IMPROVING CUSTOMER SATISFACTION OF AIR FREIGHT FORWARDING SERVICE QUALITY – A CASE IN ACT MULTINATIONAL TRANSPORTATION LOGISTICS CO., LTD

IMPROVING CUSTOMER SATISFACTION OF AIR FREIGHT FORWARDING SERVICE QUALITY – A CASE IN ACT MULTINATIONAL TRANSPORTATION LOGISTICS CO., LTD Logistics is a new and emerge field in Vietnam despite their enormous profit and contribution to the development of this country. Although there has been a numerous local logistics companies, it still cannot meet the customer’s demand. Therefore, service quality plays an important role in rating the logistics company as well as gaining new customer and maintaining the loyal ones. However, service quality is hard to evaluate, especially the new field such as logistics and freight forwarding. Therefore, SERVQUAL model, the popular tools to assess, is based on five factors: responsiveness, reliability, empathy, tangibles and assurance. Quantitative method was applied by sending survey via Email for logistics companies, who are the loyal and frequent ACT’s customers. The questionnaire are set by rating by scale from one to five according to the level of satisfaction. 55 responses were collected after two month. The result has shown some weakness of the service provided by ACT. From there, enhancing the knowledge and skills of professional staff, together with the connection of technology and 4.0 Industrial Revolution, is the prior to the solutions in order to improve the effectiveness of air freight forwarding in ACT in particular and economy development of Vietnam in general. Key words: Freight forwarding, customer satisfaction, service quality, SERVQUAL model

STATE BANK OF VIETNAM

BANKING ACADEMY Faculty of Foreign Languages

 GRADUATION THESIS

IMPROVING CUSTOMER SATISFACTION OF AIR FREIGHT FORWARDING SERVICE QUALITY – A CASE IN ACT MULTINATIONAL TRANSPORTATION LOGISTICS CO., LTD.

Student : Academic Year : 2015 - 2019

Hanoi, May 2019

I hereby declare that I am sole author of this Bachelor thesis “Improving customersatisfaction of air freight forwarding service quality – A case in ACT MultinationalTransportation Logistics Co., Ltd.” The data, statistics and information reported in thisthesis is the result of my own work and I have not used any sources other than thoselisted in bibliography I further declare that I have not submitted this thesis in anyinstitution in order to obtain the degree

Hanoi, May 2019 Signature

Chu Mai Huong

This thesis research the customer satisfaction of air freight forwarding servicesfrom 2016 to the early four months in 2019 at ACT Multinational Transportation Co,Ltd Throughout the dissertation, I have received a huge of inspiration and assistance

I would like to thank my supervisor, Mr Ngo Tung Anh, the dedicated lecturer

of Faculty of Foreign Languages Department, for his encouragement and invaluableexpertise in formulating of the research topic and giving the supportiverecommendations

I would also like to give special thanks to my colleagues at ACT LogisticsCompany for their helpful collaboration All their supports are precious guidance andmade this time memorable

I would like to acknowledge the supportive participants in the online survey.Those response to the whole questionnaires and sharing their valuable experiencesgreatly help me complete my dissertation I hereby express my gratitude to all 76customers of ACT and 55 respondents for their full supportive answer With theirpassionate support, the validation survey could not have been conducted

In addition, I would like to thank my family, especially my grandmother for hercontinuous encouragement and valuable guidance Besides, thanks to my closeclassmates, who were of great support in finding the topic and advising the surveyquestions

