CHAPTER 3: SOLUTIONS FOR IMPROVING FORWARDING SERVICE OF SEAFREIGHT IMPORT AT INTEGRATE LOGTISTICS..... Integrate Logistics Limited Liability Company is one of the enterprises participat
Historical development of Integrate Logistics Co., Lid - -ô- 3
Integrate Logistics Limited Liability Company, established on October 28, 2008, operates under Business License Number 0306144009 issued by the Department of Planning and Investment of Ho Chi Minh City The company officially commenced operations on November 6, 2008, with Mr Nguyen Hong Minh serving as the legal representative and founder.
Full name: Intergrate Logistics Limited Liability Company
Business name: Integrate Logistics Co., Ltd
Abbreviation name: Integrate Logistics (hereinafter called in Abbreviation name)
Head office: 70 Huynh Van Banh St., Phu Nhuan Dist., HCM City, Vietnam Tel: 84-8-38456716/Fax: 84-8-38456726
Email: info@integratelog.com.vn_ /Website: www.integratelog.com.vn Charter Capital: 2,000,000,000 VND (2 billion Vietnam dong)
Integrate Logistics is a legally recognized business specializing in freight forwarding and logistics, equipped with its own branding and capable of independent accounting Although it operates as a small-sized entity, the company has made remarkable advancements over the years.
In 2009: was certified to provide logistics services by Vietnam Logistics Business Association (VLA) and international organizations such as IATA, FIATA
In 2011: was listed top five of INTTRA WORLDWIDE of booking and was granted the third of top lifting volume to Middle East by UASC (United Arab Shipping Co.)
In 2012: signed for the Bonded Warehouse in Binh Duong Province for total logistics solution in 2012
In October 2014: succeeded in winning the Kimberly Clark Warehouse Solutions Package at Song Than ICD.
* In September 2016: won the chance to handle all the imports and exports of Kimberly Clark Vietnam (60-100 TEUs/month)
By April 2017, Integrate Logistics has established two domestic branches (Da Nang, Hanoi} and a network of 26 regular cooperative agents in 13 countries on 4 continents
With nine years of experience in the services industry, our company recognizes that people are its most valuable asset All team members are committed to delivering exceptional and continuously improving services to meet the ever-evolving needs of our customers Basic logistics knowledge alone is insufficient in today's integrated world; thus, we are driven to learn from the market, suppliers, partners, and clients to enhance our service quality Integrate Logistics has transformed from a traditional freight forwarder into a global network of logistics service providers, optimizing the flow of goods.
Functions, objectives, organizational structure and human resources
General assessment of the business performance from 2014 to 2016
To get a better view of the company's business performance, look at the table below
As the data of 2017 will not be released by the company until the end of the fiscal year (December), analysis will be made based on 3 nearest years from 2014 to
Table 3.1 Business performance of Integrate Logistics 2014 — 2016
The data indicates a consistent increase in revenue and profit over the years, highlighted by a remarkable total profit growth of 15% from 2015 to 2016, surpassing the 8.7% year-on-year growth recorded in 2015.
In terms of sales revenue, import revenue was only about 35.01% compared to export in 2014, the figure increased to 36.50% and 41.97% respectively in the next
Over the past two years, the expenditure has consistently increased alongside revenue, resulting in overall costs constituting around 89% of total revenue This percentage has remained stable from 2014 to 2016.
Initially, exports generated significantly higher profits for the company compared to imports, with exports yielding 86% more profit than imports in 2014 However, this figure saw a slight decline in 2015 and experienced a notable drop in 2016, where exports were only 54% more profitable than imports This trend suggests that the import sector is gaining traction and reveals its potential for future growth.
The data indicates that while the volume of seafreight import orders was approximately double that of airfreight orders, the profit margin between the two services was minimal Consequently, the airfreight sector generated greater value per order compared to the seafreight sector.
Table 4.2 Performance of Integrate Logistics on Import Business 2014 — 2016
Criteria 2014 2015 (Unit thar eis VN
(Source: Report on Business Performance 2016) From 2014 to 2016, seafreight import witnessed an upward trend in all items ranging from number of orders to profit For number of orders, the period 2015 —
In 2016, the growth rate experienced a slight decline to 3.3%, down from 4.8% in 2014-2015, yet year-over-year revenue growth increased, peaking at 21% compared to 2015's 18% Profit also surged significantly, with increases of 1.9% and 29.6% for the respective years, indicating a rise in the value of seafreight imports per order This profit growth was partly attributed to managing all imports and exports for Kimberly Clark Vietnam, while costs remained stable, growing at 20.9% compared to 19.3% in the previous period In the airfreight import sector, fluctuations were noted as orders and revenue declined in 2015 before rebounding in 2016, with profit reaching a record high of 712,735 thousand VND.
