Scope of work:Task 1 Describe transport infrastructure of Buon Ma Thuot City for available modes of transport Road transport overview, main road, infrastructure condition, development or
Introduction
This project has several objectives One of the objectives is to research and describe the transport infrastructure of Buon Ma Thuot City for its available transportation modes Another objective is to recommend 3 alternatives for the multimodal transport operation of a shipment from Buon Ma Thuot City to a European city Finally, this project evaluates some external factors’ influences on Vietnam’s logistics industry and recommends at least 3 solutions for further improvement
To be done Description Timeline
Task 1 Describe transport infrastructure of Buon Ma Thuot
City for available modes of transport
Road transport (overview, main road, infrastructure condition, development orientation)
Air transport (overview, routes, operation agency, infrastructure condition, development orientation)
Task 2 Suggest 3 options for multimodal transport operation of a shipment (LCL or FCL) from Buon Ma Thuot to a European city
Search case, purchase order, sales contract, trade document related to coffee cargo
Clarify shipment info and cargo specification Week 5
Find possible routes and corresponding transportation modes
Find route information (distance, lead time, cost, document, 3 PLs, etc.)
Suggest routes and corresponding 3 PL Week 8
Task 3 Evaluate the impact of some external factors’ influences on Vietnam’s logistics industry and suggest at least 3 solutions for further improvement
List external factors that impact Vietnam’s logistics industry
Evaluate how these factors impact Vietnam’s logistics industry in detail
Suggest solutions to deal with the influences Week 7, 8
3 Buon Ma Thuot City overview
Figure 1: Buon Ma Thuot City Map
Buon Ma Thuot city, situated in the Central Highland of Vietnam, is known as the capital city of Dak Lak province It accounts for about 2.87% of the natural area of Dak Lak province The city boundaries are defined as follows: Cu M'Gar district in The North borders, Krong Ana and Cu Kuin districts In the Southern border, Krong Pak district in the eastern borders; Buon Don and Cu Jut districts (Dak Nong province) in the western borders
Buon Ma Thuot city is divided into 13 wards and 8 communes Several industrial parks and clusters are located surrounding the city such as Hoa Phu, Phu Xuan Industrial Park, Ea Dar, Tan An, and Ea H’Leo industrial cluster, which attract a large number of investors and contribute to the area's economy With a large number of industrial parks and groups, the demand for transporting goods to factories and for its customers in these sites increases This attracts many logistics service providers in Buon Ma Thuot City and Dak Lak province
Buon Ma Thuot has its advantages in coffee production, with an output of over 550,000 tons of green coffee per year Another principal industrial crop in Dak Lak is rubber, which greatly impacts the region's growth, stability, and export turnover, with an annual output of over 34000 tons The products are exported to several nations in the world including Germany, the Netherlands, Malaysia, the United States, and China Overall, the agricultural products of Buon Ma Thuot - Dak Lak are sold to more than 68 nations and territories worldwide, particularly in major markets like the United Kingdom, France, the US, and Japan which have high standards for product quality and food safety Buon Ma Thuot - Dak Lak currently has more than 90 import-export businesses, 21 of which engage in the regular import-export business, and 3 businesses with foreign investment In the 2016–2020 period, exports of USD 2,898 million reached 76.8% of the plan (USD 3,765 million), growing at an average rate of 5% per year; imports of USD 471 million increased at an average rate of 108.9% per year, reaching 636.5% of the plan (USD 74 million).
