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The-Vina-Bubbles-Case-NGUYEN-THI-THANH-MAI-S3920913-3

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"I declare that in submitting all work for this assessment I have read, understood, and agreed to the content and expectations of the
Assessment Declaration."
LIST OF ABBREVIATIONS
AGVs
Automated Guided Vehicles
B/L
Bill of Lading
CIC
Container Imbalance Charge
CIF
Cost, Insurance and Freight
DDP
Delivery Duty Paid
D/O
Delivery Order
EXW
EX Works
GMS - CBTA
Greater Mekong Sub-Region Cross Border Transport Facilitation Agreement
HCMC
Ho Chi Minh City
LSS
Low Sulphur Surcharge
O/F
Ocean Freight
SRT
Saigon Railway Transport
SZX
Port of Shenzhen
THC
Terminal Handling Charge
2
VBC
Vina Bubbles Cola
VRS
Vietnam Railways System
TABLE OF CONTENTS
INTRODUCTION ..................................................................................................................................................................................4
TASK 1 ................................................................................................................................................................................................4
1. Standard Shipment Comparison................................................................................................................................................4
2. Expedited Shipment Comparison .............................................................................................................................................7
3. Challenges ................................................................................................................................................................................9
3.1. Transportation delays and delivery tardiness....................................................................................................................9
3.2. Energy cost escalation and fierce competition ................................................................................................................ 12
4 Recommendations ................................................................................................................................................................... 12
4.1. Chinese supplier ............................................................................................................................................................. 12
4.2. Thai supplier ................................................................................................................................................................... 13
TASK 2 .............................................................................................................................................................................................. 15
CONCLUSION ................................................................................................................................................................................... 19
REFERENCES ................................................................................................................................................................................... 20
APPENDICES .................................................................................................................................................................................... 27
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INTRODUCTION
This report aims to determine the preferable supplier for VBC regarding lead time and cost by comparing and contrasting various
transportation modes offered by Shenzhen and potential Bangkok suppliers. Afterwards, recommendations are formulated to both
suppliers for further improvements, followed by a new logistics strategy concentrating on route and carrier selection.
TASK 1
1. Standard Shipment Comparison
VBC metal is packaged in 15 wooden crates, with the dimensions of 150cm length x 70cm width x 50cm height for each. Therefore,
a 20-foot container measuring 6,10m by 2,44m is advisable for carrying (Jeremy and Somasiri 1993), with detailed calculations in
Appendix 1. Moreover, cycle time and expenses are deciding factors in the transportation evaluation process (Kour and Basu 2017).
Table 1 illustrates thorough comparison of these determinants between Chinese and Thai suppliers in standard conditions:
Chinese supplier
Thai supplier
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Transportation
mode
Sea
(Shenzhen Haiphong)
Rail
(Haiphong Hanoi)
Rail
(Hanoi HCMC)
Rail
(Bangkok - Phnom
Penh)
24 hours (Bradley
2017)
2 days 17 hours
(Ports 2023)
Transit time
Lead
time
Benefiting from
4 hours (VRS
ASEAN - China FTA, 2024)
customs process
takes less than one
day (BPOC 2016).
Port turnaround
duration is 18 hours
Loading/
in China and 20
unloading time
hours in Vietnam
(Statista 2022).
Total lead time
Cost
Delivery cost
1 hour (SRT
2014)
3 days
(RATRACO
2023)
Thanks to GMS-CBTA,
customs clearance
lasts less than one day
(OECD and WTO
2015).
It requires one day for
wooden crate
packaging (Sancopack
2022).
1 hour (SRT
2014)
1 hour (SRT 2014)
8 days 13 hours
Shipping Whale
(2024) specified
Transportation
cost is $22
Road
(Phnom Penh HCMC)
Road
(HCMC - Hanoi)
7 hours (Google
Maps 2024)
Vietnamese
customs
procedure for
imports
averaged 36
hours (SGGP
2023).
2 hours (DHL
2024)
2 days (Trans
2023)
2 hours (DHL
2024)
7 days
Transportation
cost is $366
Transportation cost is
calculated at $350
It costs $1059 to Transportation
deliver goods
fee is offered at
5
Shenzhen to
Haiphong O/F is
$200.
(Appendix 3).
Additional
expenditure at SZX
primarily includes
B/L fee ($150) and
seal fee ($4) (CMA
CGM 2023).
(RATRACO
2023).
Shipment fee to
central Hanoi is
$224 (RATRACO
2023).
Shipment fee to
central HCMC
is $163
(RATRACO
2023).
$20 (MT 2022)
$20 (MT 2022)
(Appendix 4).
(Appendix 5).
Customs clearance
fee is estimated at
$15 (CamTrans 2024).