The seafreight import business has significant potential; however, it currently yields lower returns per order compared to air transport due to high costs and fragmented orders To enhance profitability, the company should focus on increasing order volumes and minimizing overall costs, including transaction expenses.
1.5 Works done during internship period
From June 1 to 25, 2017, I interned in the Documentation Division at Integrate Logistics, where I also volunteered in other departments to gain additional experience Initially, I learned about the company's personnel structure and the collaboration between departments After observing the operational flow, I was tasked with preparing and transferring documents, which enhanced my understanding of departmental interdependence Additionally, I was trained in e-customs declarations and had the opportunity to visit Cat Lai Port, SCSC Air Cargo Warehouse, and ICD, as well as interact with shipping lines.
During my internship in the forwarding business, I have acquired valuable skills and knowledge, particularly in areas such as delivery orders and payment processes Although the internship period is brief, it has provided me with a significant opportunity to understand the operational realities of a logistics enterprise with nearly a decade of experience in the industry.
CHAPTER 2: THE ORGANIZATION OF FORWARDING BUSINESS OF SEAFREIGHT IMPORT AT INTEGRATE LOGISTICS
2.1 Organizing the forwarding service of seafreight import
Figure 2.1 The procedure of seafreight import forwarding service eee
The seafreight import procedure for a shipment from Biomin Singapore PTE Ltd to the Biomin Vietnam Company Limited branch in Binh Duong, facilitated by Germaxco Project Logistics PTE LTD in Singapore and Integrate Logistics in Vietnam, commenced in May 2017 and concluded in June 2017 The initial step involves receiving a pre-alert from the overseas agent, which is crucial for coordinating the import process effectively.
Upon receiving the draft Master Bill of Lading (MBL) from Germaxco, the documentation department's employee will create an Excel file to store the data in the database This process includes verifying key information related to the Consignee, such as the place of receipt in Singapore CY, port of loading in Singapore, port of discharge at Cat Lai, Ho Chi Minh, and the delivery location at Cat Lai CY Additionally, the employee will record the container and seal numbers (TEMU7530878/BLA003328), shipment details indicating one 40’ high cube container, commodity specifics (800 cartons of Mycofix Plus 4.0, a feed additive for animal health), and the gross weight of 22,000 kgs, along with the vessel information.
On May 15, 2017, Thana Bhum departed for Biomin Vietnam, with an expected travel time of 3 to 4 days from Singapore to Cat Lai, Vietnam In the event of delays that incur additional storage charges, Integrate Logistics will cover these costs, ensuring no financial burden falls on the customers Meanwhile, document officers are assisting Germaxco in verifying information accuracy to enable the agent to release the draft House Bill of Lading (HBL) to Integrate Logistics.
Upon receiving the draft House Bill of Lading (HBL) from Germaxco, document officers verify the information a second time, including the shipper (Biomin Singapore PTE LTD), consignee (Branch of Biomin Vietnam Company Limited), and other details on the HBL that should match the Master Bill of Lading (MBL) If discrepancies are found between the MBL and HBL, the documentation department promptly emails Germaxco to request a review and modification of the bill before proceeding to submit the manifest in the next step.
Upon the vessel's departure, High Peak Shipping will provide the final Master Bill of Lading (MBL) to Germaxco, which will then issue the official House Bill of Lading (HBL) to Integrate Logistics Subsequently, the document officer will print all shipping documents and organize them in a hard cover labeled with the same name as the Excel file (INB170556) The cover will also include essential details such as the port of loading (Singapore), port of discharge (Cat Lai), estimated time of arrival (ETA) on 18 May 2017, and estimated time of delivery (ETD) on 25 May 2017 for efficient tracking.
2.1.2 Sending House Bill of Lading to customers
The document officer will email the attached HBL (Appendix 2.2) file to Biomin Vietnam in Binh Duong Province, requesting a review and confirmation of all information Customers typically respond within 15 to 60 minutes; however, if modifications are needed, the response time may extend to 1 to 6 hours Should modifications exceed the allowed timeframe, fees will apply, costing $80 for MBL and $40-$50 for HBL per instance.
2.1.3 Prepare information and send E-manifest to Customs
Document officers complete the sample manifest Excel form for uploading to the Vietnam National Single Window Each vessel receives a unique profile and specific code assigned by the shipping company When Integrate Logistics has cargo on a vessel, DH Logistics, the shipping company’s agent, manages the process.
