ABSTRACT This report is my result of my internship during four months in Topocean Consolidation Service Vietnam Co., Ltd, the Topocean Group’s wholly own subsidiary in Vietnam, working i
COMPANY BACKGROUND
Company’s general background information
The Topocean Group is a global logistics provider founded in 1990 in Los Angeles, CA, USA The company is one of the top freight forwarder in the trans-pacific trade lane For the last 29 years, Topocean has grown with over 38 offices in more than 15 countries The head quarter is based on Los Angeles, CA, USA and the branches boarding in USA, Asia and Europe
The first mission of the company is providing All-in-One Solution for the entire of supply chain The second is providing a transparent and user-friendly end-to-end transportation pipeline And the third is providing Cost effective and cost definite service All of these missions is to focus on the global strategy that bring the satisfaction to customer
With nearly 30 year- experience, Topocean now can provide a supply chain from first miles to last mile to customer based on the facilities warehouse of 5 million square feet worldwide and 350,000 square feet in Los Angeles
Topocean provide a total solution to customer covering ocean freight, air freight, customs brokerage, warehousing, trucking and data management to big customers Their strong business is the professional in ocean freight and delivery to destination point in USA, with cost effective and customer’s satisfaction
In 2018, Topocean Group is the seventh largest Non-Vessel Operation Common Carrier (NVOCC) of the trans-pacific trade lanes by teus
2 EXPEDITORS INTERNATIONAL OF WASHINGTON INC 265,048.11 10.26%
4 ORIENT EXPRESS CONTAINER CO INC 217,624.66 28.60%
6 BLUE ANCHOR AMERICA LINE (BLUE ANCHOR LINE) 163,549.31 4.76%
7 TOPOCEAN CONSOLIDATION SERVICE (LOS ANGELES) INC 129,807.36 11.89%
10 CHINA INTERNATIONAL FREIGHT CO LTD 90,364.63 52.39%
12 MCL-MULTI CONTAINER LINE INC 75,904.28 20.56%
13 UPS ASIA GROUP PTE LTD 72,533.87 5.63%
14 ORIENT STAR TRANSPORT INTL LTD 71,164.17 15.47%
Source: https://mp.weixin.qq.com/s/LkOu0Vyxf0MsMORLE7LLBA
Now as the trends of the global market, freight forwarder is becoming an old fashion of the industry, Topocean is changing themselves by utilizing the technology for their innovation by providing more and more digital service, and a digital solution to customer It’s based on the big data concept and then can bring to customer the best cost efficiency
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Company ‘s sectors
The company sector is international logistics and freight forwarding
As the original meaning of the freight forwarding, a freight forwarder will bring their knowledge and experience on the shipping industry to provide to customers, the importer and exporter, the total solution of cargo transportation to minimize the cost and maximize the benefit to customer
It is done through integrating information on the freight market between various steam ship lines, truckers and rail operators as well as the complex regulation of different countries to push the cargo lines go smoothly from countries to countries, from the manufacture to the end buyer Under that base of concept, Topocean now is covering various main service sectors as follows:
- International Ocean freight Topocean have a close relationship with the leading ocean steamship lines of the world such as Maersk, MSC, CMA-APL, Cosco-OOCL, Evergreen, Hapag Lloy, etc in global container transportation This is the most traditional power of Topocean with many excellent experience employees in this sector
- International Air freight To providing more services, solution for customer, Topocean starting the international airfreight sector from 2012
- Warehousing With more than five million square feet of warehouse in China and USA, Topocean become a reliable provider to serve for the e-commerce industry, as well as all other customers need a warehouse solution
- Trucking Starting in USA, trucking service is widely provided to all customer in all origin countries as well as destination customer
- Customs brokerage It’s the consultant service for the regulation in any countries, especially in USA, it’s the simple service from Topocean for customer to clear customs at though a modern system integrated with US customs homeport
- Data management As the key point to develop in this industry nowadays, data management is become more and more essential for any freight forwarding company to become follow the market trends to maximize the efficiency of internal management and external value increased to customer
So based on technology solution, Topocean integrates the different services above to handle a large part of supply chain
Company’s products and services
Starting up as an international freight forwarder, now Topocean has become more than a large NVOCC Asia –US trading bring the opportunities for Topocean to develop logistics capacities
So the service ranges of the company are expanding widely The typical of product and service as follows:
Ocean freight & air freight service - NVOCC
- LCL, FCL and air freight service
- Buyer consolidation and pre-distribution
- Cross-dock, trans-load, pick & pack
- Local, national and international drayage
- Pre-pull, drop and pull service
- TITAN – Topcean Integrated Trans Asia Network, provide a platform for internal user of data updating and management, but also can launching selected data for global customer to be automatically daily update
- WBI – Web Booking Interface are web based tools used by customer to access their order management and booking database It’s a web based on-line booking application
- TOPOL – Topocean Purchase Order Locator is a web enabled purchase order management systems Through the Topocean’s homepage linkage, customer can easy to manage all their Purchase orders (POs) with the accuracy and timely of actual cargo flow on the way from the origin points to their destination points
- The integration of TITAN, WBI and TOPOL allow customer an online solution to their cargo flows based on the Order through point to point in a visible way then can help to customer well controlled and organize their business
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Targeting customers of Topocean
Topocean is providing wide range of logistics and aiming to a total logistics service solution to customers, from multiple transportation, warehousing, customs solution and data management
Targeting customers of the company are the ones who need a third party logistics (3PL) provider or a total supply chain management provider of their material and products from port to port, or port to door.
