Recommendations to improve export activity of coffee beans at dong tai global logistics and trading co , LTD

Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD PREFACE I declare that this report is my own unaided work It has not been submitted before If violated, I am solely responsible for and bear the punishments of the Institution and University Student Name and Signature Đặng Minh Anh Đặng Minh Anh GMA02 Page Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD Table of contents Đặng Minh Anh GMA02 Page Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD List of table Table 1: Freight forwarder cost (VND) 45 Table 2: Customs declarations fee (VND 46 Table 3: Payment (VND) 47 Table 4: Freight forwarder cost (VND) 48 Table 5: Total payment (VND) 49 Table 6: Coffee beans production export by Vietnam (tons) 49 Table 7: Coffee beans production export by Dong Tai Global Logistics and Trading Co.,LTD (tons) 50 List of figure Figure 1: Global coffee production by two coffee products 22 Figure 2: Global coffee production by countries 23 Figure 3: Global 24 Đặng Minh Anh GMA02 Page Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD coffee exporting by country, November 2014 Figure 4: Vietnam’s coffee value chain process 25 Figure 5: Organizatio n of Dong Tai Global Logistics And Trading CO.,LTD 27 Figure 6: The activity of exporting coffee beans 30 Đặng Minh Anh GMA02 Page Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD List of abbreviations Đặng Minh Anh GMA02 Page Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD Đặng Minh Anh GMA02 Page Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD Introduction Necessity Vietnam is ranked as second largest coffee production and second largest exporting in the globe There are a big gap between Vietnam and the largest country Brazil in this industry The major problem in production value of Vietnam coffee industry is determined as major weakness and it reduces the sustainable competitive edge of export firms in global market This study is about how to improve the exporting activity in Vietnamese coffee firms Dissertation Methodology Method of analysis: the dissertation is composed based on the real process collected information of handling paperwork for import-forwarding for FCL cargoes being implemented The dissertation also gives an analysis of advantages and disadvantages of the procedure and makes some recommendations based on those points Statistical methods of data are also applied to given statistics in this dissertation The data is collected from the company accounting and operation departments of Dong Tai Global Logistics and Trading Co.,LTD Logical methods points out the various criteria to assess the exporting performance In addition, the difficulties in implementation process are also analyzed and reported shortcomings consequences for a specific shipment Dissertation Scope The dissertation is implemented in order to analysis and evaluate current situation of exporting coffee beans The dissertation focus on the detail steps of the exporting coffee beans process procedure for understanding the real exporting activities In addition, dissertation also gives some suggestions to improve the efficiency of export procedure Duration Time The dissertation’s statistics and samples are collected within the 3-month internship During this period, I had chance to get in export activities job and gain knowledge and experience to complete this dissertation Research Result This study is aim to demonstrate the nominated good exporting procedure of Dong Tai Global Logistics and Trading Co.,LTD Meanwhile, by applying observation method, Đặng Minh Anh GMA02 Page Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD the implementation of the procedure shall be evaluated and compared with the requirements of the company procedure So that, advantages and disadvantages of this procedure implementation are figured Finally, some recommendations are built based on the above analysis Đặng Minh Anh GMA02 Page Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD Chapter 1: Literature Review 1.1 Concept of export The term export means shipping the merchandises and services out of a country’s port The foreign buyer is known as an importermeanwhile the seller of such merchandises and services is considered as an exporter It is obvious that merchandises that are manufactured in one nation are shipping to another nation for future trade or sale The sale of such merchandises adds to the producing nation’s gross output Export is not separate trade, it is purchase system which is regulated by law of countries all over the world Countries, which are involved this system, must follow nations law and international law For all nations around the world, exporting plays an important role to improve countries economy, reflect the relationship between country and country In the current globalization world, exporting activities of any nations is necessary in order to develop all aspects of country The different of countries such as location, natural resources, humans, create strength and weakness of their own So that it creates the balance of the production and consumption 1.2 The role of export