Globalization and economic integration worldwide are occurring at an increasingly rapid and robust pace, creating opportunities for the expansion and development of each country globally. This trend is evident in various aspects, such as the ability of individuals to enjoy Starbucks coffee from the United States in the comfort of their own homes, or multinational companies like Samsung Group establishing factories in developing countries to leverage abundant resources and lower costs for competitive advantages. In line with global advancements, Vietnam has actively pursued opportunities for trade, commerce, market expansion, and mutual development. For example, Vietnam is significantly boosting the production and export of textile products to foreign markets, including the USA, Europe, and China. According to the Ministry of Industry and Trade's report (2024), Vietnam’s garment and textile exports fetched USD 7.8 billion in the first quarter of 2024, marking a 7.9% increase compared to the same period in 2023. Another illustration of this is Vinamilk's investments in projects such as the Hung Yen Dairy Factory, Moc Chau Milk Paradise, Driftwood (USA), Lao-Jagro Development (Laos), and Angkormilk (Cambodia) to enhance production capacity, meet domestic consumption demand, and serve export activities. By the end of 2023, Vinamilk had exported products to 60 countries and territories, generating a net revenue of VND 4,713 billion, representing a 4.4% year-over-year increase (Vinamilk, 2023). It is evident that international trade activities are increasingly growing and playing a crucial role. Among them, freight forwarding stands out as an indispensable service sector, contributing significantly to the development of international trade. In Vietnam, the freight forwarding services sector has witnessed significant advancement in recent years. According to the Vietnam Logistics Business Association (2024), the growth rate of the logistics industry has reached approximately 14 - 16% annually, with a scale of about USD 40 - 42 billion per year. Additionally, Vietnam is blessed with a coastline of over 3,260 km from North to South, along with numerous large and small seaports scattered throughout the country, such as Sai Gon Port, Da Nang Port, and Hai Phong Port, among others. This presents a tremendous opportunity for companies involved in the transportation and freight forwarding sector in Vietnam to expand and develop. However, this expansion also entails an increase in customer demands, which are becoming more diverse and stringent. Therefore, in order to increase competitiveness, attract customers, and bolster reputation, it is imperative for companies operating within the industry, including Danalog, to conduct thorough research, capture market insights, and continually improve service quality. Specifically, Danalog, as a company operating in the logistics sector and offering a wide range of related services, with the freight forwarding service of transit goods to Laos as one of its primary offerings, must prioritize these strategies further to remain competitive and fulfill customer expectations. Moreover, the role of an efficient process in driving business strength is well acknowledged. An efficient process streamlines operations, reduces mistakes, minimizes costs, saves time, and enhances productivity (Cflow, 2023). In the long run, these factors contribute to helping the company position itself and achieve success in its industry. Referring to a service process, the steps within the process play a significant role, allowing the employees in charge to comprehend their tasks thoroughly and execute them effectively, resulting in providing satisfactory service to customers. For these reasons, the topic of “The process of freight forwarding service for goods from the USA to Laos transit via Vietnam at Danalog” was chosen. This research aims to provide a comprehensive understanding of Danalog's freight forwarding process, enabling the company to improve its operations, enhance its reputation, and effectively compete in the forwarding market. 2. Objectives - Describe and analyze the current situation of Danalog's freight forwarding service process from the USA to Laos transit via Vietnam. - Provide an assessment of the company's current service process and recommend solutions to improve the freight forwarding service process of goods from the USA to Laos transit via Vietnam at Danalog.
Rationale
Globalization and economic integration are accelerating globally, offering countries significant opportunities for growth and development This phenomenon is illustrated by individuals enjoying Starbucks coffee from the U.S at home and multinational corporations like Samsung Group setting up factories in developing nations to capitalize on abundant resources and reduce costs for competitive benefits.
Vietnam is actively enhancing its trade and market presence, particularly in the textile sector, with a notable increase in exports to major markets like the USA, Europe, and China The Ministry of Industry and Trade reported that garment and textile exports reached USD 7.8 billion in Q1 2024, reflecting a 7.9% growth from the previous year Additionally, Vinamilk is expanding its production capabilities through investments in various projects, such as the Hung Yen Dairy Factory and international ventures in the USA, Laos, and Cambodia By the end of 2023, Vinamilk successfully exported to 60 countries, achieving a net revenue of VND 4,713 billion, a 4.4% increase year-over-year.
International trade is experiencing significant growth, with freight forwarding emerging as a vital service sector that greatly enhances its development.
In Vietnam, the freight forwarding services sector has witnessed significant advancement in recent years According to the Vietnam Logistics Business Association
In 2024, the logistics industry in Vietnam is experiencing significant growth, with an annual increase of approximately 14-16% and a market size of around USD 40-42 billion The country's extensive coastline of over 3,260 km, complemented by numerous major seaports like Sai Gon Port, Da Nang Port, and Hai Phong Port, offers substantial opportunities for further development in the logistics sector.
2 for companies involved in the transportation and freight forwarding sector in Vietnam to expand and develop
The expansion of businesses in the logistics sector, such as Danalog, brings about increased and diverse customer demands To enhance competitiveness, attract customers, and strengthen reputation, it is crucial for companies to conduct in-depth market research and continuously improve service quality Danalog, with its freight forwarding services to Laos, must prioritize these strategies to meet customer expectations Additionally, an efficient operational process is vital for business success, as it streamlines operations, reduces errors, minimizes costs, and boosts productivity By clearly defining the steps within their service processes, employees can effectively understand and execute their tasks, ultimately leading to higher customer satisfaction.
This article explores the freight forwarding process for shipping goods from the USA to Laos via Vietnam at Danalog The research aims to offer a detailed understanding of Danalog's operations, which will help the company enhance its efficiency, improve its reputation, and strengthen its competitive position in the freight forwarding market.
Objectives
- Describe and analyze the current situation of Danalog's freight forwarding service process from the USA to Laos transit via Vietnam
To enhance the freight forwarding service process for goods transported from the USA to Laos via Vietnam at Danalog, a thorough assessment of the current service workflow is essential Identifying bottlenecks in logistics, communication, and documentation can lead to significant improvements Implementing advanced tracking technology and streamlining customs procedures will enhance efficiency and transparency Additionally, fostering strong partnerships with local carriers and customs brokers in Vietnam can optimize transit times and reduce costs By adopting these strategies, Danalog can elevate its service quality, ensuring timely and reliable delivery for its clients.