TABLE OF CONTENTS

DECLARATION ii

ACKNOWLEDGEMENT iii

TABLE OF CONTENTS iv

LIST OF TABLES viii

LIST OF FIGURES ix

LIST OF ABBRIVIATIONS x

LIST OF APPENDIXES xi

ABSTRACT xii

CHAPTER 1: INTRODUCTORY STATEMENT 1

1.1 Background of the study 1

1.2 Objectives of the study 2

1.3 Significance of the study 2

1.4 Scope and delimitation of the study 2

1.5 Definition of terms 3

1.6 Summary 4

CHAPTER 2: REVIEW OF RELATED LITERATURE 5

I Theoretical and conceptual framework 5

2.1 General overview of forwarding 5

2.1.1 Freight forwarding 5

2.1.2 Freight forwarder? 5

2.2 The role of forwarder in international trade 6

2.2.1 Carrier 6

2.2.2 Customs Broker 6

2.2.3 Cargo Consolidator: 7

2.2.4 Agent 7

2.3 Rights and obligations of freight forwarders 7

2.4 Responsibilities of forwarder 8

2.5 Steps of air freight forwarding 9

2.5.1 Prepare goods, make a booking allotment 9

2.5.2 Inspection, fumigation, tax calculation procedures 9

2.5.3 Trucking the commodities to the airport 9

2.6 Factors affecting the air freight forwarding 10

2.6.1 The objective factors 10

2.6.2 The subjective factor 11

II Research paradigm / conceptual paradigm 13

2.7 Service quality 13

2.7.1 Service 13

2.7.2 Quality 14

2.7.3 Service quality assessment 15

2.7.4 SERVQUAL model 16

2.8 Summary 19

CHAPTER 3 RESEARCH METHODOLOGY 20

3.1 Research Approaches 20

3.1.1 Deductive research approach 20

3.1.2 Quantitative methodology 20

3.2 Research design 21

3.4 Population, sample and sampling technique 22

3.4.1 Population of the study 22

3.4.2 Sample of the population 23

3.4.3 Sampling Techniques 23

3.5 Respondent of the study 23

3.6 Research Instrument 24

3.7 Data Gathering Procedures 25

3.8 Statistical Treatment of Data 25

3.9 Limitations of Research Methodology 26

3.10 Summary 26

CHAPTER 4: RESULTS AND STATICTICS ANALYSIS 28

4.1 The process of formation and development 28

4.2 Business Activities 29

4.3 Business Services 30

4.3.1 Air Freight 30

4.3.2 Sea Freight 30

4.4 Survey Results 32

4.4.1 Data Description 32

4.4.2 Background of the respondents 32

4.5 Customer Satisfaction scale rating analysis 37

4.5.1 Reliability Factors 37

4.5.2 Responsiveness Factors 40

4.5.3 Assurance Factors 42

4.5.4 Empathy Factors 43

4.5.5 Customer Satisfaction Factors (General Opinions) 46

4.5.6 Short – answer questions 47

4.6 Summary 48

CHAPTER 5: SUMMARY, CONCLUSION, FINDINGS AND RECOMMENDATION 49

5.1 Summary of the thesis 49

5.2 Conclusion 49

5.3 Recommendations 50

5.3.1 Recommendations for the Government 50

5.3.2 Recommendation for the Enterprise 51

5.4 Limitation of the research 53

5.5 Suggestions for further research 54

BIBLIOGRAPHY 55

APPENDIXES 56

LIST OF TAB

Y

Table 3 1: The route from HAN with ASIA 22

Table 4 1: The revenue and profit of ACT Company in recent three years 31

Table 4 2: Statistics of Reliability Factors 37

Table 4 3: Satisfaction levels of “Be always available” factors 40

Table 4 4: Statistics of Responsiveness Factors 40

Table 4 5: Statistics of Assurance Factors 42

Table 4 6: Statistics of Empathy factors 44

Table 4 7: Statistics of Customer Satisfaction factors 46

LIST OF FIGURES

Figure 4.1: The response rate of gender 33

Figure 4.2: Gender and Age 33

Figure 4.3: The department of the respondents 34

Figure 4.4: The business relationship with ACT Company 35

Figure 4.5: Type of company 35

Figure 4.6: Service Usages 36

Figure 4.7: Satisfaction levels of On - time delivery 38

Figure 4.8: Satisfaction levels of Being served accurately & professionally 39

Figure 4.9: Satisfaction levels of "Willing to give advice' 42

Figure 4.10: Satisfaction levels of “Arrange suitable working time” and “Provide support policy” factors 44

Figure 4.11: Satisfaction levels of “Be received the best services” factor 45

Figure 4.12: Satisfaction levels of “Satisfied with making payment 47

LIST OF ABBRIVIATIONS

System

LIST OF APPENDIXES

APPENDIX 1: ACT’s business report from 2016 – 2019

APPENDIX 2: ACT Planning Development Research, 2016

APPENDIX 3: ACT customer satisfaction levels questionnaire surveyAPPENDIX 4: ACT customer satisfaction levels survey’s result

Logistics is a new and emerge field in Vietnam despite their enormous profitand contribution to the development of this country Although there has been anumerous local logistics companies, it still cannot meet the customer’s demand.Therefore, service quality plays an important role in rating the logistics company aswell as gaining new customer and maintaining the loyal ones However, service quality

is hard to evaluate, especially the new field such as logistics and freight forwarding.Therefore, SERVQUAL model, the popular tools to assess, is based on five factors:responsiveness, reliability, empathy, tangibles and assurance Quantitative method wasapplied by sending survey via Email for logistics companies, who are the loyal andfrequent ACT’s customers The questionnaire are set by rating by scale from one tofive according to the level of satisfaction 55 responses were collected after two month.The result has shown some weakness of the service provided by ACT From there,enhancing the knowledge and skills of professional staff, together with the connection

of technology and 4.0 Industrial Revolution, is the prior to the solutions in order toimprove the effectiveness of air freight forwarding in ACT in particular and economydevelopment of Vietnam in general

