the analysis of external environment, competitors’ weaknesses and strengths, TCIT’s SWOT analysis, it tries to outline the most important indicators to formulate the objectives and strategi

This project aims to define an effective marketing strategy for Tan Cang Cai Mep international container terminal TCIT during 2012-2015 to enhance its effectiveness, increase the volume

EXECUTIVE SUMMARY

According to the master planning for seaport Vietnam system development until 2020 with the vision for 2030 approved by the Prime Minister, the sea-port development in the Cai Mep - Thi Vai area plays an important role thanks to its navigational channel and advantageous position in the regional maritime route There are a lot of new terminal projects in this area Within the next two years, all the projects of the sea-port development in Thi Vai Cai Mep area shall be completed Upon the completion of these projects, there shall be seven deep-sea container terminals operational in Cai Mep area Therefore competition among the deep-sea terminal operators shall be more and more fierce especially in the situation of the limited volume of inbound and outbound containers due to the global economic crisis

Tan Cang – Cai Mep International Terminal Co Ltd (TCIT) started its operation since January 15th 2011 It serves the direct services from Vietnam to USA and Europe After one year operational, TCIT has made some achievements but the volume was far to reach its designed capacity

This project aims to define an effective marketing strategy for Tan Cang Cai Mep international container terminal (TCIT) during 2012-2015 to enhance its effectiveness, increase the volume and turnover The project has identified the theoretical basis of the determinants of port competitiveness, the formulation of marketing strategy as well as the marketing mix for the port On these basis, the external and internal facto rs affecting to the operation and business of TCIT have been thoroughly analyzed A survey was conducted on the customers’ satisfaction toward TCIT and their evaluation

on the importance of the port All these results were the valuable data for the furthe r recommendations on the strategies and marketing mix which TCIT should apply during 2012-2015 to enhance its competitiveness and attract more volume to the port The marketing mix strategy includes seven “P”: product, price, placement (location and hinterland connectivity to port), promotion, people, physical evidence (infrastructure) and process

The project has made detailed recommendations for TCIT in each “P” to make the achievements and increase the volume and turnover in the years from 2012 to 2015

In Cai Mep – Thi Vai area, the development of the deep-sea terminal system to handle 110,000-DWT vessels make a great contribution to boost the economic growth for the whole country in general and for Southern area in particular, especially in the context that The South area currently accounts for about 66% of national throughput volume and in the coming time, enhancement of export and foreign trade shall serve as a major solution for national economic development for the time being till 2020

According to the master planning for seaport Vietnam system development until 2020 with the vision for 2030 approved by the Prime Minister, the sea-port development in the Cai Mep - Thi Vai area plays an important role thanks to its navigational channel and advantageous position in the regional maritime route Before June 2009, there were not any deep-sea container terminals in Vietnam and all the cargo transported between Vietnam and the countries in America, Europe or Africa had to be transshipped in the transshipment ports of Asia in Singapore, Malaysia, Hong Kong e.t.c The first deep-sea terminal of Vietnam has been operational in Thi Vai Cai Mep since June 3rd 2009 Within the two years, five terminals with the berth length of 2,500 meters have been operational in this area

1.2 Problem statement

Tan Cang – Cai Mep International Terminal Co Ltd (TCIT) a deep sea terminal in Thi Vai Cai Mep is a joint – venture company between Saigon Newport Corporation with three shipping Lines including Mitsui O S K Lines (Japan), Hanjin Shipping (Korea), and Wanhai Shipping (Taiwan) The Investment Certificate was granted for TCIT by the Vietnam Government in September 2009, with capital investment about USD 100 million, equivalent to around VND 2,000 billion

TCIT started its operation since January 15th 2011 Thanks to the great support of the shipping lines who are also the shareholders of the terminals and Saigon Newport Corporation, currently TCIT receives five voyages with the volume estimated of 7,000 to 7,500 Teus per week The volume of TCIT in 2011 has reached 275,218 Teus while its design capacity is 1.2 million Teus

Within the next two years, all the projects of the sea-port development in Thi Vai Cai Mep area shall be completed Upon the completion of these projects, there shall be seven deep-sea container terminals with the total berth length of 6,402 metres and the design capacity

of 11.2 million Teus in this area Therefore competition among the deep-sea terminal operators shall be more and more fierce especially in the situation of the limited volume of inbound and outbound containers due to the global economic crisis

The study intends to define effective marketing strategies for TCIT in such a severely competitive situation Based on the analysis of external environment, competitors’ weaknesses and strengths, TCIT’s SWOT analysis, it tries to outline the most important indicators to formulate the objectives and strategies There are questions that need to be answered:

1 What are the opportunities and threats from the external environment that affect the operation and business result of TCIT? What are the weaknesses and strengths of TCIT in comparing to those of its competitors?

