international air freight export procedure in agility logistics ltd , vietnam third submission

FOREIGN TRADE UNIVERSITY HO CHI MINH CITY CAMPUS GRADUATION INTERNSHIP REPORT Major: International Business Management INTERNATIONAL AIR FREIGHT EXPORT PROCEDURE IN AGILITY LOGISTICS LTD., VIETNAM Intern: HO HOANG GIA BAO Student ID: 0952015007 Class: K48CLC Supervisor: Ms Pham Thi Chau Quyen Ho Chi Minh City, March 2013 SUPERVISOR’S REMARKS TABLE OF CONTENTS Page Title Page Internship Organization’s Remarks Supervisor’s Remarks List of Abbreviations List of Tables and Figures Preface .1 Chapter 1: Introduction of Agility Ltd., Vietnam 1.1 Brief History 1.2 General Information .3 1.3 Organizational Structure 1.3.1 Organizational Chart 1.3.2 Functions of Main Departments .6 1.4 Business Outcomes 1.5 Roles of the Air Freight Export in the company .10 Chapter 2: The International Air Freight Export Procedure in Agility Logistics Ltd., Vietnam 11 2.1 International Air Freight Export Procedure 11 2.1.1 Receive a booking from customer 13 2.1.2 Book space with airline and confirm to customer 16 2.1.3 Prepare shipping documents and cargo labels 18 2.1.4 Pick up, receive cargo and complete documents 18 2.1.5 Check if cargo uplifted and submit documents to airline 20 2.1.6 Send a pre-alert to overseas Agility station 21 2.1.7 Trace daily and update on system for every shipment departed 21 2.1.8 File and store documents 21 2.2 Summary of Strengths and Weaknesses of the Air Freight Export Procedure in Agility Ltd., Vietnam 22 2.2.1 Strengths 22 2.2.2 Weaknesses 23 Chapter 3: Outlook, Oriented Development and Recommendation for Improvement of the International Air Freight Export Procedure in Agility Ltd., Vietnam 26 3.1 Outlook of the Air Freight Export 26 3.1.1 Opportunities .26 3.1.2 Threats 28 3.2 The oriented development of Air Freight Export Procedure .29 3.3 Recommendations for Improving the Air Freight Export Procedure 30 Conclusion .34 References 36 Annexes 37 Annex 37 Annex 38 Annex 39 Annex 40 Annex 41 Annex 42 LIST OF ABBREVIATIONS Abbreviation Full Word HAWB House Air Waybill MAWB Master Air Waybill CBT Customer, Brokerage and Transportation ROA Return on Asset ICC International Chamber of Commerce DG Dangerous Goods TCS Tan Son Nhat Cargo Service Company SCSC Saigon Cargo Service Corporation ETD Estimated Time of Departure ETA Estimated Time of Arrival CEO Chief Executive Manager CFO Chief Financial Manager COO Chief Operation Manager IT Information Technology IATA International Air Transport Association FIATA International Federation of Freight Forwarders Associations ISO International Organization for Standardization LIST OF TABLES AND FIGURES Name Content Page Illustration 1.1 Hierarchy Chart of Agility Vietnam Table 1.1 Financial data of Agility Vietnam between 2009 and 2011 Illustration 2.1 Steps of Air Freight Export Procedure 11 Table 2.1 Export Procedure divided by teams 12 PREFACE Vietnam has been a potential market for logistics activities since 2007, when it became the World Trade Organization’s official member The growth of export and import as well as retailing industry was remarkable, which fostered the rapid development of logistics sector in general and freight forwarding business in particular Despite the negative effects of the worldwide economic and financial crisis in 2008, Vietnam’s freight forwarding field has grew strongly with the average rate of 20 percent annually In 2010, it was ranked at the 53 rd out of 155 busiest logistics markets globally, and the prospect is forecasted to be very promising Although air freight is just the third common method for shipment of goods imported and exported, following behind sea and land transport, it has contributed more and more to the development of Vietnam’s freight forwarding business With the existing 26 airports including big ones having 3000-meter runways for large aircrafts, and the planned building of new bigger international airports and terminals, the infrastructure provided by Vietnam is considered very sufficient and capable of enhancing its air cargo forwarding In addition, more and more airlines and freight forwarders will operate in Vietnam, which makes the air freight gain a more important role in the whole forwarding industry In 2007, there were about 700 logistics companies in Vietnam, and that amount went up to 1,000 in 2011, which indicates a very large number of freight forwarding firms However, most of them just offered separated air or sea transport services, and worked as agents for foreign airlines or logistics companies There are a few firms can provide global integrated methods for moving goods from Vietnam to any country in the world and vice versa Agility Logistics Limited Vietnam is a typical company of that kind It has the expertise in serving emerging markets, and in fact, it has spent 19 years in researching and offering optimal services for Vietnamese shippers varying from freight forwarding by air/sea/land to warehousing management Among these services, perhaps air freight is the most