Simply to understand, it creates money to help country buy facility, equipment, technology so as to help in improving nation industrialization One of the advantages of exporting is that export promotes domestic production catch up world trends Another benefit cannot be denied is the consumption of domestic exuberancy products Export requires companies to keep innovating and perfecting corporate governance and business Exporting country is a nation in which can reduce employment rate because thousands of work is created to meet the demand of production huge of goods In additional, the relationship between countries in the world is developing through the purchase (import-export) across the barrier of nation Đặng Minh Anh GMA02 Page Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD 1.3 Types of export 1.3.1 Direct export Direct export is a situation in which a firm sells its merchandises directly to customers in another nation without using another organization or person to make arrangements for them In this situation, firm take responsible for handling documentation, pricing policies and physical delivery Selling directly to clients will prevent other businesses taking a share of your margin Nevertheless, this approach requires a large commitment of human and financial resources It takes time to build relationships and make contacts, understanding the market and carry out marketing, negotiate deals 1.3.2 Indirect export Selling to or through an intermediary is a comparatively cheap and become a direct way to enter a new market Intermediaries are typically distributors or sales agents based in your target export market who sell your goods or services to end users A good intermediary will have much experience in the market, contacts as well as reputation Using intermediary can be considered as a quick way to get your goods and services to the end customers They will generally require a level of support in the overseas marketing and selling of your product Indirect export includes: agent, export management company, export trading company, freight forwarder company 1.3.2.1Agent Party has authority to act for the principal in order to bring the principal into contractual relationships with other parties An agent is obligated to the principal, and binds the principal with his or her acts Additional powers are assigned to agent under the legal concept of 'apparent authority.' The agent, however, does not have title to the principal's merchandises in his or her possession, except where agent's lien is applicable Generally, advertising agencies not fall under this definition of an Đặng Minh Anh GMA02 Page 10 Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD + Part B will check and confirm SOA to Part A within 05 th to 10th of month After 10th of month, if part A not receive any confirmation from Part B, we will apply SOA as final confirmation + Part B must pays all expends, fees, charges and cost according to SOA at least 15th of month Especially for Ocean Freight and Air Freight: If part B requires part A on behalf of part B to pay those freights, part B has to pay part A all the amount of them within 02 days after part A payment to shipping lines and/or air lines (even when part B has not received the original invoices) Every delay in payment of Part B is considered to be opposite to be clauses in this contract and Part B has to pay the extra amount of 0.1% of the debt for late payment without investigation In case Part B doesn’t pay in time as stipulated above, Part A has right to perform one/all of the following actions: - Keep the original set of document or the goods of Part B until all of the debts including charges to collect the debts are paid - Apply necessary methods to hold the goods of Part B or stop service Part B - Cancel this contract Part B pays Part A by remittance to the following information: Benificiary: DONG TAI GLOBAL LOGISTICS AND TRADING CO.,LTD Bank account: (VND): 69787979 (USD): 71011099 Bank name: ACB (HaiPhong Branch) Đặng Minh Anh GMA02 Page 62 Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD Clause 5: Mode of delivery Goods delivery is carried out under principles:”Containers sealed” for FCL shipments and “trucks sealed” for LCL shipments Clause 6: Common clause: Both parties undertake to implement all clauses of this contract This contract is adjusted by Vietnam law During handling process, if there are any difficulties, disputes arising, both parties will resolve on mutual supported spirit before presenting them to HaiPhong People’s economic court The decision of the Court will be legal basis to tie both There are four (04) origins of this contract Each party will keep two (02) with the same legal value This contract will be effective from the day of signing until one or both parties want to cancel it REPRESENTATIVES’S PART A REPRESENTATIVES’S PART B 2.2.6 Generating document 2.2.6.1 Ocean bill of lading a Shipper Shipper is beneficiaries of L/C, specified in part 59 of L/C contract: “Dong Tai Global Logistics And Trading Co., Ltd Room 202-204 Tasaco Building, KM 104+200 Nguyen Binh Khiem, Hai An District, Hai Phong, Vietnam” b Consignee Consignee is company which send cargo