Logistics basic knowledge and logistics activities of indochina logistics trading JSC

Foreign Trade University Do Thu Huyen - 5C Foreign Trade University Do Thu Huyen - 5C ACKNOWLEDGEMENT I would like to convey my sincere thanks to Ms Phuong To Tam, Business English teacher at Foreign Trade University for her supervision and suggestions in writing of this report I also would like to express my special thanks to the entire teacher at Foreign Trade University for giving me new knowledge and studying methods I am deeply indebted to all the seniors at Indochina Logistics & Trading JSC for their support, suggestions, and criticism during the development of this report I wish to extend my special thanks to my family and my friends for their assistance and encouragement in the making of this report Finally, because of the limitation of time and knowledge, I cannot avoid some mistakes in writing my report I wish to have more opportunities like this I also wish receive more contribution and criticism of my teachers to better my report Foreign Trade University Do Thu Huyen - 5C Chapter 1: Overview of Indochina Logistics & Trading JSC 1.1- Introduction: Indochina Logistics & Trading JSC was established in 2007 with the head office locating in Hai Duong, Viet Nam With the aim to satisfy & protect customers, they have been developed strongly Their team includes long-experienced management board members, well-trained, aggressive & professional sales force plus highly-skilled operation staffs, especially all staffs have Certificate of Customs Broker They are always kept up to date on reliable import, export, customs, and logistics services and are fully committed to quality management and customer satisfaction In addition, they would like to emphasize that we are always customer-driven to follow your needs anytime, anywhere Their goal is to provide you an uncomplicated, worry-free, total transportation solution To support their sea & air freight arms and to fully serve customers in forwarding industry, they have our strong arm of logistics The strong and close relationship with port authorities, Foreign Trade University Do Thu Huyen - 5C customs department, and state owned inspections has allowed their company to grow in a strategically sound manner and with business expertise Plenty of containers and all kinds of cargoes are smoothly and efficiently imported and exported to deliver customers punctually every year Indochina Logistics is known for its ability to quickly respond to customer needs and provide knowledgeable assistance with individual concerns 1.2 - Management structure: Management Board (Hai Duong office) Ha Noi office Sales & Marketing Department Operation Department Hai Phong office Accounting & Administration Department Oversea Department Overland Trucking Department Foreign Trade University Do Thu Huyen - 5C Each department has its own tasks In this report, I only focus you on three main departments in Indochina Company Those are Management Board, Sales & Marketing Department and Operation Department 1.2.1 – Management Board: owner of the company They run the company and carry out the strategic goals, manage the company such as: meeting, marketing, delivering quality and services *Responsibility: They have a responsibility to Support operations and administration of board by advising and informing Board members Oversees meeting with partners, marketing, delivery and quality of programs and service In addition, they recommend yearly budget for Board approval and prudently manages organization’s resource within those budget guidelines according to current laws and regulation Effectively manages the human resources of the organization according to authorized personnel polices and procedures that fully conform to current laws and regulations Assures the organization and its duty, programs and services are consistently presented in strong, positive to the partner Foreign Trade University Do Thu Huyen - 5C *Authority: They employment and fire employees, separate of make effective recommendations to separate employees, making decision on the company’s finance, having authority to make some independent decisions to the business 1.2.2 – Sale & Marketing Department: In any kind of business, marketing always plays an important role “The purpose of marketing is not necessary to promote consumption, its real purpose is to identify and understand customers, and they can themselves consume”; in details, Indochina also its own marketing strategy, especially, marketing sales The sales executives make the needs of customers become their wants To be a sales executive, the seller must understand exactly what their customer’s need and try them best to satisfy those There are several ways to please customers, but the most efficient way to satisfy those needs by the most competitive price and the comfortable services In Indochina, sellers take an important part The market share of the company depends on how the sellers target customers By their art of marketing and sales, their customers believe o their services and let Indochina to take care their cargoes Foreign Trade University Do Thu Huyen - 5C One important process in selling services is to make quotation The quotation is not fixed time by time but depended on some certain issues such as schedule, transit time, fee of shipping lines (air lines, sea lines) For a certain destination, sales executives choose the best receiving agent following criterions such as good services, close relationship, quick payment It is fact that Indochina services fees can be divided into many kinds following up the place of shipment and place of destination