Transport infrastructure of Buon Ma Thuot city for available modes of transport description
The road transport system of Buon Ma Thuot City has 3 main expressways and several minor road networks which help the city easily do freight transportation between Buon Ma Thuot and its neighboring regions and connect to the coastal city which has a harbor to conduct sea transportation to other regions of Vietnam and foreign nations Buon Ma Thuot's road infrastructure basically satisfies the people and freight demand, but the road condition is badly degraded
The Buon Ma Thuot road transportation has its regulations that the peak time frame of freight transportation operates between 6 a.m to 8 a.m, and 4 p.m to 6 p.m The restriction of peak hours is intended to organize traffic efficiently and improve urban traffic safety Buon Ma Thuot; gradually and successfully implement provincial laws governing urban road transportation operations and the percentage of passenger vehicles that can accommodate individuals with impairments traveling there
Buon Ma Thuot City possesses the intersection of the three National Highways including National Highways 14, 26, and 27 National Highway 14 connects the cities in the North such as Pleiku city (178 km), Kon Tum city (228 km), Da Nang (520 km), and cities in the South including Dak Nong (83.5 km), Binh Phuoc (220 km), Binh Duong (291 km), Ho Chi Minh City (363 km) in the South of the city National Highway 26 links the city to the East which has coastal cities, connecting Ninh Hoa (154 km) and Nha Trang (187 km) which is the national marine tourism center and the hub of international sea transportation with the Van Phong deep-water port, considered as a critical sea gateway of the Central Highlands National Highway 27 connects the city to Da Lat City (211 km) and to Phan Rang - Thap Cham City (314 km) Currently, the national highway is small and degraded, with many regular traffic accidents
The transport network in the province is quite complete, meeting the demand for goods freighting and the people's travel needs, which creates favorable conditions for cooperation and development among the provinces in several fields However, in comparison to other regions in the country, the road traffic system in Buon Ma Thuot City and Dak Lak province is still on the small scale Many roads that have been constructed and operated for more than 15 years are degraded currently but have not been repaired and upgraded upgrade The road transport network only serves inter-provincial and inter-regional connectivity in the Central Highlands and Central coastal regions, furthermore, the infrastructure in the Cambodia-Laos-Vietnam development triangle has not yet met the requirement The national highway system has not been subsidized for renovation and upgrading
This national highway condition in Buon Ma Thuot City is degraded, which causes goods trade to slow, spending a long time to transport goods, and logistics costs high This led to losing considerable competitive opportunities for goods, and agricultural products which cannot be transported for too long As a result, the bad road infrastructure hinders the goods and services growth and the province’s economic development
At the end of 2019, the Dak Lak Provincial Party Committee issued a policy to build the Khanh Hoa - Buon Ma Thuot expressway which has a length of 117.5 km, a total investment of nearly VND 22,000 billion, is expected to start before November 30, 2023, and be complete in December 2026 The expressway is expected to decrease the travel time between the two areas and at the same time support the province's socio-economic growth The expressway’s starting point is the intersection of national highway 26B and national highway
1, Nam Van Phong port area, Ninh Hoa town (Khanh Hoa) The endpoint will intersect Ho Chi Minh road to avoid the east of Buon Ma Thuot city (Dak Lak)
Buon Ma Thuoc Airport is situated near the provincial capital Buon Ma Thuot in Đắk Lắk province, which can be accessed by National Highway 27 The airport has another name, Phung-Duc Airport, which possesses an active runway and a second incomplete runway that cannot be operated The airport plays a crucial role in inter-regional traffic, connecting the Central Highlands with the Southeast, Central, and South Central Coast The airport This airport is expected to be handled 1,500,000 passengers in 2022
The airport runway has a length of 3,000 meters and a width of 45 meters with auxiliary equipment including night lights, ladder trucks, forklifts, and conveyors to ensure that this airport can meet the operation of commercial aircraft such as A320, A321, and modern military aircraft day and night The airport capacity is designed to serve business development tasks economy, security, and defense in the Central Highlands region
Buon Ma Thuot airport connects to other domestic airports across Vietnam regions, which play an important role in the city and Dak Lak province to transport freight and passenger to other Vietnam regions
Buon Ma Thuot - Tan Son Nhat
International Airport, Ho Chi Minh City
VietJet Air, Vietnam Airlines, Pacific Airlines
Buon Ma Thuot - Da Nang International
VietJet Air, Vietnam Airlines, Pacific Airlines
Buon Ma Thuot - Noi Bai International
VietJet Air, Vietnam Airlines, Bamboo Airways
Buon Ma Thuot - Vinh Airport, Nghe An VietJet Air, Vietnam
Buon Ma Thuot - Tho Xuan Airport, Thanh
Buon Ma Thuot - Cat Bi International
Buon Ma Thuot - Chu Lai Airport, Quang
Table 1: Domestics Buon Ma Thuot air route
After many upgrades and renovations, Buon Ma Thuot airport currently possesses 01 take-off and a landing runway with an area of 3,000mx 45m, with the symbol 09/27 Along with that is a taxiway with a size of 209m x 18m, which connects the take-off and landing runways with the apron b Aircraft parking lot
The aircraft parking lot (Apron) of Buon Ma Thuot airport is divided into 5 parking positions to guarantee safe distance for small to medium-sized aircraft, such as ATR72, A320/321, and equivalent Buon Ma Thuot airport nowadays only serves domestic flight routes, connecting with several major cities in the country, there are no flights to regional and international countries c Terminal
Buon Ma Thuot airport terminal was built with 1 ground floor and 1 mezzanine floor with separate functional areas Both floors are equipped with advanced aviation technologies and techniques including 04 exits, 12 check-in counters, 03 baggage carousels, 01 VIP room, an automatic fire fighting system, security scanners devices, etc
Nowadays, Buon Ma Thuot Airport is invested to enhance its facilities which will satisfy the need for transportation in the future The Vietnam Ministry of Transport approved the plan to improve Buon Ma Thuoc Airport from 2015 to 2025 With the vision to 2025, Buon
Ma Thuot Airport will be upgraded to an international airport, boosting the development of Dak Lak province and the Central Highland region The airport is oriented to become a 4C- class airport and military airport level I Constructing more parallel runways with the size of 3000m x 18m This expansion is to ensure that the airport capacity can serve modern aircraft types such as A320/A321, ATR-72, F 70, and equivalent aircraft The number of aircraft receiving at peak hours is 7, the number of passengers received is 800,000 passengers/year, and the number of passengers during rush hour is 420 passengers/peak hour.
