Recommendations to improve the efficiency of fleet operation in binh minh international sunrise shipping joint stock company

MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING VIETNAM MARITIME UNIVERSITY STUDENT NAME: NGUYEN THI THU HUONG DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS RECOMMENDATION TO IMPROVE THE EFFICIENCY OF FLEET OPERATION IN BINH MINH INTERNATIONAL SUNRISE SHIPPING JOINT STOCK COMPANY HAI PHONG – 2015 MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING VIETNAM MARITIME UNIVERSITY STUDENT NAME: NGUYEN THI THU HUONG CLASS: GMA 02 DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS RECOMMENDATION TO IMPROVE THE EFFICIENCY OF FLEET OPERATION IN BINH MINH INTERNATIONAL SUNRISE SHIPPING JOINT STOCK COMPANY Supervisor: Vu Thi Thu Hang Division: Global Studies and Maritime Affairs Faculty: Economics HAI PHONG – 2015 Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company PREFACE The dissertation was undertaken as the report of my internship at Binh Minh international sunrise Shipping Joint stock Company The research was difficult, but conducting extensive investigation has allowed me to complete the target that I identified Fortunately, Ms Vu Thi Thu Hang- my supervisor was always available and willing to answer my questions I would like to give a huge thank for her excellent guidance and support during this process During the work with this thesis, I was fortunate to get help from the staff of operating department in particular and all of employees at Binh Minh Company in general for creating a friendly and supportive working environment I would like to thank you for your wonderful cooperation as well Especially, I would like to thank Mr Nguyen Truong Giang- employee of operating department for his enthusiasm providing practical knowledge and answering my questions in work during my internships at company I also give my thank for Mr Vu Le Huy, who support and have comment to me during this period The work outlined in this dissertation was carried out in the Binh Minh Shipping Joint Stock Company, over the period from 10 August 2015 to 20 September 2015 This dissertation is the result of my work and the material included in this thesis was taken from company's business figures in the period from 2012 to 2014 Student Name and Signature Nguyen Thi Thu Huong Nguyen Thi Thu Huong – GMA 02 Page i Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company TABLE OF CONTENTS PREFACE i TABLE OF CONTENTS ii LIST OF TABLES iv LIST OF FIGURES iv INTRODUCTION CHAPTER I: LITERATURE REVIEW 1.1 Concepts of fleet and fleet operation 1.1.1 Concept of shipping vessels 1.1.2 Types of ship operation 1.1.3 Basic organizational process of shipping operation 1.2 Indicators to assess the efficiency of fleet operations of shipping enterprises .6 1.2.1 The concept of the operation efficiency 1.2.2 Indicators to assess the efficiency of fleet operations 1.3 Orientations to improve the efficiency of fleet operations of shipping enterprises 12 1.3.1 Increasing the number of running days of ship 12 1.3.2 Reducing the voyage time of ship .13 1.3.3 Increasing indicators of ship operation in each trip .13 1.3.4 Cost savings in trip .14 1.3.5 Increasing revenues of trip 14 1.3.6 Other measure 15 CHAPTER II: EVALUATION ABOUT THE EFFICIENCY OF FLEET OPERATION AT BINH MINH COMPANY IN THE PERIOD FROM 2012 TO 2014 .16 2.1 Introduction about Binh Minh International Sunrise Shipping Joint Stock Company 16 2.1.1 History of development 16 2.1.2 Organizational structure of the company and main duties of departments .18 2.1.3 The situation of business and production activities of the company in the period from 2012 to 2014 20 7.201 22 2.2 Evaluations about the efficiency of fleet operation at the company in the period from 2012 to 2014 24 Nguyen Thi Thu Huong – GMA 02 Page ii Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company 2.2.1 Introduction about the fleet of BMC Company 24 2.2.2 Evaluations about the efficiency of fleet operation of the company in the period from 2012 to 2014 25 CHAPTER III: RECOMMENDATIONS FOR IMPROVING THE EFFICIENCY OF FLEET OPERATION IN BINH MINH INTERNATIONAL SUNRISE SHIPPING JSC 34 3.1 Recommendations to improve the indicators of transport volume of fleet 34 3.1.1 Recommendations on market expansion and strengthening relations with customers 35 3.1.2 Recommendations on improving the quality and focusing on product prices .36 3.1.3 Recommendations on management of the fleet activities 36 3.2 Recommendations to improve the indicators of operation and use of fleet vehicles 37 3.2.1 Recommendations to increase transport capacity of the vessel 37 3.2.2 Recommendations to increase using time indicators of the vessel 38 3.3 Recommendations to increase economic indicators 40 3.3.1 Recommendations for increasing revenues of the fleet .40 3.3.2 Recommendations for reducing the