Door to door service is the most completely service of Indochina In this quotation, Indochina quotes their customers the freight of local export (import) handling services charges, freight charges (air freight, sea freight) and then local import (export) handling charges As per this main quotation and the order of customers, Indochina divides Door to Door services into many smaller terms that are suitable to the terms of shipments on the business contract of customers For example, Door to port services, port to port services, port to door service, to door service, ect, 1.2.3 – Operation Department: Operation department starts to open file upon receiving the instruction from Sales and Marketing department, the Operation department will start open file basing on invoice, packing list from customers, Indochina issues HOBL (House Original Bill of Foreign Trade University Do Thu Huyen - 5C Lading) for customers This Bill of Lading is considered as the contract between Indochina and customers In the next step, Indochina makes chipping instruction and then sends to shipping line It contains following information: container number, shipper name, consignee name, port of lading, port of discharge, weight of cargo, quantity, etc Shipping line issues MOBL (Master Original Bill of Lading) basing on this shipping instruction After cargo delivered, the site staff makes shipping advise is the notice of local or foreign buyers that shipment has occurred with details of backing, routing, ect A copy of invoice is usually enclosed and sometimes a copy of bill of lading This document helps receiving agent receive goods quickly and actively Bill of Lading is a very important documentation in logistics field Bill of Lading is a principal transportation document by which a carrier acknowledges receipt of the freight and sets forth a contract of carriage Bill of Lading may be negotiable or nonnegotiable Every Bill of Lading must contain at least the following: 1- Date of issue 2- Name of consignor 3- Place of original consignment 4- Place of delivery Foreign Trade University Do Thu Huyen - 5C 5- Statement of whether goods are to be delivered to a specific person 1.3 – SERVICES: 1.3.1- Custom clearance services: Indochina Logistics will solve all confuse task of Customs declaration services for importation and exportation of moving consignment the fast and efficient as possible: • Filling the Customs Declared Form • Customs Declaration and Tax Code Application • Carrying out procedures of Commodity Control or applying for Extra commodity control • Dealing with parties concerned to comply with all sub- formalities upon the requirement of Customs house including: Cultural control, Geology control, Quarantine of botanical – animal – foodstuffs, fumigation, etc • Carry out of formalities to apply for Certificate of origin (C/O) Forms A, B, C, D 1.3.2- Ser freight services: Foreign Trade University Do Thu Huyen - 5C Indochina Logistics offers its customers flexible service options for ocean freight transportation Our sea freight services encompass capabilities for handling less-than-container load (LCL) and full-container load (FCL) shipments, break bulk cargoes and charter services • FCL/LCL import/export • Door to door transportation • Issuance and verification of documentation • Export and import customs clearance • Packing and crating • Warehousing and distribution • Part & full vessel charter • Conventional shipments • Transport insurance 1.3.3- Multimodal transport: 10 Foreign Trade University load and less than Do Thu Huyen - 5C wagon load, especially international transportation to/from China and OECD area Our Railway Transport Services offer the following: • LCL & FCL services • Assembly positioning of load units • Reliable door-to-door transportation service • Conventional railway transportation using variety of rail wagon suitable for break bulk and oversized shipment • International transportation to/from China and OECD • Customs clearance • Warehousing and distribution 1.3.13- Overland transportation: Road transportation can not be excluded from supply chain of logistics services Indochina Logistics provides its customers with scheduled group age services, part load and full truck load transportation Our Trucking Services include the following: • Assembly positioning of load units 19 Foreign Trade University Do Thu Huyen - 5C • Reliable door-to-door transportation service • Transportation of heavy lifts, over-sized, bulk and sensitive Cargoes • Special transportation of household goods and personal effects • Transportation of transit cargoes • Transportation of temporary admission cargoes • Warehousing and distribution Chapter 2: Logistics basic knowledge and logistics activities of Indochina Logistics & Trading JSC 2.1- Logistics basic knowledge: The verbatim definition of logistics in a course book of ESCAP (Economic and Social Committee in Asia and the Pacific) in 2000 says, “Logistics/ Supply chain management is the synchronized movement of inputs and outputs in the production and delivery of goods and services to customers.” Also in the documents of ESCAP, another definition is raised: “Advanced logistics and Supply chain management means: The concept of synchronizing the operations of different organizations in logistics 20 Foreign Trade University Do Thu Huyen - 5C chain and giving necessary feedback to organizations in production and/or to material distribution divisions in a real time with the help of information technology and digital communication network.” So, here are some highlight points: This is the synchronized movement of materials and products The definition refers