The role of seafreight import forwarding service of the company
Development prospects of Integrate Logistics in the near future
3.1.1 Opportunities driving development prospects of Integrate Logistics According to statistics of the General Department of Customs, the total import and export turnover of Vietnam in the first 6 months of 2017 reached nearly $198.22 billion, an increase of 21.5% compared to that of 2016, indicating that the demand for logistics and forwarding services is on the rise Specifically, import turnover is also predicted to catch an upward trend due to Vietnamese’s favor for foreign products and continuosly increasing population In a market reseach conducted by Grey Group last year, 77% of Vietnamese prefer foreign brands, while the rate of Asia is around 40% Vietnam’s ports are also increasingly welcoming large vessels, opening huge trading opportunities by seafreight, the event of Margrethe Maersk - a 194.000 tonne container ship with a capacity of 18,300 TEUs arriving at Cai Mep International Terminal (CMIT) in February 2017 is the case in point;
With the presence of various ERP providers like SAP, Oracle, and A-soft in Vietnam, the technological advancements present numerous opportunities for enterprises in the industry Online communication tools such as Viber, Skype, and Cisco Jabber facilitate international transactions, while improved internet speeds and the ongoing development of the National Single Window System further enhance business growth Additionally, social media platforms enable the dissemination of legal regulations, safeguarding the interests of logistics companies and their clients both domestically and internationally.
3.1.2 Challenges obstructing development prospects of Integrate Logistics First lies the factors attributing to the huge expenses that the company struggles to maintain competitive pricing: fuel price escalation and exchange rate fluctuation Fuel or oil price influence business through the impact of transport costs on overall logistic costs Besides, container vessels with increasing load capacity and the merging of shipping lines into alliances, together with uncertainty of big shipping
Hanjin and K-line have been consistently driving container transport prices to a level that makes it challenging for freight forwarders to cover their own costs Additionally, the reliance on USD for international trade complicates long-term forecasts due to the frequent fluctuations in exchange rates.
Vietnamese enterprises often adopt the "import CIF export FOB" approach, equating their responsibilities with the costs and time involved in shipping This practice leads them to rely on overseas partners for transportation, cost, freight, and insurance, negatively impacting local logistics companies Transitioning to an "import FOB export CIF" model could yield significant advantages for domestic logistics firms and the national economy However, shifting this mindset poses considerable challenges.
The competitive landscape in the business sector is intensifying as new entrants leverage technology and innovative business models, such as the sharing economy, to capture lucrative segments of the value chain These competitors are adopting agile pricing strategies, enabling shipping lines and carriers to bid on loads, which helps reduce rates and optimize capacity Additionally, they are enhancing the speed and transparency of quotations To mitigate the risk of disruption, traditional logistics companies must embrace innovation, as new players benefit from their agility and freedom from outdated processes and hierarchical constraints.
Objectives set out for future development by Integrate Logistics
After 10 years since its establishment, the business conditions of the company have gone into stable development In addition to maintaining and promoting its strength from the export business, the company is looking forward to developing the network of import business in accordance with market development and _ profit potentials.
From 2013 to 2020, the company has implemented a long-term strategy to evolve into a comprehensive 3PL logistics service provider, offering warehouse rental, distribution network design, and value-added services This shift moves the focus away from price competition against numerous small and medium-sized domestic logistics firms, emphasizing the enhancement of service quality instead Integrate Logistics aims to compete by providing value-added services and fostering deeper engagement in customers' import-export supply chains, rather than solely offering freight forwarding services.
To enhance the efficiency of importing and delivering goods, the integration of advanced technology is essential for optimizing handling times and boosting employee productivity This strategic approach aims to elevate customer service quality and foster better interaction throughout the delivery process Additionally, key objectives for 2018 include specializing departmental functions, closely managing and evaluating outsourced carriers, and expanding services related to importing goods in line with successful domestic enterprises and emerging global trends.
In the upcoming year, Integrate Logistics aims to identify and implement cost-effective management software tailored to the company's needs To achieve this goal, the company has conducted extensive research on various suppliers and gathered multiple quotations.
Improving customer satisfaction to 90% is crucial, as the current satisfaction level stands at 80%, based on feedback forms collected by the company after each transaction.
In 2018, the company is committed to restructuring the operations of outsourced carriers by ensuring that all third-party procedures are executed in a timely and appropriate manner To achieve this, the business will renegotiate contract terms and conditions to ensure strict compliance A detailed roadmap has been developed to address incomplete steps in seafreight imports, prioritizing actions to effectively resolve existing issues.