modern and complicated operation of Agility Vietnam that could bring great values to its customers The air freight procedure of this company is very detailed and efficient and it is linked to the international network of Agility to constitute a global integrated system Due to that reason, and due to the importance of air cargo forwarding in Vietnam nowadays, I decide to choose the topic for my graduation report as International Air Freight Export Procedure in Agility Logistics Ltd., Vietnam to fully learn the effectiveness of a typical modern air freight procedure The report will be divided into chapters as follows: - Chapter 1: Introduction of Agility Ltd., Vietnam - Chapter 2: The International Air Freight Export Procedure in Agility Logistics Ltd., Vietnam - Chapter 3: Outlook, Oriented Development and Recommendation for Improvement of the International Air Freight Export Procedure in Agility Ltd., Vietnam I would like to express my deepest gratitude to all Agility Logistics Limited Vietnam’s members who supported me during my internship, especially Mr.Vu Trong Anh Quan – COO of Agility Vietnam, Ms Hoang Thi Ngoc Nguyen – Air Freight Manager and Ms Bui Thi Ngoc Hien – Air Freight Supervisor I am sincerely grateful to Foreign Trade University and all my respected teachers who aided me a lot during my time at school I would like to show my best gratitude for my teacher and supervisor – Ms Phạm Thị Châu Quyên, who advised and corrected my errors when writing the report I would like to thank all my friends for their assistance Finally, I would like to show my thankfulness to my family who supported and encouraged me all the time Without them, I could not complete the report In spite of my utilization of all efforts, there may be unavoidable mistakes and errors in the report I honestly hope to receive feedbacks and contributions to make it more precise CHAPTER 1: INTRODUCTION OF AGILITY LTD., VIETNAM 1.1 Brief History Agility, one of the leading global logistics companies, was founded in Kuwait in 1979 Agility grew strongly since its establishment, and in 2004, it became the largest logistics provider in the Middle East Today, Agility presents in more than 100 countries with over 22,000 employees working in 550 offices Agility provides 28 of wooden pallet and documents for export clearance as well as import processes in destination country These directions vary from country to country and each country may regularly alter its requirements For an example, India only constrains inbound air freight shipment to have Certificate of Fumigation for wooden packaging material while Australia demands a Certification of Fumigation from a qualified provider as well as a packing list Consequently, such various and changing control raise difficulty to Agility Vietnam’s supervisors and staff to act precisely to aid the customers in shipping their cargo to the destination successfully If problems occur, there will be a huge cost for Agility Vietnam and its clients to solve and comply with the legislation in order to clear their goods The third challenge to Agility Vietnam is that it has to face with increasing competition from both local and international logistics firms Though domestic forwarding firms have lots of disadvantages and many of them not provide air freight services, they are growing quickly and some gain trust from customers In addition, large international logistics companies such as DHL, UPS, Kuehne & Nagel, Schenker, etc are high threats to Agility Vietnam because they are very experienced and professional in international market Some huge logistics corporations such as DHL and UPS actually have freighter aircrafts, which is advantageous compared to other forwarding companies in terms of flexibility and efficiency in providing full logistics resolutions Perhaps this is the biggest threat to Agility Vietnam 3.2 The oriented development of Air Freight Export Procedure The company will maintain its good results by continuously monitoring costs and increasing the productivity of the air export procedure There are proposals that are being scheduled and implemented First, Agility Vietnam plans to buy more transport vehicles in order to support the growth of Air Freight, and they are especially used for exportation At the moment, the company owns 14 big refrigerated trucks which are mainly used to transport perishable goods such as fruits and seafood, and that number is going to reach 20, 25, and 30 respectively in 2013, 2014 and 2015 In addition, beside 100 normal trucks in service, it is also contracting with suppliers to hire additional 20 29 ones to use for door-to-door transportation, notably under EXW and FCA export shipments Second, Agility Vietnam will reinforce the relationship with its traditional customers, including Nike, Nokia, Sam Sung, Siemens, Rieker, Abbott, Shell, Total and Metro These clients play a vital role in the revenue and profitability of the company because they usually have large shipments on weekly basis, except Nokia and Nike request daily basis Agility