Hai My Duong January, 2018 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Hai My Duong (NON FIXED DAY SHIPPING SCHEDULE IN TAN CANG SHIPPING AFFECTS TO CUSTOMERS SATISFACTIO[.]
Hai My Duong - January, 2018 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Hai My Duong (NON FIXED-DAY SHIPPING SCHEDULE IN TAN CANG SHIPPING AFFECTS TO CUSTOMERS SATISFACTION) MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2018 Hai My Duong - January, 2018 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Hai My Duong (NON FIXED-DAY SHIPPING SCHEDULE IN TAN CANG SHIPPING AFFECTS TO CUSTOMERS SATISFACTION) MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Trần Hà Minh Quân Ho Chi Minh City – Year 2018 Hai My Duong - January, 2018 Table of Content Executive Summary Background information Methodology Problem Identification Situation Analysis Symptoms Central problem 12 Initial cause-effected map 16 Potential root cause: 17 Cause-effected map: 21 Problem solving: 22 In short time: Providing a weekly fixed-day shipping schedule 22 In long time: Establishing the research and develop shipping schedule team 24 Action plan 25 Supported information 26 References 27 Appendix 01: Interviewees Information 28 Interview 1: Customers using TCS’s reefer service 28 Interview 2: Vice Director of TCS’s Customers 28 Appendix 02: Interview guides 29 Interview Guide 01: Customers using referred container service 29 Interview Guide 02: Regular customers 29 Appendix 4: Frequency of TCS’s shipping schedule 42 Appendix 5: Estimated output/ month for 40RH of TCS’s dry container customers 45 Hai My Duong - January, 2018 Professional terminology and abbreviation: No Professional terminology Meaning and abbreviation 20GP 20 feet general dry container 40HQ 40 feet high cube dry container 40RH 40 feet high cube reefer container TEU Depot The production of liner shipping and slot on vessel 20GP = TUES, 40HQ=40RH=2 Tues The yard contains empty container The truck goes to nearby the vessel to receive Shipside container directly does not drop container on terminal yard Closing Time Freight Plugging Fee The time which vessel will stop loading container to prepare for departing Price for transporting container by vessel Fee charge for plugging electronic of reefer container on terminal, on vessel 10 OPS Operation Service in Terminal 12 TCS Tan Cang Shipping Joint Stock Company Hai My Duong - January, 2018 Executive Summary This thesis aims to identifiy the reason why TCS new reefer service could not attract customers Basing on in-dept interview in TCS’s current customers, market information and report from marketing department, thesis find out there are potential problems: - Low customer satisfaction of regular customers Competitors are stronger than TCS show on issues: Marketing strategy to attract new customers does not implement Using theories and analysis, identified central problem is: low customer satisfaction of regular customers To giving exactly problem solving, the thesis draws cause-effected map to find out root cause Thesis uses groups of factors affect to customers satisfaction to conduct an interview on regular customers, the result show that many customer unsatisfied with TCS’s shipping schedule, to change un-fixed day shipping schedule, the broad director should change their intension that having fixed-day shipping schedule is more important than full fill each trip Background information Tan Cang Shipping Joint Stock Company (or Tan Cang Shipping – TCS) is a transport service company, was established in 2013 under the decision of the Board of Director of Sai Gon New Port Corporation The beginning mission of Tan Cang Shipping is developing the transport services of Sai Gon New Port Corporation while their vision is "Leading in quality of service, customer oriented; Advanced management, professional and high quality in human resources; Military discipline, corporate culture, community responsibility " After almost years of operation, Tan Cang Shipping now works on three areas like Sea Transport Services, Logistics and Shipping Agent Despite its short time of operation, they work quite well, complete all the missions and develop Tan Cang Shipping becomes a prestige brand, having a strong position in the shipping industry in Vietnam nowadays With the criterion "Coming to Saigon New Port, coming to one of the top quality services", Tan Cang Shipping always tries to provide their customers best quality shipping service To the Sea Transport Service, Tan Cang Shipping provides customers with domestic transport services by sea line including main routes: Ho Chi Minh - Da Nang - Hai Phong and opposite or Ho Chi Minh - Hai Phong and opposite To Logistics, they provides a full range of professional logistics services such as freight forwarding, customs clearance services, warehousing services, And to Hai My Duong - January, 2018 Shipping Agent, we now are acting as an agent for vessels to import and export in domestic ports as well as international port in Vietnam In addition, we are ready to provide ancillary services such as customs clearance, fresh water supply, fuel, crewmembers supplying and other support services when the customer needs Besides developing shipping service, Tan Cang Shipping also focus on hiring and training their employees With the core value: "Satisfaction, Trust and Long-term commitment of our customers", all the employees of Tan Cang Shipping are always enthusiastic, hardworking, having responsibility with work and more experience to solve customers’ requirements quickly in all situations happened during transportation Moreover, Tan Cang Shipping usually has the policies of supporting and