2 What are the most important factors affecting the choices of the shipping lines to the port? What should TCIT do to enhance its competitiveness

1.3 Objectives

The objective of this study is to develop marketing strategies for TCIT during 2012-2015

to enhance its competitiveness effectively as well as attract more volume to the terminal

1.4 Scope and limitation

The customers of TCIT includes three main groups: shipping lines, forwarders, and shippers/consignees Due to limited time and resources, the case study focuses on shipping lines only as this group generates the biggest revenue to the port, approximate 95% according to TCIT’s internal reports, and hence is much influential to the port’s formulation of policy and strategy

This project was developed for TCIT and mainly set for the operation of TCIT from 2012

to 2015

1.5 Research Method

The study shall be based fundamentally on both qualitative and quantitative research methods This permits a flexible and iterative approach Both primary and secondary data shall be collected In order to obtain primary data, surveys had been made through questionnaires, phone contacts, depth –interviews Secondary data have been collected from the internets, articles from different journals and magazines, different kind of business reports and statistics reports as well Acquiring secondary data shall have to give scientific proof for the findings of the project After all data have been collected, the SPSS was used to analyze these data

The four year marketing strategy to enhance the competitiveness of TCIT then shall be defined on the basis of the data analysis

1.6 Structure of the study

The research consists of 5 main chapters as follows:

Chapter 1: Introduction

Chapter 2: Literature Background

Chapter 3: External and internal analysis

Chapter 4: TCIT’s Marketing strategies to enhance its competitiveness

Chapter 5: Conclusions

CHAPTER 2 LITERATURE BACKGROUND

2.1 Determinants of Port Competitiveness

In order to study the effects of the determinants of port competitiveness, we should first justify the indicators of port competitiveness Since the environment in which ports operate has changed dramatically, ports are affected by various new forces driving global competition, including the far reaching unitization of general cargo, the rise of mega-carriers, the market entry of logistics integrators, the creation of network linkages among port operators, the development of inland transport networks, and so on (Notteboom and Winkelmans, 2001a,b) In this context, key determinants of port competitiveness include:

- Accessibility and connectivity to Port

- Port Productivity, operation & economic efficiency

- Port cargo handling charges,

- Reliability & qualities of services

- Port selection preferences of carriers and shippers

Further characteristics and influence of each factor to the port operation have been explained in more details in the Appendix 2.1

2.2 Marketing strategy

According to Baker and Michael (2008), marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantages

Marketing strategies are the basis for marketing plans to fill market needs and reach marketing objectives A marketing strategy basically includes the following steps:

- Goal setting

- SWOT analysis

- Marketing Objectives

- Marketing Mix for services business

The detailed content of each part in the marketing strategy as have been defined in the Appendix 2.2

2.3 Marketing mix for a port to enhance its competitiveness

Based on the determinants of the port competitiveness and theory of 7 P’s marketing mix for services The marketing mix for a port to put into action to enhance the competitiveness shall be concerned with the details as the following:

Product/services: Port Productivity, operation, reliability & qualities of services,

service network to create the economic efficiency and convenience, door to door services

Price: Port cargo handling charges, transportation cost for hinterland connectivity Placement: location of port, accessibility to Port and hinterland connectivity Promotions: Promotions have become a critical factor in the service marketing

mix In the severe competitive environment, the preferential policies and incentives to the loyal and big customers are extremely essential for the port to maintain customers and encourage shipping lines and customers to increase their volume through port

People: An essential ingredient to any service providers is the use of appropriate

staff and people Recruiting the right staff and training them appropriately in the delivery

of their service is essential if the port wants to gain competitive advantages The faults of staff during the handling process of cargoes at port may cause big losses to the customers Beside the skill and service knowledge, staff of port should also have the appropriate interpersonal skills, aptitude and customer service with a focus towards customer satisfaction

Process: Service process is the way in which a service is delivered to the end

customer Port should improve their process to ensure the optimum delivery/receipt process without a loss in quality The process of a Port in receiving/delivering the cargoes

is of utmost importance It is also a critical component in the service blueprint of port

Physical Evidence :Physical evidence is a very important element and considered

as a differentiator in service marketing For a port, the depth of access channel to port, length of berths, infrastructure of container yards, numbers and types of handling equipments and vehicles, working office for shipping lines and customs to make the transaction with customers are critical factors in attracting shipping lines, forwarding and importers and exporters

CHAPTER 3 EXTERNAL AND INTERNAL ANALYSIS

3.1 The external analysis

3.1.1 The economic situation of Vietnam in 2011

Vietnam aims at becoming a developed country by 2020 and in fact, Vietnam is considered as one of the fastest growing economies in the world Vietnam borders with China to the North, Laos and Cambodia to the West and has a coastline stretching more than 3,400 km along the South China Sea

Vietnam can be roughly divided into three main economic regions: North, Central and South The Southern key economic region, centered on Ho Chi Minh City, is by far the most developed region in Vietnam, considered as an engine for the country's growth Most

of the country's logistics providers are based in this area

The economy of Vietnam during the 4 year period (2008-2011) had slowed down with the global recession The GDP growth rates had decreased from 2007 to 2010 at respectively 8.46%, 6.18%, 5.32% and 6.78% In 2011, the GDP growth of Vietnam was 5.89%

According to the Ministry of Industry and Trade (MIT), the Vietnam’s export turnover in

2011 was USD 96 billion- a year on year increase of 33% Import turnover in 2011 was USD 106 billion, increasing by 33%

Relating the commodities which were the major cargoes through the port, the results achieved in 2011 was encouraging and it is forecast that the export of the major export commodities of Vietnam will continue making big achievements in 2012 and coming

years The details of the figures relating to the export of these commodities in 2011 are as

the followings:

