Nguyen Thi Minh Thanh – A1K42BBE
INTRODUCTION
Freight forwarding plays an important role in international trade. International
trade refers to the transferring of goods’ possession right. Freight forwarding is
responsible for putting this transferring into practice. After the open-door policy,
Vietnam’s export turnover has continuously increased through years. In 2000,
export turnover of Vietnam was USD 30 billions, in 2003; this number is 60 USD
billions. The highly development of export and import activities stimulates the
development of freight forwarding. At present, freight forwarding services of
Vietnam is rather diversified. Many kinds of services are provided which meet the
demand of the society. However, in fact, freight forwarding industry of Vietnam still
has many insufficiencies, in which the serious problem is the quality of services.
The main reason is inappropriate method of business operation. We need to have an
advanced method of freight forwarding in order to reduce the cost as much as
possible. In this case, logistics is an effective way, which is needed to apply in
freight forwarding enterprises in Vietnam. I chose the topic “Real situation and
Logistics applicability in freight forwarding of Haiphong Port – Recommendations
to improve performance” for my field study report. Through the time of field study
in Haiphong port, I conducted research on logistics in these following sectors:
 The overview of logistics and freight forwarding
 The current situation of logistics service in Haiphong port
 The recommendations for the logistics service in Haiphong port.
I hope that my field study report about logistics in Haiphong port will bring out
the meaning of this new service in Vietnam, and will help the port to improve their
logistics services in the near future.
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LIST OF ABBREVIATIONS
EDI: Electronic Data Interchange
ADSL: Asymmetric Digital Suberibers Lines
LCL: Less than container load
FCL: Full container load
PL: Provider of logistics
VIFFAS: Vietnam Freight Forwarding Association
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CHAPTER 1: OVERVIEW OF FORWARDING AND LOGISTICS
1.1.
Freight forwarding
1.1.1. Definition.
Freight forwarding is the process of moving cargo from one place to a
destination, according to the demand of customers.
An international freight forwarder is an agent for the exporter in moving cargo to
an overseas destination. Freight forwarders assist exporters in preparing price
quotations by advising on freight costs, port charges, consular fees, costs of special
documentation, insurance costs, and their handling fees. They recommend the
packing methods that will protect the merchandise during transit or can arrange to
have the merchandise packed at the port or containerized. If the exporter prefers,
freight forwarders can reserve the necessary space on a vessel, aircraft, train, or
truck. The cost for their services is a legitimate export cost that should be included
in the price charged to the customer.
1.1.2. Typical services of freight forwarding
Since Vietnam opened the door to develop economy, especially with the entry in
WTO in 2007, local and foreign shippers have concerns over just how competitive
the country will be, given huge challenges to its freight forwarding industry.
Therefore, freight forwarding service has been highly developing.
A freight forwarder can offer a variety of services.
 Advising on the best routes and relative shipping or airline.
 Booking the necessary space with shipping or airline.
 Arranging with the exporter for the packing and marketing of the goods.
 Consolidating shipment from different exporters.
 Handling customs clearance abroad.
 Arranging marine insurance for the shipment.
 Preparing the export documentation.
 Translating correspondence in foreign language
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 Scrutinizing and advertising on ability to comply with letter of credit.
Once the order is ready for shipment, freight forwarders review all documents to ensure
that everything is in order. This is of particular importance with letter of credit payment
terms. They may also prepare the bill of lading and any special required documentation.
After shipment, they can route the documents to the seller, the buyer, or to a paying bank.
Freight forwarders can also make arrangements with customs brokers overseas to ensure
that the goods comply with customs export documentation regulations. A customs broker is
an individual or company that is licensed to transact customs business on behalf of others.
Customs business is limited to those activities involving transactions related to the entry
and admissibility of merchandise; its classification and valuation; the payment of duties,
taxes, or other charges assessed or collected; or the refund, rebate, or drawback thereof.
According to its size, number of branches overseas, a freight forwarder will offer all or
some of these services.
1.2.
Logistics.
1.2.1. Definition.
Logistics refers to the management of the physical flow of products from the
point of original as raw materials to end users as finished product. Logistics wed
production activities to the activities needed of transportation, storage, and
distribution. According to definition of Logistics, the process is described in the
below chart:
Raw materials→Raw materials →Manufacturing→Finished goods→Market
Supply point
Storage
1.2.2. Logistics flow.
Logistics deals with geography, time and value. Moving from source to
destination, freight and transportation connects buyer to seller and make the final
delivery. In this process, there are number of stages involved. Freight and
transportation alone encompasses many modes including truck, sea, rail, and air, all
with varying issues, costs and levels of service. The flow chart below illustrates the
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process, which involves the input of these services providers in the movement of a
particular product from the point it leaves the plant to end consumer in a retail
outlet.