Customs
clearance
requires $1
(Vietnam Trade
Portal 2024).
$20 is required for
wooden crate
packaging (WPL
2022).
$693 by Tran
(2023), covering
all expenses
such as toll fee,
handling fee,
fuel cost, etc.
Surcharges in
Haiphong
encompass CIC
($50), D/O ($40) and
cleaning fee ($6)
(Samudera 2023).
THC is computed at
Loading/
$109 in SZX and
Unloading cost
$115 in Haiphong.
Total cost
$79 (CMA CGM 2022)
$1489
$20 (MT 2022)
$2237
Table 1. Chinese and Thai suppliers’ standard shipment
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Figure 1. Vietnam Railway Network connecting Haiphong, Hanoi, HCMC (VRS 2020)
Evaluation
Despite an impressive cost advantage of $748 provided by Chinese supplier, it failed to satisfy the delivery deadline. Since VBC
is a premium manufacturer valuing seven-day shipment punctuality, Thai vendor demonstrates superior viability.
2. Expedited Shipment Comparison
Air shipment is the favorable mode of expedited transportation thanks to the highest feasibility of two-day or next-day delivery
requirements (Dajana et al. 2022). To shorten transportation distance, avoid double customs and eliminate transit time, direct flights
from Shenzhen to Hanoi are recommended.
7
Regarding Bangkok supplier, Thailand-Cambodia rail route is maintained for the metal to be packaged in Phnom Penh. Subsequently,
two concurrent airplanes transfer the materials straight to HCMC and Hanoi. Despite expensiveness, air freight benefits from
simplified customs procedures, accelerated transport duration and top-notch reliability (GH 2020). Further comparison in time and
cost of expedited delivery employed by two vendors is elucidated below.
Chinese supplier
Transportation mode
Time (including loading/
unloading time, customs
clearance, etc.)
Total lead time
Cost
Total cost
Air
(Shenzhen - Hanoi)
Air
(Hanoi - HCMC)
27 hours (Fluent
Cargo 2024)
24 hours
(Dolphin
Services 2022)
Thai supplier
Rail
Air
Air
(Bangkok - Phnom Penh) (Phnom Penh - HCMC) (Phnom Penh - Hanoi)
24 hours (Table 1)
2 days 3 hours
$47,250 (HPW
2022)
$18,729 (Nasco
Express 2022)
25 hours (Fluent Cargo
2024)
27 hours (Fluent Cargo
2024)
2 days 1-3 hours
Total cost deriving from
the above calculation is
$464.
$48,566 (NEX 2024)
$65,979
$48,566 (NEX 2024)
$49,030
Table 2. Chinese and Thai suppliers’ expedited shipment
8
Evaluation
Although two vendors carry products in a similar period, Thai supplier offers a more affordable price by $16,949, highlighting
significant competitive advantage over Chinese.
3. Challenges
Besides cost and time, VBC’s supply chain could incur considerable influence from these following threats.
3.1. Transportation delays and delivery tardiness
From a global perspective, transport interruption might start from extreme weather or traffic overload in Shenzhen (Yao et al. 2021;
Cao and Lam 2019). WSC (2021) ranked it as the fourth busiest seaport worldwide. To alleviate the burden, SZX has implemented
various cutting-edge technologies, notably AGVs, surveillance, port access control and weather monitoring systems (ITF 2021).
Meanwhile, substandard infrastructure in Thailand, Cambodia, and Vietnam poses major obstacles to the freight movement of
Bangkok supplier. Infrastructure development of these nations lags behind their economic growth (Nasim et al. 2022). This raises
prominent issues, notably disconnections among transportation modes, severe road deterioration, and incomplete traffic regulations.
For instance, the national Vietnamese railway has been outdated since establishment in 1881, featuring 14,000 safety-violated
positions (Dang 2021). Consequently, cargoes encounter intense vulnerability during transportation and significant risk of accidents.
Together with inefficiencies in current incoterms DDP and EXW, suppliers and VBC might face difficulties in undertaking cross-border
duties, particularly language barriers and legal ignorance, which probably retards the delivery process (TWB 2020).
9
Considering a local viewpoint, overburden of personal vehicles in Hanoi and HCMC frequently causes bottlenecks in harbors,
airports, industrial and residential zones (Nguyen and Nguyen 2021). This impedes VBC’s manufacturing process and last-mile
delivery, provoking customer dissatisfaction (Cihan et al. 2017).