The shipment’s multimodal transport operation
1 Initial information of the shipment
The detailed information of the shipment is as followed:
− Commodity: Vietnam Robusta Coffee - Grade 1, Screen 16, 2% BB
− Place of delivery: Buon Me Thuot Province
− Destination: Avenue des Mousquines 12, CH – 1325 Lausanne, Switzerland
− Volume: 151.20 MT, corresponding to 30 lots
− Quantity: 2520 bags, (dimension 100 cm x 65 cm x 27 cm per bag)
− Price: To be fixed at USD 1,115 per MT under LIFFE May – 2011 at the Seller ‘s call
− Payment: 100% Invoice value by an irrevocable Letter of Credit at sight
− Time: December 2010 at Buyer’s option
− Documents: o Full set 3/3 Bill of Lading o Commercial invoice in triplicate o Certificate of Origin (GSP & ICO) o Phytosanitary Certificate, Fumigation Certificate if required
❖ Cargo classification: dry, light cargo (seeds)
Robusta coffee beans are round, small, about 10-13 mm in diameter Robusta beans have a dark brown color and a caffeine content of 3-4% The appropriate temperature is 24 - 29 degrees Celsius
- Moisture: 12.5% Max by oven test
- Black and Broken Beans: 2% Max
- Foreign matter (excelsa, arabica, catimor): 0.5% Max
- Bean size: min 90% of beans on screen No 16 (6.3 mm) Crop 2009 – 2010
- Free from fermented, moldy and spongy beans
- Subject to pre-shipment sample approval by Noble coffee Vietnam
• Use ventilated containers (coffee containers):
Since voyages involve transits from a warm to a colder climate, the beans emit moisture which results in condensation on the inside of the container
The containers should be stowed below the deck away from heat sources External meteorological conditions do not then have a direct effect on the containers They are shielded from the external conditions by the surrounding containers and the ship’s walls, meaning that the hold air, with its temperature and moisture/humidity values, constitutes the decisive external influence The risk of frost on the one hand and major daily variations in temperature may result in spoilage of the coffee, so stow below deck where possible
Fiber rope, thin fiber nets Used nets must be washed and dried before use, to prevent tainting by odors or seawater
To guarantee safe transport, the bags must be stowed and secured in the means of transport in such a manner that they cannot slip or shift during transport If loss of volume and degradation of quality is to be avoided, the packages must not be damaged by other articles or items of cargo.
Attention must also be paid to stowage patterns which may be required as a result of special considerations, such as ventilation measures
• Specific service requirements from customers:
− Temperatures should be between 10 and 20°C during the transport of green coffee beans
− Deny wetness: bubble foil/cardboard/solid stow method
− Deny lack of proper lining, excessive humidity, or taped container air holes are met by lack of due diligence at the receiving end
To help the seller to deliver the goods to the destination as defined in the Purchase Order, three typical routes are first determined accompanied by their corresponding and an overview of each route is presented in Table ## Each route is designed with different third-party logistics providers, so the characteristics and requirements of each route will differ
Route 1 is designed with the combination of road transportation offered by Lien Quoc Transportation (LQ Transportation) Company and intermodal transportation offered by Maersk
The completed detailed shipment in route 1 is displayed in Figure 5
Figure 5: The detailed shipment in Route 1
The shipment information for the whole route includes
• Type of container: 40 ft HC
• Payload per container: 25.2 MT (~ 5 lots of coffee bags)
• Number of required containers: 6 containers
• Mode of container shipment: Full Container Load
First, LQ Transportation Company is responsible for transporting the goods from the origin (CP Azzan Company, Buon Ma Thuoc City, Dak Lak Province) to Tan Cang - Cai Mep Thi Vai Port, Ba Ria - Vung Tau Province This is the intercity transportation, in which the shipment will travel from Dak Lak Province to Nha Trang Province and later from Nha Trang Province to the defined port The service is the door-to-port shipping service