Figure 1.1 Logistics flow
(Source: Hausman, Warren H. 2004 . “Supply Chain Performance Measures.” In
Corey Billington, Terry Harrison, Hau Lee, and John Neale, eds., The Practice of
Supply Chain Management.)
Businesses and organizations address their logistics requirements by assigning
staff to perform logistics activities by outsourcing one or several functions to third –
party providers.
In house logistics department usually manned by full- time logisticians who perform
logistics- related functions. Their positions include purchasing managers,
transportation managers, custom brokers, shippers and receivers. In the absence of
outsourcing options, companies have dealt with moving and storing of goods in a
disparate ways. Although outsourcing of logistics services is a fairly emerging trend,
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there are a large number of firms that maintain their own in- house logistics or
distribution departments. This is largely prevalent in the manufacturing, commodity
sectors, wholesaling and retailing.
1.2.3. Fundamental elements of logistics
Logistics includes such fundamental elements:
 Transportation: This is the most important element of logistics. In order to
reduce the cost of logistics, it is necessary to reduce the cost of transportation
from the manufacturing places to different markets. Transporting process
must be done smoothly to make the delivery of goods or supply required
materials on time, minimize the inventory cost.
 Marketing: Logistics includes making plans, implementing it and controlling
the delivery of goods from the point of original as raw materials to end users
as finished products. Therefore, it is clear that all the services focus on
customers and meet the demand of customers. Effective marketing strategies
help managers to have good customer services, deliver right products to right
places and right customers.
 Distribution: An effective distribution channel can reduce the cost of
logistics. It is necessary for managers to combine two factors: right place and
right time to create an optimal distribution channel.
 Management: It also plays an important role in logistics. Lack of
management factor, logistics services cannot meet the requirements of the
customers as well as the objectives of the firms. Therefore, logisticians must
have expertise or thorough understanding about transport modals, transport
cost, and warehouse.
Beside such important elements above, logistics also include following elements,
which is not less important:
 Warehouses, factories
 Technical document
 Supporting and supervising equipment
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 Human resources and staff training
1.2.4. Benefits from improved logistics
1.2.4.1. Reduces the cost for consumer and producer
Logistics is “the process of planning, implementing and controlling the efficient,
cost-effective flow and storage of raw materials, in-process inventory, finished
goods, and related information from point of origin to point of consumption for the
purpose of conforming to customers’ requirement”. So, logistics reduces the cost of
transferring goods between markets and of course it will reduce the prices paid by
consumers . On the consumers’ side, this effect can be seen most clearly by
examining the price of goods at the port relatived to the price of goods inland.
Producers will not ship goods inland unless the prices they receive, net of shipping,
is at least as high as prices at the port. This means that inland consumers bear the
full burden of shipping costs for goods that is not produced locally. This burden can
be substantial.
A similar logic applies to exports. International markets will not pay more for
goods produced in inland regions, and so the ex- factory or ex- farm prices are
reduced by the full inland logistics costs of access to the port.
1.2.4.2. Insurance against regional price fluctuations.
When agricultural output varies because of unpredictable weather, one region
may experience drought and food shortages while another enjoys sufficient rainfall
and ample harvests. If the regions are separated by poor logistics and transport
systems, consumers in the shortfall region face very high prices for food, while
producers in the surplus region face a market glut. Regional variations in
agricultural prices are especially pronounced within country like Vietnam, in which
interior regions are poorly connected or inaccessible. Good internal logistics
facilitates surplus commodity shipments from surplus to shortfall regions,
smoothing prices variations between them and providing a kind of insurance against
shortage and glut. Better market access appears to dampen price volatility for a
broad range of products. Validity in goods prices between city pairs riser with the
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distance between the cities, and is especially large for city pairs across national
borders. Essentially, arbitrage is necessary to narrow price differentials across
locations, and this is much harder to achieve when logistics are poor.
1.2.4.3. Reduced inventory costs.
Better transport and logistics system not only lower the costs of delivery, but also
make the timing of delivery more reliable. Producers cannot manufacture goods
without the inputs they need, and retailers cannot sell goods they do not have in
stock, so if delivery times are uncertain, firms must hold large inventories of goods.