Financial performance of Topocean
For the year ended 31 December 2018 Currency VND
1 Revenue from sales of goods and services provision 15 111,897,585,945 85,009,153,647
3 Net revenue from sales of goods and service provision (10-01-02) 111,897,585,945 85,009,153,647
4 Cost of goods sold and service provision 16 99,425,650,810 75,153,319,438
5 Gross profit from sales of goods and service provision (20-10-11) 12,471,935,135 9,855,834,209
15 Current corporate income tax expense 22 1,390,750,115 976,466,676
16 Deferred corporate income tax expense - -
The income statement is showing the increase on revenue as well as the net profit of Topocean Vietnam The revenue increase VND 26,888,432,298 ($1,144,188), from VND 85,009,153,647 ($ 3,617,140) to VND 111,897,585,945 ($4,761,599), equal to 32% The net profit after tax increase VND 1,646,895,217 ($70,080) from VND 3,904,760,372 ($166,160) to VND 5,551,655,589 ($236,240), equal to 42% from 2017 to 2018 The increase over 30% on revenue while the average market is 15-16% (according to reports by VLA and World Bank) is proof of the potential Vietnam – US transportation market and the efficient of business operation of Topocean Vietnam For the Vietnam market, when President Trump applied duty on the cargo importing from China, the cargo exporting from Vietnam to USA has increased dramatically Many US buyers seeking for Vietnam suppliers to replace for the China suppliers Many multinational companies that have their own factories in both Vietnam and China have tried to adjust their production lines to have their Vietnam factories to exporting to US and their China factories will export to other market than
US Therefore, it becomes a big chance for Topocean Vietnam, a forwarder – NVOCC that mainly focus on the Trans-pacific trade lanes to increase the volume, revenue and profit margin
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COMPANY STRUCTURE AND ORGANIZATION
Topocean’s branches and network
Chart 2.1: Topocean’s worldwide network and branches
SINGAPORE PHILIPPINE THAILAND VIETNAM MALAYSIA
LAS VEGAS SAN FRANCISCO NEW YORK
SAMMER – ITALY AQUA GULF - CARIBBEAN
CHILE BRAZIL FRANCE GERMANY BELGIUM
Topocean Group has its own branches in USA, China main ports and Southeast Asia countries In USA, Los Angeles office is the head quarter and will control all the main activities of the Group and the USA nationwide There is the full function, divisions locating here with over 200 staffs, and the most importance person on board of managers The other office in New York, Atlanta, Chicago and San Francisco are the handling cargo importing the area around these offices, so mostly just sales or customer service and operation teams are represented here
In Asia, Topocean Hong Kong is the regional main office It’s all so full managing divisions in Hong Kong office, combination with Los Angeles office, this second head quarter will control all of the activities of the group
In China, the main office is Shang Hai office It’s the third big and importance office of Topocean Group with full of divisions and function Shanghai office will control all the activities from China mainland, and take part in a part of the global managing office together with Los Angeles and Hong Kong office
In Southeast Asia, Topocean presents in most of countries The Malaysia with the higher education, international languages and more trading interacted with USA, so become the leader in Southeast Asia Topocean Malaysia as the center of the areas will have the responsibility of coordinating Southeast Asia countries for all the sales and operation project to ensure well trained group’s policy to all the offices in the area
Topocean Vietnam, presented in Vietnam for more than 12 years already, is one of the best operation organized and exporting volume in the Southeast Asia With the main office in Ho Chi Minh and one representative office in Hanoi, these two office will handle cargo from all ports of Vietnam, containing all the international sea ports Hai Phong, Ho Chi Minh, Vung Tau, Da Nang, Quy Nhon, Cai Lan as well as international airports as Noi Bai and Tan Son Nhat
In the rest of other countries, Topocean use its agency network for its word wide service at destination The main agents are Manuport, Nee-levat, Cardinal, Nee-levat in Europe, Freight Mart international’s in Australia and Manitoulin in Canada
The first and biggest Topocean’s agency network is Manuport This is also a global forwarder that present in some Euro countries as well as South America Manuport have strongpoints on cargo specialists They develop special cargo project such as heavy cargo, out of gauze cargo, tank cargo or bulk cargo Cooperating with Topocean, Manuport will help Topocean consign their cargo to worldwide and enhance the capacity in handling different type of cargo By the way, Topocean
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10 can also help Manuport to complete their local knowledge and experience in working with China, Southeast Asia and USA countries
In the Europe, Topocean also works with Cardinal for cargo consign to the United Kingdom and Nee-levat for the cargo need more destination service in Europe mainland through Netherland, especially cargo via Rotterdam port
In Australia, Freight Mart International as the first local forwarder with wide range of warehousing service and closed relationship with most of Australian carriers Cooperating with Freight Mart International helps Topocean to complete its last miles’ worldwide service in Australia.
Topocean’s organization
•Enhance sales forces, market share, revenue
2.2.1 The board of managers and president
The top managers are in Los Angeles office Some of them are in Hong Kong office and Shanghai These board of managers together with Topocean’s president (Mr Robert Wang) will decide for the Group’s strategy in each period The board of managers control directly eight global divisions the groups that are worldwide operating, that containing four traditional divisions that representing in all Topocean’s branches, are the Operation, Sales Center, Customer Service and Accounting & Administration and another new four divisions that present some main office of the group only, are Business Development, Pricing Center, IT & Data Management and Global Account
The Operation division is the biggest division in each office There are contain the documentation team, trucking team and customs clearance team As the traditional of an international freight forwarding, documentation work such as issuing Bill of Lading, monitor and controlling cargo is always requiring much more staff than other divisions It’s also the same situation for the customs declaration team, especially in the southeast Asia countries when customs procedure still heavily relay on manual process The difference practice of handling cargo in each local area is the core importance to help the company to handle smoothly any local matters Combining the experience and knowledge of each local office, each operation manager in each country will take a function as legislation consultant This is a very important function for the other divisions and the whole of group
The USA Sales will be the sales center of the whole group, that manage and centralize all sales activities in all office branches But the efficiency of sales activities in each office are strongly different The USA sales team and China sales team are the most active and enthusiasm, then their outcome are the best at all They accounted for the highest number of customer and revenue contributed to the group In other Southeast Asia, except the Malaysia, most of salesman are lack of experience, knowledge and skills then sales activities are also limited than US and China Sales Team
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The Customer Service division is working as the linkage division between different office, divisions and connection the company with any customer to seeking the customer’s satisfaction
The Accounting and Administration is of course representing in all countries to follow up the credit term, payment and cash flows in each country It also the reporting for the loss and profit of each shipment, activities and projects as well as the outcome of performance of each office
2.2.3 Business Development, Pricing Center, IT & Data Management and Global Account divisions
These are presented in the three head office in Los Angles, Hong Kong, Shanghai and Port klang
In other countries, Business Development and Pricing Center can be combined with Sales Center or Customer Service Division IT & Data Management and Global account can be combined with Operation and Customer service division
Following as the trends of the market, that technology is applying more and more in the freight forwarding industry, so the traditional divisions might become smaller and smaller while the new four divisions will be enhancing day by day Manual process will be replaced by automatic process in all division IT & Data Management team are the core team in the process of innovation of the group.