costs of the fleet 40 3.4 Recommendations on human resources 42 3.4.1 Recommendations for training and retraining of human resources 42 3.4.2 Recommendations on remuneration and attracting talent 43 3.4.3 Recommendations on coordinating work of crew members 44 CONCLUSIONS 45 REFERENCE 46 Nguyen Thi Thu Huong – GMA 02 Page iii Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company LIST OF TABLES Table 2.1: Registered business lines of Binh Minh Company 16 Table 2.2: Production and business results from 2012-2014 21 Table 2.3: The fleet of Binh Minh Companyto 2014 24 Table 2.4: Indicators of transport volume of BMC fleet from 2012-2014 .25 Table 2.5: Indicators of operation and use of fleet vehicles of BMC fleet from 20122014 .28 Table 2.6: The indicators of financial results of fleet 30 LIST OF FIGURES Figure 2.1: Line graph of the Baltic Dry Index over the recent years 32 Nguyen Thi Thu Huong – GMA 02 Page iv Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company INTRODUCTION Necessity Vietnam is a country with a favorable geographical position in international maritime traffic Consequently, maritime sector has many advantages to develop in order to serve the cause of national industrialization and modernization, contributing to the country's rapid economic integration in the region and the world One of the essential socio-economic strategies of the Party and the state in the early years of the 21st century is to develop the marine economy, which mainly maritime transport Therefore, Vietnam maritime industry is facing a tremendous task is to build a national fleet that being capable of transport 30% of the volume of goods import and export and over 90% of domestic cargo volume by 2015 Fleet of Vietnam has joined the international market for several years but has not achieved the significant position in the region area The pace of development and business management skills have not kept pace market mechanisms that leads to bad impacts on the position and brand of national fleet More worrying, current maritime transport market in Vietnam also has been entered by the participation of dozens of shipping companies around the world, so the challenges of competition always is a raising question not only on international routes but also within the domestic market Binh Minh international sunrise shipping Joint Stock Company has established in 2006 Since its establishment, the company's fleet has engaged in transportation on international routes and achieved business efficiency in fleet operations However, due to the direct impacts of the economic slowdown on maritime transport, along with the intense competition from foreign businesses having potential and reputation, it is necessary to analyze and assess the advantages and drawbacks of the company to propose effective means to improve the efficiency of ship operation in the future Therefore, I have chosen the subject:” Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company” for my dissertation Nguyen Thi Thu Huong – GMA 02 Page Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company Research Object Research object of this dissertation is the efficiency of the fleet operation of Binh Minh Joint Stock Company Research Scope This research used data and figures on business as well as fleet operation results of Binh Minh Joint Stock Company in the period time from 2012-2014 Research Findings The dissertation codified certain theoretical issues and practices related to the efficiency of fleet operators and assessed the pros and cons in the operating fleet work of Binh Minh Joint Stock Company Thence, it can be drew comments as a basis for proposing measures to improve the efficiency of ship operator of the company in the future Research Methods The method of this dissertation is based on the study of economic and techniques, combined with a systematic study about some theoretical issues and practices related to effective fleet operation of the Binh Minh Company These results are considered through a variety of indicators to assess the efficiency of operationwith a series of comparative and quantified method Nguyen Thi Thu Huong – GMA 02 Page Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company CHAPTER I: LITERATURE REVIEW 1.1 Concepts of fleet and fleet operation 1.1.1 Concept of shipping vessels According to Curriculum of operating fleet subject of Dr Nguyen Huu Hung, shipping vessels (also known as merchant ships), in order to be entitled to the national and international regulations in the process of exploitation, are defined as follows: - According to The Hague Rule 1924: "Ship" means any vessel used for the carriage of goods by sea.(Convention, 1924) - According to The HNS Convention (Hazardous and Noxious Substances by Sea Convention) 3/5/1996: Ship means any seagoing vessel and seaborne craft, of any type whatsoever.