The first reason for long and uncertain delivery times is poor infrastructure – roads
may be impassable, and railways nonexistent, or roads may cause damage to trucks
that involve high costs and long delays. Another reason is peak load congestion – a
severe problem in areas where population and manufacturing intensity have grown
faster than infrastructure capacity. In Ho Chi Minh City, for example, the
government bans trucks heavier than 2 tons in the inner city between 6 a.m. and 6
p.m. to combat growing traffic congestion, and thus manufacturers must hold large
inventories all day rather than delivery midday shipments, and trucks sit idle during
the day. This contrasts with modern just- in - time techniques, in which deliveries
are continuous, and the transport capital stock is in constant use. Leaner production
techniques require a substantial flow of information. Manufacturing firms can only
run with small inventories of inputs if they are certain where and when the next
shipment will arrive. In turn, this requires sophisticated electronic data interchange.
1.2.4.4. More developed markets.
Well-developed logistics increase consumers’ choice and producers’ sources of
supply, and bring more markets within producers’ reach. According to the statistics
of International Exhibition Logistics Associates, 40% of trade growth in East Asia
arises from offering new product lines and extending exports of existing product
lines to new trading partners.
Products diversification benefits both agricultural- and industrial- based economies,
since for both specialization in narrow range of products can be dangerous because
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of prices volatility. According to the Global Competitiveness Report 2005-2006
(World Economic Forum), most of the differences in trade levels between small and
large economies can be attributed to differences in the range of goods that are
traded, and that much of the growth in imports that results from lowering trade costs
come through expansions in the set of products available. The welfare benefits from
expended product variety can dwarf those from standard calculations of the gains
from trade.
Better logistics allow variety expansion in several ways. First, they may directly
lower the fixed cost of expansion. There are significant scale advantages to
providing transport hubs, warehousing, and logistics services that many firms can
share. Second, by lowering the marginal costs of serving markets, it is possible to
increase sales and spread entry costs over more units.
The diversification argument also applies across markets, as reliance on single
export destinations leaves firms subject to significant business cycle risks.
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CHAPTER 2: HAIPHONG PORT AND LOGISTICS SERVICES
2.1. Overview of Haiphong port
2.1.1. Establishment and development
Haiphong ports was founded in 1876, with original name is Ben Sau Kho. Over
121 years of existence and development, port of Haiphong has always played the
most important role of the “Border gate” interface in the North of Vietnam. Import
and export cargoes to and from North of Laos and South of China, have been
transferred via Haiphong Port to the markets of many countries and vice versa.
Haiphong port has the biggest cargoes throughput among the ports in the North of
Vietnam. The port is equipped with modern facilities and equipments and has safe,
sufficient infrastructure which meets all international modes of transport and trade.
The estimated cargo throughput of Haiphong Port in the 2005- 2010 period is from
12.000.000 tons to 18.000.000 ton per year.
The Head Quater is at number 8A Tran Phu Street, Ngo Quyen district, Haiphong
city.
2.1.2. Scope of business activities
In Haiphong port, handling operation areas are located based on the infrastructure
advantages such as railway, high way, and inland waterway. These areas are
installed and equipped with modern and advanced handling equipments which are
suitable to every kind of cargoes, meeting the demand for different models of
transport.
Main services of Haiphong port:
 Cargo handling, forwarding and logistics.
 Ship towage and assistance
 International container transshipment
 Forwarding and transporting agent
 Transporting containers from Haiphong to Laocai and vice versa by railway
 Bagging, packing, and transporting cargoes by sea, highway, and inland
waterways.
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 Ship agent and marine brokerage
2.1.3. Organizational structure
Haiphong port is operated like a big state-owned company. The leader of
Haiphong port is General Director who is responsible for all activities in the
Haiphong port. There are four Deputy General Directors who support General
Director in four sectors: business, operation, engineering, and port rehabilitation
project. Separating to the General Director and Deputy General Directors are
functional departments. For example, Business department, Accounting department,
Technical department, Agent shipping and brokerage department, Human resources
department, etc. Besides these functional departments, Haiphong port has five
enterprises which mostly responsible for cargo handling services. They are: Hoang
Dieu, Le Thanh Tong, Chua Ve and Bach Dang Stevedoring Enterprise. Each
functional department is controlled by a manager.
2.1.4. Situation of business activities
Haiphong port continuously improves its methods of providing services to
customers, increases handling productivity, cuts short procedures of cargo delivery
and receipt as well as applies advanced methods of management in order to enhance
the quality of services, minimize cost and time for customers. Therefore, Haiphong
port’s throughput has increased through years.
Table 2.1 Haiphong port throughput from 2001-2006
2001
Export
2002
2003
2004
2005
2006
1,336,393 1,365,476 1,757,845 1,792,446 2,349,119 2,925,092
throughput
Import
4,357,606 5,266,554 5,401,516 5,365,624 5,196,931 5,198,669
throughput
Domestic
2,881,513 3,669,293 3,358,601 3,325,623 2,965,007 3,127,601
thoughput
(Source:Annual report of Haiphong port’s business department -unit:billion tons)
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Haiphong port throughput from 2001- 1006
From 2004, Haiphong port faced some difficulties and more fierce competition
due to the appearance of several ports in the North of Vietnam, such as Transivina,
Greenport, Quangninh port. Although these ports are smaller than Haiphong port,
market share of Haiphong port has reduced. Haiphong port also suffers several
damaged due to natural calamities through the year of 2007.