My intern’s position within the company
My intern’s position is in Topocean Vietnam – Hochiminh head office, at Customer Service Division During my intern period, my duty is focus on sales support activities, that is how to make the sales activities become more efficient
There are two people on the Board of managers that will make decision for all the matters of the Topocean Vietnam
The organization of Topocean Vietnam is much more simple than the group with the Data management are done through the Operation Team, the Pricing Center are done through the Customer Service Team The Business Development task will be done through directly by Customer Service Team, Sales Center and Board of Managers The Global Account control are done through both Operation Team and Customer Service Team
The board of managers will directly control most of activities in all divisions to ensure all the staff will be well independent handling their task With total 30 persons in both Hanoi and Hochiminh offices, Topocean Vietnam is the much more simple organization than other countries and become one of the best efficient operating team
Customers, and coordinating other divisions;
- Increase Sales revenues, lifting quantity, new target customers.
Admin (1), Accountant (3) and IT (1) Team
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THE MISSION – ASSIGNED TASK AND GOAL
The tasks assigned to my position: Joining on Sales Team and Customer Service Team
Service Team to find a way to increase the efficiency of sales activities
- Collecting market information and determine the trends of the marking in the coming time
- Identify company’s market position and market share
- Reporting to management and sharing market information to other teams
3.1.2 Working as pricing center for Vietnam
- Daily coordinating with oversea pricing center to keep global contract rate updated for Vietnam
- Rate dealing with local suppliers to update to sales team or managers upon request
- Working with the main suppliers that are shipping lines, local trucking companies and the ocean shipping lines, local trucking companies and customs broker agencies It’s daily communication with them for rate request, negotiation by email, phone, other media devices and/or face to face meeting These activities are very important to the company to get the best rate and best support from the supplier, as well as get the market information update as the quickest way
If the Vietnam Sales Team will take care all the Vietnam customers, who can decide to use the freight and pay all the freight in Viet Nam, so the customer service team will be in charge of nomination customers It’s the Vietnam exporters that sell cargo under Vietnam port FOB/FCA / EX-work term or or the importers that buy cargo under the Vietnam CIF/CPT/DDP/DDU terms
So while the global sales team reach to the freight decided parties, it’s very necessary for customer service team to continuously follow up with the local nominated customer to seek for their convenient and satisfaction within the company’s service
I also joined in sales team to visit customer and listen to their directly feedback to find a way to satisfy them
3.1.4 Coordinating with other divisions to maximize teamwork force
- Sharing daily rate update, market information to other divisions then all member of the company can well understand status of the market, company and have a reasonable response on their daily handling with customers
- Sharing customer’s feedback to the team to find the best way to satisfy customer and reach to company’s goal of profit for long term
- Coordination with other teams to get status of each customers, supplier before communication
3.1.5 Sales support and improve sales revenue
- Keep sales team to be updated latest rate upon request
- Keep sales team for rate quotation to customer upon they are outside
- Keep sales team to be update for market information and customer’s status / attitude, if any
The link between subject matter and my mission
My subject matter is improving sales activities Sales activities in Vietnam is efficient through the outcome of the activities of Vietnam sales team and Global sales team
Vietnam Sales Team mostly focus on local customers But the market shares of main international freight (ocean freight and air freight) are small for Vietnam salesman because it is normally decided by foreign traders There are limited Vietnam customers that can decide the freight to pay in Vietnam The first reason that Vietnam traders are smaller than their partners, then freight negotiation power is weaker than their own foreigner partners so they cannot get the better freight than their partners The second that most of the big customer for international freight are come from the export processing contracts or companies, so all the freights are also nominated by a mother company in oversea for both importing materials and exporting product And the third reason that the custom practice of buying under CIF term and selling under FOB terms, so the freight is often decided by the foreigners
The global sales team with their own global customers, who are the decider of international freight in most of international companies For example, Walmart as a big USA customer will order cargo from various factory in over the world So if global sales team can work successfully with Walmart, so they can win the freight contract for various origin countries
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Sales outcome will reflect through the sales revenue of the company in the whole of Vietnam It’s the actual number of container or air tonnage proceeds by Topocean Vietnam It will be done by the effective of both Vietnam Sales Team and Global Sales Team But due to most of the main freight rely on the global sales team, so the sales activities in Vietnam are not limited on the Vietnam sales team, it strongly relies on the activities of the global sales support, it’s all the activities of the customer service team in Vietnam.
