE OF CONTENTS

PREFACE i

ACKNOWLEDGEMENT ii

LIST OF ABBREVIATIONS v

LIST OF TABLES vii

LIST OF FIGURES viii

INTRODUCTION 1

CHAPTER I: LITERATURE REVIEW 3

1.1 Port services for container cargoes 3

1.1.1 Port services 3

1.1.1.1 Port service definition 3

1.1.1.2 Classification of port services 3

1.1.2 Container cargoes 5

1.1.2.1 Container cargoes definition 5

1.1.2.2 Port services for container cargoes 5

1.2 Port service pricing 6

1.2.1 Port service price 6

1.2.1.1 Definition 6

1.2.1.2 Factors affecting to the port service price 6

1.2.2 Port service pricing 9

1.2.2.1 Principles on port service pricing 9

1.2.2.2 Port pricing method 9

CHAPTER II: PORT SERVICE PRICING FOR CONTAINER CARGOES IN THE PORT OF HAI PHONG JOINT STOCK COMPANY 12

2.1 General introduction of the Port of Hai Phong JSC……… 12

2.1.1 History of Hai Phong Port Joint Stock Company 12

2.1.2 Infrastructure 13

2.1.2.1 Navigation channel 13

2.1.2.2 System of berths 13

2.1.2.3 Storage system 14

2.1.2.4 Equipment 14

2.1.4 The business result of the Port of Hai Phong Joint Stock Company 18

2.1.5 Development plan of the Port of Hai Phong Joint Stock Company 21

2.2 Port serice pricing method for container cargoes in the Port of Hai

Phong Joint Stock Company 22

2.2.1 The service price system for container cargoes being applied in the Port of Hai Phong JSC 22

2.2.1.1 The price of 3 main services for container cargoes 23

2.2.1.2 The prices of other services for container cargoes 26

2.2.2 Port pricing method for container at the Port of Hai Phong JSC 26

2.2.2.1 National regulations and private regulations on port pricing 26

2.2.2.2 Port pricing method 29

2.2.2.3 Example of port service pricing for container handling 31

2.3 Evaluations to port service price system and port service pricing method for container cargoes of the Port of Hai Phong JSC 33

2.3.1 Advantages 33

2.3.1.1 Stable price system 33

2.3.1.2 Concise pricing method 33

2.3.2 Disadvantages 34

2.3.2.1 Limitations of domestic and foreign pricing 34

2.3.2.2 Limitations of pricing method 37

CHAPTER III: RECOMMENDATIONS TO PORT SERVICE PRICING FOR CONTAINER CARGOES IN THE PORT OF HAI PHONG JOINT STOCK COMPANY 39

3.1 Recommendations to the Port of Hai Phong Joint Stock Company .39 3.1.1 Recommendation to pricing method 39

3.1.2 Recommendation to implementation scope 39

3.1.3 Recommendation to implementation time 40

3.1.4 Recommendation to pricing strategy 40

3.1.5 Recommendation to application of IT system 41

3.2 Recommendations to authorities 41

3.2.1 Recommendation to the Ministry of Transport 41

3.2.2 Recommendation to the Ministry of Finance 41

3.2.3 Recommendation to the Viet Nam seaports Association 42

CONCLUSION 43

REFERENCES 44

FIATA International Federation of Freight Forwarders Associations

VINALINES Viet Nam National Shipping Lines

LIST OF TABLES

Table 1.1: Port services for ship and cargo……….4

Table 1.2: Direct services and intermediary services of port ……….4

Table 1.3: Advantages and disadvantages of each port pricing method ………… 11

Table 2.1: The navigation channel of the Port of Hai Phong ……… 13

Table 2.2: Key area at berth of the Port of Hai Phong ……….13

Table 2.3: Equipment of the Port of Hai Phong Port Joint Stock Company……….15

Table 2.4: Cargoes throughput of the Port of Hai Phong Joint Stock Company from 2011 to 2014……… 18

Table 2.5: The performance indicators of the Port of Hai Phong Joint Stock Company in 2014……… ………20