Methodology
This report employs qualitative methods for data collection, incorporating both primary and secondary data Primary data is gathered through direct observation of the freight forwarding process and interviews with responsible personnel.
Secondary data is gathered from firm data, including financial statements and firm documents, and external sources like scientific publications and reports from the Ministry of Industry and Trade.
Scope
- Research object: The process of freight forwarding service from the USA to Laos transit via Vietnam
- Research scope: Danang Port Logistics Joint Stock Company (Danalog)
- Research Duration: The period from 2020 to 2023
Research structure
In addition to the Table of content, List of figures, List of tables, Abbreviations, Introduction, Conclusion, Appendixes, and References, the report is structured into four chapters as follows:
- Chapter 1: Theoretical basis of freight forwarding service for transit goods
- Chapter 3: Process of freight forwarding service from the USA to Laos transit via Vietnam at Danalog
- Chapter 4: Solutions to complete the process of freight forwarding service from the USA to Laos transit via Vietnam at Danalog
THEORETICAL BASIS OF FREIGHT FORWARDING
Overview of freight forwarding service
1.1.1 Definition of freight forwarding service
Freight forwarding services encompass a wide range of activities related to the transportation, consolidation, storage, handling, packing, and distribution of goods These services also include ancillary and advisory support, such as customs and fiscal assistance, official declarations of goods, procurement of insurance, and the collection or facilitation of payments and documentation associated with the goods.
The law replacing Commercial Code 1997 is Commercial Law 2005 used the term
Logistics, as defined in Article 233 of the Vietnam Commercial Law, encompasses a range of commercial activities where traders manage various tasks such as receiving, transporting, warehousing, and storing cargo It also includes completing customs procedures, providing consultancy, packaging, marking, and delivering goods, along with other related services, all conducted in accordance with customer agreements to earn service fees.
Also, as defined by Salamakhina & Poliak (2022), freight forwarding is a service involving the processing of a shipment, packaging, transportation, storage, and consolidation
Freight forwarding involves a range of operations related to the transportation of goods, utilizing single or multimodal transport methods Key activities include consolidation, storage, loading and unloading, packaging, and distribution, along with consulting services The primary goal of freight forwarding is to efficiently transport goods from the shipper's location to the consignee's destination, thereby supporting international trade.
1.1.2 Forwarder and scope of freight forwarding
There is currently no universally standardized definition of the term ‘International freight forwarder’ In different countries, providers of freight forwarding services are
5 identified by different titles, including 'Customs house agent', 'Customs broker', 'Shipping and forwarding agent', and occasionally referred to as 'Principal carrier', among other alternative designations (Ngo, 2014)
The International Federation of Freight Forwarders Associations defines a freight forwarder as the individual who enters into a contract for Freight Forwarding Services with a customer Additionally, Article 234 of the Vietnam Commercial Law outlines relevant regulations governing these services.
In 2005, it was established that traders providing logistics services must legally comply with the conditions outlined in the Law on Enterprises, which requires them to operate as a Limited Liability Company or a Joint Stock Company and obtain a Certificate of Business Registration for freight forwarding services According to Decree No 163/2017/ND-CP, logistics services are categorized into 17 types, with specific provisions for their delivery detailed in Articles 3 and 4 Consequently, businesses engaged in logistics must adhere to particular requirements based on the nature and scope of the services they offer.
A freight forwarder serves as an intermediary between the shipper and the carrier, particularly for international shipments These professionals are equipped to quickly and effectively adapt to evolving customer demands and international shipping requirements, including both imports and exports.
A forwarder is a logistics company or agent responsible for the shipment of goods on behalf of shippers, facilitating the movement of products from manufacturers to markets or final distribution points (Jamaluddin et al., 2023) Their services include local transportation monitoring, advisory support during shipping, warehousing, freight rate negotiation, shipment consolidation, and cargo insurance coverage Additionally, forwarders handle customs clearance, document preparation for imports and exports, vessel booking, and cargo shipment from origin to destination (Salamakhina & Poliak, 2022).
In this research, a freight forwarder is defined as an intermediary who organizes the transportation of goods on behalf of consignees, ensuring that products are delivered efficiently to customers in Laos.
The forwarder can advise or substitute for the shipper or consignee in performing all stages of the contract execution process (Ngo, 2014):
- Consulting, advising on packaging, routes, insurance, customs procedures, transport documents, payment regulations
- Acting on behalf of the shipper/consignee to implement following tasks, facilitating and streamlining the freight forwarding process
Figure 1-1 Duties of the forwarder when acting on behalf of the shipper/consignee
(Source: Ngo Thi Hai Xuan, 2014)
1.1.2.3 Rights and obligations of freight forwarder
According to Article 235, Vietnam Commercial Law 2005, traders providing logistics services have following rights and obligations:
Traders offering logistic services have specific rights and obligations unless otherwise agreed They are entitled to service charges and reasonable expenses, can deviate from customer instructions for valid reasons that benefit the customer, and must promptly inform customers when they cannot fully comply with instructions, seeking further guidance as necessary.
7 d To perform their obligations within a reasonable period of time if there is no agreement on specific time limit for performance of their obligations to customers
2 In the course of transportations of goods, traders providing logistic services must comply with the provisions of law and transportation practices.”
However, Article 237, Vietnam Commercial Law 2005 stipulates the cases in which traders providing logistic services are exempted from liability for the goods loss:
- “The loss is caused by faults of customers or their authorized persons;
- The loss is caused by traders that have strictly followed the instructions of their customers or persons authorized by customers;
- The loss is attributed to defects of the goods;
- The loss occurs in cases of liability exemption according to law and transportation practices, if traders providing logistic services organize transportation;
- Trader providing logistic services are not notified of complaints within fourteen days from the date they deliver goods to recipients;
Traders offering logistic services face a significant issue, as they are not informed of any lawsuits filed against them in arbitrations or courts within nine months following the delivery of goods.