consultation so that they can make their customers feel satisfaction when they choosing their service and want to build a long-term stable cooperation The organizational structure of Tan Cang Shipping consists of departments: Hai My Duong - January, 2018 Methodology This thesis was developed and supported by both primary and secondary data with particular following methods and resources: Business reports: TCS's business performance report for dry service and reefer service in 2017 checked in order to analyze how TCS achieve the target revenue as well as how each trip follows the golden structure The report on reefer container’s revenue in 2017 be classified by customer’s name and trip Interview: From the results of data analysis in business report, classify the customer using TCS services into focus-groups, build an interview guide and in-depth interview for each group and TCS’s Vice Director Market Research: Online research in Viet Nam shipping line market as well as interview TCS’s customers to understand refer container market size Theory: Customer satisfaction and Service Quality in liner shipping industry Problem Identification Situation Analysis The domestic shipping market has types of good: dry container and reefer container Dry container included: 20GP (20feet) and 40HQ (40 feet) Reefer container in domestics market only has 45RH In liner shipping industry, the quality of good the vessel carried is calculated by TEU Each vessel has limited TEU to carried, all good have to be packaged in to container and 1x40HQ=1x45RH=2x20GP=2TEUS The domestic shipping is the core business of TCS TCS operates vessels with routes SouthNorth and opposite a week Domestic shipping industry in Viet Nam has liners: Hai An, TCS, Vinafco, Vietsun, Germadept, Bien Dong, GLS…TCS and Hai An are liners have more vessels and routes than the others From the beginning, TCS only transported dry container base on the relationship of broad Hai My Duong - January, 2018 director in the market to attract customers After years, TCS gain their trust and loyal, and the Broad of Director realized that reefer container market is a potential field to develop TCS has launched Reefer container’s service with objectives: Diversified TCS’s service: Most TCS customers are freight forwarders who have goods in both dry and reefer container TCS want to provide full of choice to customer who already has used TCS’s service in dry container filed Opportunity Costs: Receiving a reefer container is economically more cost-effective than a dry container of the same size Specifically, the empty dry containers are owned by TCS and incur costs repair, cleaning, stock in yard… while empty reefer containers are owned by the customer (domestic liner does not own empty reefer containers), so that customers will pay all of these fees Regarding the freight, reefer container cost 10 million VND while the dry one is million VND We can calculate the opportunity profit of transport a reefer container, TCS will gain million VND from difference freight while 40HQ and 40RH are covered similar slot (2 TUES), TCS will not pay the clean (200.000 VND) and storage fee (100.000 VND/ day) because 40RH are customer’s owner In order proceed reefer service, TCS's leaders were based on the actual situation of TCS customers, TCS infrastructure conditions and freight rates to calculate a golden structure for each ship to ensure the feasibility and maximize profit in the beginning At present, there are 20 customers using TCS’s dry service have reefer container need to transport (see Appendix 05, Source: Marketing Department Report, December, 2016) TCS expects to attract 20-30% of these qualities About the facilities of TCS, vessels of TCS have different capactity, Tan Cang Foundation (TCFD) – 370 TEUS, Tan Cang Victory (TCVR) – 325 TEUS, Tan Cang Pioneer (TCPN) – 395TEUS and Tan Cang Glory (TCGR) – 425 TEUS and different freight of 20GP (3 million VND), 40HQ (7 million VND), 40RH (10 million VND) TCS calculated the effective structure to ensure the feasibility, maritime safety and maximize profit called “golden structure” Hai My Duong - January, 2018 Table 2: Golden Structure of TCS’vessels Target Quantity 40RH 20GP 40HQ TCFD 15 120 110 TCVR 20 125 80 TCPN 20 125 115 TCGR 20 135 125 10.000.000 3.000.000 7.000.000 Freight (VND) Symptoms After months operated reefer service, the result could not be as expected Show on: Under-expected quantity: For detail, basing on the revenue report from Jan to July, 2017, it is figured out that 95% of the transfer below the expected level, only 5% achieved as equal or more than expected 5% achieved the expected is on March, after Lunar New Year, when the market in in the peak But only 5/ 16 routes on March achieved, while the market is in the peak on March Chart 1: Revenue and target revenues by vessel in the beginning of 2017 For detailed analysis, for 20GP and 40HQ dry container, it is easy to see that dry sales nearly achieve the expected level, especially some trips are more remarkable Chart 2: Revenue and target revenues by Dry container in the beginning of 2017 Hai My Duong - January, 2018 For revenue of reefer container, the output was completely below expected and unstable on each ship So that, the operation of reefer service is lower expected Chart 3: Revenue and target revenues by Reefer container in the beginning of 2017 Attracting dry’s customers is not effective: Only 15/20 dry’s customers used TCS’reefer service and of them have signed the fixed-slot contract with TCS, become key account in TCS’s reefer field Table 3: TCS’reefer customer Type of customer Key account Regular Customer Customer’s name Number of 40RH