The goals to reach
Studying about the group Understanding the procedure and activities of each division within the company Deep insight study for the sales and customer service divisions
Study the international logistics and freight forwarding market
Collect information about the international freight forwarding market in the world as well determine the trends of the industry
Understand the economic situation of Vietnam Use PEST, five force Porter’s business model to analysis the potential and obstacle of the Vietnam market
Reporting and consulting with board of managers before sharing to the other teams
Keep daily working with pricing center & suppliers for daily update marketing information and other local rate request for sales team
Understanding the rate market position within the internship period
Keep daily communicating with supplier to get daily market information updated
Set up face to face meeting to build up the close relationship with suppliers, then can always get the support from rate and service from the suppliers
Writing meeting recap to management
Visiting nominated customer upon new shipment or new project to determine customer’s demand Coordinating with other divisions to make solutions to ensure customer’s satisfaction
Cooperate with other divisions for internal support each other, especially sales team
Sharing market news within the teams, especially sales team and operation team
Collecting the information from operation team for any problem, analysis for the reasons and sharing the outcome
Find out customers demand and market trends to find a way to increase sales revenues
Continuously studying for the whole internship job to make deep inside of the task
Continuously practice each specific task assigned above to complete knowledge and skills during the internship term
Make supplement for the internship report upon the new knowledge, skill or solution can be updated till end of the term
My contribution to the company
My contribution to the company that I had studied about market situation and trends, then after referring to my supervisor, I shared my understanding to the teams, helped them to understand the industry trends then they could have better knowledge and spirit to improve their internal daily work then find a better way to understand and satisfy customer, as well as help the managers on the ideas for the innovation actions on sales activities
For example, I realized that the international freight forwarder is faster and faster diversification than before Firstly, utilizing technology application, freight market is become more transparency, easier to understand and touch to all users If it took hours or even days to get a transportation quotation from point to point before via email, phone call for any shippers, so now Maersk and Hapag Lloyd, the two leading global container ships, have offered a very convenient online freight quotation function on their website It’s fast, easy, flexible 24/7 So I did access this online function to get the ocean freight from point to points for sales team as well as customer I also share this
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18 with the sales team, online checking rate with Maersk and Hapag Lloyd become easier than before to compare with the company’s current contract rate and update to customer in very quick time However, the issue that some direct customers can also assess the freight quotation like this So to maintain the advantages of a freight forwarder, the sales team and customer service team need to keep closer relationship with the shipping lines, especially for the cargo peak season, once the space capacity is limited by high increase demand of transportation, the quotation still so easy to get but the direct shipper will not be able to get space on the vessel at all the time, we can always control the forecast and space availability Therefore, our consultant service will be always essential for the customers
Secondly, all of the carriers using block chain technology to the customers so easy to follow up the movement of each container or cargo packages The e-commerce increased so customer also very easy to order any item online with door delivery under a click on their PC or a touch on their mobile, with not much care about transportation consulting service as before So these facts of the freight markets make a freight forwarding company become so old fashion with manual process every day, and it is also a thread for the whole of the freight forwarding industry In Topocean Vietnam, I can realize the automatic process is step by step applying with some divisions such as at accounting team for planning of issuing e-invoice for next few month, at operation team for daily strictly data control of each shipment It can say that Topocean Vietnam in on the time of changing from manual process to automatic process So following up the global trends of forwarding for automatic system, Topocean is also under its innovation By understand this feature of the market and the company position, sharing with the team to more understand about the company’s trend, then the sales team, customer service team and I can be more confident to introduce Topocean’s modern service to customer, suppliers, then it helps Topocean to improve its position in the market.
The theoretical knowledge acquired during the academic year in Master AMI that I can
that I can put into practice during the internship
This internship is a so good chance for me to connect the knowledge acquired from the AMI course with the actual practice It helps me to complete my skills and education for my career All the subjects are so useful to me, but typical impress me that are the following subjects:
Table 3.2: MBA subjects and its usefulness
As the first subject of my course, this subject brought me a very global fundamental knowledge that have never got before I understood about financial statements, cash flow, and the very basic knowledge about finance then I could have better understanding the next subjects is Financial Management and Financial Risk Management Therefore, I could be easier to follow up the financial health of my current internship company, the competitors, the suppliers as well as the customers, then I could have a suitable action for each communicating and consulting action in work
This is a typical subject helped me more understanding about the current status of global trade, where the globalization is an unavoidable trends but combining herein so different trends emerging Through this subject, I understand of the CPTPP, the trade war issue, the breakxit matter, and it impacts really intensive to the cargo movement in global transportation industry as well as the Vietnam importing and exporting market
Taxation is always the story in global trade International Trade Taxation is so an essential subject for any industry, especially my freight forwarding industry Under this subject, I have a better knowledge and skill about many kinds of taxes, duties and the tariffs, the way the government acts on this and how it effects to the cargo lane around the world
As one of the most interesting subject, the International Business Plan brings me a specific and practical knowledge and skills to reach to a business goal For the international freight forwarding industry, the subjects
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20 helps me to set up the ideas, measures to improve sales activities base on a very logical knowledge
This is a very close subject with be business field of my internship, therefore, the International Distribution Chanel had enhanced my knowledge about the global distribution channels It motives my passion on studying about the lessons of success as well as failure in the distribution industry, and gave me the idea to continuous study about the trends of the freight forwarding industry in Vietnam as well as in any destination countries that the internship company Topocean is consigning cargo to, and then I know how to set up a plan to match with the destination operation to bring the satisfy to customer
This subject is still new in Vietnam, but actually, it very essential and practical subject in this information age By educated by this subject, I become more confident in each action to consulting our customers for some issues happened in developed countries, that is far different from Vietnam or some developing countries
DEVELOPMENT
The macro environment analysis –PEST frame work
To understand the macro business environment, I use PEST frame work to identify the factors impacting on the ocean freight forwarding industry in Vietnam The PEST model will take in to account of for the main four factors: Political and Legal, Economic, Social- cultural and Technology
International logistics and freight forwarding is an international industry, then the situation of the political and legal in the world and Vietnam domestic are strongly impact to the global trading, then highly impacting on the international transportation and logistics environment
Firstly, the trade war between China and USA has strongly impacted on the trans-pacific transportation In 2019, when the president Trump still insist to impose 45% tax on Chinese cargo, so it has created a movement of factory investment in Vietnam to avoid the tax for their cargo exporting to USA, then it make Vietnam freight market to USA become so potential than ever The ocean vessels from both main ports of loading, Haiphong and Ho Chi Minh/Vung Tau, are always over space The international company such as Foxconn, Samsung, Vinasolar with various factories in Vietnam and China have changed their exporting market plan, that the China factories will focus for Europe market, and Vietnam factories will focus on exporting to USA market Therefore, Vietnam Exporting to USA is dramatic increasing volume to USA in the first half of
For the domestic efforts, Vietnam government establish itself as the export oriented economy, various trade agreements such as CPTPP, Vietnam – EU free trade agreement have been signed These agreements have highly attracted foreign investment then boost the trading and international transportation logistics to be developed
Vietnam current policy is also open for logistics development In 2007, Vietnam allowed join venture logistics company set up Sin 2012, Wholly foreign owned enterprises (WFOEs)to provide
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22 international maritime transport and courier are permitted And from Jan 2014, WFOEs allowed to provide container station depot service, warehouse service and freight transportation agencies
According to the WTO report, the world trade volume growth will fall from 3.8% in 2008 to 2,6% in 2019 due to trade tension, and estimated to increase to 3% in 2020
Chart 4.1: World merchandise trade volume and real GDP growth, 2011-2020
Note: GDP is measured at market exchange rates Data for 2019 and 2020 are projections.