According to Article 237 of the Vietnam Commercial Law 2005, traders offering logistic services are not responsible for any loss of profits incurred by their customers due to delays or misdeliveries that are not their fault.
Overview of transit goods
1.2.1 Definition of transit of goods
According to Article 241 of the Vietnam Commercial Law 2005, the term "transit of goods" refers to the transportation of goods owned by foreign entities through Vietnamese territory This process encompasses various activities, including transshipment, portage, warehousing, and changes in shipping methods or other tasks carried out during transit.
The Circular No 54/2018/TT-BGTVT does not regulate ‘transit of goods’; instead, it defines to the term 'commodities in transit' as “merchandise whose place of delivery
Goods originating from outside Vietnam and destined for locations beyond its borders may transit through or be processed at Vietnamese seaports or stored in warehouses during their journey.
Generally, transit refers to the movement of goods from one nation through a border gate into Vietnamese territory to another nation or back to that nation
The right to transit goods is stipulated in Article 242 of the Vietnam Commercial Law 2005 as follows:
Foreign organizations and individuals are permitted to transit their goods through Vietnam, requiring customs clearance only at designated import and export border gates, in accordance with legal provisions However, exceptions apply for certain items: weapons, ammunition, explosives, and other highly dangerous goods, which need Prime Minister approval for transit; and goods that are banned from business, export, or import, which can only transit with permission from the Trade Minister.
2 Goods in transit when being exported from, and means of transport carrying goods in transit when leaving, the Vietnamese territory must be the goods or means of transport which have previously entered the Vietnamese territory
3 Foreign organizations or individuals that wish to transit their goods through the Vietnamese territory must hire Vietnamese traders providing transit services to do so, except for cases mentioned in Clause 4 of this Article
4 The transit of goods through the Vietnamese territory by foreign organizations and individuals themselves or by hired foreign traders must comply with treaties to which the Socialist Republic of Vietnam is a contracting party and the provisions of Vietnamese law on exit, entry and transport.”
According to Article 246 of the relevant legislation, the maximum transit duration through Vietnamese territory is set at thirty days from the completion of customs procedures at import border-gates This timeframe is extended in cases where goods are warehoused in Vietnam or if they are damaged or lost during transit.
Article 249 of the Vietnam Commercial Law 2005 defines goods transit services as commercial activities where traders facilitate the passage of goods owned by foreign organizations or individuals through Vietnamese territory for a fee.
To provide transit services, traders must be registered business entities holding valid business registration certificates that authorize them to offer transportation or logistics services in compliance with legal regulations.
Full container load goods
Full container load (FCL) is defined by CSCMP as "a term used when goods occupy a whole container" (CSCMP, 2013) According to Maersk, the definition of FCL is
FCL, or Full Container Load, refers to the transportation of goods that fill an entire shipping container from a single shipper Customers utilizing FCL services must pay for the entire container, ensuring their goods occupy the complete space available.
Utilizing Full Container Load (FCL) shipping provides significant benefits for international logistics, enhancing operational efficiency and cost savings FCL ensures greater control and security, as each container is dedicated to a single consignee's goods, reducing the risk of damage or loss by eliminating shared space with other shippers This singular ownership streamlines shipment tracking, leading to more reliable deliveries Additionally, FCL maximizes container capacity, resulting in lower transport expenses by avoiding costs for unused space The reduced handling requirements associated with FCL further decrease the chances of loss or damage, potentially lowering insurance costs.
Overview of process
A process is defined as a sequence of time-based activities that are interconnected to achieve a specific outcome (CSCMP, 2013) The International Organization for Standardization provides a more comprehensive definition of this concept within the framework of Quality Management Systems.
A process is defined as a series of interrelated activities that utilize inputs to achieve a specific outcome, which can vary based on contextual factors like output, product, or service When two or more connected processes interact in a sequence, they collectively form a process To enhance value, organizations often meticulously plan and execute these processes under strict control Inputs for processes can be intangible, such as data or information, or tangible, including materials or equipment.
1.4.2 Criteria for evaluating the effectiveness of the process
According to the framework introduced by Brand & Van der Kolk (1995), the process performance should be measured on four dimensions: time, cost, quality, and flexibility
Time is a crucial performance indicator and a competitive advantage, as highlighted by Jansen-Vullers, Kleingeld, and Netjes (2008) It specifically refers to cycle time, which encompasses the total duration required to complete a process from start to finish Cycle time is divided into processing time, which is the actual time spent on tasks, and waiting time, the duration spent awaiting necessary actions or resources, particularly when equipment requests are delayed (Truong, 2022).
Cost is a critical factor in process implementation, significantly impacting an organization's revenue and profits (Truong, 2022) Jansen-Vullers et al (2008) highlight the relationship between cost and time, noting that time spent on tasks translates to monetary expenses Additionally, costs are associated with quality, as low-quality outputs necessitate costly and time-consuming corrections Moreover, a process's flexibility plays a vital role in cost management; inflexible processes lead to higher execution costs.
The quality of a workflow can be evaluated from two main perspectives: external and internal External quality focuses on the customer's viewpoint, where client satisfaction with the product and process determines the overall quality Product satisfaction reflects how well the delivered output meets customer expectations, while process satisfaction relates to the effectiveness of the workflow execution Conversely, internal quality pertains to the worker's perspective, emphasizing job characteristics that enhance their experience, such as the use of diverse skills, significant impact on others, and a degree of autonomy in their roles.
Flexibility is the capacity to effectively adapt to changes across various levels, including individual resources, specific tasks, and overall workflow It encompasses five key types: mix flexibility, which allows for handling diverse situations; labor flexibility, enabling the execution of different tasks; routing flexibility, which permits addressing cases through multiple routes; volume flexibility, the ability to adjust to fluctuating input volumes; and process modification flexibility, which involves altering processes as needed (Jansen-Vullers et al., 2008).
Muurinen (2020) emphasizes that businesses cannot optimize all performance criteria simultaneously and must prioritize which dimensions to enhance and which to minimize The challenge of operationalizing quality dimensions, both internal and external, arises from the numerous factors influencing quality perception, which is often subjective and based on personal opinions rather than objective measures (Ingh & Den, 2016).