The company is expanding its seafreight import business into the Korean market, leveraging the growing interest and utilization of the Vietnam-Korea Free Trade Agreement (FTA) As a result, the overall profit target is set to rise to 5 billion VND, with seafreight imports projected to contribute 1 billion VND by 2018 To enhance the forwarding service for seafreight imports, targeted solutions will be implemented.
3.3.1 Training and developing human resources
The company lacks a dedicated Customer Service Division, resulting in slow processing and response times to customer issues Additionally, the connection with customers is limited, and the document staff faces a heavy workload, leading to inefficiencies when handling multiple tasks.
The decision aims to reduce processing times and enhance delivery speed, ultimately improving service levels and boosting customer satisfaction Additionally, it contributes to increased employee productivity and morale.
The HR Department will create and post a job description on recruitment websites, seeking a candidate with strong problem-solving skills to handle customer orders and inquiries, address requests or complaints via phone or email, and track deliveries while providing status updates The role also involves supporting colleagues with quotations, schedules, and policies, emphasizing the necessity of excellent communication skills Proficiency in English is preferred, as the position requires interaction with clients and foreign offices Due to budget constraints and company policy limiting excessive hiring, only one position is available, with an estimated salary of 6,000,000 VND per month Future recruitment may occur if business expansion leads to increased workload.
Once the customer service department is fully operational, it is anticipated to handle 20% of the current workload of the document officer This enhancement will lead to improved customer care, as claims will be processed and responded to within just 15 minutes.
O Training programs for human resources:
The current workforce exhibits a limited ability to identify special goods, such as hazardous materials and perishables, highlighting a significant knowledge gap in negotiation and effective management skills To enhance operational efficiency and prepare for future industry demands, it is essential to update human resources with the latest skills and trends.
Training human resources enhances the range of imported goods, equipping employees with essential experience This development boosts productivity and professionalism among cargo-handling staff, enabling businesses to gain a competitive edge By fostering awareness of new market entrants, companies can better prepare for competition and adapt to industry changes.
- Measures: Sending employees to participate in training courses and programs at the relevant training center However, it can be very costly
Businesses have two options for training: First, they can receive free training from experienced Board of Directors, although scheduling may be challenging for busy entrepreneurs Alternatively, they can join the VLA, which offers access to conferences, seminars, and training courses organized by the Association, Logistics Institute, and relevant ministries To become a member of VLA, businesses must submit an application form, a copy of their business registration certificate, their business charter, and a summary report on their activities The annual membership fee is 1,000,000 VND for the first year and 6,000,000 VND for subsequent years.
The company aims to achieve a well-trained workforce, with at least 80% of human resources proficient in handling procedures, ensuring that all forwarding officers can manage special shipments confidently This initiative is expected to enhance response times to customer needs, reduce delivery times by 5% through improved coordination, and eliminate delays caused by uncertainty or lack of knowledge Ultimately, these efforts will result in a higher service level of 85% within six months of participation.
3.3.2 Establishing KPIs for evaluating outsourced partners
Recommendations for better developimenI[ - - - ôsec se 25 1 For shipping limes
To enhance efficiency, it is essential to adopt new technologies that streamline processes, moving away from traditional software and manual operations Establishing representative offices throughout the city will facilitate better service delivery Additionally, accurately assessing and balancing employee productivity will ensure optimal allocation of human resources, meeting current workloads and significantly reducing waiting times for businesses.
3.4.2 For Vietnam Logistics Business Association (VLA)
To enhance connections among domestic logistics firms and develop qualified human resources through standardized training, the VLA aims to attract new members by organizing seminars and training programs for non-member businesses, fostering multi-dimensional links Additionally, the association will hold vocational programs, job fairs, and internships to boost the supply of skilled workers Emphasizing the significance of enterprise collaboration, VLA will introduce measures for businesses to implement, such as connecting domestic trucking networks and optimizing two-way transport by utilizing empty vehicles.
State management agencies in Vietnam should prioritize the development of a national international vessel fleet to reduce reliance on foreign shipping companies Additionally, it is essential to strategically re-plan warehouses based on geographic location and market demand, while also restructuring central Ho Chi Minh City warehouses to support the growing e-commerce sector and attract foreign investments To enhance efficiency, efforts must be made to shorten import clearance times in line with the General Department of Customs' 2020 objectives, including the transition from Incoterms 2000 to Incoterms 2010 within the VNACCS/VCIS system for a more streamlined process Finally, a thorough analysis of the benefits of importing under alternative conditions, rather than solely Incoterms C and D, should be conducted and shared on social media to educate relevant stakeholders on these advantageous options.