As per the statistics of VinaTex (Vietnam National Textile and Garment Group), despite an increase in costs for input material, textile and garment revenues of 2011 reached USD 13.5 billion, a year-on-year increase of 30% The export to the major markets has increased sharply: USA- increase by 14%, Europe: increase 41%, Japan: increase 52% However, Vietnam still acts as a processing maker, most of the materials for garments and textiles must be imported In 2011, the value of the import material of the

VinaTex was total USD 8 billion In 2012, Vinatex targets at reaching the export of USD

15 billion

According to Vietnam Association of seafood exporters and producers (Vasep), in

2011, Vietnam's fisheries exports has officially reached over 6 billion The seafood exports increased by 20% compared to that of 2010 It is expected that in 2012, the total production will be 5.35 million tons of aquatic products (fishing products: 2.2 million tons; aquaculture products: 3.15 million tons) and total seafood export turnover reached 6.5 billion USD

The statistics of Vietnam Food Association (Vietfood) states that in 2010, Vietnam exported 6,75 million of tons of rice and the revenue of rice export was USD 2.912 billion Rice export in 2011 reached 7 million of tons and value of USD 3.7 billion- year on year increase of 3.7% in volume and 22% in value It is expected that in 2012, Vietnam will rank first in rice export in the world The difficulties which Thailand is facing due to the flood and rice cost increase will be the opportunity for Vietnam to develop the market of high value rice in 2012 and the coming years

This year, coffee exports of Vietnam was 1.1 million tons - were estimated at 1.2 million tons accounting for a revenue of $ 2.54 billion, 5.3 percent higher in volume and 59.5 percent greater in earnings than those of 2010 The coffee volume of Vietnam now accounts for 14-15% of the total coffee globally

In 2011, export rubber reached 800,000 tons making a revenues of USD 3.2 billion

In 2010, the figures were 783,000 tons and USD 2.38 billion The fact that the revenue of coffee export increased sharply while the increase of export volume went up slightly reflects the encouraging signal of the raise of Vietnam Coffee price in the global market The Economist Intelligence Unit of England (EIU) has also made their estimation of Vietnam Economy in the coming year as in the following table

Table 3.1: Estimation of Vietnam’s Economy in the coming years according to Economist Intelligence unit -EIU (Economist Group) of England

a negative impact on manufacturers Inadequate logistic infrastructure and lack of information and cooperation between enterprises have increased expenditure and weakened Vietnam’s competitiveness compared to their peers in the region This has led the Vietnamese government to start taking serious steps to improve facilities for transport and logistics However, in the past ten years the government's record in infrastructure investment can best be described as mixed Road and rail networks are still relatively inefficient and port facilities are still far from world class

3.1.2 Port industry in Vietnam

3.1.2.1 General Information

Currently, Vietnam’s Port Association (VPA) has 58 port members In 2010, the total volume of the port members of VPA was 154 million tons – a decrease of 4% in comparing to those of 2009 (10% increase in 2009) However, container volume growth rate continued to be high, at 18% (15% in 2009) and reached nearly 6.5 million The ports

in HCMC area occupied more than 66% of container throughput country wide

The ports in the Northern area had maintained growth of container of 10% in 2010, the central area ports made an increase of 12% In the Southern focal economic area and mainly in HCMC area, total cargo throughput reached almost 74 million tons, increased by 2% in which containerized cargo was 4.3 million TEU, increased 24%

The details of the throughput of the member ports of VPA in 2007-2010 have been summarized in Appendix 3.1

3.1.2.2 Estimation of the port throughput in the coming years

According to the seaport development master plan up to 2020 with the vision for

2030 which was approved by the Prime Minister under Decision No 202/1999/QD-TTg,

the estimation of the volume of the general cargo and containerized cargo through the ports in Vietnam in 2015, 2020 and 2030 as described in the following table:

Table 3.2: The estimation of the volume of the general cargo and containerized cargo through the ports in Vietnam in 2015, 2020 and 2030

(Source: The seaport development master plan up to 2020 with the vision for 2030)

According to this estimation, the container throughput in 2015 will be increased by nearly 107.7 % in comparing of those in 2010 in the low scenario and by 133.8% in the high scenario It is an impressive growth

Vietnam can be said to have the top potentials in shipping, with its advantageous geographic location, the seaport system of Vietnam, if being properly and quickly developed up to the international standards, could affect the container shipping pattern of the region in the next decade

However, the inherent weakness of the world financial system is affecting world trade and together with other potential and hidden risks in the region, the port operators should have more measures to mitigate risks, ensure higher sustainability for their businesses

3.1.2.3 Problems of the deep sea ports:

One of the main issues of Vietnam is the landside transport infrastructure and the hot spots are the container terminals as predicted Many port projects have been implemented speedily while the hinterland connections as well as other utilities and supporting services (electricity, water supply, types of services, Customs formalities, port dues and charges…) are not adequate and ready, thus increasing the costs and risks to the port operators

Total cargo

throughput

Low Scenario

High Scenario

Low Scenario

High Scenario

Low Scenario

High Scenario

The demand of using large vessels (more than 350 meter long, more than 100,000 DWT)

to reduce the shipping costs within the allowable channel conditions of the Thi Vai river shows that the theoretical restrictions of the master plans has been and continues to be the obstacles for the port and maritime development in the Southern focal economic area