Process of freight forwarding service process for FCL
1.5.1 Legal basis and principles of freight forwarding service
The transit of goods must adhere to legal principles, encompassing both international legal norms and legal documents of Vietnam (Nguyen, Hoang, Nguyen, &
- International convention on the sale of goods: United Nations Convention on Contracts for the International Sale of Goods, 1980
The international framework governing bills of lading and transportation includes key agreements such as the United Nations Convention on the Law of the Sea (1982), the Hamburg Rules (1978) which address the carriage of goods by sea, and the Hague Rules (1924) that unify certain legal principles related to bills of lading These conventions collectively establish essential guidelines for maritime trade and the responsibilities of carriers, ensuring a standardized approach to international shipping practices.
Vietnam's legal framework governing foreign trade, transportation, and goods delivery includes key regulations such as the Law on Foreign Trade Management 2017, the Vietnam Maritime Code 2015, and the Commercial Law 2005 Additionally, Decree No 140/2007/ND-CP outlines specific conditions for engaging in logistics services and addresses the limitations of liability for logistics service providers These legal documents collectively ensure a structured approach to international trade and logistics operations in Vietnam.
Vietnam legal documents governing the principles of import and export cargo handling at Vietnamese seaports are as follows (Nguyen et al., 2003):
- Cargo handling follows the procedures selected and decided upon by the parties in the contract, based on the most advantageous terms
- The fundamental principle is that the method of delivery selected ought to correspond with the cargo receipt method Forwarding methods include:
● Delivery, receipt by whole packages, bundles, sheets, logs, or pieces
● Delivery, receipt by whole sealed container
● Delivery, receipt by quantity, weight, or volume
The cargo handling responsibility lies between the goods owner or their authorized representative at the port and the carrier It is essential for the cargo owner to organize proper cargo handling to meet the standards for loading and unloading at the port.
- In case the cargo owner is unable to deliver the goods themselves, they must entrust the port in the delivery and receipt to the ship and domestic goods owner
- The consignee must present valid documents proving their entitlement to receive the goods and must have proof of payment for the port charges
The port assumes no responsibility for the internal condition of cargo as long as the packaging, containers, and seals are intact Additionally, any losses or damages identified by the recipient after signing the receipt documents with the port are not the port's liability.
The port is responsible for managing goods in its yards and warehouses using appropriate techniques tailored to each shipment If any loss of goods is identified during storage, the port must immediately notify the cargo owner and implement necessary measures to prevent or minimize further losses.
- Loading, unloading, forwarding and storage of cargo at the port are carried out based on contracts signed between the port and the cargo owner, carrier, or appointed representative
Depending on the specific type of goods and prevailing regulations, the documentation required between different shipments would vary Some essential documents include:
- Sales contract: A written agreement between a buyer and a seller outlining the terms of a sale and purchase transaction (parties information, commodities, delivery method, payment method, )
A commercial invoice is a vital document issued by the seller to request payment from the buyer, detailing the agreed-upon amount in the contract This invoice includes essential information such as the invoice number, details of the parties involved, descriptions of the goods, delivery terms, unit prices, and the total value of the transaction.
- Packing list: A description on the packaging of the shipment, including quantity of packages, packaging materials, gross & net weight, measurement, etc
- Arrival notice (A/N): A notice issued by the shipping line, shipping agency, or forwarder company to notify the consignee about the arrival date of a shipment to its destination
A Delivery Order (D/O) is an essential document issued by a carrier, shipping agency, or forwarder, which must be presented to the cargo supervision agency to facilitate the release of goods to the designated recipient.
- Custom declaration: A document used to declare the list of goods with the competent authority and indicate whether or not they are eligible to be imported into another country
A Master Bill of Lading (B/L) is a crucial document issued by the carrier that serves as the contract of carriage between the shipper and the carrier It is issued directly to the designated party and stands as the most reliable proof that the carrier has received the goods for transportation.
● House B/L: A B/L issued by a freight forwarder to the actual shipper (shipper) and actual consignee (consignee)
Depending on the types of goods, there are additional documents required such as Certificate of origin, Phytosanitary certificate, Fumigation certificate, Certificate of quality, Insurance policy, etc
1.5.3 Description of freight forwarding process for FCL
The process of freight forwarding FCL cargo at port is carried out according to the main steps as illustrated in the diagram below:
Figure 1-2 The process of freight forwarding FCL cargo
(Source: The author compiled information from the International Transportation and Logistics
Curriculum, Ho Chi Minh City University of Industry and Trade, 2017)
As the vessel approaches its destination port, the shipping line or its agent sends an Arrival Notice (A/N) to the Notify party Upon receipt, the company verifies key details on the A/N, including estimated departure and arrival times, cargo quantity and weight, vessel name, and voyage number After confirming the accuracy of this information, the company proceeds to settle the associated expenses outlined in the notice.
The company submits essential documentation, including the original Master B/L, A/N, a business introduction letter, and a container release order, to the shipping line for the delivery order (D/O) receiving process Alternatively, companies now have the option to use an electronic delivery order (EDO) sent via email by the shipping line for added convenience.
1.5.3.2 Conduct customs procedures for imported goods
Businesses utilize the VNACCS system to submit customs declarations by entering necessary information into the electronic customs declaration software Once the declaration is submitted, the system promptly provides notifications containing essential details such as the receipt number, declaration number, and the cargo processing status, which can be categorized as green, yellow, or red line.
The green line process allows for the acceptance of an enterprise's cargo for clearance solely based on the customs declaration information This streamlined procedure enables the cargo to advance directly to the payment of tariffs, taxes, and fees, bypassing the need for document checks and goods inspections.
Yellow line: No physical inspection of the goods is required, but enterprises must submit documents for customs to check
- Submitting documents according to regulations, either by submitting the original copies or verifying related documents through Vietnam Single Window
- In case the documentation complies, the process proceeds to tax and fee payment
If the documentation does not comply or raises suspicions, the customs authority
16 decides to transfer the declaration to the Red line for physical inspection of the goods
When goods are categorized under the Red line, the enterprise is required to submit the same documentation as for the Yellow line, and customs will carry out a physical inspection of the goods.