in month (79 routes) HNC VINACONNECT HAI DANG PHAT TCRF 10 Quantity in month/ total quantity 233 143 46,88% 28,77% 22 4,43% 22 4,43% Hai My Duong - January, 2018 Table 4: groups of reefer customers Type of customer Customer’s name Key account HNC VINACONNECT Regular Customer HAI DANG PHAT TCRF COLLYER : VINALINES HP VIET SAC New customer: SCL HAMITRANS TNN GL GREEN LOG DE LTA GMD KIM THANH SINH Not Reachable TTO Nhat Phuong To understanding the customer’s insight about TCS’s reefer service, the elements affected to their decision to find out which TCS missed, we conduct an in-dept interview on focus-groups Basing on the in-dept interview TCS’s customer groups, the key accounts group is satisfied with TCS’s service and they give more slots on TCS than other liner (60% for TCS) The other slot on other liner to ensure they have flexible schedule So that it is difficult to increase their volume on TCS They have signed fixed-slot contract with TCS to ensure the volume on each trip Different from key account, the regular customer group is still not gave more slot on TCS while their ability is more than They used TCS’s service to maintain relationship in the high season, they also have current partner and not intend to switch to TCS’s service as their main choice The regular customers are not satisfied with TCS service included: policies, freight, supporting when un-expected situation occurred… While being ask “do you intend to increase slot in the future”, they were said that their current regular shipping line is quite well, thus no plan to switch 13 Hai My Duong - January, 2018 to TCS because TCS’s service have not competitive advantages and they not satisfied with TCS’s service In the high season, the new customers group just come by themselves to use TCS’s service when they have emergency good to transport and TCS’s shipping schedule is available, they did not gain any support or promotion and they never reuse TCS’reefer service On the other hand, there are still more well-known customers in the market that have not used TCS’s reefer service (Table 4) It clearly shows that TCS could not reach potential customers In general, both regular customer group and new customer group have choices in other competitive liners who joined the market long time ago and they could not see competitive advantaged in TCS’s service In particular, regular customers were not appreciated in service quality of TCS and the new customers were not received any support or policies to promote their volume, they only know TCS’s new service through market informations rather than the marketing activities of TCS Basing on the interview result, there are potential problems of the symptom: - Low customer satisfaction of regular customers Competitors are stronger than TCS show on issues: • • - TCS joined reefer transportation service lately TCS has not competitive advantage compering with other liners Marketing strategy to attract new customers does not implement According to these analysises, TCS should focus on low customer satisfaction of regular customers because: - - Current regular customers have large and stable volume with transportation contract with the reputed companies For example, Hai Dang Phat Logistics have about 100-150 40RH need to be transported a month but only give 5% of this to TCS, Vinaline Logistics HP has sign the contract with Merino ice-cream to transport 80 40RH from Ho Chi Minh to Hai Phong a month… They have not given more their quantity to TCS but they want to remain relationship with TCS to diversified their service offerd to their customers by booking every route with 2-3 TEUS All regular customers have used TCS’s dry service, so that, TCS have all of database, information, relationship with manager and leader, it is easily to build the cooperation in the long time Regular customers are more potential to be key account than new customer group or nonreachable potential customers if TCS can meet their needs and create competitive advantage compared with other competitors 14 Hai My Duong - January, 2018 Basing on interview result, regular customers are not satisfied with TCS’s service and could not see competitive advantage in TCS when comparing with other liners who join reefer domestic shipping long time age To gain the loyalty of them, TCS must meet at least element or all of them About the competitors factor, TCS joined market lately, so that, TCS must create competitive advantage comparing to other liners to attract customers In general, Korler and Armstrong (1) stated that “a shipping firm can satisfy customers by offering low-cost or differentiated services”, but domestics liner could not dump freight, so that according to Dadfar and Brege (2) “liner should differentiated services, one way to differentiate a firm’s services is by offering high-quality service” Midoro (3) said “the only way to gain competitive advantage is providing high level of customer satisfaction.” In domestics shipping market in Viet Nam, the best way to increase competitive advantage is increasing customer satisfaction or offering high-quality service About attracting new customers, another thesis will solve this problem So that, my thesis chooses low customer satisfaction of regular customers is the central problem 15 Hai My Duong - January, 2018 Initial cause-effected map Central problem: Low customer satisfaction of regular customers Symptom: Customers are not satisfied with TCS’s reefer service Competitors are stronger than TCS in reefer transportation service TCS has not competitive advantage compering with other liners TCS joined domestic shipping market lately Marketing strategy to attract new customers does not implement 16 Hai My Duong - January, 2018 Potential root cause: About the service quality in liner shipping, according to Kum Fai Yuen and Vinh V Thai’s research called “Service quality and customer satisfaction in liner shipping” accepted 29 March 2015 by School of Civil & Environmental Engineering, Nanyang Technological University, Singapore, customer’ satisfaction in liner shipping can be classified into groups: Responsiveness, Speed, Value, Reliability.