Source: WTO and UNCTAD for trade, consensus estimates for GDP
According to ADB (Asia Development Bank) press released in 18 Jul 2019 in Malina, Philipines, Asia development will remain strong but moderating growth in 2019-20120 due to trade impasse and a slowdown in electronics cycle In Southeast Asia, the economic outlook is robust at projected at 6.6% in 2019 and 6.7% in 2020 but has been downgraded slightly to 4.8% in 2019 and 4.9% in
In trading with USA, Vietnam exporting rose 9.3% year to year to $22.6 billion in Jul 2019, boosted by sales of electronic, computer and components, footwear, wooden product, textile, machinery and equipment spare parts, according to the 2019 US TradeNumbers WorldCity, Inc
The trade world between China and US and the producing cost increasing in China have made a wave of moving factories from China to other countries, especially Vietnam With stable political, high growth of GDP and convenient location in the pacific coast as well as low labor cost, Vietnam are considered as second China in the eyes of foreign investor Many report show that the investment capital from Hong Kong and China for 2018 and the first half of 2019 is highest amount, over the Korean and Japan that still be the leading investor to Vietnam for many years The exporting ratio of Vietnam to USA increase significant These condition push the requirement on Logistics and transportation on this lane is boosted
Vietnam Logistics Performance Index (LPI) in 2018 is 39/160 countries and territories of the World Bank’s ranking The ranking is done each 2 years In comparison with 2016, Vietnam had step 25 position from the 64
Per Vietnam Logistics Forum 2017, Vietnam logistics is increasing 15-16% per year, about 3000 enterprises However, there are 70% number of the firms are small and medium, and are in local private sectors Logistics cost in Vietnam about 20.8% GDP, it’s high level in comparison with China about 14%-16% and the developed countries are about 8-11%
Vietnam targeting to 2025 for the logistics industry increase at 15-20% per year, contribute to 8- 10% GDP and logistics cost will reduce to 16-20%, improve LPI ranking from World Bank
Vietnam with the population of 90 million people, in the golden age, low labor cost and easily to adapt with the development of technology, they are potential human resources for the innovating freight forwarding industry as well as logistics industry
The logistics and supply chain management has become more and more popular subject in the training institutes and schools and universities For example, Vietnam Logistics and Aviation (VILAS), together with International Air Transport Association (IATA), Vietnam Logistics Association (VLA), Vietnam Logistics Institute (VLI) is providing the training programs about logistics, aviation and supply chain following the global standard and practical knowledge of the Federation of Logistics Associations International Transport (FIATA) in Vietnam Many talk show, workshop, seminar and website about the industry also be held in Vietnam recently The ministry of industry and trading has set up the website www.logistics.gov.vn as the official information gate for the logistics to update the industry status
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24 and evens VTV9, a media channel also has a weekly program about logistics All these activities will create an active environment and strong dynamic for the development of the logistics industry
Vietnam is in the fourth industrial revolution with the innovation index ranked 45 th in 2018 jump in to 42th in 2019, according to The Global Innovation Index Database, Cornell, INSEAD, and World Intellectual Property Organizaion (WIPO), 2019 However, Vietnam still in the Lower- middle income countries group, then it’s potential for Vietnam innovation, but will still depend a lot on the growth of other economic factors
Table 4.1 – Top 3 innovation economic by income group
In the Information Technology (IT), Vietnam is booming in both software and hard ware industry According to the Vietnam Software and IT Service Association (VINASA), Vietnam IT industry has increase steady at 30% per year The hardware sectors are contributed by huge investment of big giant such as Sam Sung, LG, Foxconn The IT development is also focus to develop by 290 universities and 55000 students every year The government also have a lot of policy to develop the IT business sectors such as allowing income tax preferable for the big IT company
The government pays high attention on the information-communication technology, that expecting to account for 10% of the country GDP by 2020
The logistics industry, with one of the main leg is information technology, will be highly get the advantages the technology environment to take on
The industry environment analysis – Porter’s Five Forces Framework
To understand the industry of logistics and freight forwarding, I use Porter’s Five Forces Frame work to analyze and understand
So it must to say that, logistics is a very potential increase industry in Vietnam The market players can be divided into three groups:
The first group is the global freight forwarding companies, that mainly foreign companies like DHL, UPS, Expeditor, SDV, Kintetsu, are small number of firms but take for the majorities of the market share and profit performance, especially in international transportation These companies mainly focus on global customers based in Vietnam such as Samsung, Honda, Toyota, Bristone Topocean Vietnam is also on this group that is working with many multinational companies, such as Foxconn, Sanhua, Netgear, Fellowes
The second group is the cooperation or state owned companies that mainly focus on local domestic transportation service, warehousing or the sector that the Vietnam market has not opened yet, such as GERMANDEPT, VINALINES, VIETFRACHT, VICONSHIP, … This group is expanding for the foreign ratio on the capital due to changing in the policy that allow these company to sell their shareholders to foreign investors
The third group is the Joint Stock and Private companies in private sectors with small, limited network, low capital and limited human resources, account for 80% of the firms but just account for 25% market share By the driven of technology and development of the logistics industry, this group is fiercely competing with the 1st group Typical on these groups such as Sotrans, Vinalink, Bee Logistics, VVMV, Vinatrans, Vinafreight
Therefore, Topocean Vietnam has to fiercely compete with not only other global freight forwarding companies, but also the local private companies, especially when Vietnam logistics industry is highly attractive for investor due to high increasing potential import- export growth rate in the coming time
However, the threats of rivalry still be limited in Vietnam due to the government’s policy Per WTO engagement, only 100% capital- foreign- owner is only allowed to set up after 7 years is
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26 joint venture already Moreover, the customs broker service, inland domestic transportation service is not really opened to the foreign companies or investors