Table 2.6: The domestic price and foreign price of warehousing service for general container………23

Table 2.7: The price of warehousing service for reefer container………23

Table 2.8: Price of container handling of the Port of Hai Phong ….………24

Table 2.9: The price of packing goods on container and withdrawing goods out of general container……… 25

Table 2.10: The price of packing goods on container and withdrawing goods out of reefer container……….25

Table 2.11: Price of container weighing at the Port of Hai Phong Joint Stock Company……… 26

Table 2.12: Price of container transport inside the port………26

Table 2.13: Price of container inspecting……… 26

Table 2.14: The rate of salary deductions……….31

Table 2.15: The price of container handling at the Port of Hai Phong JSC

……… 33Table 2.16: The comparison between domestic price and foreign price ofwarehousing service for container………34Table 2.17: The comparison between domestic price and foreign price ofstevedoring service for container……… 36

LIST OF FIGURES

Figure 2.1 Organization diagram of the Port of Hai Phong JSC………… 16Figure 2.2: Total cargoes throughput of the Port of Hai Phong Joint Stock Companyfrom 2011 to 2014……….………19Figure 2.3: Total container throughput of the Port of Hai Phong Joint StockCompany from 2011 to 2014………19Figure 2.4: The comparison between domestic price and foreign price ofwarehousing service for general container………35

1 Necessity

In the process of economic integration and globalization, liberalization ofinternational trade, Viet Nam makes effort to implement open-door policy to enrichinternational relations Maritime sector plays a vital role in the development of theeconomy of country More than 90 percentages of imported and exported cargoesare transported by sea In addition, container is considered as a great revolution inthe marine industry because transporting by container helps the volume of goodstraded worldwide increase With the scientific and technological development,transporting containers on super vessels is no longer strange Annually, around 72%

of containers throughput went to the southern ports of Vietnam and 26% ofcontainers throughput went to the northern ports [CITATION Van09 \l 1033 ].However, with open-door policy and the rapid growth of seaports especiallycontainer terminals, Viet Nam still is not able to gain competitive ability compared

to other ports in the region such as Singapore, Hong Kong and Bussan port…because of issues related to port service price for container cargo Port servicespricing for container cargo has long been a controversial issue concerning a largenumber of ship-owners, shipping companies and ports

There are several distinctive gaps in the price system of port services for containercargoes in the port of Hai Phong port joint stock Company in particular and in otherports of Viet Nam in general Firstly, the port service pricing for container cargo isnot based on a systematic and specific method Secondly, there has existed thediscrimination between domestic price and foreign price in the port services Thedisparity between domestic price and foreign price is considerable, leading to theinequality between domestic shipping lines and foreign shipping lines Thisalleviates the attraction of the Vietnamese ports in the context of economicintegration and trade liberalization It is necessary that pricing port service forcontainer cargoes need to study rigorously and deeply

Via the study on systematic issues related to port services pricing for containercargo, I will refer to some recommendations to port pricing for container cargoes inthe Port of Hai Phong in order to not only ensure economic benefits for port andcustomers but also enrich competitive ability of port in the globalization era

2 Research objective

The objective of research is to standardize the port price system and port pricing atthe port of Hai Phong JSC, especially improve the price system for each kind ofservice of container cargoes based on cost foundation and other factors to computesufficiently to enhance competitive ability in the regions and the world

3 Research scope

Research scope focused on the Port of Hai Phong Joint Stock Company Researchscope is limited in the port service prices for container cargoes at the Port of HaiPhong JSC from 2010 to 2014

of Hai Phong in the future in order to minimize the disadvantages of old methodused in the Port of Hai and ensure that the new method of port service pricing could

be suitable with practical market

CHAPTER I: LITERATURE REVIEW

1.1.1 Port services

1.1.1.1 Port service definition

According to the traditional view, the main task of the port is stevedoring, however,according to the modern view, the business field of the port is expanded, the portnot only provides cargoes stevedoring service but also provides many differentservices related to the distribution of cargoes such as supervising the cargoestransported to the final destination