Most of the world first-class port operators have been attracted for investment in container port and marine services in Ho Chi Minh City and Baria Vung Tau We can see the presence of Ports of several well-known port developers in Cai Mep-Thi Vai of Ba Ria-Vung Tau province such as SITV of Hutchison Ports (Hongkong), SP-PSA of PSA (Singapore); CMIT of APM Terminal (Maersk A/S - Denmark), SSIT of SSA Marine (USA) and Dubai Port world developed their Port namely SPCT in the south of HCM city From 2008 to 2011, the capacity of container ports in the South of Vietnam has increased 300% (from the capacity of 4 million Teus/year in 2008 to 11.2 million Teus/year in 2011) while the actual increase of the throughput was at the rate of 15-18%/year There is a severe competition in price which has been causing financial difficulties for the port operators, especially for those of the deep sea terminal in Cai Mep Thi Vai They can not increase the handling price while the inflation in Vietnam is high and price of oil, petrol, electricity has increased 18% in 2011

2009 and 2011 were considered the toughest years for all the shipping lines The sea freight market has experienced steep declines on account of the gloomy economic situation

in 2009 and 2011 A sharp dip in trade volumes, especially in the European and North American trade routes, and increased idle fleet have adversely affected profitability Reduced demand and rising fuel prices have resulted in losses of 25-50% for many shipping lines Maersk Line, the biggest container carriers, suffered a loss of USD 2 billion in 2009 In 2011, Maersk Line lost USD 351 million from January to September and USD 293 million in the third Quarter In such a hard situation, cutting cost is the ultimate goal of each shipping line

From the above analysis, we can see that the operators of the deep sea ports in Vietnam are still facing big challenging in 2012 and the coming years and TCIT should find it appropriate way to increase the volume and make the profit

3.1.3 Competitors’ Analysis

3.1.3.1 Deep Sea Terminals in Cai Mep Thi Vai Area

To meet the increasing demand of the shipping lines for the deployment of direct services from Vietnam to The US and European countries, Vietnam has developed the deep sea terminal in the port group No 5 in Baria Vung Tau The feasible study for the project started in 2004 and afterward, the construction of the first deep sea port started in 2006 The first deep sea terminal iin Cai Mep Thi Vai area into operation in June 2009 and up

to the present time, there are five terminals with the berth length of 2830m and designed capacity of 5.3 million Teus have been operational Most of the terminal now can reach only 5-20% of their capacity and this actual situation has caused the competition between the deep sea Terminals in Cai Mep Thi Vai more and more fierce The locations of the deep sea terminals in Cai Mep Thi Vai have been shown in the Appendix 3.2

3.1.3.2 SP-PSA

SP-PSA is a joint venture between Saigon Port, Vinalines and PSA Vietnam Pte Ltd, the latter

is a wholly-owned subsidiary of PSA International Pte Ltd (PSAI) of Singapore.) It is the first deep-sea container terminal operational and started operations in May 2009 The facility and equipment of SP-PSA are described in the Appendix 3.3 (Table 3.3.1)

SP-PSA started its operation by welcoming the APL mother vessel in May 2009 After one year operational, in 2010, SP-PSA received five voyages per week including the vessels of APL (service to the US West Coast), the Grand Alliance (service to the US West Coast), CMA-CGM (two services- one to the Mediterranean Sea and one to North of Europe), Maersk (service to the US West Coast) 2010 was quite a successful year for SP-PSA because that time there were only three terminals operational in Cai Mep Thi Vai and the shipping market had recovered after the crisis of 2009 SP-PSA reached the volume of 293,913 Teus in 2010 However, in 2011, more players come into the market and some shipping lines had to stop their service to Vietnam due to the sharp decrease of freight The services of CMA-CGM and Maersk Line moved to CMIT, service of the Grand Alliance moved to TCCT and APL stopped their service on Dec 7th 2011 There is not any service

in SP-PSA in the current time The volume of SP-PSA was 118,352 Teus in 2011, accounting for 16.3% of the total throughput of the deep sea port in Cai Mep Thi Vai and the volume decreased by 59.73% 2012 and the coming years shall be the hardest time for this terminal

Strength of SP-PSA

SP-PSA has advanced facility and handling equipment SP-PSA is a subsidiary of PSA International Pte Ltd PSA international ranks first among the leading global port operators (based on equity Teu throughput) in 2010 PSA has its flagship operations in PSA Singapore terminal and PSA Antwep PSA operates 29 terminals in 16 countries across Asia, Europeand the America In 2010, the total volume of the terminals of PSA was 51.3 million Teus making up 9.4% of the world throughput SP-PSA's terminal operating system will streamline their internal processes to facilitate data interchange and enhance communication with their business partners around the world In 2010, terminals belonging to PSA handled 65.12 million Teus of containers in which PSA (Singapore) handled 27.68 mil Teus and Terminals outside Singapore handled 37.44 mil Teus SP-PSA have good relationship with the shipping lines globally and thanks to their system terminals globally, SP-PSA can have a good price policy globally to attract shipping lines

to use their services

Weaknesses of SP-PSA

SP-PSA is located in a disadvantageous place in comparing to other terminals like CMIT, TCCT and TCIT It is too far from the pilot station and causes more petroleum to the shipping lines coming to this terminal SP-PSA is under the high pressure of the facility and equipment depreciation and thus its price is the highest in comparing to others in the region There is no shipping lines joining in the operation of SP-PSA and they do not have the hinterland logistic facilities in Ho Chi Minh city