The threat of entry in freight forwarding and logistics service in Vietnam is higher and higher because the barriers of entry is reducing day by days
Sales and Experience is becoming easier to have than before because there are many open training course and open information for the industry can be shared through internet, forums, workshop and seminar nowadays The Vietnam labor is better skill and education than before The young people can easy to adapt with technology and global business culture, then even the local logistics and forwarder company can also easy to learn and adapt with new requirement of this industry
The ability of accessing to suppliers is easier than before, especially the ocean international transportation For many recent years, the capacity of carriage vessel is still surplus in comparison with the world goods trading, so the shipping lines have the pressure of reducing the freight to full fill space available, all the carriers are more enthusiasm to connect with the shipper than before All the big shipping lines such as Maersk, MSC, APL-CMA, ONE, Hapag Loyd, Cosco, Zim, Yang Ming, Evergreen, OOCL, SML, PIL have set up their own branches in Viet Nam Their sales team is more aggressive to access and offer the freight and service to any customer
The regulation for entrance this industry in Vietnam is more open than before According to
WTO agreement, Vietnam entrance in 2006 and the foreign forwarding company can create a joint venture within 7 years and set up 100% foreign capital investment In the means time, the EUFTA also enhance big opportunities for Europe company for the transportation, logistics and freight forwarding industry In the means time, the capital investment is always an advantages of the foreign company for the local firms in this industry, then opening the policy will welcome more foreign logistics providers join in the Vietnam market
Topocean Vietnam, as present in Vietnam for long time, 100% capital investment of Topocean Group, experience in the industry and branch network in most of trans-pacific coastal ports are the strong advantages in the Vietnam market But the joining of more competitors will require more competence for the company’s opportunities
The logistics industry offers a wide range of service from packing, warehousing, customs clearance, transportation, distribution, total solution for supply chain and management From each service cope or service level it has a different price The key performance of logistics service is competitive price, convenient service and time accuracy Therefore, threat of substitute in logistics industry can come from the customer’s backward integration, when the customer can set up their own logistics service department to do all the logistics job It also come from supplier’s forward integration, when the shipping lines set up their own logistics company such Maersk with Damco, CMA with CMA logistics, OOCL with OOCL logistics and so on Many shipping lines is also offering online tools for any customer can access carrier’s website directly to get the freight and create the shipping order Therefore, if Topocean just provide only freight forwarding service, the threat of substitute is high
But with for a total logistics service solution with different price level, a freight forwarder or logistics company can offer many service level, and it is not easy for any shipping lines and customer to imitate, so it’s medium threat of substituted
So to keep low threats of substitutes, Topocean need to diversify its own service, from first miles to last mile services as well as the extra value added service such as data management
The suppliers of logistics service are the physical asset providers, who have the owners of warehouse, vehicles, vessels or the IT system For Topocean, mainly ocean transportation service, the main and biggest suppliers are the shipping lines
The ocean container carriage is seasonal industry In the pacific trade lane, it’s the peak season from Jun till Christmas time when cargo need to ship out for the Christmas consumption season and before Lunar New Year, when all the factories want to ship out cargo as much as possible before the Lunar holiday in Asia It is always high demand of transportation on the peak season
So how to balance the ocean vessel carriage capacity for the whole year is a pressure for any shipping lines, that how to increase rate in the peak season and how to maintain customer in slack season But they are also powerful on rate increase while service reduce They have a wide range of physical network set up With the technology innovation in transportation and platform
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28 management, they are high threat for any freight forwarding company not only because of forward integration, but also the new service directly to customers
Internal environment analysis
Geographical location of the company
Two office in Hanoi and Ho Chi Minh
Can control all cargo in the whole of Vietnam Limited on ports service
Level of technology Global IT system Automatic process
Just available for US cargo, limited for other routing, and limited in Vietnam application
Quality of human resource High quality
Possible to further education, training
Motivate for further training, and limited in skills
Financial resources for foreign investments
All the countries branches must independent first
Global sales managers sharing weekly
All the team are timely updated the new information
Local team is limited on analysis
Commercial network and contacts abroad
Global agency set up around the world
Can handle cargo to any destination in the world
More strongly on the location with branches
International experience of human resources
Vietnam is mainly local staff
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English is required for all staff, Chinese is encourage
Most of staff are more better in writing and reading skills than speaking and listening
Limited staff improvement and enhance more foreign language
Strong brand in Trans-Pacific market
Strong brand in Vietnam-USA market Limited on other trade lane
Vietnam is becoming logistics hub of area
More and more foreign companies invest in Vietnam
Most of the global customer are freight controlled by their oversea partners / headquarter
Mostly from the salesman, partly from managers
Management strongly following big account
Limited support for small account
Measures to improve sales activities – Ansoff matrix
Understand the environment of the business of the company, to complete the task as improve sales activities, I use Ansoff matrix to access to execute the task
Enhancing import service, tri-angle business service from Vietnam
Developing more ocean exporting shipments from Vietnam to USA
Enhancing services range: multimodal transports, local inland trucking, customs consultancy, data management, total logistics solution service
This strategy is focus on existing products on existing market The current products of Topocean Vietnam are mainly the ocean freight service from port to port or port to door from Vietnam to USA Topocean Vietnam have strong experience when present in Vietnam for more than 20 years as well as the advantage of price and professional experience