According to Britannica dictionary, port service is an industry that providesinvisible or tangible objects for customers who are ship-owner, shipping agency,cargoes- owner and consignee trustees There are no specific concepts and fullydefinition about port services in Britannia dictionary, port services are defined thatport economics activities are service industry which provides the equipment orfacilities of port for cargoes handling and ship docking Overall, it is very difficult

to define exactly and fully in terms of “port service”

The world in general and Vietnam in particular have not given an specific definition

of port service because of the diversification of port service which always changeand transform to the needs of the market

Each country has a different explanation about the definition of seaport services Inthis dissertation, the port services are defined by the world trade organization(WTO): “Port services are the use of port resources including infrastructure andfacilities, labor forces to provide service toward vessel, cargo and passenger forcustomers Port plays a role as a supplier and ship-owner, shipping agency, cargoowner and consignee trustee are considered as a customer”[ CITATION WTO91 \l

1033 ]

1.1.1.2 Classification of port services

According to the provision 1 of the decree 10/2001/ND-CP of the Governmentdated on March 19th 2001 about the classification of port services Port services aregrouped according to the objects served and the nature of service[CITATIONGov01 \l 1033 ]

(a) Port services classified according to the objects served

Table 1.1: Port services for ship and cargo

(b) Port services are classified according to the nature of service

Table 1.2: Direct services and intermediary services of port

- Ship-broker: middleman signs the contracts related

to maritime activities requested by the cargo-ownerunder each specific contract For example, cargoinsurance contract, cargo transport contract

- Non-vessel operating common carrier (NVOCC):According to Decree 335 of China, “NVOCC is thecarrier receiving cargoes from the shipper and issuing

a B/L or other documents of their own, thenarranging transportation process through otherinternational carriers and taking responsibility forthose cargoes with customer as the actualcarrier”[CITATION Dec01 \l 1033 ]

1.1.2 Container cargoes

1.1.2.1 Container cargoes definition

According to ISO No.668 about container characteristics, container is considered as

a kind of special cargo which plays an important role as a transport tool, container is

a box in which goods can be stored and transported Container is designed withsustainable and strong characteristics to be suitable with the re-use Container is

specially designed for purpose: container cargoes are shipped by different modes oftransport Equipment installed of container enables convenient handling,particularly when container is transferred from a mode of transport to other modes

of transport It is designed for easy packing or withdrawing goods out of thecontainer; with volumes equal to 1or more cubic meter[ CITATION ISO91 \l

1033 ] There are seven kinds of containers following ISO standard: Generalpurpose container, bulk container, named cargo container, reefer container, open-top container, platform container, and tank container

1.1.2.2 Port service for container cargoes

 Service of container stevedoring:

- Stevedoring container from a Ship (barge)  CY

- Stevedoring container from a Ship (barge)  truck, barge at wharf

- Stevedoring container from Ship’s hold  barge or another ship at waterarea

- Other modes of handing (according to requirement of customer)

 Service of warehousing container including general container and reefercontainer:

- Service price for general container is calculated according to the number ofday container stored at the warehouse or CY of port

- Service price for reefer container is calculated according to the number ofhour port running electricity for container

 Service of putting goods on container and withdrawing goods from container:

- Packing goods on container/withdrawing goods in container from CY truck

- Packing goods on container/withdrawing goods in container from CY ship/ wagon/ barge before transporting goods to the warehouse of port

- Putting /withdrawing goods from one container at CY  other container atCY

 Container forwarding: is the container transportation service to destination, inwhich freight forwarder sign contract with shippers, also signed contract withthe carrier to perform the service[CITATION FIA \l 1033 ].