Table 2.2 Market share of Haiphong port from 2001- 2006
(turnover 1000 tons)
Year
2001
2002
2003
2004
2005
2006
Turnover
8575
10314
10518
10486
10512
11000
Market share
79.3%
75.35%
68.84%
58.87%
54.29%
53.11%
(Source: Annual report of Haiphong port’s business department-2007 )
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Haiphong port ensures to provide all clients with services of high quality through
the effective application, maintenance and operation of the Quality Management
system acclaimed the standards of ISO 9001- 2000. At the same time, the port
continuously improves and upgrades the infrastructure and invests in modern
facilities to enhance the quality of services to meet all requirements of clients with
the motto:
“Productivity- Quality- Safety- Effectiveness”
Fully exploiting the advanced equipment, Haiphong port try to offer a wider
range of services to its customers. Besides the every effort of Haiphong port, the
development of Vietnam in the stage 2001- 2006 brings Haiphong port more
opportunities to push forward its services, especially forwarding services. Handling
cargoes and forwarding are traditional services of Haiphong port, while logistics is a
new service applied in freight forwarding; However, this type of service has been
continuously developing in Haiphong port.
2.2. Freight forwarding and logistics services in Haiphong port.
2.2.1. Advanced condition of Haiphong port for logistics applicability in freight
forwarding.
2.2.1.1. Geography.
Haiphong port embraces a lot of advanced condition for logistics applicability.
Firstly, it is the geographical condition. Haiphong port has always plays an
important role of the “Border Gate” interface in the North of the country. It locates
on the International maritime road. From Haiphong port, we can easily and
conveniently transport or have cargoes transported to other ports on the world by sea
rout, or to main economic zones by sea rout or to main economic zones of Vietnam
or to the South of China by inland waterway, railway and national highways with
the shortest time and in the most efficient manner.
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Table 2.3 Distance from Port of Haiphong to some main seaports.
Seaport
Knots
Seaport
Knots
Danang
320
Klang
1528
Saigon
799
Penang
1730
ZhangZiang
200
Busan
1749
Hongkong
500
Vladivostok
2114
KaoShiung
940
Tokyo
2349
Bangkok
1390
Sydney
5560
Singapore
1442
Roxtexdam
9770
(Source: Agent shipping and brokerage department- 2006)
Further more. Haiphong port is located in Haiphong city, one of the most highly
developed cities of Vietnam. Haiphong city is linked to other cities by the
convenient transport systems: road, railway, water and airline. Therefore, Haiphong
city is central transportation of the North; link other cities of the North to world
market by Haiphong port.
2.2.1.2. Material condition.
Haiphong port has the biggest cargo throughput among the ports in the North of
Vietnam. The port is equipped with modern facilities and equipments and has safe
sufficient infrastructure which meets all international modes of transport and trade.
Haiphong port has total 14 safe berths with 2215m in length, having depth alongside
from -8.5m to -8.7m with total area of 36550 m2. The warehouses are divided into
specialized areas, which are suitable for storage, handling, and transportation of each
kind of cargo. Of these warehouses, there is a standard Container Freight Station
(CFS). Haiphong port has 7500 m2 warehouse with, which are used for cargo
consolidation and distribution of LCL containers and a storage yard with total area
of 394000 m2 includes 223000 m2 of container yard, used for container stacking
and storage and 171000 m2 for steel, equipments, bulk, cargoes and other cargoes.
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2.2.1.3. IT system and equipment.
Haiphong port is equipped with modern technology. These technology and
equipment are very necessary for developing logistics service in Haiphong port. In
Haiphong port, the Management Information System (MIS) has officially been put
into operation at all departments, divisions and sections like: operation, cargo receipt
and delivery, equipment protection and maintenance, operational and financial
accounting. MIS is applied at 3 main areas of Haiphong port, 18 buildings and more
than 50 functioning departments. Furthermore, Haiphong port has applied the Custer
Sever HP TC 4100, which operates 24 hours a day
Beside 3 other servers are in reserve at affiliate enterprises, 233 affiliated
computers are linked together and they are also linked to the Head quarter where it
is used by more than 400 officers on the local area network 100 Mps ( fiber optics
cable/ UIP) and WAN 2 Mps (bonze cable is used to link between ChuaVe terminal
and Management Building at No 8A Tranphu street)
2.2.1.4. Abundant human resources.
Logistics is a new kind of service in Haiphong port. Although Haiphong port
lacks thorough knowledge about Logistics as well as professional logisticians, staff
of Haiphong port is over 400 people, mostly graduated from Maritime University.