In today's global economy, international integration is increasingly pursued by enterprises, leading to significant growth in import-export activities and heightened competition among logistics service providers This dynamic environment raises concerns about market share between domestic and foreign companies Over nearly a decade, Integrate Logistics has established a stable presence in the industry; however, ongoing research and innovation remain crucial for ensuring sustainable development in the future.
During my internship at Integrate Logistics Co., Ltd, I focused on organizing the forwarding service for seafreight imports The insights and solutions I developed were compiled into a report submitted at the conclusion of my internship Fortunately, the management team recognized the practicality of my proposals, deeming them reasonable and feasible for short-term implementation.
Optimizing seafreight imports and the overall logistics chain not only delivers direct benefits to customers but also enhances the company's competitive edge This aligns with the Government's Action Plan aimed at integrating advanced logistics technologies and developing highly skilled professionals to facilitate trade Additionally, it fosters the growth of logistics service providers that can compete effectively in both domestic and international markets, promoting a modern and professional logistics industry.
My internship at the company provided a valuable opportunity to apply my academic knowledge in a practical setting, allowing me to understand the differences between theory and real-world application Despite the short duration of my internship, the dedicated guidance from my instructor and colleagues greatly enhanced my skills and expertise I am truly grateful for the knowledge I gained during this experience.
Foreign Trade University, especially Ms Chu Mai Linh, has helped me to complete this report
Government (2017) Action Plan for enhancing competitiveness and developing Vietnam logistics services to 2025
Processing the results from VNACCS/VCIS system (2017) Ho Chi Minh City: Human Resource Training and Development Center of New Port - STC
Nguyen Thanh, N (06/2016) Human Resources Development Solutions for Vietnam's Logistics Services Journal of Finance, (2), pp.113-115
Selecting and managing a third-party logistics provider Best Practices (2016) The University of Tennessee’s Haslam College of Business Supply Chain Management Faculty, pp.8- 14
Logistics Research (2012) About the impact of rising oil price on logistics networks and transportation greenhouse gas emission Springer Berlin Heidelberg, pp 147-156
The logistics industry is experiencing significant transformations, as highlighted in the 2017 report by PWC, which discusses shifting patterns in the sector In Vietnam, the first Action Plan for the logistics industry outlines key expectations and strategies for future growth This initiative aims to enhance efficiency and competitiveness within the logistics framework, reflecting broader trends observed globally For more insights, visit the article on Vietnambiz, which provides an overview of the anticipated developments in Vietnam's logistics sector.
In 2017, an article on baomoi.com emphasized the importance of retaining control over Vietnam's logistics market, cautioning against allowing foreign enterprises to dominate this crucial sector The piece highlights the potential risks of losing market share to international competitors and urges local businesses to strengthen their presence Access the full article [here](http://www.baomoi.com/dung-de-mieng-banh-thi-truong-logistics-viet-nam-vao-het-tay-doanh-nghiep-nuoc-ngoai/c/22023957.epi).
30 www.maerskline.com (2017) Margrethe Maersk become the largest vessel to call Viet Nam
VOV.vn (2017) Vietnam receives great attention from RoK investors [online] Available at: http://english.vov.vn/economy/vietnam-receives-great-attention-from- rok-investors-346544.vov [Accessed 17 Jun 2017]
Freight Hub (2017) European shipping lines are suffering from dependency on dollar exchange rate [online] Available at: https://freighthub.com/ [Accessed 1 Jul
Vietnam Logistics Review (2016) CIF — FOB and a narrative of foreign trade alumni [online] Available at: http://www.vlr.vn/vn/news/ [Accessed 19 Jun 2017]
AFR Solutions (2017) [online] Available at: http://www.afr-solutions.com/ [Accessed 19 Jun 2017]
Vietnam Customs (2017) VCCI proactively deploy Vietnam National Single Window System [online] Available at: https://www.customs gov vn/Lists/TinHoatDong/View Details.aspx?
ID%773 &Category=Tin%20n%E1 %BB %951 %20b%E1 %BA%ADt [Accessed 5 Jul 2017]
Logistics Bureau (2017) 6 Key Supply Chain and Logistics Trends to Watch in
In 2017, significant trends in supply chain and logistics emerged, highlighting the need for Vietnamese enterprises to adapt to a competitive landscape where 77% of Vietnamese consumers prefer foreign products To effectively compete against international rivals, local logistics companies must develop strategic initiatives that enhance their service offerings and operational efficiency For more insights on these trends and strategies, resources are available at Logistics Bureau and Interserco.