The customs declarant must receive notifications, forms, and details regarding the physical inspection of goods from customs authorities via the VNACCS System They are responsible for registering the inspection's location and time with customs authorities and ensuring that all necessary conditions for the physical inspection are adequately prepared.
After completing the electronic customs declaration, the enterprise needs to prepare a comprehensive set of documents required for declaration registration at the port, including:
- Physical inspection registration (for the Red line)
- Any additional pertinent documents as necessitated
The enterprise submits a set of documents to customs for inspection If no issues are found, these documents are sent to the tax assessment department to calculate the applicable taxes After completing the document or physical inspection, customs stamps the documents and provides the inspection results to the enterprise.
OVERVIEW OF DANALOG
General introduction about Danalog
- Company name: DANANG PORT LOGISTICS JOINT STOCK COMPANY
- Address: 97 Yet Kieu Street, Tho Quang Ward, Son Tra District, Danang
- Email: kinhdoanh@danalog.com.vn
- Vision: The company’s orientation is to become a professional logistics supplier in Central Viet Nam and reliable partner of domestic and foreign customers
- In 2006: Danalog, formerly known as Da Nang Port Logistics Station, was established
- In 2009: the company commenced operations as a Joint-stock company, with a charter capital of VND 30 billion, as per Enterprise Registration Certificate No
0400999731 issued on 05/03/2009 by the Danang Department of Planning and Investment The company has subsequently amended its business licenses on eight occasions, with the latest amendment dated 02/11/2017
- On August 25, 2010: Danalog officially became a public company under Decision No 2672/UBCK -QLPH of the State Securities Commission
- On August 18, 2011: The company registered to be traded on the UPCOM market
- At the end of 2022, the company had a charter capital of 43.1 billion VND and
2.1.2 Major business activities and scope
- Warehouse operations and freight forwarding services
- CFS and bonded warehousing services
- Inland transportation agency, container agency
Business scope: Central and Central Highlands of Vietnam and Southern provinces of Laos
Danalog functions in accordance with its approved Charter of Organization and Operation, as established by the General Meeting of Shareholders, and adheres to the provisions set forth in the Enterprise Law The company is managed, supervised, and administered by the Administrative Council, Supervisory Board, and Management Team.
The organizational structure of Danalog follows the model of a joint stock company as follows:
Figure 2-2 Organizational structure at Danalog
(Source: The Human Resources and Administration Department of Danalog)
- Be the highest decision-making body of the company
- Have the right to elect the Administrative Council and the Supervisory Board
- Manage the company and have the full authority, in the name of the company, to make decisions and to exercise the rights and perform the obligations of the company
- Have the power to appoint, dismiss, or remove the Management Team
- Set strategic objectives and annual development plans for the company
- Decide the organizational structure and internal management regulations of the company
- Be elected by the General Meeting of Shareholders
- Represent shareholders in supervising the management and operation of the company by the Administrative Council and Management Team
- Control the company's daily operations following legal requirements and internal regulations
- Monitor and manage the activities of functional departments
- Organize the implementation of business plans and investment plans
- Devise methods of Dividend payment plans and business profit and loss handles
- Manage company operations in the absence of the General Director (or as authorized by the General Director)
- Direct and monitor the activities of Container Depots, Technical and Mechanical Divisions
- Research and develop Container Depots business plans
- Report the operational situation to the General Director, provide feedback on difficulties in management, and propose new solutions
Human Resources and Administration Department
- Manage all personnel in terms of human resources records, politics, and professional expertise
- Develop and implement human resources plans, including recruitment and training strategies
- Address administrative office matters, including reception duties and handling company documents and licenses
- Ensure technical and material resources are adequately provided, advice on equipment procurement, and professional training to enhance efficiency in using technical equipment and meeting business requirements
- Manage the company's accounting and financial transactions to ensure efficient business operations
- Make periodic financial plans and balance sheets
- Manage the use of capital resources reasonably and economically to maximize efficiency and implement measures to minimize unnecessary costs in business operations
- Safeguard and archive accounting documents securely to maintain confidentiality and prevent any confusion, loss, or misplacement
- Conduct market research in the field of warehouse leasing
- Develop business plans for warehouse operations
- Formulate marketing strategies to attract and retain customers, negotiate and finalize contracts related to warehouse activities
- Supervise operations at Container Freight Stations (CFS), Bonded Warehouses, and Domestic Warehouses
- Develop and implement plans for handling and forwarding goods
- Manage and coordinate the movement of vehicles for transporting goods
- Conduct market research and develop business strategies for domestic and international cargo transportation via inland waterways, roadways, and sea
- Negotiate and finalize agency contracts for freight forwarding and transportation services
The Depot Container efficiently organizes containers within its yard, enhancing the processes of container exchange, withdrawal, and transfer Currently, the company operates five depots located in the Tien Sa Port area.
Technical division and Mechanical division
The Technical and Mechanical divisions are responsible for repairing and maintaining the company's vehicles and equipment to facilitate its operational activities
The company’s business result in the period of 2020-2023
After the pandemic, both the national economy and, more specifically, Danalog still face a multitude of challenges However, the company has managed to implement its set objectives
Table 2-1 Business results of Danalog 2020-2023
Figure 2-3 Business results of Danalog 2020-2023
In general, the company’s total revenue increased over the four years from 2020 to
In 2020, the COVID-19 pandemic prompted global social distancing measures and travel restrictions, impacting many businesses Despite these challenges, Danalog worked diligently to maintain connections with customers and agents to facilitate the transport and forwarding of goods once operations resumed However, the pandemic's effects led to a total revenue of VND 131.939 billion, reflecting the difficulties faced during this period.
In 2021, the company experienced remarkable revenue growth, exceeding VND 218 billion, which marks an impressive increase of nearly 66% from the previous year This success is largely due to the effective utilization of its core services and ongoing business expansion The company prioritized the development of warehouses and container depots while also enhancing its operations by providing in-house trucking services for transporting containers between ports and warehouses, instead of depending on outsourced trucking or agents.
In 2022, the company experienced a slight decline in total revenue following significant growth in 2021, largely due to inflation and the ongoing Russia-Ukraine war, which caused a spike in oil prices and increased costs for goods To manage expenses, shipping companies reduced or canceled voyages and leased vessels Additionally, China's strict zero COVID-19 policy led to factory and seaport closures, resulting in a sharp decrease in imported goods The continuous fluctuations in container freight rates further affected key commodities at the port, including iron and steel, imported fertilizers, and domestic containers.