to the movement of both inputs and outputs The point which needs special attention is that logisticians need to make use of digital communication to give necessary feedback to producers, distributors, and consumers There are many different definitions of logistics service, however, each definition focuses on a certain aspect, for example one definition says, “Logistics is the process of planning, implementing and managing efficiently the cost of flow of materials, inventory and finishedproducts ” There is also the definition: Logistics is the process of delivering the right products to the right place at the right time All of these definitions aim to the ultimate requirement of logistics service, which is to ensure the essential quality 2.2- Logistics activities of the company: Indochina Logistics & Trading JSC is an international provider of integrated logistics services including over-land 21 Foreign Trade University Do Thu Huyen - 5C transport, worldwide air and sea freight and associated logistics services Indochina provides its customers with professional, personalized guidance in the export and import process Indochina is known for its ability to quickly respond to customer needs and provide knowledgeable assistance with individual concerns Even though the most profit of Indochina comes from commercial companies but it its fact that Industrial Zones is long term target of Indochina Currently, there are some customers in Industrial Zones that Indochina has targeted Some Industrial Zones using Indochina logistics such as: 1- Phuc Dien Industrial Zone 2- Tan Truong Industrial Zone 3- Dai An Industrial Zone 4- Nam Sach Industrial Zone 5- KEN MARK Industrial Zone STT Company Brother Industrial Industrial Zone Phuc Dien Industrial Zone, Hai Vietnam Co Ltd Duong 22 Foreign Trade University Do Thu Huyen - 5C Regent Garment Co Nam Sach Induatrial Zone, Hai Ltd UMC Electronics Duong Tan Truong Industrial Zone, Hai Vietnam Co Ltd Sumidenso Vietnam Duong Dai An Industrial Zone, Hai Co Ltd KEN MARK Industrial Duong KEN MARK Industrial, Hai Co Ltd Duong KEN MARK Industrial, Hai MACRO MAX Co Ltd Duong List of customers in Industrial Zones With the customers in Industrial Zones, Indochina must target in long term Indochina set target into steps The first step, Indochina contacts with persons in charge (the person who will decide the transport provides for the cargo) and then making good relationship with them After the first time of targeting, Indochina must give them the best quotation that they need For the first time of providing services, Indochina must try their best to make all things go smoothly Any way, in order to sell services to this kind of customers, Indochina must take time to persuade that they are really caring about business Beside the above customers in Industrial Zones, Indochina targets other sources of customers 23 Foreign Trade University Do Thu Huyen - 5C Each group above needs a different way target The report will show you the art that Indochina used to target Turn to the second group, Ltd companies are the potential customers of Indochina Even though this group of customer does not bring the biggest profit but it takes an important role in Indochina financial statement In comparing to the customers in Industrial Zones, the groups not have many goods to deliver but in each consignment the amount of goods is very large The profit per consignment is also bigger in comparison with the profit comes from the Industrial Zones group It is because the fact that Industrial Zones are very potential ones for logistics companies It is difficult for Indochina to complete without a nice pricing policy One important group business partners of Indochina are agents There are many agents that Indochina has built good relationship Below are some best relationships that Indochina has built List of agents of Indochina JAPAN JAPAN TRACY CORP NAIGAI NITTO CO LTD TAIWAN AST FREIGHT SERVICES CO LTD UK EXCEL AIRFREIGHT LTD SIGMA ASL LOGISTICS LTD 24 Foreign Trade University Do Thu Huyen - 5C It is fact that when building relationship with agents, Indochina must make an agency agreement After the agreement, Indochina and the agent will make the transaction When receiving requests for pricing of Indochina, agents will immediately send Indochina the best price Indochina has And then, Indochina sells its customers for using services The process consists of two steps as follow: Step 1: Indochina’s customers want to deliver goods -> they will contact with Indochina and ask for price and other terms -> Indochina contacts with its agents in the country that goods are delivered -> Indochina ask agents for pricing and any other necessary information such as shipping line, name of carrier and transit time, ect -> Agents will inform Indochina all necessary information -> Indochina informs to its customers -> deliver goods Step 2: Agent will deliver goods into destination port -> send Indochina a debit note -> Indochina collects charges from its customers -> In the end of each months, Indochina will clear the amount with its agents 25 Foreign Trade University Do Thu Huyen - 5C It is the fact that, the agents system makes transportation go smoothly With many agents around the world, Indochina can not only choose the cheapest shipping line for customers but also make its business go fluently and efficiently Indochina Company has reached achievement Indochina business partners are variety There are many kinds of business that Indochina targets Those activities bring profit for Indochina But the most profitable one is coming from commercial enterprises Below are some tables that show the result