(4) Reliability: consisting of core and non-core attributes which reflect the overall consistency in providing customer service, error-free documentation, on-time pick up and transportation Included: • Consistency of customer service • Error-free documentation • On-time pick-up and delivery of cargo Speed: related to the core activities of shipping service Included: • Transit time of transportation service • Frequency of transportation service • Accuracy of cargo tracking systems • Idle time of shipments and availability of empty containers contribute to the speed of a shipment Responsiveness: this factor relates to the supporting elements of liner shipping service Included: • Speed of claims • Effective of sale team • Promptness of customer service • Exhibition of socially responsible behavior • Involvement in green shipping practices • Availability of large selection of service offerings 17 Hai My Duong - January, 2018 Value: involving maintaining the cost advantage of shippers by being sensitive to the pricing of shipping service and shipper’s total logistics cost In addition, cost can be reduced by maintaining the condition of ships equipment, and enhancing the safety and security of shipment “Value” can be evaluated by elements: • The pricing of shipping service • Total logistics cost • Condition of ships equipment • Safety and security of shipment From the study, Kum Fai Yuen and Vinh V Thai found that Reliability and Speed are the main predictors of customer satisfaction, the result indicated that liner prioritize time-related and responsive service Following after is Responsiveness consist of supporting indicators which assess customer’s perception and experiences before and after using service Finally, Value determined the competitive freight and fee Basing on these concepts and result, conducting an interview of regular customers and finding out which are the potential root causes 18 Hai My Duong - January, 2018 According to the interview result, regular customers of TCS have trouble in many indicators: Consistency of customer service, On-time pick-up and delivery of cargo, Transit time of transportation service, Frequency of transportation service… But the highlight is Frequency of transportation service, the indicators strongly affected to customer’s decision About the factor: “Frequency of transportation service”: TCS has vessels and run about trips/ week, but the schedule is not fixed (Table 2) For example, in the 2nd week of 2017, vessels run on Monday, Saturday and Sunday, but the next week, schedule is Wednesday and Sunday Although TCS updates shipping schedule on website day by day, the schedule is arranged in one month and any revised will be noticed, but according to customers it is difficult to manage the packing plan so that they could not give a fixed number of reefer container on each trip Customers trend to compare TCS with Hai An, the direct competitor of TCS, Hai An has fixed shipping schedule with trip on Tuesday and trips on Sunday Frequency of transportation service is reflected by shipping schedule TCS have not had weekly fixed-day service, shipping schedule is floating, this non-fixed day service lead to consequences: - Customers could not actively set up packing schedule in the long time while all of their transportation contract be signed long time - Liner could not book a fixed schedule berths in port, TCS also book while vessel have exactly time of discharge But, port will priotitize arrange berths for liner who has fixedschedule, TCS’s vessel often anchored offshore from 6-12 hours, in the peak season may be 24 hours Ship anchored offshore will be lead to delay in both ports, affected to prestige of company, schedule of other ships if the time discharge or arrived is duplicated - Delay also incurred the per day ship cost The per day ship cost is the expense company has to pay whenever vessel run or not, according to vessel management department’s calculator, vessel day cost 79.014.442 VND (Table 2) 19 Hai My Duong - January, 2018 Table 2: The per day ship cost No Details Cost per day Salary (12 personal) 10,553,425 Rations Water 214,027 Imasat-C + 3G communication + Ship tele 147,945 Small maintainance 2,739,726 Big maintainance 9,150,685 Material 5,479,452 Depreciation Insurance 5,284,890 10 Overhead cost 9,589,041 11 Interest on loan 13,972,603 12 Other 1,369,863 Total 79,014,442 1,700,000 18,812,785 So that, the root cause of central problem is: un-fixed day shipping schedule of TCS Basing on these theories, data and analysis, drawing the cause-effective map to see the root cause of central problem 20 ... CHI MINH CITY International School of Business Hai My Duong (NON FIXED-DAY SHIPPING SCHEDULE IN TAN CANG SHIPPING AFFECTS TO CUSTOMERS SATISFACTION) MASTER OF BUSINESS ADMINISTRATION... intension that having fixed-day shipping schedule is more important than full fill each trip Background information Tan Cang Shipping Joint Stock Company (or Tan Cang Shipping – TCS) is a transport... top quality services", Tan Cang Shipping always tries to provide their customers best quality shipping service To the Sea Transport Service, Tan Cang Shipping provides customers with domestic transport