(GUIDE TO THE IMPLEMENTATION OF THE HNS CONVENTION, 2005) - According to The Vietnam Maritime Law 2005: Ship is a vessel or other floating mobile structure that is specialized in maritime operations (Nam, 1990) 1.1.2 Types of ship operation a Direct exploitation: Ship owners organize the shipping by their own vessel to take the freight transport Today, in sea transport in the world, there are two types of shipping organization: - - Liner shipping: A cargo liner is a type of merchant ship which carries general cargo and often passengers Operator will organize liner shipping under the loop between trips on the same fixed routes A ship will transport many kinds of good for many cargo owners in the same trip This service requires the connections between Feeders and Liner Hauls, runs between the Hub ports Tramp shipping: As opposed to freight liners, tramp ships trade on the spot market with no fixed schedule or published ports of call Operator must provide the right ship in the right place at the best possible time for cargo owners A Nguyen Thi Thu Huong – GMA 02 Page Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company ship usually transports only one kind of good for a cargo owner during a trip following the contracts b Indirect exploitation: Charterer agrees to hire a ship from its owner and the hire money for this transaction is known as “freight” to the ship owner for the use of his vessel There are two types of chartering ship according Vietnam Maritime Law 2005: - Bare Boat Charter: A bareboat charter is an arrangement for the chartering or hiring of a ship or boat, whereby no crew or provisions are included as part of - the agreement; instead, the people who rent the vessel from the owner are responsible for taking care of such things Time Charter: Charterer hires a vessel for a specific period of time; the owner still manages the vessel but the charterer selects the ports and directs the vessel where to go The charterer pays for all fuel the vessel consumes, port charges, and a daily hire to the owner of the vessel 1.1.3 Basic organizational process of shipping operation a Tonnage offer and receiving cargo offers In order to promote their services, operators will send tonnage offers to Ship Brokers, Ship Agencies, and Cargo Owners through with the details of the ship as: Technical parameters, insurance organizations of ship, the last port (at ship has finished unloading), estimated time free… Ship operators will collect cargo offers from Cargo Owners or Ship Brokers through email, fax or website and select business opportunities that being consistent with exploitation conditions Cargo offers usually contain the following: name of cargo, volumes need to be transported, departure and destination ports, freight transport, laycan (period of time vessels must be at the loading port for the charterer loading good and the time of cancellation of the contract)… b Making preliminary plans for arrange ships following cargo offers Nguyen Thi Thu Huong – GMA 02 Page Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company Figure 2.1: Line graph of the Baltic Dry Index over the recent years Source: Baltic Dry Index Since 6/2014 to early 1/2015, oil prices fell sharply and continuously continued downward trend The price of Brent crude of Europe and West Texas Intermedia crude oil of the US fell to the lowest level over years Meanwhile, the Organization of Petroleum Exporting Countries (OPEC) decided to keep the mining production of 30 million barrels / day making oil prices slumped Gasoline prices surged to a peak was set on 07/07/2014 when 95 RON gasoline price for the first time has surpassed the threshold of 26,000 VND In Vietnam, from early 2014 to early 2015, retail fuel prices in the domestic market dropped 13 times with a total reduction of 26.1% and 25% respectively for RON 92 petrol and 0,25S diesel.(VIỆT, 2015) According to research by International Maritime transport Organization and World Bank, fuel costs account for 50-60% of the total shipping cost The bulk and container shipping companies are the most benefited group from falling oil prices In time oil prices down, demand for oil from Asian countries, especially China increased significantly Therefore, the ship running Asian routes would gain clearly benefits In the long term, freight rates will be adjusted following the downward trend of oil prices However, the prices are still low because general freight shipping industry in Vietnam is still facing difficulties, the immediate benefit from lower input costs are enormous Nguyen Thi Thu Huong – GMA 02 Page 32 Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company The decline in the cost of company was also due to deduction of rental ship for months in 2013 This led to the fleet management costs decreased significantly compared with 2012 Over years, although the company's revenues have decreased, the costs of