of Indochina activities Unit 20'DC 40'DC Package Pallet Total in ton Jul Aug Sep Oct Nov Dec (unit) 652 821 1,452 30 (unit) 727 960 1,596 69 (unit) 864 1,091 1,736 92 (unit) 993 1,128 1,972 74 (unit) 1,136 1,432 2,234 89 (unit) 1,079 1,314 2,019 62 302,470 421,102 453,659 478,692 502,127 485,845 Volume of goods delivered at nd half 2008 26 Foreign Trade University Do Thu Huyen - 5C We can see that Indochina services activities develop stable time to time There is one point slows down is on December of the year From the August to November of the year, the demand for delivering goods is very large, but it is smaller on December and some next months Financial report Term Turnover (Billion VND) Profit (Billion 2007 1st half 13,00 2008 2nd half 12,00 1st half 19,00 25,00 1,62 2nd half 16,00 35,00 1,34 2,42 1,76 VND) 2,96 4,18 In the financial report, we must consider two main indictors: turnover and profit Indochina’s turnover increased remarkably each year, especially for from 2007 This trend is still kept for 2008 As per the financial report we an see that the percentage of increasing in profit between 2007 and 2008 is 41% This means that, in the 2008 the company has improved its technology and 27 Foreign Trade University Do Thu Huyen - 5C method of going business so that Indochina can save cost and internal management expense for increasing the profit Chapter 3: Some recommendations to services of Indochina Logistics & Trading JSC and developing logistics Market in Viet Nam at international economics integration progress 3.1- Services development in the Indochina Company: It can be realized from services of Indochina company, although there is little or no change in their unmodernized communication with clients and information technology has not been widely applied, have covered the essentials of logistics service such as acquisition, handling, storage, transportation and delivery of goods, custom procedures, other documental procedures, client consultancy services, packaging, labeling or other goods-associated services In order to develop logistics services, the following actions are highly recommended The company needs to improve their equipments and infrastructure Logisticians are required to enhance the consolidation to come up with good solution irrespective of the source and destination of goods The system of oversea consolidation agencies also need to be enhanced for the smooth 28 Foreign Trade University Do Thu Huyen - 5C goods carriage without any difficulties relating to customs formalities, legal procedures or transportation There is the urgent need that logistics businesses be equipped with digital information technology, with which, businesses can keep close track of goods in and goods out, warehousing, inventory, giving feedback on goods circulation to importers, exporters, producers and distributors Apparently, information technology requires a considerable investment; however, it should not be avoided 3.2- Logistics solutions in Vietnam: Logistics is a kind of service, which can bring huge benefits for society So, Vietnamese government should set up logistics strategies and put forward policies to attract more investment in logistics Firstly, the government should improve the transportation infrastructure of Vietnam in order to meet the international standards For example, the high way needs to be rebuilt to meet international standards TEU (ISO 668), for 30.5 tons and 40 feet container At present, this high way can only be used for less than 30 tons containers Besides that, the government can support logistics enterprises in term of high technologies or capital to 29 Foreign Trade University Do Thu Huyen - 5C rebuild or enhance their equipment for logistics like warehouse, yard and IT (Information technology) system Secondly, the government should offer tax incentives to logistics services and logistics providers For example, the government can reduce the income tax for logistics enterprises or reduce export and import taxes when they use logistics services of local logistics enterprises This method will stimulate the Vietnamese logistics provides to develop their service Moreover, companies not have necessary understanding of international laws and the laws of the nations that Vietnam’s logistic services may concern Misunderstanding of international laws and cases may put Vietnam logistics enterprises into troubles Those problem need to be overcome so that enterprises can follow up the development of logistic industry Finally, the government needs to develop human resources for logistics service At present, Vietnam has not had any university or institution training logistics in term of regular training course In this case, the Ministry of education and training can associate with the Commercial Ministry and Transportation Ministry to research and provide logistics training at university as an official subject 30 Foreign Trade University Do Thu Huyen - 5C CONCLUSION Logistics is not a new industry in the world but is a quite new one in Vietnam Logistics plays an important role in developing Vietnam’s foreign trade, help to speed up the development of urban areas and hi-tech industrial parks It will make conditions to modernize the national logistics when the foreign trade grown As a result, the development of Vietnam’s Logistics sector is necessary and the economy is expected to be more industrialized 31 Foreign Trade University Do Thu Huyen - 5C Local forwarders should be prepared to find a firm position in foreign markets They also need to raise their position so that they can rent foreign means of transports for their services in the future When