The specific quotation from the shipping company based on its shipping rate list [1] is presented as follows:
Cat Lai Port, Ho Chi Minh City
Table 2: Route 1's distance, lead time and delivery cost in Vietnam
(Source: https://www.vantailienquoc.com)
So, the total rate is around 23,000,000 VNĐ, not including VAT and other surcharges The lead time may vary from 3 to 6 days
Next, Maersk will receive the shipment at the Tan Cang - Cai Mep Thi Vai Port and is then responsible for transporting it to the destination This is an international and intermodal transportation, in which the shipment will travel from HCMC Port to Malaysia Port, then to Netherlands Port by sea, and to Lausanne by train Maersk offers port-to-door shipping service for this route
The specific quotation from the shipping company from its website is presented as follows:
Cat Lai Port, Ho Chi
Pelabuhan Tanjung Pelepas Terminal, Tanjung Pelepas, Malaysia
APM 2 Terminal Maasvlakte II, Rotterdam, Netherlands
Noble Group Avenue des Mousquines 12,
Table 3: Route 1's cost of delivery from Cat Lai Port to Switzerland
The costs incurred during the transportation offered by Maersk also include:
• Export customs clearance in Vietnam, costing 210 USD
• Import customs clearance, including Domestic Transit Import, in Switzerland, costing
• Cargo Protection and Insurance (up to 15,000 USD), costing 29 USD
Those costs do not include surcharges, such as detention costs, etc
So, the total rate is around 962,929,290 VNĐ, not including certain surcharges The lead time is estimated to vary from 35 to 39 days
The detailed schedule by Maersk is illustrated in Figure 6 and the estimated cost is displayed in Figure 7
Figure 6: The detailed schedule of shipment from Cat Lai Terminal to Lausanne by
Figure 7: The cost quoted by Maersk
This route does bring several benefits; however, it also causes some drawbacks Its pros and cons are presented in the table below
• The estimated cost is reasonable thanks to the combination of the three cheapest modes of transportation
• Lead time is comparatively short
• All clearance procedures are conducted by 3PLs (Maersk)
• Only 2 third-party logistics providers are needed for the route, which simplifies the tracking and tracing
• Multiple 3PLs may cause difficulty in the transfer of containers
• The route from Daklak to Cat Lai Port is longer due to the limit in container shipment by LQ Transportation Company
Table 4: Route 1's advantages and disadvantages 3.2 Route 2
With the suggestion of using the rail transportation service, we found Ratraco Solution Company was a reasonable selection Our shipment is proposed to come across more than 6 nations by railway and finish at Duisburg Station, Germany Because Ratraco Solution Company does not provide first-mile and last-mile services, we have to find other logistics partners providing road transportation, namely Trong Tan Transportation and DHL Express The whole detailed shipment in Route 2 is displayed in Figure 8
Figure 8: The detailed shipment in Route 2
Firstly, the shipment will be carried by Trong Tan Transportation from Daklak and unloaded at Yen Vien Railway Station, Hanoi Ratraco Solutions Company continues to transport shipments along the international railway After that, the shipments will depart from
Ha Noi to Duisburg Railway Station, Germany At this point, DHL Express plays a role as the cross-border and last-mile transporter to deliver shipments contractual destination in Switzerland
The shipment information for the whole route includes
• Type of container: 40 ft HC
• Payload per container: 25.2 MT (~ 5 lots of coffee bags)
• Number of required containers: 6 containers
• Mode of container shipment: Full Container Load
Estimated distance: 13,336 km and lead time: 35 – 39 days, detailed in table 5.
From To Type Distance (km) Leadtime
Yen Vien Rail Station, Ha Noi
Table 5: Route 2 distance and lead time
The total estimated cost of transportation is approximately 1,260,218,480 VND The detailed quotation and lead time from all the logistics partners from its website and customer consulting service via the digital platform (Zalo) are presented as follows:
Table 6: Route 2’s cost of door delivery in Vietnam (Trong Tan Co, Ltd.)