10
Figure 2,3,4. Supervision at Chinese ports using 5G Cloud Computing (Cyrus 2023), RFID weather monitoring system and AGVs
(Le et al. 2023)
Figure 5. Vietnamese degraded train crossed densely populated areas (Pham 2022)
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3.2. Energy cost escalation and fierce competition
The ongoing global recession has eroded Vietnamese purchasing power (McKinsey 2023), while fuel and commodity expenses have
surged under the impact of Russia-Ukraine war (Le 2023). Simultaneously, the domestic soft-drink industry witnesses dynamic
competition with numerous players, noticeably Coca-Cola, Pepsi... striving to offer the most affordable price (VietnamPlus 2023).
This necessitates VBC formulating an economical transportation strategy to minimize costs while preserving outstanding quality,
since transportation constitutes 60% of logistics spending in Vietnam (VIRAC 2023).
4. Recommendations
To mitigate interruption risk, VBC should constantly update geopolitical situations and natural disasters, combined with supervising
and evaluating suppliers’ delivery performance to identify potential disruptions (Ross et al. 2016). Cultivating seller-buyer partnership
is also advisable to proactively and promptly tackle unexpected scenarios. Furthermore, supplier diversification can complement each
stakeholder’s deficiencies and diminish VBC’s passivity in DDP (Golmohammadi and Hassini 2020).
Based on above analyses, the report proposes Thai vendor as the primary source, and Chinese being the alternative supply, with
recommendations for each to economize time and cost:
Chinese supplier
To resolve lengthened transportation, they should leverage trucks instead of trains to transfer materials. According to Kemal and
Saygili (2021), road shipment is optimal for short distances between Haiphong-Hanoi (120km), and provides greater flexibility in
departure time and routes. This allows door-to-door delivery to VBC buildings, saving loading time from trains to transit cars.
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Meanwhile, Shenzhen-Haiphong maritime course is retained thanks to both ports’ proximity and continuous schedule (Pham and
Yeo 2018). Consequently, transportation time is remarkably reduced to 7 days 13 hours, given a marginal price increase of $166.
Shenzhen - Haiphong
Transportation
mode
Sea (Current)
Haiphong - Hanoi
Rail (Current)
Road (Recommended)
Hanoi - HCMC
Rail (Current)
Road (Recommended)
3 days 1 hour
2 days 2 hours (Table 1)
$549
$693 (Table 1)
It takes 4 hours in total, comprising 2Time
5 days 7 hours
5 hours
hour transportation (Nitoda 2021) and
2-hour handling materials (DHL 2024).
Cost
$674
$266
$288 (Nitoda 2021)
Table 3. Suggested route for Chinese supplier
Thai supplier
For Phnom Penh-HCMC transmission, barges are more promising than trucks in lessening transportation expenditure. Hoang (2023)
articulated that Vietnam-Cambodia ocean shipment expenses are 50%-60% lower than other methods. Following this replacement,
the overall transportation cost of Bangkok vendor plummets to $1517, showcasing price competitiveness against Chinese ($1489).
13
Phnom Penh - HCMC
Transportation mode
Road (Current)
Sea (Recommended)
On-board time is 2 days (5StarTrans 2023).
Time
2 days
It takes 2 hours to load and unload cargo (DHL 2024).
Total expenditure is $414, including:
Transit fee ($120)
Freight pick-up cost ($36)
Cost
$1080
Delivery to VBC warehouse in HCMC ($18) (Gemadept 2017)
THC ($120)
LSS ($40)
Document charges ($40)
Telex release ($30)
Seal fee ($10) (Fast Shipping 2023)
Table 4. Suggestion for Thai supplier
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TASK 2
This section focuses on outlining a thorough logistics plan for Thailand vendor as the major supply. To remedy limitations of DDP
and EXW, VBC should adopt CIF to allocate power to both parties (Piltz 2019). To elaborate, Bangkok supplier takes responsibility
until materials reach HCMC, including transportation, customs fees and product insurance. Then, VBC organizes paperwork, pay
customs expense in Cat Lai Port and distribution to their factories. Consequently, both could share risks and exploit their competence.
For implementation, trucking became the temporary solution during the construction of Thailand-Cambodia railway. Given this route,
road shipment proves fastest and low-priced compared to other approaches (CargoRouter 2024). Specifically, a 20-foot lorry of AGS
transfers 26.25 tonnes of metal pallets from Bangkok supplier warehouse to the packing station in Phnom Penh. After parceled in
wooden crates, materials are shifted to Phnom Penh Port and boarded to Cat Lai Port by Gemadept. These harbors are chosen
thanks to close distance and enormous capacity to handle overweight cargoes (CMA CGM 2023). From Cat Lai, Gemadept conveys
half to VBC manufacturer in HCMC, while TruongNam delivers the rest to VBC Hanoi. Detailed timeline, budget and rationale for
carrier selection are demonstrated in Table 5. This plan enables intermodal connectivity by utilizing the optimal transportation mode
for each route, thus facilitating timeliness, affordability, practicality and quality assurance.