In the current Vietnam market, when exporting from Vietnam to USA is increasing more and more due to the China-US trade war, all the current of customer of Topocean is increasing their volume exporting to US, so it’s necessary to keep more and more close working with current customers on this market to take the advantage of the company to increase the sales revenue
The customers always demand more and more services It’s not only ocean transportation, but also the air freight, road freight, courier freight, customs clearance service, and total solution service It’s not only to the US market, but also to any destination in the word Therefore, Topocean need to enhance more service range for the current customers The services need to be diversified from sea freight to stronger air freight, local trucking freight, Customs Clearance and multimodal transportation The routing should not be limited to mainly USA, but also need to enhance to Euro, Australia, Intra Asia Enhancing services providing is not only take the loyalty of customers, but also increase significant sales revenue
This corner strategy is selling existing product in the new market The current market of Topocean is mainly the factories located in Vietnam Since Vietnam is fast growing, so it appears many Vietnam companies that are high demand of moving cargo around the world, not only come and from Vietnam For example, An Phat Holding, a big cooperation of Vietnam specialized in plastic industry They produce plastic bag and selling around the world They trading the plastic resin as well as buying it with big volume as material Or Vingroup, a Vietnamese cooperation that is diversifying their investment in many different industries, that always high demand of logistics service In the same time, many small and medium enterprises in Vietnam, that are booming their import and export product, that are also high demand of transportation and become the very potential market segment So to exploring Vietnam freight and logistics market, Topocean need to enhance the customer ranges to Vietnamese enterprises market as the more and more potential in the industry
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This is the strategy of selling new product on a new market As the analysis above, the logistics industry in Vietnam is on fast growth ratio, while logistics service covers very wide range of services, not only transportation, but also warehousing, total solution service With the highly development of technology, Vietnam e-commerce is a very potential market that many companies are ready to jump in So as a forwarding company, ecommerce can be a new field that the company can consider to join as a service provider
For some US global customer, Topocean Group is also working as a supply chain management, that providing a platform and connection for the cargo information flow from factories to the end buyer The group experience is showing that this is very potential market, potential product with high switching cost for customer, then always have a long term customer Therefore, implement the data management service for Vietnam company is a new opportunity for the company’s business sector
CONCLUSION
Achievements of the Internship
During the internship, I have learned a lot of new knowledge, experience, skill as well as complete my academic to be in practice
I know how to use the theoretical framework to apply on practice working to thoroughly understand the task It’s using Pest framework, using Porter’s Five Forces framework to analysis the business environment, so I have a full understand of the industry The analysis using the theoretical framework help me a better understanding about what I have learnt in the school It’s useful for not only this industry, this company, but I can also use it for any further business environment analysis in the future, in different industry or in my career I know how to use Ansoff framework to determine the goal of sales and marketing and know the orient to enhance the sales activities and the market All the frameworks help me to cover all the aspects of the business matter
By linking the knowledge learned from the AMI course, I also have better understand about the company, and the Topocean Group I know to read the financial statement I can understand about the finance situation of the company I know how to care about the free trade agreement that can impact on the economy, and the trends of the business and how it impact to the company, and so how the company need to cope with it, then I can have better preparation to adapt with the trends for my jobs as well as my career
The internship task helps me to understand not only about the global logistics market, but also Vietnam freight market, that is very fast developing industry, high requiring of technology application and high requiring of innovation, so I have a chance and dynamic to find more thoroughly about technical of transportation, of information technology, the trading environment and the global economic knowledge It’s the China trade war, the CPTPP, the international investment, the EVFTA and many other macroeconomic sector that I have never take into account before
At the time in Topocean, I also have better experience and skill of team working, how to coordinate between different division to make the tasks to be done in the best way and get the best outcome
I myself can improve a lot of the necessary skills, such as:
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- The skill of searching information and analysis
- The skill of writing a formal document and report
- The skill of collecting information and presentation before customer and colleagues
- The skill of negotiation with customers and partners in different countries or different culture point of view
- The skill of using well and efficiently computers, software as well as other media device
Shortcomings of the Internship
Within fourth months on the internship bring me a lot of knowledge, experience and skills, but the
I know that it still be a lot of shortcoming in my task due to the industry is vast, the cope of business is covering a lot of matters, in a wide range of geographical need to study, while the market situation is changing every day
Some of shortcoming can be listed out as below:
- Within limited time of internship, my market cannot be sufficient due to lack of data and information, such as the contribution of the firms in the logistics industry in Vietnam
- I did not analysis the specific impaction of competitors
- My study is still lack of the information about a specific target sales volume and income
- The target plan still has many things to do but has not specific
- My tasks on the internship is mainly focus on how to handle international transportation freight, to develop the international customers, but on freight transportation only, and limited on study thoroughly on the local logistics service as well as the local domestic customer that is becoming more and more potential day by day.