Table 7: Route 2’s cost of rail delivery from Vietnam to Germany (Ratraco Solutions)
Shipment Insurance (1.5% of cargo value)
Total 88,418,480 Table 8: Route 2’s cost of door delivery from Germany to Switzerland (DHL Express)
This route does bring several benefits; however, it also causes some drawbacks Its pros and cons are presented in the table below
• Lead time is shorter than route 1
• The rate of rail transportation is certain
• The route is not affected by the weather
• 3 different 3PLs may cause difficulty in the transfer of containers
• It takes a lot of time to be approved by foreign custom clearance (6 nations)
Table 9: Route 2's advantages and disadvantages 3.3 Route 3
In case of any complication with the operation of the direct route from Ho Chi Minh City to Switzerland, route 3 is introduced as an indirect route which goes through another country to approach Switzerland
An overview of the route shows that it begins with the first state from 119 Hung Vuong,
Tu An, Buon Ma Thuot City, Dak Lak Province, to SP-ITC International Container Terminal by road transport, then the shipment will be transported from SP-ITC International Container
Finally, the goods will travel from Hamburg, Germany and get to Lausanne, Switzerland with a combination of road, maritime and rail transport
A visual and detailed description of this route is displayed in figure 9:
Figure 9: The detailed shipment in Route 3
The estimated distance of this route is 20884.3Km, and the estimated lead time is 48 days
7 hours, detailed as in table 10.
From To Type Distance (km) Leadtime
SP-ITC International Container Terminal Road 990, Phu Huu Ward, District 9, City
Table 10: Route 3's distance and lead time
The shipment information for the whole route includes
• Type of container: 40 ft HC
• Payload per container: 25.2 MT (~ 5 lots of coffee bags)
• Number of required containers: 6 containers
• Mode of container shipment: Full Container Load
First of all, the shipment will be transported from CP Azzan Company at 119 Hung Vuong,
Tu An, Buon Ma Thuot City, Dak Lak Province to SP-ITC International Container Terminal at Road 990, Phu Huu Ward, District 9, City Ho Chi Minh by road transport by Van Tai Tay Nguyen Company The estimated distance is 333km and the estimated lead time is 7 hours The fees needed to cover are from [2] which are demonstrated below:
From To Type Distance (km) Leadtime
SP-ITC International Container Terminal Road 990, Phu Huu Ward, District 9, City
Table 11: Route 3's distance and lead time in Vietnam (Vantaitaynguyen)
Next, the goods will be transported from Ho Chi Minh City to Hamburg in Germany In this case, Hapag-Lloyd AG might be a suitable choice since this is a German Company, so it will be more reliable and experienced with the routes related to Germany Hapag-Lloyd will transport the goods from Ho Chi Minh City to Vung Tau by the barge since this area has an interlaced river system, which will be good for inland waterway Next, the goods will be moved from Vung Tau to Hamburg by a vessel named ONE CRANE This is a vessel weighted 14026 TEU, 364 in length and 51 in breadth This vessel was built in 2016 and owned by Ocean Network Express This vessel, along with the barge will take 38 days to cover 19186km from
Ho Chi Minh City to Hamburg
The fees needed to cover are from [3] which are demonstrated below:
Identify transport cost for 40'STD
− Terminal Handling Charge Orig.: 4000000 VND
− Sealing Charge at Origin: 185000 VND
− Terminal Handling Charge Dest.: 245 EUR = 6,048,000
− Terminal Security Charge Dest.: 12 EUR = 296,000
Table 12: Route 3's distance and lead time from Vietnam to Germany
Finally, Maersk will be responsible for transferring the goods from Hamburg port to the buyer’s company in Lausanne, it will use the combination of truck, ocean and rail transport via another city from German - Bremerhaven, to Rotterdam, Netherlands and finally get to Lausanne, Switzerland The cost proposed by Maersk is 633,913,000 VND which is from [4]
Table 13: Route 3's distance and lead time from Germany to Switzerland (Maersk)
Therefore, the total charge is estimated to be 1,091,691,000 VND, with a lead time of 48 days and 7 hours The total cost of this route is analyzed as followed:
Type of cost Cost Unit
Although this route has some advantages related to the choice of 3PL, and additional options, it raises some concerns regarding the lead time and conflict of transit A detailed analysis of this route’s advantages and disadvantages is as followed:
− Since Hapag-Lloyd AG is a German
Company, it will be more reliable and experienced with the routes related to Germany
− The estimated lead time is 48 days 7 hours in total, which is quiet long for coffee since this product is fresh and in best condition in 2 months
− Hapag-Lloyd introduces the option of Non-Operating Reefer (NOR) container, which helps save cost and reduce the rate of empty container for the system
− The route combines many modes of transport for a better overview
− The transferring through many vendors may be more likely to cause conflict
Table 15: Route 3's advantages and disadvantages
As the three routes above have their positive and negative sides, this section will compare three routes regarding lead time, total transportation & add-ins cost, mode of transportation, and 3PLs partners Table 15 illustrates such a comparison
Lead time 35 to 39 days 35 to 39 days 49 days
Total transportation & add-ins cost
Table 16: Comparison of three routes for the shipment
Having reviewed the three suggested routes, the proposed route is Route 1 for 5 reasons
First, the lead time of Route 1 is the shortest among the three routes (within 1 month and a half) Undeniably, the date of products has a significant effect on the buying decision as the coffee is at its best taste within a certain period after being manufactured So, a short lead time ensures that the quality of coffee is still in its best condition when selling to customers
Exte rnal factors’ influences on Vietnam’s logistics industry and solution
1 An overview and outlook for Vietnam’s logistics industry 2022:
According to government data, there were around 3,000 businesses from all economic sectors offering logistics services in Vietnam in the beginning of 2022 VLA has official members and associate members who represent more than 500 of these companies The majority of the companies are small and medium-sized Vietnamese logistics companies are divided into three main groups: (1) Foreign companies with 100% foreign investment capital or joint venture companies, (2) State-owned enterprises, (3) Private companies
In the first nine months of 2021, the number of newly registered transport and storage firms climbed by 4.61%, and capital increased by 43% over the same time in 2020, according to the Vietnam Logistics Report 2021 of the Ministry of Industry and Trade Many logistics businesses had revenue and profit growth in 2021, the majority of which was a double-digit increase.