operating vessel were on the decline even more Thus, the profitability of companies on average had a positive growth rate 17.2% Nguyen Thi Thu Huong – GMA 02 Page 33 Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company CHAPTER III: RECOMMENDATIONS FOR IMPROVING THE EFFICIENCY OF FLEET OPERATION IN BINH MINH INTERNATIONAL SUNRISE SHIPPING JSC In the coming time, Vietnamese economy is increasingly broad and deep integration into the world economy, most recently in late 2015, ASEAN will establish a general economy; including unification of shipping market Meanwhile, the challenges faced are enormous because most of the levels of Vietnamese shipping enterprises are small and medium The first is that the competition will be more fiercely The smallscale enterprises with inferior service are easily "removed" from the market Therefore, company should make efforts to improve the quality of service not only in ship operation department but also in the entire operating company apparatus To improve the efficiency of ship operation activities of the company, basically have to rely on the following note: - - 3.1 To ensure comprehensive and systematic, meaning that must consider the multiple benefits of the exploitation plans Based on the current situation, the possibility of future development of the fleet and based on freight demand in a year of each kind of good, each route and each region Improve the efficiency of the operation should not only gain the immediate benefits but also must be associated with long-term benefits in the future It need to combine evaluation of both qualitative and quantitative aspects, in terms of the nature and quantity of goods to be transported Recommendations to improve the indicators of transport volume of fleet Currently, integration with the development of Vietnam's economy, maritime businesses of Vietnam have attempted to develop fleets, but the rate of growth of marine transport activities annually reached only 5-6%, the percentage is quite low compared to the overall growth of the economy The growth rate of import and export of VN is expected to remain at high levels, with support from "China + 1” trend and the FTA, TPP agrrements "China + 1" trned continues in 2014 when many large Nguyen Thi Thu Huong – GMA 02 Page 34 Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company manufacturers in Japan, Korea, move production from China to VN due to political tensions, as well as costs of Chinese workers are becoming higher than other countries in the region Besides, the TPP and FTA agreements signed will also attract foreign capital flows into the import and export sectors were the main beneficiary, such as textiles, fisheries, electronics However, according to statistics, the fleet of Vietnam only assumes approximately 14-15% import and export shipping cargo of Vietnam To increase the share of transport, the company should implement the following strategies: 3.1.1 Recommendations on market expansion and strengthening relations with customers In market conditions for ship operator services, companies need access to and control of the relationship with the shipping agents and goods owners Besides, there must be a direct approach to large cargoes owners for seeking opportunities to sign contracts for long-term supply of their transport, while also trying to capture the needs of agents and goods owners which currently are not clients of the company To expand the market, the company also pays attention to other forms of advertising, such as through the mass media, publications, professional journals, the reputed website In addition the company should also be interested in the fairs and seminars in the field of transport to gain experience, while expanding cooperative relations, seeking more partners The activities on the sidelines of the conference and the workshop were a good opportunity to promote the image and market expansion of the company Company should also consider expansion the scope of operations of the fleet Previously, company has just operated exclusively on international routes However, the Vietnamese domestic market is still a lot of potential could be exploited To domestic fleet make well inland sea transport and create conditions breakthrough for national maritime development, the Ministry of Transport added content about socialization policy in investment of construction and exploitation of marine infrastructure; development priority policy shipping fleet through tax incentives and interest rates; development priorities seafaring that meet domestic and international needs The new draft law has stipulated: "Goods, passengers and luggage to be transported inland by sea must be transported by Vietnamese ship, owned by Nguyen Thi Thu Huong – GMA 02 Page 35 Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company organizations or individuals in Vietnam If domestic fleet not carried out, the foreign vessels may participate in transport with the specific cases”.