These staff are knowledgeable about transport, shipping and etc; they can meet the
requirements of logistics services. Because logistics service requires many staff,
who understand about transportation and forwarding.
2.2.2. Applying logistics in freight forwarding in Haiphong port.
Haiphong port is not the first company supplying logistics services in freight
forwarding in Vietnam. However, Haiphong port is trying their best to make fulladvantage of its advanced conditions to develop logistics service. Because Haiphong
port is aware of the huge benefits from logistics services. At present, logistics
providers in Haiphong port receive the cargoes from other shipper in the port.
Moreover, after that, they will bag, pack and transport the cargoes on demand. It is
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different from in the past, Haiphong port just handled the cargoes and gave it to the
shippers.
Haiphong port has been providing rail carriers services for decades. However,
they only transport containers form Haiphong to Lao Cai and vice versa by railway.
With the rapid growth in neighboring ports as domestics and cross-border trade, rail
carrier service in Haiphong port has gained popularity among shippers, importers as
an invaluable alternative for freight services. The containers rail service has seen a
remarkable growth in Haiphong port. Total rail cargo handled in Haiphong port
recorded a growth of 15.5% , equivalent to 463,889 tons in 2006.
In Haiphong port, coastal and ocean freight services play an important role in
International shipment of goods. International shipments handled in Haiphong port
are more than 75% of marine tonnage. In July 2007, the port has signed an
agreement to cooperate with KaoShung port in China. So, in the next years,
Haiphong port will provide containerized freight services, conventional freight
services (for bulk carriers) to Kunming and KaoShung in China.
With the advantage of material conditions such as large warehouse, yard, berth
and modern equipment, Haiphong port is extending their services. In other words,
Haiphong port is trying to apply logistics services in freight forwarding. Haiphong
port is one of the few enterprises in Vietnam is equipped Electronic Data
Interchange (EDI) system. The time delivery of goods is reliant on the smooth flow
of documents. Documents can and do get held up at several intersections in the
transport process. EDI system enables the directly exchange data and expedite the
clearance of goods. In order to realize the full benefits from EDI, all the key players
in the logistics channels must be integrated electronically into the system. However
full integration has not taken place yet in Vietnam. Many logistics companies in
Vietnam do not have this system because the cost for applying EDI system is
expensive, which obviously increases their logistics cost. So, it is very difficult for
Haiphong port to coordinate with other logistics companies.
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At present, Haiphong port provides logistics services in 2nd Providers Logistics
(PL). Meanwhile, in the world, professional logisticians are called 4th PL logistics
providers who manage the “supply chain process” - the process of planning,
implementing and controlling the efficient cost, effective flow and storage of raw
materials, in process inventory, finished goods, and related information form point
of origin to point of consumption for the purpose of conforming to customer’s
requirement.
It shows that logistics services in Haiphong port are at the first stage of
development. However, by applying logistics services in freight forwarding,
Haiphong port has reduced the cost of transport and increased the trade. Therefore,
the total cargoes delivered by the port has continuously increased through years.
Figure 2.4 Container Volume (TEU) from 1995 to 2006.
(Source: Haiphong port’s business department -2007)
Haiphong port is trying to improve its logistics service in order to meet the
international standards. At present, Haiphong port is using the loan from Japanese
ODA Fund ( through the Japanese bank for International Cooperation) to invest in
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building a new access channel which has depth of 7.3m, building 2 more new berths
at Chuave Terminal, one enterprise of Haiphong port and buying handling
equipments. Therefore, in the near future, it is hopeful the logistics service of the
port will develop and meet the international standards.
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CHAPTER 3: RECOMMENDATIONS TO IMPROVE PERFORMANCE OF
FREIGHT FORWARDING SERVICES IN HAIPHONG PORT
3.1. Some comments on difficulties of Haiphong Port and some possible causes
Logistics services of Haiphong port is at the first stage of development. It is
desultory, lack of integration. Like many logistics providers in Vietnam, Haiphong
port acts as 2PL logistics provider. We cannot compare 2 PL logistics providers with
3 PL or 4 PL logistics providers like APL logistics. This show that the
underdevelopment of Haiphong port in the term of scale of activities and logistics
experiences. Besides that, Haiphong port does not have cooperation with other firm
in logistics sector. Meanwhile, the logistics service requires a lot of capital for
training and high tech equipment. Haiphong port has not really attracted many
customers in using logistics service of the port.