Suggestion for the company
During the internships, with my achievement and shortcoming combination and my review all the tasks I have done, I would like to have some suggestion to the company as below
For the sales team, the weekly sales meeting for reviewing all customers as currently are necessary to be done in all office The sharing market information are necessary not only in each office, but also in the whole of the group due to the character of the industry is trans-nations, worldwide But how to sharing the information efficiently need to be concerned So far the prompt emailing systems of the company can help us a lot But now with the very fast development of the information technology, to sharing and manage market information fast and efficiently, the
35 company can build of a platform or software for sales meeting and daily sharing the information that is possible to access for any salesman in any time I think by this way, the company can also better manage the sales activities of all the team, have better information collecting for manager to have the best decision on the fluctuation market
In the mean times, for the possible to apply the technology in the daily job, it also requires all the company member have the ability to adapt with the working tools So it’s necessary for all the staff need to improve themselves on the skills of using technology Actually with different human generation in the company, so the younger human can easy adapt with new technology, but for the older one, the company need to have more time on training the usage of technology for all the staff, but more than that, it also need to train and alert about the trends of the industry with technology, so all the staff can understand their own responsibility for improving themselves for the skill and knowledge of using the advance technology in the industry And of course, if the company can have a specific policy for all the staff on further education will be the strong advantage for the future innovation of the company
Also in the human matter, when the industry is not limited in the countries, when Vietnam is coming the Billion US dollars of foreign investment every year, so the foreign language communication is become more and more importance with all the staff on the company For the sales team, with the wave of Hong Kong and China investment, it requires the company for some Chinese speakers to keep close with customers and take the chance and opportunities It’s also the same requirement with the Korean and Japanese customer Therefore, all the sales team as well as the company staff should be encourage and acknowledge of having more and more foreign language for efficiently working with international customer However, the main language in communication of the company is English, but all the Vietnam team just be well done in reading and writing only, lack of skill of listening and speaking in comparison with some other team in other countries like Malaysia or Thailand, then it also need the all the staff to improve English skills, at least for catch up with the colleagues in Southeast Asia area
Regarding the business scope, now Topocean Vietnam is mainly nominated customers from oversea sales, and just mainly handling the freight from port to port, limited the first mile’s service such as trucking, customs clearance, fumigation service, domestic transportation With the practice of exporting under FOB and importing under CIF, the international are mainly the one are pay for
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36 the main freight However, when Vietnam is the coming destination of many multinational companies, especially when now the market is very open after CPTPP, EVFTA and then impact of China-US trade war, so the local first mile’s service area required more and more for international customers, so Topocean Vietnam need to take part in this market sector There are many ways to do this The company can have more human force on this local service Or the company can also outsource the service from the local partners So firstly, it requires some human work as local specialist on the local logistics Secondly, the management need to have the policy to focus on this sector to provide more service to customer The more services that the company can provide to customer, it will be the higher switching cost for customers, then company can have more long term and loyal customers on hand.
Conclusion
In summary, the internship term in Topocean Vietnam is so really valuable to me It helps me have a great chance to deeply understanding the academic theories that I learned in my AMI courses
I know about the macro economic matters I know about the factors impacting on the logistics industry in Vietnam and in the worldwide And analyzing it and applying in Topocean Vietnam, I realized the weak points, the strong points of the company as well as the opportunities and the challenges of the company From here, I know how to complete my task and the importance of combination of both theories and practice working
Moreover, within four months in Topocean, have a chance to working with a very friendly team that always ready to help each other to gain the best performance of each one I also have the chance to touch with a very skillful, high knowledge and kind managers, that help me a lot on having an accurate and objective eyes on any problem as well as any projects and tasks
It’s really my luckiness when have a time experienced in Topocean during last four months It’s a professional working environment, but it’s also warm and closed between each other Practicing here for few months, I be sure that I help me a lot on my career I believe that, with always improvement, Topocean Vietnam will be faster and faster enhance their business in Vietnam as well as the growth of The Topocean Group
Website https://mp.weixin.qq.com/s/LkOu0Vyxf0MsMORLE7LLBA https://www.maritime-executive.com/article/chinese-cabinet-approves-cosco-cscl-merger) https://tradingeconomics.com/vietnam/exports https://www.ustradenumbers.com/country/vietnam/ https://www.wto.org/english/news_e/pres19_e/pr837_e.htm https://topocean.com/home/ https://lpi.worldbank.org/ https://www.worldbank.org/en/country/vietnam/overview https://www.vla.com.vn/ https://vli.edu.vn/ https://www.wipo.int/global_innovation_index/en/2019/ https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2019.pdf http://ven.vn/it-industry-in-vietnam-enjoying-boom-35716.html
Gerry J., & Richard Wh MA, Kevan S., Duncan Ag & Patrick Re., 2017, Exploring Strategy, Text and Cases, , Eleventh edition published (2017) (electronic), Pearson Education Limited,
Edinburgh Gate, Harlow CM20 2JE, United Kingdom, Web: www.pearson.com/uk
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Table 3.2: MBA subjects and its usefulness
Table 4.1: Top 3 innovation economic by income group
Chart 2.1: Topocean’s worldwide network and branches
Chart 4.1: World merchandise trade volume and real GDP growth, 2011-2020 Chart 4.2: The Ansoff matrix
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NVOCC Non-Vessel Operating Common Carrier
LCL Less Than Container Loaded
TITAN Topcean Integrated Trans Asia Network
TOPOL Topocean Purchase Order Locator
FIATA Logistics Associations International Transport
VILAS Vietnam Logistics and Aviation
IATA International Air Transport Association
WFOE Wholly Foreign Owned Enterprise
EVFTA Europe Vietnam Free Trade Agreement
CPTPP Comprehensive and Progress Trans Pacific Partner
CIF Cost, Insurance and Freight
PEST Political and Legal, Economic, Social, Technology