3.1.3.3 SITV

SITV (Saigon International Terminals Vietnam) is the Joint Venture of the Hutchison Port Holdings (HPH)- Hong Kong and Saigon Invevestment Commercial Company SITV is a member of Hutchison Port Holdings (HPH) of Hong Kong- the world's leading port investor, developer and operator SITV has been operatio

nal since August 2010

The facility and equipment of SITV are described in the Appendix 3.3 (Table 3.3.2)

From the start of operation to September 2011, SITV receives one vessel/week (service of Kline and MOL to the US East coast) with the monthly volume of 4,000-4,800 Teus/months In September 2011, MOL and K’ line moved their service to TCIT and now there is not any container services in SITV They sometimes handle the bulk vessel The volume of SITV in the 8 moths of 2011 was 49,699 Teus accounting for 6.8% share of the area and SITV is experiencing the most challenging time for them in Vietnam market

Strength of SITV

SITV is a subsidiary of Hutchison Port Holding (HPH) who is the second biggest container terminal operator in 2010 (on equity Teu throughput) HPH has 52 ports, spanning 26 countries throughout Asia,the Middle East, Africa, Europe, the Americas and Australasia In 2010, the HPH port network handled a combined throughput of 36 million TEU worldwide, accounting for 6.6% of world throughput Like SP-PSA, SITV's terminal operating system will streamline their internal processes to facilitate data interchange and enhance communication with their business partners around the world Hutchison can also utilise their good relationship with shipping lines using their ports globally to develop their market in Vietnam It is also noticing that SITV had made lower investment into the handling equipment because they moved their second hand Quayside cranes and RTGs from foreign facilities to Cai Mep That is the reason SITV applies a low handling rate to shipping lines using their services Their handling price is 15-20% lower than handling price of CMIT, TCCT or TCIT and 30% lower than price of SP-PSA

Weaknesses of SITV

SP-PSA is located in the most disadvantageous place in comparing to other terminals like CMIT, TCCT and TCIT It takes the vessel an hour and a half to come from TCIT to SITV There is no shipping lines joining in the operation of SITV and they do not have the hinterland logistic facilities in Ho Chi Minh city The turning basin and depth at berth is also a disadvantage for SITV in attracting the big ship

3.1.3.4 CMIT

Cai Mep International Terminal Co., Ltd (CMIT) was established on January 26, 2007 as a joint venture between the Vietnam-based Saigon Port, Vietnam National Shipping Lines and APM Terminals BV APM Terminals offers an integrated Global Port, Terminal and

Inland Services Network of 50 ports and terminals, and 122 inland facilities with 22,000 employees in 64 countries on five continents CMIT started its operation in March 2011 In September 2011, CMIT received 5 voyages/week including two services of CMA-CGM (the services to Europe moved from SP-PSA to CMIT), one of Maersk Line to USA, one

of the Grand Alliance to Europe and one domestic feeder However, currently, CMIT receives only 2 vessels/week

The facility and equipment of CMIT are described in the Appendix 3.3 (Table 3.3.3 in

2011, the volume of CMIT from March to December is 89.668 teus making up of 12.3%

of the total volume in this area

Strength of CMIT

CMIT is the strongest terminal operator among the deep sea terminals in Thi Vai Cai Mep area Their strength comes from APMT who ranks third among the Top world leading terminal operators with market share of 5.8% and volume of 31.6 million Teus in 2010 CMIT has also the advantages over SP-PSA or SITV thanks to the suport of Maersk Line who is the sister of APMT in the AP Moller- Maersk group (Denmark) Maersk is the leading container shipping company in the world with a fleet numbering more than 500 container vessels The capacity of Maersk Lines accounts for 16% of the total container shipping capacity

CMIT is in the most advantageous location and is the nearest container terminal from the pilot station They also have advantages in term of the access channel and turning basin

Weaknesses of CMIT

Most of the cargo to the deep sea ports in Thi Vai Cai Mep come by barge from Ho Chi Minh city to Cai Mep and thus the customers have to drop their containers in the ICDs or Terminals of Ho Chi Minh city However, CMIT, like SP-PSA and SITV, do not have their own facilty in Ho Chi Minh city and they all have to rely on the ICD in Ho Chi Minh city area for this dropping The facilities of ICDs are quite limited The details of the falilities and equipment of the ICDs in Ho Chi Minh City was shown in Appendix 3.4 and thus it is a risk for big shipping lines if they rely only on the ICDs and this is a big obstacle for CMIT to attract the shipping line to their terminal

The competition between the deep sea terminals in Cai Mep Thi Vai will also be more fierce in 2012 and the coming years with the operation of SSIT (SP-SSA International Container Terminal) – a joint venture between Saigon Port and SSA Marine (USA) SSIT locates next to CMIT SSIT has 60 hectares of CY, one 300 meter berth (first phase) and two berths (600 meters) when they complete the project SSA is the leading terminal operator in the USA Marketing strategy for TCIT from 2012 to 2015 thus has to take into account all the above- mentioned competitive factors and find out the best solutions to enhance its strengths and opportunities