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Carrier
TRUCK
BARGE
TRUCK
Thai supplier (Bangkok) Packaging Factory (Phnom Penh)
Phnom Penh Port (Phnom Penh) - Cat Lai
Port (HCMC)
Cat Lai Port (HCMC) VBC’s Warehouse (Hanoi)
AGS Movers
Gemadept
Truong Nam Logistics (TNL)
Total transit time and customs
clearance takes 25 hours (JICA 2013).
Time
Wooden crate packing demands one
day (Sancopack 2022).
2 days 2 hours (Table 4)
2 days 2 hours (Table 1)
1 hour is spent on loading/ unloading
materials (SRT 2014).
Total time
Cost
Total cost
6 days 6 hours
$439 (BOI 2023)
$414 (Table 4)
$693 (Table 1)
$1546
16
AGS gained 15-year experience in
Cambodia and 26-year experience in
Thailand (AGS 2024).
Reliability
Having offices in Bangkok, Phnom
Penh, HCMC and Hanoi, AGS could
seamlessly work with VBC, suppliers
and manage cargoes at both ends.
Reasons for
choosing
Diverse
services
Their all-in-one package ranges from
transportation, packing, customs
clearance, documentation to
storage, with well-trained staff and
24/7 tracking (AGS 2024).
Established in 1990, Gemadept
spearheaded cross-border water shipment,
being the most reliable domestic carrier
(Vietnam Report 2021).
TNL accumulated 26-year
expertise in transporting goods
nationwide, with branches and
warehouses in HCMC and
Hanoi (TNL 2024).
It has operated Phnom Penh - HCMC route
Transparent contracts and
since 2004, with consistent weekly
compensation policies protect
schedules and cutting-edge technologies
VBC and guarantee timely
(Figure 6).
intact delivery (TNL 2024).
Besides barge shipment that ensures
arrival time, Gemadept conducts customs
procedures, freight loading/ unloading,
warehousing and door-to-door delivery
(Gemadept 2024).
TNL provides end-to-end
transportation without
external charges and tailors
shortest routes (DaNang
News 2022).
Table 5. Carrier and Route Selection
17
Figure 6. Technologies adopted by Gemadept (Gemadept 2017)
Figure 7. Suggested route visualization
18
CONCLUSION
In recapitulation, Chinese vendor gains cost effectiveness yet suffers from overdue dispatch, while Thai supplier deliver materials
timely with extravagant budget. Besides, both confront multi-level threats related to transportation disruptions, namely congestion in
Shenzhen, inferior infrastructure systems in Southeast Asia and Vietnamese railway degradation. Accordingly, specific
recommendations are developed to overcome each weakness. By substituting trucks for trains, Chinese supplier better suits VBC
requirements for seven-day shipment. Nonetheless, since VBC prioritizes promptness, Bangkok supplier should become the
fundamental source. Consequently, a comprehensive transportation strategy is devised with carrier nomination and route
customization following VBC supply chain activities. Bringing to execution, this plan enhances competitive advantages for VBC by
curtailing abundant expenses and accelerating the entire SC process.
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APPENDICES
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Appendix 1: Calculations for selecting 20-foot container
● Volume of one crate of metal: 150cm x 70cm x 50cm = 525,000 cm³ = 0,525 m³
● Volume of 15 crates: 0,525 x 15 = 7,875 m³ < Maximum volume of a 20-foot container (approximately 33 m³)
● Total weight of 15 crates: 1750 x 15 = 26250 kg < Maximum weight of a 20-foot container (28,280 kg)
Appendix 2: Surcharges for an imported 20-foot dry container in Port of Haiphong (Samudera 2023)
Appendix 3: Calculation of railway transportation cost from Haiphong to Hanoi
Railway transportation cost from Ha Noi to HCMC is 366 USD (Appendix 4). The railway distance from Ha Noi to HCMC is 1730
(Phuong 2023).
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Hence, railway delivery fee from Haiphong to Ha Noi, with a distance of 102km (VNPay 2023), is calculated at 102 x 366 / 1730 =
$21.58.
Appendix 4: Calculation of railway transportation cost from Bangkok to Phnom Penh
The distance between Bangkok and Phnom Penh is 647 km (Google Maps 2024). Referring to the above table (BOI 2023), railway
transportation cost for this route is $13.3 per ton. Therefore, the total cost of moving 26.25 tons would be 13.3 x 26.25 = $349.
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Appendix 5: Calculation of roadway transportation cost from Phnom Penh to HCMC (Referred to JICA, MOT and TDSI
2000)
Transportation cost of 26.25 tons of metal through a distance of 230 km from Phnom Penh to HCMC is 4,300 x 26.25 x 230 =
25,961,250 (VND) = $1059.
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