 Container weighing: is the service requested by customer, container istransported to weighing station for weighing to check the actual weight of thecontainer to meet the provisions of the Health, Safety and the Law Other wises,container weighing service help ship-owner to prevent situation - withdrawinggoods out of container

 Container cleaning and repairing: is the hygiene service for empty container,cleaning container shell - warning stamps, deodorizing chemical poison toensure sanitation for container to re-use [ CITATION MAE15 \l 1033 ]

1.2.1 Port service price

1.2.1.1 Definition

According to the textbook of port economics published in 2015, the term “portservice prices” is briefly named “port prices” It is difficult to define “port prices”.The port prices are defined by the definition of port service price for vessel, cargoand passenger Port prices are the price applied for cargo, vessel, and passenger

“Port price for passenger” is called port ticket price and often combined with trainticket price “Port price for cargo” is price paid by cargo-owner for port when usingfacilities and equipment of port to handle cargoes “Port price for vessel” is pricepaid by ship-owner for port when docking at berth and using port services includingship’s hold hygiene, mooring and unmooring, ship escort [CITATION Uni15 \l

1033 ]

The services price which is the prices established by service provider is negotiatedbetween service provider and customer The port services price is the price which ispaid for port by customers who are ship-owners, ship-agency, cargo-owners andtrustees Port service price is divided into two types which are port service price infact, the port service price based on real cost

1.2.1.2 Factors affecting to the port service price

(a) Environmental pollution factor

A port need to consider the impacts from outside factors the port's activities affectthose who do not use the port services If the external impact is negative, peoplewho do not use port services will bear the cost of this external influence rather thanport operators One of the typical examples is the cost of air and water pollution.Ship docking to the port causes air pollution when the ship engines are run to supplyelectricity for ships Ship causes water pollution because ship emits the toxic fromship ballast water to at the port area Air pollution affects to the health of peopleliving around the port Ballast water can contain strange animals and plants fromforeign ports where ship ran through, also this strange animals and plants may haveadverse effects on local animals and plants Therefore, people who do not use portservices (those live near the port area) must bear the cost of environmental cost.

It is supposed that port operators seek out the effective operation target to maximizenet profit of port services, and in which the port service price are applied according

to marginal cost However, if the port must bear the environmental costs whenproviding port services, port services price according to marginal cost do not play arole in maximizing the net profit of port services

In case of port service prices affected by the environmental cost, to achieve thetarget of maximizing net profit, the environmental costs of port must also reflectsthe variable costs of the port, or in other words the price according to theenvironmental costs must reflect the marginal social cost (the internally marginalcost and externally marginal costs) Therefore, a port is capable of achieving target

of effective exploitation as well as maximizing net profit of port services when PortAuthority requires the port operators to take responsibility for the environmentalcosts or Port Authority collects charges of those who cause pollution For example,the activeness of the port operators for the environmental costs will have positiveeffect if imposing the polluted tax on heavily polluting ships (this tax is equivalent

to the externally marginal cost) to remediate pollution

(b) Congestion factor

Port congestion incurs when people using port services are intervened by the use ofother resources of the port, therefore service time in port will increase (Service time

is the time the ship stays at the berth whether it works or not)

Port congestion may be spontaneous or intentional Intentional congestion incurswhen the port has the priority, for instance port has the priority in serving ship and

transport vehicles inside the port for a special kind of cargo rather than serving shipand transport vehicles of other cargoes Spontaneous congestion occurs in anynormal exploitation activities of the port.

When port is congested, it will lead to increase in a range of costs such as cost ofdetention of the vessel, the cost of waiting time , and the import-export businessenterprises have to suffer from these costs so that it can reduce the profit ofbusinesses Frequent and prolonged congestion at port will decrease the competitiveability of ports in transshipment service which considerably contribute to revenuefor the State budget[CITATION ToT08 \l 1033 ] Cost for the time a ship waitingfor an available berth (or cost of waiting of ship to be served) is the highestcongestion costs which incur when demand exceeds supply Congestion at berthoccurs when the ship must wait to be docked at berth because that berth also servesanother vessel [ CITATION Vie13 \l 1066 ] Congestion due to handling cargoesoccurs when a vessel docking at berth must wait to be handled until another vesselended the process of cargo handling when resources for stevedoring the ship islimited

Congestion at the port gates occur when transport vehicles enter or go out the portgate, and congestion at port gate occurs when loading and unloading cargoes ontotrucks and trains