3.2 Internal analysis

3.2.1 TCIT business profile

Tan Cang – Cai Mep International Terminal Co Ltd (TCIT) is a joint – venture company

of Saigon Newport Corporation with three shipping lines including Mitsui O S K Lines (Japan), Hanjin Shipping (Korea), and Wanhai Shipping (Taiwan) The Investment Certificate was granted for TCIT by the Vietnam Government in September 2009, with capital investment about USD 100 million, equivalent to around VND 2,000 billion TCIT

is located in Tan Phuoc Commune, Tan Thanh District, Ba Ria – Vung Tau Province TCIT is 18 nautical miles from the pilot station (Bouy zero) and 80 km from Ho Chi Minh city

The organization chart of TCIT is as shown in Appendix 3.5

The facility and equipment of TCIT are described in the following table:

Table 3.3: Facilities and equipment of TCIT

3.2.2 Operation of TCIT in 2011

TCIT officially started operation in January 2011 by welcoming the vessel of Mitsui O S

K Lines Currently, TCIT receives five voyages/week Mitsui O.S.K Lines- one partner of TCIT is deploying two services at TCIT- one to the US West Coast and one to Europe and joining with K’ Line in the service to the US East coast Hanjin- another partner of the joint venture has a service to US West coast and Cosco- a members of CKYH (Cosco, Hanjin,K’line , Yangming) is also deploying a service at TCIT

In 2011, TCIT reached the volume of 275.218 Teus, making up 37.9% of the total throuput

of the area TCIT has the biggest market share in the area in 2011 Mitsui OSK Lines was the shipping line with the biggest volume in TCIT in 2011 and Hanjin ranked second The volume of each shipping Line in TCIT in 2011 was described in details in the Appendix 3.6

The volume of the deep sea container terminals in Thi Vai Cai Mep is shown in the following table:

Table 3.4: Volume of terminals in Cai Mep Thi Vai in 2011 Total volume (inbound and outbound) (teu) Tyû leä %

3.2.3 Analysis of the strengths and weaknesses of TCIT

3.2.3.1 Strength of TCIT

TCIT has a good hinterland logistics connectivity network thanks to the good system

of Saigon Newport Corporation (SNP) - the biggest partner in the joint venture of TCIT

SNP currently operates two terminals in Ho Chi Minh City namely Tan Cang and Cat Lai Terminals, and one in Ba Ria-Vung Tau Province, Tan Cang-Cai Mep Terminal (TCCT) which locates next to TCIT TCCT has been put into operation since June 3rd 2009- one and a half year before operation of TCIT The current services of Mitsui O.S.K Lines and Hanjin Shipping at TCIT started deploying at TCCT in 2009 and then moved to TCCT when it started operation in the early of 2011 Moreover, SNP has terminals operational in the center of Vietnam (Quy Nhon city) and one terminal in the North of Vietnam (Hai Phong) operational in the second quarters of 2012 SNP also operates a good systems of ICDs in the South Focal Economic Area of Vietnam- Tan Cang Long Binh ICD in Dong Nai province (40km from TCIT), Tan Cang Song Than ICD in Binh Duong province (80

km from TCIT) Binh Duong and Dong Nai are the provinces with large amount of the industrial parks Both ICDs of SNP have good system of the warehouses and Container yards as well as the handling equipment and tractors Currently, SNP expands their system

to Mekong Delta with some terminals in Dong Thap and An Giang provinces SNP also has their own barging fleet to carry containers between Cat Lai, Cai Mep, Mekong Delta and they establish a joint venture with Sun Cypress of Hong Kong to barge containers between Vietnam and Cambodia SNP is now taking the lead in the port operation in VN, with 81%

of market share of import-export containerized cargoes in Hochiminh city area and almost 50% nationwide in 2011 In 2011, the volume of Cat Lai terminal of SNP was 2.6 mil TEU SNP aims to create a port chain throughout the country to accommodate the potential demand of the shipping market in the long run The partnership of SNP with its strong hinterland facilities allows TCIT to have a competitive price for the barging cost (handling cost for barge at end of Ho Chi Minh city) and a strong back up for TCIT

TCIT has a good support from the shipping lines- partners of TCIT Mitsui O.S K

Lines (MOL) – one of the shareholder of TCIT, is the leading container terminal in Japan and they are a member of the New Worl Alliance-TNWA (including MOL, APL and Huyndai) According to AXS –Alphaliner, up to January 2011, the total fleet of TNWA

includes 142 ships having the total capacity of 1,344,188 Teus making up 8.4% of the total container shipping capacity globally Hanjin Shipping- another shareholder of TCIT, is the leading Carrier of Korea Hanjin Shipping is a member of CKYH (Cosco- K’Line- Yangming-Hanjin) and as per the statistics of AXS Alphaliner, CKYH has a fleet of 483 vessels with the total capacity of 1,797,674 Teus, accounting for 11,3% of the total carriage capacity The third shipping shareholder of TCIT is Wanhai- the leading internal carrier with the fleet of 76 ships and capacity of 170,205 Teus The total capacity of the share holders of TCIT and their alliances is 3,312,067 Teus occupying for 20.8% of the world total container shipping capacity In comparing to Maersk Line- the leading container carrier in the world and sister of CMIT, the capacity of TCIT’s share holders and their partners of Alliance is 30% higher than that of Maersk Lines