Vietnam has signed long-term agreements with these customers to fix rate on some main routes as well as the minimum and maximum volume of each shipment The quotation price is stable for a period of some months, normally one quarter, subject to each client After that time, the Air Freight Manager and COO of Agility Vietnam will have a meeting with the customers and agree on new rates The Annex shows an example of price offered by Agility Vietnam from November, 2012 to January, 2013 The rate from January to March, 2013 is said to remain the same The new offer for the next months will be determined by the meeting scheduled on Tuesday, March 26 th, 2013 By stabilizing the prices, Agility Vietnam will have strong business connection with the customers, which fosters the development and outcome of the company Third, Agility has the initiative to keep close relationship with airlines and agents so as to have large space allotment and best freight in order to cut cost and serve customers well As freight and charges are the majority of cost of goods sold, cutting these expenses down is a reasonable method to enhance efficiency and increase profit Fourth, the company is considering opening new offices in other provinces to cope with the growing demand from customers The reason why Agility Vietnam has not run an office in Central Vietnam is that, during the difficult time, the company had to cut expenses, and the demand was not so high But, based on the forecast of Agility Vietnam’s senior managers, the situation will be better after 2014, and the prospect of establishing a new office in Da Nang is very likely to happen 3.3 Recommendations for improving the Air Freight Export Procedure 30 There are several recommendations for Agility Vietnam to improve the Air Freight Export Procedure First, regarding the computer system, the interface should be upgraded so that it can process multiple commands at a time This will highly contribute to the productivity of all procedure by reducing overlapping working time for every action The pressure of work staff facing would be reduced and tens or even hundreds of labor hours would be saved Furthermore, if the system is enhanced, each new office to be opened will need fewer workers, which decreases cost for the company Additionally, the new interface helps internal control, especially compliant audit, execute quickly and effectively Second, Agility Vietnam should open an operating office in Central Vietnam, because this location will produce many opportunities for development of not only air freight but also ocean freight and other services Da Nang is the best location to take into account because it is a big city and has a relatively large international airport that can serve modern freighters such as the Boeing 747F, Boeing 747-8 and other Airbus families Moreover, there are some critical clients locating in this area such as the company Foster Electric Da Nang Co., Ltd – the headphone manufacturer and provider for Nokia Corporation This company is a loyal shipper to Agility Vietnam who almost has shipment every day Another business bases in Central Vietnam (i.e Quang Nam and Da Nang provinces) is Rieker Vietnam Ltd a shoes producer and supplier of Rieker Shoes Corporation These two companies are the regular shippers, and it is more favorable to them if Agility Vietnam opens an operating office in Da Nang Third, the company should build close and long-term relationship with existing and new customers to agree on fixed schedule of export so that it can manage and organize right number of staff at a right time in order to strengthen the efficiency On one hand, seasonal demand is high in some specified months, so all employees need to be aware of the large amount of work in order to complete jobs on time During busy periods, Agility Vietnam ought to ask some students for parttime jobs as well as create chances for them to intern These students are very helpful in several simple tasks such as checking and printing documents, which 31 releases the stress from the company’s members and facilitates all duties On the other hand, during a week, Monday and Thursday are usually the most industrious, and the Air Freight Department should divide tasks scientifically in order that all processes are finished on Friday to let personnel have two day-offs on Saturday and Sunday Fourth, Agility Vietnam should develop online booking and payment facilities for loyal as well as new clients Since its establishment, orders were only received via email, facsimile or telephone However, as information technology advances with the growth of electric commerce, many customers wish to reserve space and settle payment through the Internet Each client should have an account and they just only need to log in to Agility Vietnam’s website to search for appropriate route, date and time to request a shipment or services After that, every relevant detail would be posted on the web pages including HAWB, MAWB, Cargo Manifest, Number of Pieces, Chargeable Weight, freight, local charges, tracking