Port service price for (waiting time) port congestion is collected to increase thecapacity of service with the fixed resource, for example, when the trucks stand inline for entrancing the port Some ports such as Los Angeles and Port of LongBeach has applied for program “pier pass”, in which the truck receiving container atport must take a fee on each container during peak hours and take no fee at normalhours The objective of the program is to transform transportation flow from peakhour to normal hour; thereby the service capability of the port gates in 24 hours isenhanced

(c) Market factor

Port prices are affected by price fluctuation of competitors and some goods onmarket For example, the increase of petroleum price leads to high price of portservice because of the rise in material In nature, many port operators make decision

on port pricing based on susceptibility of price of competitors and the demand ofpotential market This can motivate competition and reduce the monopoly power of

some ports Market factor is a common thesis in early literature review for portpricing[CITATION Ben79 \l 1033 ].

1.2.2 Port service pricing

1.2.2.1 Principles on port service pricing

Pricing port services need to comply with national and international principles:

 Pricing port services had to match with international practices and the realsituation in Vietnam seaports in the process of economic integration inregional and the world

 Pricing port services had to match with the economic development policies ofthe party and Viet Nam government (business law with provisions inDocument 4211/BKHDT-business registration, Decree 78/2015/ND-CP dated11/01/2015 by Government)[CITATION Bus \l 1033 ]

 Pricing port services had to ensure coverage of the costs, accumulating capitalfor re-investment in infrastructure as well as machinery and equipment

 Pricing port services must be flexible to meet the need of the market andincrease competitiveness in the fiercely competitive market at present

 Pricing port services had to abide by the price frame for container handlingissued by the Ministry of Finance to unified price management

1.2.2.2 Port pricing method

Market share of each strategic commodity market in each year and each period oftime, price is given to customer matching with reality The price of monopoly types

of cargoes can be raised at a reasonable price, the price of competitive cargoes can

be balanced based on average cost to create the largest competitiveness In general,each type of service prices will be priced in different methods Some basic methodsfor port pricing literature are considered

(a) Port pricing based on average cost

This pricing method is calculated by the fixed cost, variable cost and demandestimated for providing port service It is equal to (sum of fixed cost and variablecost) which divides the number of demand estimated for providing port service.The advantage of this method is to ensure that income will be equivalent to the totalcost if demand estimated for providing port service is performed This method can

achieve the overall financial goals, named as non-subsidized prices With the porthaving high rate of fixed costs, the increasing yield can significantly reduce cost perunit.

The disadvantage of calculation method based on average cost is that there are twotrends in setting port service price, price may be set to be higher than real demand

or price may be set to be lower while demand is much higher [CITATION MAL06 \

l 1033 ]

(b) Port pricing based on variable cost

This pricing method is calculated by variable cost, demand for providing portservice and equipment Specifically, it is equal to variable cost which divides theamount of (demand for providing port service and equipment)

In general, this method is only suitable when variable costs account for a largeamount of total costs For example, the labor cost for stevedoring bulk cargoes Infact, pricing port service based on variable costs is not performed, just on thetheory However, this method encourages the effective use of the resources of port.The reason why method of pricing port service based on variable costs is notimplemented is that the variable costs of equipment and port services are so low thatthe deficit cannot be offset Therefore, this method cannot be considered as a basis

to set price for port services

(c) Port pricing based on marginal cost

This pricing method is calculated by marginal cost and demand for providingservice following the plan Specifically, it is equal to marginal cost which dividesthe amount of (demand for providing service following the plan)

Pricing port service based on marginal cost requires the relationship betweenvariable costs and desired output which needs to be clarified during the price beingperformed The change of using resource needs to be calculated when demandincreases To have information about marginal cost, it waste much time to collectbecause the change of variable cost in a period of time is considered on itscorrelation and other fluctuation elements of demand In addition, it is very difficult

to estimate and predict marginal cost in both short – term and long – terms Also it

is hard to divide marginal cost following to charge categories because of thedifficulty of demand prediction According to port economics text book, the

customers using the port service with the number of services required are frequentlychanging rather than being fixed [ CITATION Por15 \l 1033 ] Therefore, thecollection of data and analysis of customer needs with very difficult and ports areessential in setting the price of port services Those problems are the reason whymarginal cost is not used to calculate the port services.