TCIT and the neighbor TCCT (a subsidiary of SNP) have the longest berth in Cai Mep Thi Vai These both terminals have 3 berth with 890 meters in length which have

been equipped with 9 Quayside gantry Cranes TCCT has three dedicated barge quays to serve the handle of the containers barged to TCCT and TCIT This is a big advantage for

TCIT because nearly 85% of domestic containers come to TCIT by barges

3.2.4 Results gained from survey and data analysis

3.2.4.1 Methodology of survey and coding of analysis

The research aims to explore the evaluation of important factors and satisfaction of the customers to TCIT’s services and its facility In doing so, the research can define what TCIT should do to enhance its competitiveness

To address the research questions, the research consists of a quantitative survey The questionnaires of the survey were based on the determinants of the port competitiveness and asked the participants the questions relating to their evaluation on the satisfaction and importance of the location in term of geographical characteristics, infrastructure, people, service cost and policies The survey questionnaires consist 2 parts of Importance and Satisfaction rating The details of questionnaires are as shown in Appendix 3.7

The survey was conducted in the first week of December 2011 with a target customer group of 10 shipping lines using TCIT’s services Outcomes of the survey are assumed

to reflect customers’ perception and attitude as regards customer satisfaction and evaluation on the important factors towards the ports Therefore, the survey questionnaires were sent to 10 representatives of each shipping lines/agents to complete during the week from 2nd December to 5th December 2011 Within two weeks (8th Dec to 24th Dec), 85 responses from shipping lines/agents were sent back, making up a response rate of 85% All the responses were valid for analysis Results of the survey were analyzed using descriptive tools of SPSS software – version 11.5 The 25 items of the survey were

e n c oded into 5 main dimensions as in the following table:

Table 3.5: Encoded Dimensions of quantitative survey:

I GEOGRAPHIC FEATURES

1 GEO01 Geographic location of TCIT

2 GEO02 Access Channel

3 GEO03 Traffic connectivity

4 GEO04 Logistics network of associated ICDs and depots

II INFRASTRUCTURE

5 INF 05 Yards and warehouses

6 INF 06 Berth

7

INF 07 Facilities and equipment for container handling & transport

8 INF 08 Public facilities: shuttle bus, canteen, waiting area

9 INF 09 ICDs & depots under SNP's management

No CODE ITEM

10 INF 10 IT system: TOPX, EDI, online payment

III SERVICE RELIABILITY

11 REL11 Handling productivity

12 REL12 Cargo delivery time in TCIT

13 REL13 Cargo delivery time in HCM City

14 REL14 Safety in operation

15 REL15 Safety in transportation to HCM city

17 REL17 Operational processes

IV PEOPLE

18 PEO 18 Top management's vision and competency

19 PEO 19 Top management's flexibility in solving problems

20 PEO 20 Staff competency: work performance, English skills

21 PEO 21 Staff's communication skills toward customers

V SERVICE COSTS & POLICIES

22 COS 22 Service rates

23 COS23 Favorable policies: VIP customers, storage, transport

25 COS25 Commissions, promotions

3.2.4.2 Analysis on the satisfaction of customers toward TCIT

To define the strength or weakness of TCIT, the survey on the customers using TCIT’s has

a significant role

According to Hill et all (2003), on a 10-point scale, average satisfaction scores above 9.00 demonstrate that customers are extremely satisfied with the attributes Those scoring above 8.00 refer to “satisfied” customers, 7.00 means “quite satisfied”, and 6.00 equates to “barely satisfied” Average satisfaction scores of 5.00 or lower indicate dissatisfied customers With this measurement scale, any item having an average

satisfaction score below 7.00 should receive serious attention from the service provider The details of the survey result have shown in Table 3.6 below

Table 3.6: Results of the survey on the satisfaction of the customers towards TCIT

satisfaction to customers Customers are most satisfied with the infrastructure of TCIT (INF 06-Berth, INF 05-Yard and INF0 7-equipment) This is understandable because currently, TCIT is a new modern Terminal with the longest berth length in this area Customers are also highly evaluate the Top management's vision and competency and Flexibility in solving problems (Peo 18, Peo 19), staff competency (Peo 20) and handling productivity of TCIT (Rel 11) with the means of 8.27, 8.09, 8.00 respectively The other attributes which quite satisfied customers of TCIT are Logistic network of associated ICD and depot (GEO 04), and IT systems (INF 10)

TCIT should pay more attention to improve the delivery time of containers moved from HCM city to Terminals and ICD in HCM city area because the satisfaction level for this item is low (mean= 6.45) Security (Rel 16) is also an issue which does not satisfy the customers Commission and promotion is also an alarming issue for TCIT when it ranks last in the satisfaction table (mean = 5.73) TCIT also should focus on improving its documentation process because this is one of those having the least satisfaction score (REL 17)

Most of the scores have standard deviation score around 1 However, there is quite a big deviation on the favorable policies This has shown that some shipping lines are satisfied with the favorable policies while other are not This has also reflected the different point of view between shipping lines who are the share holder of TCIT (MOL, Hanjin, Wanhai) and other normal shipping lines on the issue