In 2022, the company experienced a 12.24% decline in total revenue compared to 2021 However, by 2023, revenue rebounded to VND 219.470 billion, surpassing the annual target by 13.72% This recovery was attributed to successful strategies, including enhanced service quality and the introduction of additional services for customers Notably, the transportation and forwarding service achieved 113.49% of its annual plan, reflecting a 21.57% increase from the same period in 2022 This growth indicates strong potential for the company's future development and expansion.
From 2020 to 2024, the company's total expenses consistently increased, peaking at over VND 207 billion in 2021, which marked a significant 71.53% rise compared to 2020 By 2023, expenses had further fluctuated to VND 209.948 billion This upward trend in expenses can be attributed to rising input costs and substantial investments in infrastructure, equipment, and technology aimed at improving logistics efficiency Notably, in 2022, the company enhanced its warehouse security with an anti-theft alarm system and expanded its fleet by acquiring five tractors and five trailers In 2023, additional investments included an office container, parking lot, and mechanical workshop, which, while increasing expenses, also helped reduce contact, minimize infection risks, and streamline business procedures (Danalog, 2022, 2023).
Over the past four years, the company has maintained high total revenue; however, its expenses have also remained elevated, exceeding 90% of revenue As a result, profit before taxes has been consistently low, with figures around VND 11 billion in 2021 and 2022, a decline to VND 7.156 billion in 2022, and a modest recovery to VND 9.522 billion by the end of 2023 Overall, the financial performance reflects ongoing challenges despite stable revenue levels.
2023, the company's profit exceeded the plan by 26.96%
PROCESS OF FREIGHT FORWARDING SERVICE
Flowchart of the process of freight forwarding service from the USA to Laos
Danalog's freight forwarding service for transporting goods from the USA to Laos via Vietnam includes obtaining a transit license, managing customs procedures for transit goods, receiving Full Container Loads (FCL), and delivering goods to Laos However, Danalog is not responsible for any procedures outside the contract's scope, such as sea freight from the USA to Vietnam or customs processes within Laos For a detailed overview of this service process, please refer to the accompanying diagram.
Figure 3-1 Flowchart of the process of freight forwarding service for goods from the USA to Lao transit via Vietnam at Danalog
Detailed description the process
After the vessel departs from the USA, the customer (importer) receives and sends to Customer service staff (CS) the document set of the shipment via email or fax, including:
Upon receiving the document set, CS verifies the accuracy and validity of the content, subsequently sending a confirmation email to the customer The contents subject to verification include:
- Type and quantity of required documents
- Shipper, consignee, and notify party information
- Description, category, quantity, and weight of goods
- Vessel name, vessel number, port of loading, port of discharge, container number, and seal number
If documents are incomplete or contain discrepancies, the customer service team quickly informs the customer to ensure timely corrections Should customers neglect to provide necessary updates or adjustments, they will be responsible for any associated costs.
To facilitate the freight forwarding of goods from the US to Laos through Vietnam, it is essential for customs declaration staff to apply for a transit license from the Da Nang Regional Import-Export Management Department, under the Ministry of Industry and Trade The application must include specific documentation to ensure compliance with transit regulations.
- An application for transit of goods, specifying descriptions, HS headings, quantities, and values, along with details regarding means of transport and transportation routes: 1 original
- A written request for transit of goods from the Minister of Industry and Trade of the Lao People's Democratic Republic: 1 original
The Da Nang Regional Import-Export Management Department will review the application and issue transit licenses if all requirements are satisfied Customs declaration personnel will collect the transit license directly from the regional management office Once obtained, they will submit the license to the shipping line, which will then declare the transit manifest for the cargo containers scheduled to arrive at Danang Port.
The Arrival Notice (A/N), issued by the shipping line or its agent, serves to inform the consignee of the vessel's arrival schedule at the destination port Typically sent 2 to 3 days before docking, the A/N allows the notify party to prepare for cargo receipt If the estimated time of arrival approaches without receiving the A/N, the customer service (CS) team should contact the shipping line or agent to obtain it Upon receipt, CS verifies crucial details such as estimated departure and arrival times, quantity, weight, vessel name, voyage number, and container count, while also confirming any applicable fees with the shipping line.
3.2.4 Make payment for debit note and receive D/O
A debit note is a crucial commercial document issued by a service provider to inform a service user about outstanding invoices that need to be settled It can also serve as a reminder for upcoming payments or to provide details regarding forthcoming payment invoices.
Upon receiving the debit note from the shipping line, customer service promptly forwards it to the customer via email or fax to confirm the charges due at the port of discharge in Da Nang These charges usually encompass various fees associated with the shipment.
After confirming the charges between the shipping line and the customer,
CS initiates a payment request and forwards it to Danalog’s Finance and Accounting Department while simultaneously emailing the shipping line to acquire the EDO The essential documents needed for obtaining the EDO are submitted alongside the request.
Danalog has shifted its process for obtaining the Delivery Order (D/O) from direct receipt at the shipping line to receiving the Electronic Delivery Order (EDO) via email, enhancing convenience for users However, if the original Bill of Lading (B/L) is required, operations staff must present it to the shipping line to complete the necessary documentation before requesting the issuance of the EDO.
After submitting payment and documents to the shipping line, Customer Service (CS) will receive an Electronic Delivery Order (EDO) via email It is crucial for CS to verify the EDO details against the Arrival Notice (A/N) and Bill of Lading (B/L), ensuring that all information, including consignee details, vessel number, B/L number, loading and discharge ports, container count, commodity details, and actual arrival time, is accurate If any discrepancies arise, such as incorrect or unclear information, missing signatures, or seals, CS must swiftly contact the shipping line to request corrections or a re-issue of the EDO, providing supporting documents like the original B/L, A/N, and the erroneous EDO for reference.
To expedite relevant procedures like container receipt and reduce unnecessary costs such as demurrage and storage charges, it is essential for customer service (CS) to be aware of the permitted time duration for storing containers at the port.