Table 1.3: Advantages and disadvantages of each port pricing method

Port pricing based on

average cost

- Achieve the overallfinancial goals, called asnon-subsidized prices

If fixed cost of port ishigh: Increase quantity

=> reduce unit cost

- Not match with realdemand Price may behigher than real demand ormay be lower than realdemand

=> missed customers whocan pay at lower price

Port pricing based on

variable cost

- Encourage the effectiveuse of the resources inthe cases of variable costwhich is high

For example, the laborcost for stevedoring bulkcargoes

The variable costs ofequipment and portservices are low that thedeficit cannot be offset

=> This method is notbasis for port pricing

Port pricing based on

marginal cost

- Maximize profit in case

of no change in demand(fixed demand in a period

of time)

- waste much time andmoney to collectinformation about marginalcost because of dramaticfluctuation of demand

=> this method is just ontheory

CHAPTER II: PORT SERVICE PRICING FOR CONTAINER CARGOES IN THE PORT OF HAI PHONG JOINT STOCK

COMPANY

2.1.1 History of Hai Phong Port Joint Stock Company

The Port of Hai Phong which is located in the left bank of the Cam river is located

at 20o51’ northern latitude and 106o41’ eastern longitude The Port of Haiphong hasbeen recognized as the largest seaport in the North of Vietnam by cargo volumewhich offers advanced facilities and complete and safe infrastructure suitable formulti-modal transportation and international trade

The Port of Hai Phong JSC was established in the 19th century and has a historyover 100 years Hai Phong port was built in 1876 with 90 meters of wharf, loading

by 100,000 tons a year From 1895 to 1898, French clonies planned to build HaiPhong port with larger scale called “six-warehouse station” After the north ofVietnam was completely liberated, the Port of Hai Phong operated under themanagement of Transport Ministry in 1956 In 1965, there were 7 piers with thelength of 1042 meters, 8 warehouses with square of 29,000 m2 On October 12th

2007, Hai Phong port made a transformation of legal form into the Port of HaiPhong Holding Limited Liability Company under Vietnam National ShippingLines On April 8th 2014, The Port of Hai Phong made a change of legal form fromHai Phong Port Holding Limited Liability Company into the Port of Hai PhongJoint Stock Company[ CITATION the15 \l 1033 ] The Port of Hai Phong consists

of four major branches including Hoang Dieu Terminal, Chua VeTerminal, Tan VuTerminal, and Bach Dang Terminal

Overall, the port of Hai Phong has contributed considerably to the development ofHai Phong city in particular and the growth of Viet Nam in generaloverall growth ofthe country in general The Hai Phong port plays an important role in the goodsexchange of the north of Vietnam with other countries in the region and in theworld Being a general trading port with directly serving production, importing andexporting goods; Hai Phong port currently is more interested in investment inrenovating and expanding infrastructure in order to meet the increasing demand ofthe national economy

2.1.2 Infrastructure

2.1.2.1 Navigation channel

Channel name Length (km) Width (m) Depth (m)

(Source: The port of Hai Phong Joint stock Company)

2.1.2.2 System of berths

There are 19 berths in Hai Phong port joint stock Company in which 9 berthsbelong to Hoang Dieu terminal, 4 berths belong to Chua Ve terminal, 5 berthsbelong to Tan Vu terminal

Table 2.2: Key area at berth of the Port of Hai Phong JSC

Branch Berth Length Depth (deadweight ton) Capacity

- Total surface area: 1,169,213 m2

- Warehouse: 51,202 m2 ( with CFS: 6,620 m2 )

- Open storage: 701,301 m2 (with container yard: 403,301 m2)

- Storage capacity: 220,000 (MT) (with container yard: 21.000 TEU)

 Hoang Dieu terminal:

- Warehouse: 36,579 m2 (storage all kinds of cargoes) including 7 warehouse

- Yard: 102,179 m2 (storage all kinds of cargoes) including 11 yards

 Chua ve terminal

- Container yard: 202,110 m2 (storage container cargoes)