(Chung, 2015) This will enhance the company's competitiveness compared with foreign firms in the domestic market 3.1.2 Recommendations on improving the quality and focusing on product prices The product of the transport sector is the service does not exist as an object, and can not measure the specific quality standards as commodity products realized Therefore customers using the service have different feelings about the services they are using So the most important thing for the company remains focused on good customer service, improve service quality, reasonable pricing, expand the scope of responsibility of the carrier, timely compensation commodity losses to their owners in case of risk, accident, consulting and supporting customer to resolve the procedure for compensation from insurance companies Company needs to create environmentfriendly, mutually beneficial cooperation, customer-centered development An also important factor to attract and expand the number of customer is the price of products Company should implement a flexible pricing to strengthen price competitiveness following principles: - For new customers can apply promotion forms For the maritime brokers, it should have special preferential policies such as calculated brokerage commission rate under rates progressivity method Flexible price agreement in the case of round voyage or consecutive voyagesand transport of large volumes 3.1.3 Recommendations on management of the fleet activities - Regularly monitor channels and world supply and demand situation to make predictions and adjust the appropriate fee on each route in order to attract customers and increase the number of transport contracts - Regularly organize the evaluation, consideration the effectiveness of the ship and research cargo flows; calculate and balance the needed ship and business efficiency of each vessel on each section, each stage and each period Nguyen Thi Thu Huong – GMA 02 Page 36 Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company 3.2 Recommendations to improve the indicators of operation and use of fleet vehicles 3.2.1 Recommendations to increase transport capacity of the vessel To enhance transport capacity of ship following voyage measured ton unit, it is necessary to increase the listed coeficients α: Coefficient of taking advantage of Deadweight cargo carrying capacity This is the reflection coefficient of taking advantage level of ship capacity So when the company wants to increase the carrying capacity of the ship, it needs to increase this coefficient That means that operating department have to find the volume of shipments (Qh) near by deadweight carrying capacity tonnage of ship (Dt) in order to α closer to To achive purpose, company could take a numerous measures: - Establish a network to find suitable shipments so that their ships moving in bidirectional ways It help reduce the time ship run empty - Establish agencies for looking up sourcing goods in new markets such as - Singapore, Japan, Ho Chi Minh City, etc… Coordination of carrying cargo between ports to increase cargo capacity of the vessel γ: Coefficient of taking advantage of the distance ships carrying cargoes This is the reflection coefficient oftransport level in bidirectional ways of vehicles In order to increase the coefficient of taking advantage of the distance ships carrying cargoes, company must minimize the distance that ships run empty Target is γ be approached to β: Coefficient of changes in cargo turn at a voyage This coefficient determines the number of changes in cargo turn at a voyage This factor increases mean that ships will carry more good turns in the same trip, thus saving time and cost in ship operation activities Increased carrying ability of vessel Nguyen Thi Thu Huong – GMA 02 Page 37 Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company In order to increase carrying ability of the ship in a year, it is need to raise the number of transportation voyage in a year To increase this indicator, the first way is to increase the utilization time, which means reduced time for repair, maintenance and decommission of ship because of the weather The second way is to reduce voyage time in order to increase the number of voyages To achieve this, it is necessary to reduce the time the ship anchored at the ports It depends large very on the level of ship operator, agent level, mechanization and modernization of the seaport as well as the rhythmic coordination of related parties To reduce the time of repairing ship in the year, the company needs to strengthen supervision of repairs and accelerate progress Combining small repairs and maintenance of the vessel (painted staircase, painted chimney, apply grease on the rust spot …) at ports during the time of handling cargo of