shipment from airline, ETD and ETA Finally, freight and local charges will be paid online to Agility Vietnam and overseas Agility station If these facilities are created, the company will become more flexible in operation and interactive with the customers as well as airlines Clients and suppliers will surely have more convenience, and the transfer of information would be much faster than before Fifth, Agility Vietnam is advised to continuously focus on and flourish its human resource because this is one of the core competencies of the company Quality of personnel is more vital, namely in case of a service provider like Agility Vietnam Not only the managers and supervisors but all employees must also strive to master all procedure as well as how to deal with arising problems and satisfy customers’ needs By training and mentoring, the new recruits and existing workers will have the basic knowledge and skills to handle daily work In addition, company should expand more professional courses like it has done to create more opportunities for staff to learn from prestige organizations such as International Air Transport Association (IATA) and International Federation of Freight Forwarders Associations (FIATA) Further education and certificates from these organizations will ensure the quality of the personnel who could deliver best solutions for the 32 jobs In addition, Agility Vietnam should send experienced members to Agility’s branches in developed countries to learn and practice in the international environment Beside the knowledge, soft skills are also important As everyday duty varying from complying with the procedure standard to communicate with customers is performed in foreign languages, all members necessitate linguistic abilities in order to smoothly conduct their tasks Most frequent language used is English, and sometimes clients would like to communicate in Chinese and Japanese It is no exaggeration to say that the majority of business done between the clients and Agility Vietnam is indirect, which means the information is transferred by verbal or other means except for face-to-face method Attitudes and greeting arts of employees are so crucial that influence feeling and perception about the company of the clients Thus, staff’s proficiency in communication will absolutely build customers’ preferences and competitiveness for the company as well Agility Vietnam could open some competitions and invite experts from overseas branches to share experience to improve soft skills of all members Sixth, Agility Vietnam ought to promote entire internal control activities to maintain standard quality and minimize risk in each procedure Awareness of risk management from each department needs to be nurtured Every criterion must be completed in all work in order to make sure the ISO requirement is met Agility Vietnam has qualified for international standards ISO 9001:2000 and EMS 14000 for superb services and business environment It needs to keep up the good job and try to exceed that quality In order to help the above recommendations accomplished, supports from outside parties consisting of the state, career associations and clients are extremely vital As air forwarding business depends strongly on the facilities such as airports and cargo terminals and other constructions, the state is of the essence in providing sufficient infrastructure for air freight export not only of Agility Vietnam but also of the whole logistics sector The state should expand current airports and build more highways to connect industrial zones and factories to the terminals New international airports should be constructed also for future development Besides, Vietnamese government needs to legislate on clear, detailed and stable regulations 33 and cooperate with other countries to agree on simple and convenient requirements so that it is easier for both forwarders and sellers in exportation Along with the state, career associations notably IATA and FIATA should create more opportunities for personnel in air freight forwarding sector to study and attain experience at a low expense Career events and competitions ought to be organized for staff from different companies taking part in and sharing their opinions and knowledge Last but not least, clients of Agility Vietnam could surely enhance the air freight procedure by long-term commitments on date, time, quantity of cargo, and freight rate for each shipment with the company so that it is more proactive in processing services with the correct amount of resources, which leads to the reduced cost and better price for the customers This contributes to the efficiency of Agility Vietnam as well as the benefits of its clients Customers will receive the optimal price, Agility Vietnam allocates its resources scientifically thanks to the precise schedule, and airlines receive regular space allotment, which is the win-win-win situation that all parties would like to achieve CONCLUSION Air freight will definitely be the key player in future development of not only