Subsequently, CS will forward the EDO to other responsible staff to conduct further procedures for cargo receipt at the port of discharge in Da Nang
3.2.5 Conduct customs procedures for transit goods at Da Nang Port
For goods transiting through Vietnam, the customs procedure involves the opening of an independent transportation declaration, commonly referred to as an OLA declaration This declaration, issued by customs authorities, authorizes the movement of import-export goods and other items under customs supervision between two designated cargo storage locations.
Upon receiving the Delivery Order (D/O), customs declaration staff at Da Nang Port initiates the OLA declaration to secure customs approval for the transit of goods to the Lao Bao International Border Gate The declaration process involves several key steps to ensure compliance and facilitate the transportation of goods.
Customs declaration personnel input and register information into the VNACC/VCIS system After meticulously verifying all details in the declaration, they affix a digital signature and submit the declaration for processing.
Step 2: System classifies the declaration
After completing the declaration of goods transport, the system automatically receives, checks, and classifies the declaration The results of the stream classification could fall into one of two categories:
Green line: The declaration is approved by the e-customs system and the system automatically returns a notice of approval
Yellow line: According to regulations, customs declaration staff must present a set of documents for customs inspection, including:
- Independent transport declaration information: 1 copy (printed from the software)
- Other documents as required by relevant laws and regulations
Upon successful inspection, shipments receive approval for transportation However, if there are suspicions of legal violations, the shipment must be submitted to the Da Nang Port customs authorities for a physical inspection.
Step 3: Customs Clearance of Goods
After the customs declaration is approved, the customs declaration staff prints the approval notice and submits it to the customs authority at the Da Nang Port border gate sub-department, finalizing the customs clearance process Subsequently, the supervisory customs seals and certifies the cargo containers at Da Nang Port The customs declaration staff then receives two official OLA declarations and a list of containers cleared to enter the customs supervision area, commonly known as the barcode customs declaration.
It should be noted that there are three original copies of the OLA declaration, which include:
General evaluation of the process of freight forwarding service from the USA
to Laos transit via Vietnam at Danalog
Danalog's freight forwarding service process closely resembles the standard procedure for FCL shipments, yet it incorporates unique features that set it apart Consequently, Danalog's process may include additional or fewer steps compared to traditional methods, highlighting the distinct characteristics of their service.
Fundamentally, there are three main different points as follows:
Danalog serves as a freight forwarder in the service process, but unlike typical freight forwarders, it does not prepare documentation Instead, the responsibility for documentation lies with the customer, who must provide the necessary documents Danalog's role includes receiving these documents, verifying their accuracy, and notifying the customer of any discrepancies or required adjustments.
Danalog specializes in freight forwarding goods from the USA to Laos, with transit through Vietnam To ensure the smooth transit of goods through Vietnam before reaching Laos, Danalog must first obtain a Transit license from the Ministry of Industry and Trade This essential permit application process is completed prior to the arrival of goods at Da Nang Port, differentiating it from the standard procedures for imported goods.
In the standard FCL forwarding process, customs clearance for imported goods occurs after the company receives the Delivery Order (D/O) However, for transit cargo under customs supervision, the procedure differs The company initiates customs clearance by filing an independent transport declaration (OLA) to obtain customs approval for transporting goods from Da Nang Port to Lao Bao International Border Gate Upon arrival at the destination, the company must complete additional customs procedures to ensure customs officials record the cargo container's arrival and facilitate the goods' exit from Vietnamese territory.
To assess the specific effectiveness of the freight forwarding service process for transit goods at Danalog, we will evaluate based on the criteria outlined in the theoretical framework chapter
Danalog does not establish a specific timeframe for service completion but emphasizes efficiency among its employees to enhance customer experience Typically, the process from receiving A/N to delivering cargo containers at the customer's factory takes about a week, which is considered a reasonable duration for freight forwarding services to Laos.
In the service process, each step is assigned to designated personnel, enhancing efficiency and clarity Customer Service (CS) manages document verification, delivery order procedures, and customer communication, while customs declaration staff handle transit licenses and OLA declarations Operations (OPS) oversees vehicle arrangements and cargo handling This clear division of responsibilities enables employees to effectively execute their tasks, thereby accelerating the overall processing procedures.
Danalog prioritizes the establishment of strong relationships with authorities, including customs and port officials, which has streamlined customs clearance and shipment delivery processes This focus on collaboration ensures timely service delivery and enhances overall quality.
Danalog's Transportation Sales Department is currently supported by a single Customer Service representative, who handles documentation for FCL freight forwarding and transportation services while also managing direct communication with clients.
Customer service (CS) frequently struggles with heavy workloads, particularly during peak periods like year-end, leading to work overload and slower processing times Furthermore, unforeseen circumstances such as health issues, family commitments, or business travel can hinder CS's ability to meet demands, and the absence of backup staff exacerbates delays in service delivery.
Danalog's freight forwarding service is marked by well-defined task divisions and efficient coordination among team members, allowing the company to reduce service delivery time and lower labor costs per service unit, ultimately enhancing operational efficiency.
37 competitive price advantage Additionally, as Danalog owns a fleet of 15 tractor trucks that require minimal outsourcing, the company can reduce transportation costs and offer competitively priced services, appealing to customers
Danalog often struggles to fully optimize its vehicle fleet due to inefficient scheduling by operations and unexpected issues with transportation staff, such as health concerns or licensing problems This can lead to a shortage of personnel for vehicle operations, ultimately causing delays in container receiving and transportation, as well as incurring additional costs from outsourcing to third parties in urgent situations.
Danalog is committed to delivering top-notch service, supported by knowledgeable staff who efficiently manage every aspect of the shipment process Their established routes and proactive vehicle arrangements enhance efficiency and minimize delays, ensuring customers receive timely updates on their shipments This dedication to quality has fostered strong, long-term relationships with clients, resulting in high satisfaction and minimal complaints Additionally, employees benefit from clear task assignments and the opportunity to collaborate and make decisions in real-time, contributing to a positive work environment Overall, Danalog's freight forwarding service excels in meeting both customer and employee expectations.
The interconnected nature of various stages in the process means that any errors can have a cascading effect, jeopardizing overall service quality Currently, Danalog lacks an internal system for automated information updates, requiring employees to manually exchange information via phone calls, Zalo messages, and emails.