According to part 46A, B/L is created as the command of sender This is written: “To order of Dong Tai Global Logistics And Trading Co., Ltd” c Notify address Đặng Minh Anh GMA02 Page 63 Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD Part 46A defines “Notify Applicant”, so Notify Address is written : “JIN MYUNG FOODCo.,Ltd, No 32 Guanghua road, BusanDist, Seoul” d Place of receipt Part 44A defines port of loading is “Vietnamese port” and part 46A defines a specific port of loading: “Dinh Vu Port, HaiPhong” e Ocean vessel Ship of Wanhai lines, this box is written: “WanHai 101 s04” f Port of loading Part 44A of L/C is specific that: Loading on board/Dispatch/Taking in charge at/From: Vietnamese Port And part 46A also defines “ B/L to indicate specific port of loading and discharging” This box: “Dinh Vu Port, HaiPhong” g Port of discharge Port of unloading is defined in part 44B (For transportation to): Port of Seoul, Korea and in this part the name of specific port is written: “Incheon port, Korea” h Place of delivery FCA Dinh Vu port, HaiPhong, incoterms 2012 Place of delivery is:“Incheon Port” i Number and kind of packages/ description of goods This part depending in part 45A (Description of goods and/ or sevices): “about 25 tons of Robusta coffee beans, Vietnam origin at USD 1.800 per ton” j Freight amount As agree k Freight payable at Đặng Minh Anh GMA02 Page 64 Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD According to part 46A, freight is prepaid So freight is paid in Dinh Vu port: “Dinh Vu Port, Haiphong” l Number of originals issued Part 46A L/C requires “Full set of not less than 3/3 clean on board bill of lading” so the number of originals are not less than 3: “three(3)” m Place and date of issue The delivery location and date of the bill of lading, usually after receiving the goods, the delivery will be released immediately lading to the shipper to assert themselves took responsibility for goods Therefore, the release date is also the date of delivery: “Dinh Vu port September 18th2015” n Signature This part is for WanHai line to sign and stamped 2.2.6.2 Commercial invoice a Shipper/ exporter This is beneficiaries of L/C, specified in part 59 of L/C contract: “Dong Tai Global Logistics And Trading Co., Ltd Room 202-204 Tasaco Building, KM 104+200 Nguyen Binh Khiem, Hai An District, Hai Phong, Vietnam” b For account & Risks of Mrss This is people who take responsibility to pay for the cargo or is created L/C in part 50: “JIN MYUNG FOOD Co.,Ltd, No 32 Guanghua road, BusanDist, Seoul” c Notify party Notify to who have to pay According to part 50: “JIN MYUNG FOOD Co.,Ltd, No 32 Guanghua road, BusanDist, Seoul” d Port of loading, Port of discharge, Carrier, Sailing on or board Đặng Minh Anh GMA02 Page 65 Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD - Port of loading: part 44A says: Vietnamese port, Vietnam - Final destination: part 44B: Port of Seoul, Korea - Carrier: WanHai Lines - Sailing on or board: part 44C: September 31st 2015 e No and date of invoice Date of bill is also is date of delivering goods: September 25th 2015 f Payment - Part 40A defines: Documentary Credit: Irrevocable - Part 42C says: Drafts at sign - According to part and 31C about number and date of creation L/C The method of payment is by irrevocable letter of credit to pay immediately when having the draft g Mark & No of packages With 25 tons loads in container 40’: “1 container 40’ h Description of goods According to part 45C: Robusta coffee bean, Country of Origin: Vietnam i Quantity unit Part 45C of L/C - Quantity: 25 tons - Unit price: USD 1,800 per Ton FCA Dinh Vu Port, Vietnam, Incoterm 2010 - Amount; USD 45,000 Đặng Minh Anh GMA02 Page 66 Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD - Total: o In figure: USD 45,000 o In words: United States dollars forty five thousands j Signature: people authorized sign 2.2.6.3 Insurance certificate - NO: BH122114 - Name of assured: Dong Tai Global Logistics And Trading Co., Ltd RM 202-204 Tasaco Building, KM 104+200 Nguyen Binh Khiem, Hai An District, Hai Phong, Vietnam Since this insurance is transferable by endorsement, is stipulated in the Section 46A Write the name and address of the exporter Exporters buy coverage for goods, so named insured is the exporter Then the exporter may Endorsement for insured licensee to another person, in this case, the exporter may endorsement may transfer insurance benefits to importers - Documentary credit (L/C) No: according to section 20 and 31C - B/L Number: 141220 MT-VN: following bill of lading of WanHai Lines provide - Contract No: number of contract - Form: named port of loading as part 44A, and it is named specific in B/L: Dinh Vu, HaiPhong - To: named port of unloading as section 44B, and it is specific in B/L: Incheon, Korea - Sailing on or about: as B/L September 28th 2015 - Subject matter insured: named of cargo which is insured: Robusta coffee bean, Country of Origin: Vietnam Đặng Minh Anh GMA02 Page 67 Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD - Sum insured: 49,500.00: this the value of insured goods Section 46C 2, multiplying 110% of total value - Premium: USD 74,25= 0,15%* 49,500 - Premium rate: 