waiting for procedures in order to reduce repair items to bring the ship into a long repair process This saves the maximum repair time In addition, it is necessary to strengthen the maintenance of the vessel to keep the ships always into situation of good technique It will help improve the time used the machinery and equipment on board Indeed, today's fleets of Korea, Taiwan, and Singapore… are maintained very well Thus even after a period of 15-20 operating years, equipment and machinery are still new and used high efficiency 3.2.2 Recommendations to increase using time indicators of the vessel o Enhance coefficient of utilization For BMC Company, to improve this coefficient, the company must try to increase the duration of the utilization ship to almost nearly the present time in the company of ships To this, they must reduce the time of repair in the year by combining the time the ship stops at ports with repair time The operators must pay attention on arranging ships on routes not affected by weather factors such as storms, wind for reducing downtime by weather In the East Sea, on average, there are nearly 20 tropical storms each year thus also significantly affect the vessel's downtime for weather reasons o Enhance coefficient of utilization Nguyen Thi Thu Huong – GMA 02 Page 38 Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company To increase its utilization ratio, company needs increase running time of ship in voyages Operating department has to look for longer transport routes and minimize the time the ship stops at ports It is the result of good coordination between the ship and the port Characteristics of the tramp shipping are ships run on non-fixed routes and have not previously announced schedule Thus, the coordination between the ship and the port is more difficult than the container ship To overcome this problem, the vessel of company should choose the familiar ports and carry large shipments with many similar trips in one year Since the ship will make up a good relationship with the ports, thereby reducing inspection time and gaining the priority of the port used for loading and unloading cargoes that lead to reduce the time ships anchore at ports o Reduce coefficient of ship anchoring at port We have: 𝜀đỗ = 1- 𝜀𝑣ℎ In constrast to performance time, the time ships stop at ports is as small as possible According to the assessment in chapter 2, the utilization coefficient of the vessel is generally low with the high density and time of running emty Through which shows the irrational work of ship made extend waiting time and increased the cost of ship operators This issue is currently receiving a lot of attentions because meantime, ports will handle more goods to increase revenue per wharf meter The more number of voyages come to port, the more revenue the relevant parties gain The reduction in anchored time will increase the number of voyages in a year that lead to raise revenue and profit o Rejuvenate the fleet to increase the time ship ready to transport To increase the good times of the fleet, the company should sell the ship with old age, investing in buying or building ships with younger age and have payload is more than 20,000DWT because large vessels are highly profitable That is the longterm development plan has sustainable and economic nature In fact, the BMC Company’s fleet is relatively young but the average tonnage only more than 10,000 DWT In the future, company has plans to acquire two vessels Nguyen Thi Thu Huong – GMA 02 Page 39 Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company of 18.055 DWT and 15,000 DWT to raise the average tonnage and can carry larger orders, enough to compete in the current integration environment 3.3 Recommendations to increase economic indicators To improve the efficiency of fleet operators, profit targets are basic criterias to assess accurately 3.3.1 Recommendations for increasing revenues of the fleet - Measures on the organization and management: o Company needs to establish organizational processes produce under optimal scheme Futher more, company has to apply the optimum economic solution, the optimal method of administration and corporate governance o In the future, the management of company should strengthen the management efficiency shown in three basic factors: increasingly improve management level by sending staff for training in developed coutries as the Netherlands, Japan, Korea, and Singapore… or maybe learn courses in a short time Besides that is equipped with modern technical equipment for the management and computerization of management methods - Measurements on operation: To increase sales, company has to increase the cost of transporting cargoes and increase volumes of freight during the trip Firstly, to increase the transport freight, company must select items of high value transportation with far transporting distances