38 manual method not only consumes time but also heightens the risk of errors, potentially impeding service delivery, incurring financial losses, and negatively affecting the company's reputation
Danalog's freight forwarding service process lacks a formal written description, providing employees with significant flexibility to modify procedures as needed This absence of strict documentation allows staff to adapt various steps in the process to better suit practical circumstances, such as assessing container conditions upon receipt.
At Da Nang Port, transportation staff must report container conditions to OPS, which then communicates with CS to inform customers and shipping lines In practice, however, all parties often use group chats for quicker problem-solving, highlighting the benefits of procedural flexibility Nevertheless, this lack of a documented process creates challenges, especially in employee recruitment and training, leading to confusion and errors among new staff, which can adversely affect service quality.
SOLUTIONS TO COMPLETE THE PROCESS OF
Regarding human resources
The Sales Transportation Department is facing challenges due to having only one customer service staff member, which is inadequate for managing the high volume of work Other team members lack the expertise to assist with tasks outside their roles, resulting in increased workloads and delays in service delivery Additionally, employees experience limitations in their capacity to execute tasks effectively, particularly in operations, which adversely impacts the overall quality of service provided.
To enhance efficiency in the transportation sales department, the company should consider recruiting additional customer service (CS) representatives or providing training for existing employees on CS procedures Increasing the number of CS staff can help distribute the workload, reducing the likelihood of errors during busy periods Furthermore, having backup personnel available to take over tasks when CS representatives are unavailable due to health issues or other reasons ensures timely service delivery and maintains high-quality standards.
OPS should implement a more efficient work schedule for transportation staff, ensuring that primary handlers are always prepared to take on tasks Additionally, a backup list of staff should be established to step in when primary personnel are unavailable By optimizing the scheduling process, Danalog can enhance its vehicle fleet's efficiency, leading to significant savings in outsourcing costs and improved service delivery time.
To ensure exceptional service experiences for clients, companies must prioritize continuous training and the enhancement of employee professional competencies, as employees are the primary point of contact with customers The human resources and administration department should implement a systematic training plan to maximize effectiveness Additionally, regular meetings to share knowledge and address work-related issues are essential for fostering understanding and empathy among team members, enabling them to navigate challenges collaboratively These discussions also provide valuable learning opportunities for new employees by addressing their job-related concerns and contribute to strengthening internal relationships within the organization.
Regarding technology application
During the service provision process, employees regularly communicate through email, Zalo messages, and phone calls to update and share information However, these methods can be time-consuming and are susceptible to errors in information transmission.
To enhance shipment management, the company must implement an internal system that allows employees to efficiently upload, download, back up, and track essential shipment data For instance, during the receiving documents phase, customer service representatives should promptly update the system with relevant documents and information.
Employees can efficiently access documents and track shipment progress without constant direct communication, saving time and reducing errors in information updates This accessibility empowers staff to be more proactive in their tasks, enhances their understanding of shipment status, and ultimately streamlines operations while ensuring high service quality.
Implementing an internal system can effectively address ongoing issues related to the storage of hard-copy documents This transition not only frees up valuable office space but also alleviates the challenges faced by employees who spend excessive time managing physical paperwork.
Implementing a modern internal system for backing up soft copies of documents can significantly reduce the reliance on hard copies, enhancing efficiency This system allows employees to easily retrieve and search for shipment documents, streamlining the process of accessing information related to past orders.
Regarding process updates
The company does not have an official document outlining the freight forwarding service process for transit goods, which allows skilled employees flexibility in execution but poses challenges for training and information sharing.
Danalog should prioritize the development of a formal written documentation that outlines its service process, including a summary diagram and detailed descriptions of each step along with assigned personnel This documentation must be shared with relevant staff through notices, training sessions, meetings, and review conferences to standardize processes and provide a comprehensive overview of the service workflow, facilitating the onboarding of new employees Additionally, it is essential for the company to encourage employees to take initiative in refining the service provision process, allowing modifications to enhance operational efficiency, as not all steps may be applicable in every situation Ultimately, this formal documentation will promote professionalism while ensuring flexibility, preventing rigidity, and maintaining high service quality.
Company managers should regularly assess the practical implementation of service delivery against established processes Additionally, conducting annual surveys of assigned staff can help identify strengths and weaknesses in the execution process, allowing for necessary adjustments.
In short, the company should refine its service process annually in order to perfect the service provision process, improve service quality, and strengthen the company's reputation
As Vietnam integrates into the global economy and aims for greater prosperity, international business activities have gained significant importance, particularly in freight forwarding, which is crucial for foreign trade This rising demand for freight forwarding services has led to intensified competition, prompting companies to improve service quality and strategically tap into market potential.
With 15 years of experience, Danalog aims to be the leading logistics company in Central Vietnam, earning strong credibility from clients and partners To thrive in today’s market, Danalog focuses on efficient management and teamwork under experienced leadership Despite its achievements, the company faces challenges in freight forwarding services for transit goods To enhance these services, Danalog must implement changes in human resources, technology, and processes This will lead to more effective operations and strengthen its position in the Vietnamese logistics sector The internship report titled “The Process of Freight Forwarding Service for Goods from the USA to Laos Transit via Vietnam at Danalog” analyzes the practical service steps, assesses strengths and weaknesses, and suggests improvements for service quality Acknowledging potential limitations from the internship experience, feedback from international business faculty is welcomed to enhance the report.
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(Source: Danalog’s Transportation Sales Department)
(Source: Danalog’s Transportation Sales Department)
(Source: Danalog’s Transportation Sales Department)
(Source: Danalog’s Transportation Sales Department)
(Source: Danalog’s Transportation Sales Department)
(Source: Danalog’s Transportation Sales Department)
(Source: Danalog’s Transportation Sales Department)
Figure 4-8 List of containers eligible to pass through the customs supervision area
(Source: Danalog’s Transportation Sales Department)
Figure 4-9 A copy of OLA declaration - Page 1/4
(Source: Danalog’s Transportation Sales Department)
Figure 4-10 A copy of OLA declaration - Page 2/4
(Source: Danalog’s Transportation Sales Department)