Customers are quite not satisfied with the traffic connectivity and access channel However, as explained in the port problem, these attributes are beyond TCIT’s control and

it much depends on the speeding up of the projects of the government

3.2.4.3 Analysis on the important attributes as evaluated by the customers

According to Hill et al (2003), average importance scores on a 10-point scale above 9.00 show an extremely high level of importance to customers Scores of 8.00 mean

“important” to customers, 7.00 mean “quite important” Also on this type of measurement scale, a standard deviation of around 1.00 or below indicates a strong consensus of opinions Meanwhile, a standard deviation of 2.00 or above illustrates a wide disparity of views

The details of survey results are as in the Table 3.7 below It has shown that almost all

of the attributes having significant importance to customers, with 10 attributes being extremely important, 12 important and 3 quite important

Table 3.7: Survey on the important attributes as per evaluated of TCIT’s customers:

see representatives of Service reliability (REL14, REL15, REL 16), People (PEO18, PEO19, PEO 20), Infrastructure (INF07, INF10) and Service costs & policies (COS 18) Safety in transportation to HCM city (REL 15) is strongly chosen as the most important attribute with the highest mean of 9.73 and small deviation of 0.65 Also, customers are very concerned about the safety in operation (mean = 9.64) and security Because TCIT is in Cai Mep- 80 km from Ho Chi Minh city and most of the containers are transported to HCM city to deliver to customers, delivery time in HCM city is one of the extremely important factor for shipping lines All the attributes relating to people play significant role as perceived by the customers

Considered as having the least importance is supporting facilities and public facility (INF

08 & INF 09) Public facilities (INF 09) with the score of 7.45 is also the one with highest standard deviation score of 1.29 This illustrates a quite wide discrepancy of customers’ viewpoints on the issue Commission and promotion is the third least importance to customers with the score of 7.73

The results of survey shall be the basis for TCIT to give priorities in improving the safety

in operation and transportation, strengthening the security Top Management must be reasonable in deciding the service rate (COS 22) because this is significant important to customers (mean =9.0) However, in such a severely competitive environment, in the customers’ point of view, service rates are not the most important factor but it ranks after the service reliabilities and people The big gaps between the evaluation on the satisfaction and importance have also reflected the fact that TCIT will have to try their best efforts in term of the service qualities, skills and qualifications of their staffs to meet the demand of customers

The analysis of the survey on the satisfaction and important factors has given us more profound understanding of strength, weaknesses and well as improvement priorities and this will serve for the right solutions in the strategies to enhance TCIT’s competitiveness

CHAPTER 4

TCIT’S MARKETING STRATEGIES

TO ENHANCE ITS COMPETITIVENESS

4.1 Goal setting

4.1.1 Vision

TCIT aims at becoming the leading deep-sea container terminal operator in Vietnam and the port operator of choice in the world's gateway hubs TCIT commits to bring most reliable and competitive services to customers, meanwhile keeping their focus on ensuring health, safety and environment sustainability, a professional, effective working environment to the employees and success to the partners By valuing their people, their customers and their role in the community, TCIT will ensure a safe, sustainable and profitable business

4.1.2 Mission

To achieve vision, TCIT always understand that their customers, their staffs and community are essence of their business TCIT respects and fosters the unique abilities of all the people to contribute to their success

TCIT ensures the security and safety of every person and cargo accessing their terminal

on their shareholders’ strengths to support their ongoing development

For community orientation, TCIT is a good neighbour in terms of corporate, environmental and social responsibility

For employee orientation, they issue policies to bring economic effectiveness to improve

employees’ earning and opportunities to improve their learning They also focus on building up the spiritual values for their staffs and promoting staff productivities

 In 2012, increase the volume by 30% and the turnover by 25%

 In 2013, the volume and turnover will increase 35% and 30% respectively versus

2012

 In 2014, the volume will increase 40% and the turnover will increase 40% in comparing to those of 2013

 In 2015, the volume will increase 50% and the turnover will increase 50%

In 2011, the volume of TCIT was 275218 Teus and the turnover was 17 million USD With the set target, the volume and turnover in the coming years of TCIT shall be in details as follows:

Table 4.1: The target for volume and turnover of TCIT from 20-12 to 2015

TCIT will also increase the direct receipt/delivery of containers with shippers/consignees

at TCIT and by that way, TCIT will be able to increase its turnover from the collecting lifting on/off charges, stuffing/ un-stuffing, reefer container monitoring, depot services (Maintenance & Repair, storage of empty containers, cleaning of containers) Currently, this charges were collected at the ICDs or terminals in Ho Chi Minh city

TCIT shall be the deep sea terminal with the most reliable service quality for the customers and the demand of customers shall be the orientation for TCIT to prioritise its improvement

The volume of containers through the deep - sea port in the South of Vietnam increases annually More shippers have the tendency to have their containers shipped directly from Vietnam to Europe and America without coming through the trans-shippment hub in the foreign country as previously

The development of many deep sea ports in Thi Vai Cai Mep area makes this place a transshipment hub of the region like Tanjung Pelepas of Malaysia or Sigapore port of Singapore

The trade between Vietnam and other countries in the world has been raising up sharply especially after Vietnam’s entrance to WTO in 2007

Vietnam has a lot of strengths in export of sea food, garment and textile products, agricultural products The demand for these kinds of commodities increase sharply globally even in the situation of the financial crisis Vietnam import a lot of materials to serve the processing demand for export and thus both the import and export will increase These all come through the sea port