0,15% - Total amount: - Condition or special coverage: institute cargo clauses (section 46A 2) 2.2.6.4 Certificate of Origin Reference number (C/O): VN 14021 Issued in: Vietnam – exporting country a Good consigned form (export business’s name, addresss, country- section 59): Dong Tai Global Logistics And Trading Co., Ltd Room 202-204 Tasaco Building, KM 104+200 Nguyen Binh Khiem, Hai An District, Hai Phong, Vietnam b Goods consigned to (consignee’s name, address, country- section 50): JIN MYUNG FOOD Co.,Ltd, No 32 Guanghua road, BusanDist, Seoul c Means of transport and route - Departer date: September 28th 2015 - Vessel’s name: Wanhai 101 S104 - Port of discharging: Incheon port d For official use: the first box in order to tariff preferences e Item number: number of goods in L/C which is not mention So this box is blank f Marks and number on packages: not mention in L/C, blank Đặng Minh Anh GMA02 Page 68 Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD g Number and types of package, description of goods: Section 45A: Robusta coffee bean h Origin criterion: part 45 A- name of exporting country; Vietnam i Gross weight: 25 Ton – part 45A j Number and date of invoices; 034MT-GT August 2nd 2015 k Declaration of by exporter - Exporting country (part 59): Vietnam - Importing country (part 50): Korea l Certification: C/O form ICO: Hanoi on August 5th 2015 2.2.6.5 Bill of exchange a No: number of bill of exchange b For: USD 45,000.00 c Haiphong, September 31st 2015 d At sight of this FRIST of exchange (first of the same tenor and date being unpaid): time to pay of B/E, according to part 42C: drafts at sight e Pay to the order of Bank for ShinhanHaiPhong: Bank represents the exporter (confirming bank): Receiver’s bank: Shinhan Bank Haiphong f The sum of United States dollars forty five thousand only g Value received as per our Invoice(s) No(s) 034 MT-GT dated August nd 2015 h Drawn under JIANGSU RURAL bank, Korea: sender bank: JIANGSU RURAL bank, Korea i Letter of credit No ICD/070564 Đặng Minh Anh GMA02 Page 69 Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD j To JIANGSU RURAL bank, Korea: sender bank: JIANGSU RURAL bank, Korea: sender bank: JIANGSU RURAL bank, Korea k For Dong Tai Global Logistics And Trading Co., Ltd: name of creation B/L, exporter, according to section 59 2.2.7 Payment After finishing and presenting all documents to importer and issuing bank, company got signed draft (B/E) Dong Tai company sent B/E and discounted it to advising bank – Shinhan Bank Bill of exchange discount cost is 0,25 % the value of B/E No: 120393 – BE For: USD 45,000 BILL OF EXCHANGE At sight of this FIRST of exchange (First of the same tenor and date being unpaid) Pay to the order of SHINHAN BANK VIETNAM HAIPHONG BRANCH the sum of United States dollars Forty five thousand only Value received as per out Invoice(s) No(s): 034MT-GTDate September 2nd2015 Drawn under JIANGSU RURAL BANK KOREA SEOUL BRANCH Letter of Credit No ICD/070564 TO FOR Jiang Rural bank Korea Seoul branch Dong Tai Global Logistics And Trading Co.,Ltd No: 120393 – BE For: USD 45,000 BILL OF EXCHANGE At sight of this SECOND of exchange (First of the same tenor and date being unpaid) Pay to the order of SHINHAN BANK VIETNAM HAIPHONG BRANCH the sum of United States dollars Forty five thousand only Đặng Minh Anh GMA02 Page 70 Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD Value received as per out Invoice(s) No(s): 034MT-GT September 2nd2015 Date Drawn under JIANGSU RURAL BANK KOREA SEOUL BRANCH Letter of Credit No ICD/070564 TO FOR Jiang Rural bank Korea Seoul branch Dong Tai Global Logistics And Trading Co.,Ltd Đặng Minh Anh GMA02 Page 71 Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD Chapter 3: Evaluation and Recommendations 3.1 Evaluation 3.1.1 Advantages - Assessment process is divided into separate steps There is plentiful resources to analyze the market and partner - Receiving and delivering process is quickly, bringing high economic efficiency - Vietnamese Coffee Firms warehouses are equipped with WMS technology (Chess Logistics) and are enabled real time environment, in order to ensure maximum efficiency and a detailed audit trail of all activity relating to the production chain of the company This technology also helps Inventory Managers to be full visibility of the inventory status through a web-based portal - Payment process is safety process payment, assuring benefit for both exporter and importer - Paying by L/C help seller save the time and resources It means that the bank take full responsibility to check the trust of buyers financial capability which took a lot of time and money 3.1.2 Disadvantages - Assessment the marketing and partner process is based on reflection from customer, so there is not initiative to find partners If the market decreases, company will find hard to find partners - Evaluation process is based on secondary information about report marketing This information, which sometimes not screened, is not reliable It leads to the result is likely to not correct - In 2014 there are 10 times slow delivery In the first months of it increases to 13 times Because the transportation is limited Đặng Minh Anh GMA02 Page 