The easiest method to demonstrate this is by pointing out that as the domestic economy steadily improved, sea and inland waterway transit improved in the first 10 months of 2021 compared to the same time in 2020 The number of commodities moved specifically by sea and inland waterways was predicted at 68.1 million tons and 265 million tons, respectively, in the first 10 months of 2021, much higher than the same period Notably, throughout the same time period, the overall tonnage of ships rose significantly by 22%.
However, logistics is still a sector garnering a lot of investment in Vietnam and is predicted to develop greatly as a result of supporting sectors, the production of automobiles and electronic components, as well as state investment plans into important economic zones The Vietnam-EU FTA provides additional leverage for the promotion of logistics (EVFTA) Following the effects of Covid-19, market signals have indicated a promising future for Vietnam's logistics sector
The World Bank estimates that Vietnam's e-commerce logistics business is presently worth USD 560 million The development of huge e-commerce enterprises' own ecosystems, in which e-logistics is a key component, is noteworthy The market is evolving, and with it, so is the competition.
2 Some external factors effect Vietnam’s logistics industry
On the other hand, to efficiently develop logistics services in the region, contributing to the execution of strategic orientations and planning To fulfill the practical demands of economic development, commerce, and international integration Vietnam has to create and carry out a strategy to expand logistics services in the region over the future years in order to develop and increase the competitiveness of logistics services As a result, it is crucial to identify and analyze the issues impacting the logistics sector in Vietnam.
Logistics costs normally include risks and damages, transportation costs, administration costs, customer service costs, handling and packaging, inventory-carrying costs, and others.
Transportation and freight cost: Of all the logistical expenditures, transportation is by far the one that has the most impact on businesses, particularly those with their own fleet This is due to the fact that this industry, among other things, entails the purchase of cars, the usage of gasoline, maintenance, depreciation, and idle time
With issues like accidents, long-distance deliveries, and cargo thefts increasing risk exposure, investing in this industry is essential Risk management techniques are excellent solutions for preserving the protection of the company's goods even when they increase the overall freight cost.
Storage and inventory: The cost of logistics inventory is based on how many items the business uses and how long the material is stored in the warehouse Thus, it follows that logistical costs will increase as production time and quantity increase.
Packaging: Packaging plays a crucial role in the appropriate packing of the things, which is crucial to leave a favorable impression on the client who gets your product As a result, it is feasible to increase safety and reduce the likelihood of accidents and product problems This aspect makes it possible to conserve space and use it as efficiently as possible This is due to the fact that quality packaging may greatly differentiate products and result in cost and storage space savings
Administrative costs including customer service, taking and processing orders, and labor management are included in administrative costs Information technologies such as computer hardware and software are also included.
There are 5 external factors that affect logistics costs in Vietnam
The cost of shipping is significantly influenced by fluctuating fuel prices All forms of transportation depend on gasoline, regardless of the freighting and delivery provider a merchant chooses for their business In general, steady fuel prices result in lower costs for trucks, shipping containers, air freight, and ocean freight Unfortunately, merchants can't do much to keep fuel costs down, much like the rest of the global markets.
Contrary to common opinion, the weather does have an impact on logistics and shipping Inclement weather can result in substantial delays and problems with an order, whether it events, ports and transportation hubs continue to charge shops, which lowers customer satisfaction The same is true for freight companies, airplanes, and cargo ships.