Currently freight rates depend on supply and demand, so at the time of high freight rates, the vessel should be enhanced operating When market rates low, ships should be given at periodic repair or transfer to chartering ships Secondly, to increase the volume of transported goods, it needs to increase the Coefficient of taking advantage of Deadweight cargo carrying capacity These measures have been mentioned in the previous sections 3.3.2 Recommendations for reducing the costs of the fleet Nguyen Thi Thu Huong – GMA 02 Page 40 Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company - Measures on the organization and management: o Since the decision to buy or ship building, operators must calculate scientifically and carefully to buy ships at a time of the most favor economic cycles for company Especially in periods of economic crisis, ship price will be very low But after the crisis, ship prices have increased If price getting ship is cheap, vessel depreciation will be lower This is a major factor contributing to reducing the cost of operating ship o Companies must have a policy of training and recruitment of staff and seafaring that have excellent knowledge and highly skilled That helps to operate ship rhythmically Because in maritime transportation, not good human factor will give rising of additional costs - Measurements on operation: o In operating ship, fuel costs account for 50-60% of the total shipping cost thus, reducing fuel costs will lead to reduced operating costs However, how the enterprises take advantage this opportunity is a matter for concern The first way, company may hold as the current rates or adjusting small reduction (by request of the Ministry of Finance, for example), so get short-term benefits due to input costs fell sharply but less volatile revenue Second, company makes adjustments to reduce rates as appropriate to the actual reduction of fuel, which take advantage of this opportunity to expand market share, enhance credibility and thereby get more long-term benefits Especially the fuel prices are not absolute trends and oil prices not only are decided by supply – demand but also are affected from geopolitical factors Thus, company may be active in cutting costs by two ways: The first is the purchase of fuel at these locations during the trip have low price Today, the price of fuel between the countries is relatively major differ The time of purchase also decided to fuel prices therefore companies may sign contracts to buy large quantities at a time when fuel prices fell The second is to leave train at economic speed, the speed at which consumes less fuel Company also should evaluate plan each trip whether reasonable or not, Nguyen Thi Thu Huong – GMA 02 Page 41 Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company which measures shortening the trip, the fuel consumption rate in order to the cost of mining is minimal o Reduce crew costs by renting Vietnamese seafare with lower salary than the average level of the world However, required quality assurances of crew members meet the need of operating activities o Reduce costs at the port where the ship visited Currently, the trend is that the ports are toward privatization and the prices of the handling units in a port area are different If the ship has a good relationship and often comes to a certain port, it will create a close relationship with the port and enjoy preferred rates Therefore company should become familiar partners of the port that often have good services and reasonable prices in order to be able to enjoy lower prices of services in comparison with the average o Reduce repair costs, company should seek the repair workshop has reasonable prices compared to the quality of service For the major repair of the ship, the company should choose a time when low cost For small repair and maintenance, the company can flexibly work conducted when the ship stops at ports This helps reduce repairing time of ship and increase the the exploitation time of ship 3.4 Recommendations on human resources 3.4.1 Recommendations for training and retraining of human resources Along with the rapid development of science and technology, the automation and remote control are solutions helping reduce the number of operators on board On the other hand, the norm for crew members is higher to operate the vessels meet the requirements of modern transport of globalization Standardization issues are also key problem of globalization Products and services must meet the new international standard that just has the advantage of keeping market share According to experts, if the current standard on the level of marine regions is 10 points, Vietnam is at 2.5 points Necessity is now Vietnam Nguyen Thi Thu Huong – GMA 02 Page 42 Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company maritime industry must strive to improve competitiveness