- Container freight station: 3,300 (storage consolidated cargoes)

 Tan Vu terminal

- Container yard: 510,000 (storage container cargoes)

2.1.2.4 Equipment

Table 2.3: Equipment of the Port of Hai Phong Port Joint Stock Company

Portal crane

Quay sidecane (QC)

3.5.7 – 40

Rubber tyredgantry (RTG)

35.6 –

Forklift of allkinds

3.1 – 45

Containertractor trailers

GENERAL MEETING OF SHAREHOLDERS

BOARD OF DERECTORS

GENERAL DIRECTOR

BOARD OF SUPERVISORS

DEPUTY GENERAL DIRECTORS

Port vocational and professional technique school

Medical center

Electrical center

Hoang Dieu terminalChua Ve terminalTan Vu terminalBach Dang terminal

Figure 2.1 Organization diagram of the Port of Hai Phong JSC

(Source: Personnel Department of Hai Phong port)

General meeting of shareholders: has highest jurisdiction to make decision on all

crucial issues of company under the Enterprise Law and the Company Charter TheCouncil ratifies short-term and long-term investment policies, decides capitalstructure, elect management committee and chief executive officer of the company

Board of directors: on behalf of the Shareholders Council, Board of Directors

manages the company Represent legally the company in order to decide all issuesrelating to the interests of the company except the problems that ShareholdersCouncil must decide Orientating steady development through formulating policies

is a part of its responsibility Board of directors also perform action and suggestsolution to improve the production of the company

Board of supervisors: elected by the Shareholders Council, on behalf of

shareholders to promote their interests through the governance of the company and

to hire and supervise the executive directors and CEO

Director: is the leader of the company, who has responsibility for all business

activities including plans, objectives, business strategies, production operation, andmonitoring company

Business department: has main responsibility for all manufacturing activities and

business activities of company This department has to find material resources toperform manufacturing activities Finding potential markets, partners and catchinginformation about them is also mission of business department

Operation department: related to loading and unloading cargoes and manage

cargoes forwarding at port Also this department implements economic agreementssigned with shippers, ship owners, solves problems happened in handling andforwarding process that were regulated in contract

Planning and statistic department: The role of this department is to seek to attain

superior returns The department operates in accordance with the InvestmentStrategy Statement established by the fiduciary committee of the board of directors.Department’s responsibilities include selecting investment managers, monitoringperformance, and screening investments, engaging in advocacy and managing thePositive Social Purpose Investment Program

Technology Department: has responsibility for issues related to science and

technology This department plans to invest new facilities, technology and materialsand repair equipment; direct the installation of lighting and water system, save andensure the safety of specification

Labor and salary department: is responsible for paying salary to worker and staffs

of port, updating and implementing policies, regulations of government aboutminimum salary for officers, staffs and workers

Personnel and administration department: Subscribe to the number of officers and

employees of the Company, it is responsible for implementing and resolving theproblems of institutions and policies, regulations of state for officers, staffs.Monitoring situation of the implementation of staffs and workers, organized labor,wages, and established the norms on a product, training staffs, and improving skillsfor employees

Safety, quality management department: solving problems related to safety of

employees, initiating the process of Safety

Military and security department: is responsible for protecting the entire port area,

protecting merchandise protection and preventing theft, controlling goods entering

or going out port gate

2.1.4 The business result of the Port of Hai Phong Joint Stock Company

Table 2.4: Cargoes throughput of the Port of Hai Phong Joint Stock Company

3,912,586MT

3,380,481MT

3,621,000MT

throughpu

t

1,098,142TEUs

1,029,984TEUs

960,999TEUs

1,038,978TEUs

1,002,178TEUs

Source: Business department of the Port of Hai Phong Joint Stock Company

Generally, the number of cargoes throughput in Hai Phong port increased gradually

in the most of period shown From 2013 to 2014, the number of cargoes throughputdecreased slightly from 23,170 thousand tons to 23,330 thousand tons The number