The most significant element influencing a logistics company's shipping prices is likely to distance The cost of shipping a package increases with the distance between the origin and the destination In the US, there are a number of shipping zones to be aware of For businesses that export internationally, lowering shipping costs may require setting up shipping facilities in multiple strategic places.
The customs clearance process must be followed when items need to be imported into Vietnam or transported to other countries The products are detained at customs for a long time because of outdated technology and information system support, which increases the logistics cost since goods transit is delayed for customs processes and is charged from warehouses, ports, etc that are seized by cargo and document fees The location will be invoiced for in the cargo hold for custom clearance at warehouses, ports, and container yards.
Modern customs operations are backed by cutting-edge technology and information systems like the VNACCS/VCIS Automatic Clearance System, which makes it quick and easy for businesses and customs officials to complete electronic customs procedures This help business reduces logistics cost significantly in carrying out the custom process With the help of an electronic customs data processing system, the business can decrease from ⅓ to ẵ the time and save 759200 VND per day for document fees compared to before the innovation
Conclusion
In conclusion, this project covers 3 main objectives including Buon Ma Thuot transportation infrastructures description, shipment’s multimodal transport operation, and finding out external factors’ influences on Vietnam’s logistics industry and solutions
Moreover, we understand more about finding quotations from many delivery service providers and improve our teamwork skills.
Appendix
Question 1: Why do all three routes have a lead time more than a month? Does it affect coffee quality?
The cumulative lead time of three routes is considered reasonable because the lead time is is quite large and the total weight of shipments is high which requires higher resources than usual shipments Though the high lead time of transportation, the quality of coffee can remain the best throughout the first 6 months after manufacturing Therefore, the effect of lead time on coffee quality seems low
Question 2: Explanation of the cargo’s classification (light or heavy):
According to international standards, the method to define cargo in sea transportation is as follows:
- 1 ton < 3 CBM: heavy goods, calculation method is applied according to the price list KGS
- 1 ton >= 3 CBM: light goods, calculation is applied according to CBM price list
According to the size of the jute bag, the total cbm for this shipment is:
We have the total weight of this shipment which is 151.2 MT
Therefore, in this case, for 1 ton, the CBM is 417.69 / 151.2 = 2.7625 ≈ 3.
In conclusion, the shipment is classified as light cargo
Question 3: Why are 40-feet containers suitable for this shipment?
The below are five reasons why this shipment should utilize 40-feet containers:
- Suitable for the size of the shipment
It is undeniable that the 40-foot containers are big, which means the company has a lot more options with regard to what it can transport and store Adding shelving can further increase your possibilities
To efficiently use the containers, the company carefully considers the volume and the height of your cargo because a 40 ft container can add up to a total extra volume of 9 cbm saving the company from having to book an additional shipment
The current shipment contains more than 2520 60-kg bags of coffee, which implies a large- sized shipment Therefore, 40ft containers should be considered For 6 40-feet containers, each container is supposed to transport 420 bags, piled up on 24 pallets of 1000mm x 1200mm
- Size of one bag: 100 cm x 65 cm x 27 cm
- Size of container: 1200 cm x 240 cm x 240 cm
This implies that 40-feet containers are suitable to carry the shipment
As 40-foot containers are able to carry far more cargo at once, this represents a more economical and efficient option for the transportation and storage of large quantities The first fact to consider is that 20ft containers are not more cost-efficient than 40ft containers The usual price for a 20ft container is around 75% of a 40ft container So instead of using 12 20- feet containers, 6 40-feet containers can save up to 50% for large shipment
Each container is designed to carry specific cargo based on factors such as weight to volume ratio and weight distribution When planning on shipping heavy loads, the company may not be able to utilize all the available space of the container This is one of the reasons why 20′ containers are more suitable to transport dense items and heavy cargo such as machinery, metals, cement, and sugar And it might not be the best option for voluminous cargo due to limited space