in all aspects in order to meet the requirements of economic integration Currently, the number of center training maritime human resources across the country is limited There are only two universities (Vietnam Maritime University and University of Transport and Communication in Ho Chi Minh City) and some other colleges and schools Another issue is the current obsolete training curriculum for bothseafare and operating teams have not kept pace with reality For management and operating fleet system, it needs to develop towards high professionalism, for the following specific measures: - Eliminate unqualified staff of professional qualifications and foreign language to move to other parts Recruitment of human resources with high quality to meet the work requirements from the parts department or direct interviews from outside Organize training on job skills, computer skill and foreign language skills of staff exploitation The current average level of operating employees at company are weaker than peers in other countries in the region such as Singapore, South Korea, Taiwan - Encourage and create favorable conditions for employee getting development capabilities: more professional learning, foreign language, negotiation skills, understanding of marketing 3.4.2 Recommendations on remuneration and attracting talent When assigned to a specific task to the head of apparatus (Head of operators), company should associate their responsibility with their interests by adequate remuneration which is equal to the work efficiency There are policies to encourage diligently and competently staff by promotion positions and salary increases ahead of schedule, rewarded according to the monthly work efficiency, create favorable conditions for them to develop their capabilities and, demonstrate their contribution in the development of the company Nguyen Thi Thu Huong – GMA 02 Page 43 Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company Due to the strenuous and risky nature of profession, the company should have remuneration policies consistent and flexible for crew members 3.4.3 Recommendations on coordinating work of crew members Company should strengthen close relationships between the departments in coordinating work on the fair and flexible principle and get high efficiency Company should have monthly remuneration plan and publicly announced on the internal network At the same time, it is necessary to establish flexible and proper policies in prioritizing arrangement and layout of the crew members in the form of policies, the poor family, and crew members prepares to retire and new graduates are recruited Nguyen Thi Thu Huong – GMA 02 Page 44 Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company CONCLUSIONS Topic “Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company” is based on the study of economic and techniques, combined with a systematic study about some theoretical issues and practices related to effective fleet exploitation of the BMC Company For the purposes have been set to study, dissertation has done some of the following major contents: Correct evaluation on the current status of operation company's fleet during the period from 2012-2014 Recommends the main measures to improve the efficiency of fleet operations of the company for the next time Due to the limiting level and time, despite many efforts, the dissertation is unavoidable from the shortcomings and limitations So I look forward to receiving of comments from the teachers for more completed topic Nguyen Thi Thu Huong – GMA 02 Page 45 Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company REFERENCE Convention, I (1924) International Convention for the Unification of Certain Rules of Law relating to Bills of Lading ("Hague Rules"), and Protocol of Signature Adniraly and Maritime Law Guide Chung, T (2015, June 3) BÁO ĐIỆN TỬ CỦA CHÍNH PHỦ NƯỚC CỘNG HÒA XÃ HỘI CHỦ NGHĨA VIỆT NAM Retrieved 2015, from Vận tải đường biển nội địa phải tàu Việt Nam: http://baochinhphu.vn/Chinh-sach-va-cuoc-song/Vantai-duong-bien-noi-dia-phai-bang-tau-Viet-Nam/228541.vgp GUIDE TO THE IMPLEMENTATION OF THE HNS CONVENTION (2005) Nam, H h (1990) BỘ LUẬT HÀNG HẢI VIỆT NAM VIỆT, C t (2015, May) BẢO VIỆT Securities Retrieved from Logistics - Sức hút năm 2015: http://www.bvsc.com.vn/News/201515/327046/network.aspx Nguyen Thi Thu Huong – GMA 02 Page 46 ... operation in Binh Minh International Sunrise Shipping Joint Stock Company CHAPTER III: RECOMMENDATIONS FOR IMPROVING THE EFFICIENCY OF FLEET OPERATION IN BINH MINH INTERNATIONAL SUNRISE SHIPPING JSC In. .. Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company LIST OF TABLES Table 2.1: Registered business lines of Binh Minh Company. .. 32 Recommendations to improve the efficiency of fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company The decline in the cost of company was also due to deduction of