Agility Vietnam but also the entire Vietnam’s forwarding industry Although air freight is not as popular as ocean or land transport, the demand for air cargo is expected to increase strongly, especially after 2014 Along with the enhanced infrastructure and airport facilities, opportunities for rapid growth are still ahead Moreover, multimodal transportation, in which air freight is an essential component, is forecasted to be applied more regularly in the international trade of goods Vietnamese businesses are changing the habit of exporting under FCA and importing under CIP term Instead, exportation using CPT and CIP terms is the new trend, which nurtures demand for goods carried by air from Vietnam to destination 34 countries Vietnamese market, therefore, will become much more vibrant for logistics and forwarding sector The International Air Freight Export Procedure of Agility Vietnam is a highly integrated and effective one It is well designed with the utilization of the computer system, along with the control from excellent personnel The procedure is so detailed and strictly monitored that mistake hardly occurs It is capable of processing almost every situation that might happen during daily work In addition, it also contributed a lot to the firm’s business results even though in the difficult time from 2009 to 2011 During this period, profitability fell dramatically, but it is slightly recovered thanks to the efforts made by the company to reduce total cost and increase all procedure’s efficiency Proficient operation in air freight has improved the quality of the whole Air Freight Export Procedure The most valuable advantage of Agility Vietnam’s operation is that it links the firm with the customers and carriers to form a complete supply chain of transportation Agility’s wide global network with agents and airlines is another factor producing outstanding services For instance, door-to-door delivery provided by Agility is state of the art and a good sample for any logistics firm in the marketplace However, there are some weaknesses that need improvements The sophisticated interface of the computer system and the pressure from seasonally fluctuated shipments are main issues that require enhancement In addition, the lack of operating facilities in the central area of Vietnam raises difficulty and risk for Agility to handle goods from local shippers If there were any active office in this location, Agility would enjoy more flexibility and productivity in its air freight procedure Agility Vietnam has planned for the future by preparing the best efforts as well as resources to make use of the opportunities With its core competencies in air forwarding, the company will surely offer more and more services as well as upgrade the existing ones to bring optimal values to customers Additional assets and vehicles have been purchased to cope with the upward demand The company is also considering the establishment of a new office in Da Nang if market’s conditions are optimistic in the year 2015 as planned Agility Vietnam also expects that more clients from Vietnam, as well as Laos and Cambodia, will use combined 35 transportation such as land/air and air/sea methods by taking advantage of large airports and seaports in Vietnam With the qualified staff and superior competitive capacity, Agility Vietnam will successfully exploit the opportunities and it will absolutely develop stronger in the future REFERENCES Trịnh Thị Thu Hương, 2011, Giáo trình Vận tải bảo hiểm ngoại thương, NXB Thông tin Truyền thông, Hà Nội Stephen P.Robbins and Mary Coulter, 2009, Management, Pearson International Edition, Prentice Hall Ministry of Transport of Vietnam, Decision 238/QĐ-BGTVT Prime Minister of Vietnam, Decision 909/QĐ-TTg International Chamber of Commerce, Incoterms® 2010 Agility Vietnam’s Internal Information Nguyên Hương, 2012 Thị trường dịch vụ Logistics Việt Nam: Cơ hội thách thức!, Economics and Business Times - tamnhin.net, [online] Available 36 at: [Accessed March 2013] Nguyễn Hùng, 2012 LOGISTICS VIỆT NAM: năm sau WTO (20072012), The Magazine of Vietnam Freight Forwarders Association,[online] Available at: [Accessed March 2013] ANNEXES Annex 1: The HAWB original 37 Annex 2: Booking confirmation with the airline 38 Annex 3: The Cargo Manifest 39 Annex 4: The HAWB original 40 Annex 5: MAWB issued by the airline 41 Annex 6: Quotation for Rieker Vietnam for the route from Da Nang to Komarno 42 ... documentsAIR FREIGHT EXPORT CHAPTER 2: THE INTERNATIONAL Agility station complete to airline LOGISTICS LTD. , VIETNAM PROCEDURE IN AGILITY documents 2.1 International Air Freight Export Procedure The Air. .. Air Freight Export in the company .10 Chapter 2: The International Air Freight Export Procedure in Agility Logistics Ltd. , Vietnam 11 2.1 International Air Freight Export Procedure. .. Year 2010 3 7,8 60 3 2,0 70 3 0,0 72 2 1,6 18 5,8 56 2,5 98 1,9 98 168 2,1 66 475 4,2 70 11.10 11.87 Year 2011 4 0,2 55 2 9,0 62 2 6,7 71 1 7,7 49 6,5 34 2,4 88 2,2 91 17 2,3 08 217 1,9 49 6.08 5.15 231 2,0 77 7.15 5.16