72 Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD - The disadvantage of L/C payable service of bank is too complicated It needs perfect match of L/C and documents If there are small mistakes (spelling mistake), the bank may refuse payment 3.2 Recommendations to enhance export activity of coffee beans at Dong Tai Global Logistics And Trading Co.,LTD 3.2.1 Recommendation about analyzing market and choosing partner The aim of the company is trading for profit, however, company performance, often working with patrons This has limited the ability of the Company to compete in the market Therefore, companies should find new customers quickly, by the ways of constantly improving the services, satisfy the needs of customers, further expanding the scope of activities of the company, increasing its prestige in the marketplace For example, company can promote its image through the mass media such as newspapers or introducing clearly about the company's activities on the company's website These are the most effective marketing measures to introduce company's image to a variety of customers It is need to buy or rent information, figure from Econometric research institute in order to accurately analyze market and finance 3.2.2 Recommendation about receiving and delivering process Currently, office equipments of the company are well-equipped, nevertheless, means of transportation are still limited Therefore, company need to invest more transportation In this respect, the company is depending on the outside a lot More specifically, the company needs to strengthen the tractor vehicle, truck, expanding the storage system Companies often have to pay storage charges, demurrage due to the lack of transportation when finishing packing With nominated good every year, company need to make plan to purchase more container, trailer Financial resource could be collected from hare holders or make a loan from bank These vehicle in forwarding season can transport container not only for company but also for customers, deal with the condition of lacking transporting means Đặng Minh Anh GMA02 Page 73 Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD 3.2.3 Recommendation about payment process Using factoring service of commercial bank to protect company from bad debt and push payment process quicker Đặng Minh Anh GMA02 Page 74 Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD Conclusion It can be said that import and export activities is the leverage of the economy In countries with developed globalization economies, import and export goods are flourishing and become efficient service business of the country, playing a significant part in the trade flow of goods in these countries These activities increase cooperation relations between countries Nevertheless, in our country, import and export activities is relatively new, hence, the legislation on the rights and obligations of importers and exporters are also inadequate Therefore, the authorities should release more legal documents that clearly define roles, obligations of delivers as a basis of dispute and complaint resolutions during transport processes to promoting these activities Although the internship time in the Dong Tai Global Logistics And Trading Co., Ltd is not long but it's really a rewarding time for me Through which, I can apply the knowledge studying in class, acquire more practical skills At the same time, I can absorb a wide range of knowledge, realizing the differences in processes, business operations of each item, as well as between imports and exports On my honor, I give my sincere thanks to Mr Tran HaiViet, the teachers in this department along with employees in Dong Tai Global Logistics And Trading Co., Ltd facilitate and help me in this internship Đặng Minh Anh GMA02 Page 75 Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co., LTD References Global coffee production by two coffee products, United States Department of Agriculture (2014), http://www.fas.usda.gov/data Global coffee exporting by country, November 2014, http://www.statista.com/statistics/268135/ranking-of-coffee-exporting-countries/ Vietnam’s coffee value chain process, Ipos Business Consulting (2013) News of logistics market in Vietnam, from http://www.vnbusinessnews.com/2008/12/vietnam-seen-becoming-exciting.html Shenon, P (1994) Red tape in Vietnam, from The New York Times http://www.fva.org/0295/redtape.html Duc, P.M (2005), Vietnam customs reforms, http://www.unescap.org/tid/projects/tfac_duc.pdf Economic Development Emerging Markets, from Allbusiness http://www.allbusiness.com/trade-development/economic-development-emergingmarkets/5314443-1.htm Đặng Minh Anh GMA02 Page 76 .. .Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co. , LTD Table of contents Đặng Minh Anh GMA02 Page Recommendations to improve export activity. .. beans at Dong Tai Global Logistics And Trading Co. , LTD List of abbreviations Đặng Minh Anh GMA02 Page Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading. .. Recommendations to improve export activity of coffee beans at Dong Tai Global Logistics And Trading Co. , LTD 2.2.1 Sending fix offer In order to export coffee with handsome profit, company decided to