3.1.1. Transportation infrastructure of Vietnam
Infrastructure is one of the most important key to support logistics development.
At present, the transportation infrastructure of Vietnam is underdeveloped in
comparison with other Asian countries.
Table 3.1:Availability of transport infrastructure
Country
Total roads
% roads that Railways
(1000 km2)
are paved
Number of airport
(km/1000km2) with paved runways
longer
than
1523m/1000km2
Vietnam
283.1
25.1
9.5
45.5
Malaysia
196.1
75.3
5.5
63.7
Korea
888.9
74.7
31.7
375.7
Thailand
125.7
97.5
7.9
75.9
Indonesia
178.5
46.3
3.4
32.8
(Source: Policy research Corporation (2005))
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The table above shows that, transportation infrastructure of Vietnam is poorly
integrated. The number of total roads of Vietnamese is not a small number, but the
percentage of paved roads is rather small. This is a really challenge to transporting.
Highway no.5A built in 1998 which links Haiphong city to Hanoi has no longer
suitable for container transportation or multimodal transport. This highway is only
used for containers less than 30 tons. Meanwhile, international standard TEU (ISO
668) is 20 tons for 20-foot containers and 30.5 tons for 40-foot containers. Haiphong
port is equipped with modern technique, computer system. However, the intermodal
transport system of mostly other neighboring districts are poorly integrated, with no
streamline procedures to support the seamless movement of containers between
coastal and inland areas. Many of them lack containers freight stations, yards, and
trucks in their inland regions.
3.1.2. Legal framework.
The law dealing with logistics service in Vietnam is plentiful. However, logistics
activities are stipulated in the Commercial Law 2005, from article 233 to article 240.
But the articles lack stability, consistency. Therefore, it creates many additional
problems for logistics firms. They are not clearly about their rights and obligations
as well as their scope of activities.
3.1.3. Capital.
Logistics service requires a lot a capital for training and equipments. Now,
Haiphong port has 6 cranes: 2 Gantry cranes (with lifting capacity is 40 tons), 4
Rubber Tyred Gantry Crave 40 tons, 2 floating cranes 10 – 80 tons. Each crane costs
4.5 to 6.5 millions USD. Meanwhile, Singapore port has 100 cranes, which cost 8.5
to 11 million per each.
EDI system has been used in Haiphong port. However, many users in the port
complain that the EDI system in Haiphong port is not consistent with international
EDI system, resulting in double logging. It does not only incur cost but also impose
unnecessary delays for the efficient movement of cargo. If equiping a new EDI
system, the port has to spend a huge amount of money. Meanwhile, Haiphong port is
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mobilizing capital on the Port rehabilitation project. This project will be finished in
2010. Therefore, at present, Haiphong port lacks capital for developing logistics
service.
3.1.4. Human resources.
In every industry, human resources and knowledge are the keys to success. An
enterprise cannot meet their goals nor perform the task efficiently if they lack skilled
workers.
Logistics is a new kind of service in Vietnam, so the skillful labors for this
service is still very poor. In Haiphong port, almost staff has knowledge about
shipping industry, forwarding, but they do not have thorough knowledge about
logistics. Almost of them have to learn by themselves to improve the logistics
knowledge. Haiphong port does not have any certified professional logisticians. The
port also has not sent any staff into oversea training course. So, they understand
about logistics vaguely and inaccurately. Some of them think that freight forwarding
and logistics are the same.
3.1.5. Competition
Some large Vietnam maritime companies such as Vietnam Ocean Shipping
Company (VOSCO), Vinaship or Falcon Shipping Company- which have managed
to develop their own brands and gradually adapt to help from reliable foreign
partners. Nevertheless, most local companies appear unable to compete with bigger
shipping lines. Haiphong port competes not only with foreign firms like Wanhai
Lines, APL, but also with large Vietnam maritime companies like Vinaship or
Vosco. Furthermore, at present, Haiphong port is mobilizing capital and human
resources on” the rehabilitation of DinhVu and ChuaVe project”. Therefore, in this
year, logistics sector has major opened to foreign players such as Wanhai Lines,
APL logistics.
3.2. Recommendations.
3.2.1. To the government.
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Nguyen Thi Minh Thanh – A1K42BBE
Logistics is a kind of service, which can bring huge benefits for society. So,
Vietnamese government should set up logistics strategies and put forward policies to
attract more investment in logistics.
Firstly, the government should improve the transportation infrastructure of
Vietnam in order to meet the international standards. For example, the high way 1A
needs to be rebuilt to meet international standards TEU (ISO 668), for 30.5 tons and
40 feet container. At present, this high way can only be used for less than 30tons
containers. Besides that, the government can support logistics enterprises in term of
high technologies or capital to rebuild or enhance their equipment for logistics like
warehouse, yard, and IT system.