Therefore, considering the products of the shipment - beans of coffee - a 40′ container is usually the best option as it is classified as the light product (explained in the below part) A 40’ container cannot handle twice the amount of weight a 20’ container can; however, it can fit more than double the volume This can also be proved in the first section
40-feet containers are built to last They are the perfect dry storage solution as they are designed to keep out wind and water and keep your items safe from theft, vermin and physical damage
Regarding the required conditions for coffee shipment, these containers ensure product quality till the destination This is particularly important for international shipments The condition of the products in the containers is hard to control for long-distance shipment 40- foot container shipping for this sale contract turns out to be a safe choice
- Other issues with 20ft containers
There can be loading and timing issues with 20ft containers as they can run some delays when sent by train or truck to reach the cargo vessel 20ft containers are usually mounted on the rail in pairs Therefore, it is advisable for the shipment to opt for a safer option, which is 40-feet containers
Question 4: Quotation/ Shipping rates for the shipment
[1] The shipping rate list offered by LQ Transportation https://www.vantailienquoc.com/bang-gia-cuoc-van-chuyen- container/#Van_chuyen_hang_hoa_bang_duong_bien
[2] The shipping rate offered by Vantaitaynguyen: https://vantaitaynguyen.com/bang-gia-van-chuyen-hang-tu-tp-hcm-di-dak-lak/
[3] Quotation by Hapag-Lloyd AG:
[4] The shipping rate offered by Maersk Logistics Company https://www.twill.net/my/booking/f6981186-2bcb-405b-b8f4-20e0c25ebb9e/services
INTERNATIONAL UNIVERSITY, Vietnam National University HCMC
Course: INTERNATIONAL TRANSPORTATION AND LOGISTICS
Hồ Văn Việt Nhật – IELSIU19226
Trần Huỳnh Tố Nhi – IELSIU19054
Vũ Thị Ngọc Nhi – IELSIU19055
TOPIC: For the purpose of this group work, you are acting as logistics department staff in a logistics company which is going to provide logistics services for clients from industrial zones in Buon Ma Thuot City
Course: INTERNATIONAL TRANSPORTATION AND LOGISTICS Code: IS067IU
LECTURER/TA: Assoc Prof Dr Ho Thi Thu Hoa/DOAN THUY
NHA; TRAN DUC KHANH TAN Word count limit: …
Date of issue: 18 st September 2022
Task 2: Suggest 3 options for multimodal transport operation of a shipment
Task 3: Evaluate the impact of some external factors to Vietnam’s logistics industry
STUDENT’S CONFIRMATION OF AUTHENTICITY: I confirm that this is my own work
Student’s Signature: Date of submission:
Very poor Poor Neutral Good Very good
Voting: How many members in group agree with your evaluation?
*** Minutes of meeting need to be submitted together with this paper
Participant: Nguyên, Nhân, Nhật, Ngọc Nhi, Tố Nhi
Objective: Review each task's progress
Task 1: Organized format, found reference sources
Task 2: Selected cargo, wrote Cargo specification
Task 3: Organized format, found reference sources
Task 1: Continue research, find lasted data, information and do task 1
Task 2: Complete 2.1, 2.2 section Find carrier, 3pl, route
Task 3: Detail factor, impacts, research, find lasted data, information
Participant: Nguyên, Nhân, Nhật, Ngọc Nhi, Tố Nhi
Objective: Review each task's progress
Task 1: complete overview, main roads added road and air transport connection map
Task 2: Set address of origin and destination, found potential carrier, 3pl, and possible route
Task 3: Complete describes how these factors impact Vietnam’s logistics industry (both pros and cons)
Task 1: Continue research, find lasted data, information and do task 1
Task 2: Ask for quotation for each route
Task 3: Find 3 of the most significant factors and suggest 3 solutions for improving these impacts
Participant: Nguyên, Nhân, Nhật, Ngọc Nhi, Tố Nhi
Objective: Review each task's progress
Task 1: (50%) complete overview, main road, route, basics illustrated map of road, and air transport Task 2: (50%) Found route information (distance, lead time, cost, document, 3 PLs, etc.)
Task 3: (50%) Complete list of factors, basics pros and cons analysis
Task 1: Complete 75% of road, and air transport
Task 2: Complete 75% of task 2, needed note citation, quotation of each route data
Participant: Nguyên, Nhân, Nhật, Ngọc Nhi, Tố Nhi
Objective: Review each task's progress
Task 1: Complete 100%, Task 2: Complete 75%, Task 3: Complete 75%
Complete all tasks, construct PowerPoint file
Participant: Nguyên, Nhân, Nhật, Ngọc Nhi, Tố Nhi
Objective: Review each task's progress
Task 1: Complete 100%, Task 2: Complete 100%, Task 3: Complete 100%, PowerPoint: 100%
No Full name of students Contribution to group work/Detail tasks Scale Voting
1 Phạm Khôi Nguyên Develop concept, research, and complete task 1, do
2 Huỳnh Thiện Nhân Develop concept, research and complete task 2, and present (100%) 5 5/5
3 Hồ Văn Việt Nhật Develop concept, research, and complete task 3, do
4 Trần Huỳnh Tố Nhi Develop concept, research and complete task 2, and present (100%) 5 5/5
5 Vũ Thị Ngọc Nhi Develop concept, research and complete task 2, and present (100%) 5 5/5