Vietnam joins the World Trade Organization (WTO), logistics service providers will have both opportunities and challenges They are making their best effort to improve their capability, expanding business in order to complete against foreign logistic companies to the customers Vietnam logistics enterprises have to combine to each other in order to gather enough financial power, capacity, human resources, technique and vehicle to gain the market share from foreign companies We have reason to believe that Logistics can its tasks better in the coming years and become one of the most developed Associations in Vietnam REFERENCES • www.indochina-logistics.com 32 Foreign Trade University Do Thu Huyen - 5C • www.vietlogistics.com • www.3plwire.com/2008/09/25/vietnam-lack-of-logisticsinfrastructure-higher-logistics-costs/ • http://vietnamnews.vnagency.com.vn • http://www.mb.com.ph/node/198686 • Indochina’s report (2007, 2008) 33 [...]... Transportation of heavy lifts, over-sized, bulk and sensitive Cargoes • Special transportation of household goods and personal effects • Transportation of transit cargoes • Transportation of temporary admission cargoes • Warehousing and distribution Chapter 2: Logistics basic knowledge and logistics activities of Indochina Logistics & Trading JSC 2.1- Logistics basic knowledge: The verbatim definition of logistics. .. efficiently the cost of flow of materials, inventory and finishedproducts ” There is also the definition: Logistics is the process of delivering the right products to the right place at the right time All of these definitions aim to the ultimate requirement of logistics service, which is to ensure the essential quality 2.2- Logistics activities of the company: Indochina Logistics & Trading JSC is an international... book of ESCAP (Economic and Social Committee in Asia and the Pacific) in 2000 says, Logistics/ Supply chain management is the synchronized movement of inputs and outputs in the production and delivery of goods and services to customers.” Also in the documents of ESCAP, another definition is raised: “Advanced logistics and Supply chain management means: The concept of synchronizing the operations of. .. to logistics services and logistics providers For example, the government can reduce the income tax for logistics enterprises or reduce export and import taxes when they use logistics services of local logistics enterprises This method will stimulate the Vietnamese logistics provides to develop their service Moreover, companies do not have necessary understanding of international laws and the laws of. .. immediately send Indochina the best price Indochina has And then, Indochina sells its customers for using services The process consists of two steps as follow: Step 1: Indochina s customers want to deliver goods -> they will contact with Indochina and ask for price and other terms -> Indochina contacts with its agents in the country that goods are delivered -> Indochina ask agents for pricing and any other... business so that Indochina can save cost and internal management expense for increasing the profit Chapter 3: Some recommendations to services of Indochina Logistics & Trading JSC and developing logistics Market in Viet Nam at international economics integration progress 3.1- Services development in the Indochina Company: It can be realized from services of Indochina company, although there is little... international provider of integrated logistics services including over-land 21 Foreign Trade University Do Thu Huyen - 5C transport, worldwide air and sea freight and associated logistics services Indochina provides its customers with professional, personalized guidance in the export and import process Indochina is known for its ability to quickly respond to customer needs and provide knowledgeable assistance... Warehousing and Distribution Services include the following: • Receiving and inventory • Sorting and segregating • Forklifts and cranes • Pick and pack, labeling • Crating • Delivery and emergency parts distributions • Security • Insurance 1.3.9- Fairs & Exhibition services: Indochina forwarding Logistics services offers to/from comprehensive international trade exhibition fairs and exhibitions Our Fair and. .. the most favorable? And the price? And the security, insurance, customs clearance and a lot more - that are the questions, but Indochina Logistics will assist you to solve the problems Indochina Logistics will take full and complete responsibility for the immensely important task of moving your personal effects and household goods to a new home-wherever the destination Every step of your move will be... customs formalities and clearance in other countries 1.3.6- Customs brokerage services: 12 Foreign Trade University Do Thu Huyen - 5C Prompt and effective clearance of international cargoes is critical to the successful supply chain As a total logistics solutions provider, Indochina Logistics deploys one of extensive customs brokerage operations Indochina Logistics incorporates a team of professional customs ... Warehousing and distribution Chapter 2: Logistics basic knowledge and logistics activities of Indochina Logistics & Trading JSC 2.1- Logistics basic knowledge: The verbatim definition of logistics. .. and criticism of my teachers to better my report Foreign Trade University Do Thu Huyen - 5C Chapter 1: Overview of Indochina Logistics & Trading JSC 1.1- Introduction: Indochina Logistics & Trading. .. requirement of logistics service, which is to ensure the essential quality 2.2- Logistics activities of the company: Indochina Logistics & Trading JSC is an international provider of integrated logistics