Secondly, the government should offer tax incentives to logistics services and
logistics providers. For example, the government can reduce the income tax for
logistics enterprises or reduce export and import taxes when they use logistics
services of local logistics enterprises. This method will stimulate the Vietnamese
logistics providers to develop their service.
Information technology (IT) is considered as a key factor for the development of
logistics. However, according to the assessment of World Bank, the IT system of
Vietnam is underdeveloped and the cost of this service is rather high. For example,
with Asymmetric Digital Suberibers Lines (ADSL), connects 24/24, speed 1.5 – 2.0
Mbit/s, Vietnamese has to pay 250 USD per month, and meanwhile, Chinese has to
pay 24 USD/month. Few Vietnamese enterprises have EDI system, which is very
necessary for logistics service. EDI systems enable directly exchange data and
expedite the clearance of goods. Therefore, the government should develop the IT
system to support logistics service effectively. An EDI system among ports of
Vietnam and other terminals in the South East Asia need to be set up. Furthermore,
the government should improve the internet system to modernize communicating
system by ADSL, which helps transferring information among enterprises quickly
and accurately.
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Nguyen Thi Minh Thanh – A1K42BBE
The government should enforce legal provisions to facilitate logistics
development. In concrete, Vietnam should have legal provisions, which guide
logistics providers to implement the articles in Commercial Law 2005 on logistics. It
is necessary to explain more clearly and accurately such things as logistics
definition, logistics service provider, logistics service contract, the due date of
responsibility. In addition, the government should simplify the trade documentation
as customs procedures. Customs clearance of Vietnam is slower than other neighbor
countries in the South East Asia.
Table 3.2: Average day for customs clearance
Air
Sea LCL
Sea FCL
Vietnam
5
7
7
Malaysia
4
4
4
Philippines
4
5
3
Singapore
2
3
3
Thailand
5
5
5
Source: International Exhibition Logistics Associate (http://www.iela.org
LCL is Less than Container Load
FCL is Full Container Load
Therefore, the government can apply some methods for these problems. For
example, the use of through-waybills and single invoices for all modes, allow
containers to be cleared for tariffs, customs, health, and taxation charges at inland
locations away from the ports- would help to reduce port congestion, but could raise
additional security concerns.
Finally, the government needs to develop human resources for logistics service.
At present, Vietnam has not had any university or institution training logistics in
term of regular training course. In this case, the Ministry of education and training
can associate with the Commercial Ministry and Transportation Ministry to research
and provide logistics training at university as an official subject.
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Nguyen Thi Minh Thanh – A1K42BBE
3.2.2. To Haiphong port.
Beside the support of government, Haiphong port should make their own efforts
to improve the quality of logistics services. Firstly, Haiphong port needs to extend
and diversify freight forwarding services. The purpose is to develop the full-mode of
logistics services. Haiphong port is now providing mainly bagging, packing and
transporting service in logistics chain services. It needs to have further services like
stocktaking or distribution channel from the point of original as raw material to end
user as finished products. To attract more customers, the port can reduce the fee of
warehousing for regular customers or for big quantity of goods.
Secondly, Haiphong port should apply high tech equipment in management. It
needs to have computerized inventory system to support loading, delivering the
goods in warehouse just in time, up date the information of the goods from the time
out of stock to final destination of goods.
Thirdly, Haiphong port should coordinate with oversea logistics firms. Logistics is a
new service in Vietnam, so most of Vietnamese enterprises lack logistics
experiences. According to VIFFAS, Vietnam has not had any professional logistics
provider. We mostly act as an agent for oversea logistics firms. Therefore, in this
case, coordination will help Haiphong port to learn and gain more experience from
oversea firms.
Fourthly, Haiphong port should develop marketing strategies to attract more
customers and raise the staff’s awareness of function and the role of logistics in
freight forwarding. Their tasks are:
 Set up and broaden the relationship with agents and representatives of
oversea firms in Vietnam.
 Draw up plans to research and learn more experiences in order to improve the
services for customers, comply with the international standards.
 Finally, Haiphong port should focus on training. The staff in Haiphong port
need to improve their knowledge about logistics, understanding of both
national and international laws.
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Nguyen Thi Minh Thanh – A1K42BBE
CONCLUSION
Logistics is not a new industry in the world but is a quite new one in Vietnam.
Although, Haiphong port has many advantages to develop this kind of service, the
results depend on many factors such as time, capital, labor, competition.
During the practice period in Haiphong port, I have learnt many useful issues such
as drawing up contract, customs clearance procedures. I also have opportunity to
apply the knowledge I learnt at university like foreign trade practice, Transportation
and forwarding in foreign trade in reality. These are useful experiences for me to
studying at university as well as for my work in years after.
Because of the limitation of time and knowledge, I cannot avoid some mistakes in
writing my report. I wish to have more opportunities like this. I also wish to receive
more contribution and criticism of my teachers to better my report.
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Nguyen Thi Minh Thanh – A1K42BBE
REFERENCE
1. Clark, Ximena, David Dollar, and Alejandro Micco. 2004. “Port Efficiency,
Maritime Transport” and “Costs, and Bilateral Trade.” Journal of
Development Economics 75: 417–50.
2. Decree No.125/2003/ND-CP of October 29, 2003 on international
multimodal transportation
3. Documentation of freight cost, contracts of Business Department, Agent
shipping and Brokerage Department
4. Jan Ramberg, Professor Emeritus of Private Law ,FIATA, the Law of freight
forwarding-, Stockholm University
5. Freight Transport Buyer Asia Magazine, No. 2000-2001
6. Hausmen, Warent H.2004. “ Supply Chain Management Measure” in Corey
Billington, Terry Harrison, Hau Lee and John Neale, The Practice of Supply
Chain Management..
7. International Exhibition logistics Association (http://www.iela.org)
8. Logistics and International shipping, Institute of International maritime
Affairs, Korea Maritime University, 2001
9. Vietnam Commercial Law 2005
10. Visabatimes magazine no. 3,4,5,6,7,8/2003
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Nguyen Thi Minh Thanh – A1K42BBE
TABLE OF CONTENTS
Page
Acknowledgements
Introduction .....................................................................................................1
List of abbreviation............................................................................................2
CHAPTER 1: OVERVIEW OF FORWARDING AND LOGISTICS
1.1. Freight forwarding.......................................................................................3
1.1.1. Definition.................................................................................................3
1.1.2. Typical types of freight forwarding services ..........................................3
1.2. Logistics........................................................................................................4
1.2.1. Definition.................................................................................................4
1.2.2. Logistics flow...........................................................................................4
1.2.3. Fundamental elements of Logistics..........................................................6
1.2.4. Benefits from improved logistics..............................................................7
CHAPTER 2: HAIPHONG PORT AND LOGISTICS SREVICES
2.1. Overview of Haiphong Port..........................................................................10
2.1.1. Establishment and development.................................................................10
2.1.2. Scope of business actities...........................................................................10
2.1.3.Organizational structure..............................................................................10
2.1.4. Situation of business activities...................................................................11
2.2. Freight forwarding and Logistics services in Haiphong Port........................13
2.2.1. Advance condition of Haiphong port for Logistics applicability
in freight forwarding.............................................................................................13
2.2.1.1. Geographical conditions.......................................................................... 13
2.2.1.2. Material conditions...................................................................................14
2.2.1.3. Information Technology system and equipment.......................................15
2.2.1.4. Human resources.......................................................................................15
2.2.2. Applying Logistics in freight forwarding in Haiphong Port........................15
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Nguyen Thi Minh Thanh – A1K42BBE
CHAPTER 3: RECOMMENDATIONS TO IMPROVE PERFORMANCE OF
LOGISTICS SERVICES IN HAIPHONG PORT
3.1. Some comments on difficulties of Haiphong Port and some possible causes...19
3.1.1. Transportation infrastructure in Vietnam.......................................................19
3.1.2. Legal framework.............................................................................................20
3.1.3. Capital.............................................................................................................20
3.1.4. Human resources.............................................................................................21
3.1.5. Competition.....................................................................................................21
3.2. Recommendations..............................................................................................21
3.2.1. To the government...........................................................................................21
3.2.2. To Haiphong Port.............................................................................................24
CONCLUSION....................................................................................................... 25
REFENRENCE........................................................................................................26
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ACKNOWLEDGEMENT
I would like to offer my thanks to all of my teachers at Foreign Trade University,
who equipped me a lot of useful knowledge to write up this report, and special
thanks and appreciation to Ms. Bui Thi Quynh Giao for her editing my report.
I am particularly grateful to Dr. Truong Quang Duc, the Managing Director of
Agent shipping and Brokerage Department, who, with charm, grace and
tenaciousness, supported me in many ways, including his priceless suggestions.
Special debts are also due to the Management Board of Haiphong port who
showed whole-hearted support through the process, especially in providing
necessary information and statistics for my field study report.
Finally yet importantly, I am fortunate to have my family whose patience and
unfaltering love have carried me through many difficulties time from the beginning
to the end of the field study process.
Haiphong, 30th, September 2007.
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