Key words: Freight forwarding, customer satisfaction, service quality, SERVQUAL

model

CHAPTER 1: INTRODUCTORY STATEMENT 1.1 Background of the study

The 21st century has seen a dramatic fall in trade barriers, intensiveglobalization, and rapid growth in international trade Companies of all sizes areseeking to take advantage of opportunities in this new world economy, and Vietnam is

no exception Together with the development of several innovative modes oftransportation recently, international transportation system plays an increasingly crucialrole Along with the economic growth, import and export activities creates moreopportunities in the forwarding industry’s development

In recent years, logistics and supply chain management have strongly developedbecause of the rapidly increasing import and export activities However, theinternational transportation is not as simple as domestic transportation Freightforwarding, by itself, is a process, a chain management of international logistics andthe forwarders on behalf of carrier having responsibility to deliver the commodity topredefined destination Many forwarding companies have been established,specializing in providing customs clearance services, warehousing services, truckingservices and customs brokerage services In order to achieve effective business result,the employees must master the logistics professional qualification, affreightment(renting a ship), customs procedures, etc

However, it seems that this provided services do not meet the customerrequirement and satisfaction Therefore, measuring customer satisfaction is a good way

to evaluate the quality of these service

Throughout the Internship period at ACT Multinational Transportation LogisticsCo., Ltd, together with the support of the staffs in the company, especially the

dedicated guidance of the lecturer Ngo Tung Anh, I have decided to choose this title "

Improving customer satisfaction of air freight forwarding service quality – A case in ACT Multinational Transportation Logistics Co., Ltd " as my graduation thesis.

1.2 Objectives of the study

The broad objective was to study the satisfaction levels of the ACT’s customerabout air forwarding service quality

The specific objective of the study were:

 To measure the levels of satisfaction about the provided services

 To determine which model and factors are used to evaluate the services

 To determine which services are mostly used and highly satisfied by thecustomers

1.3 Significance of the study

The result of the study will be of great benefit to the following:

ACT LOGISTICS COMPANY The data and statistics are collected on the behavior

of customers toward the provided service of ACT This result enable the company toimprove the air freight forwarding quality and the human resource The gathered datahelp ACT understand the requirement and satisfaction in order to plan and upgradesuitable services

FORWARDER The result of the study will help the forwarder evaluate the quality of

services provided by ACT, especially the ACT’s customers The forwarder might havemore choices to use ACT’s services Besides, it is an opportunity to gain the newcustomers

STUDENTS This study will provide the information about the theoretical background

of air freight forwarding and logistics field Also, this research evaluate the servicequality in every aspects of five factors of SERQUAL model The data gathered willalso be a valuable source to help the other students

1.4 Scope and delimitation of the study

This thesis will focus on measuring and evaluating the customer satisfaction ofACT’s service Due to time constraints, this graduation thesis is limited to just

mentioning the process of air freight forwarding without mentioning any other means

of transportation Besides, the thesis focuses only on exporting goods rather thanprocedures for imported goods This topic uses the document and information of theACT Company within three years to refer to exporting goods of the company (from

2015 to the early four months of 2019)

1.5 Definition of terms

A freight forwarder is a business, acts as an intermediary, receiving the goods ofthe shippers, or consolidating multiple cargo into larger shipments, then hiring carriers(shipping lines, airlines) to transport from the starting point to the final destination

 Consolidator

A freight consolidator is an operator who uses the carrier as a vehicle Hegroups a small of commodities from a range of individual exporters into a fullcontainer of cargo and loads these collected goods under his own name to ultimatelyreach one or more consignees’ end destination

Air cargo is cargo transported by plane, otherwise known as by air This is themethod where the cargo is delivered by a dedicated cargo plane (FRT, Cargo Air Craft,

or Freighter), or carried in the Passenger’s Plane (PAX)

Master Airway Bill is a document issued by the carrier to confirm receipt of theshipment for air transport, usually abbreviated as MAWB This bill is used to regulatethe relationship between air carriers and consolidators and delivery documents betweencarriers and consolidators

House airway bill (HAWB) is a transport document, which is issued and signed

It is also known as the Forwarder’s House Airway bill This bill is used to adjust therelationship between the consolidation and the individual shippers.

Manifest is the transport document that gives a detailed summary of airway billsissued by a carrier (or its agent) for a specific shipment Manifest is a system to receivecargo declarations, other relevant documents and electronic customs clearance for theagent and forwarder

 Customs Declaration

A customs declaration is an official document that the owner must declare aboutthe shipment when exporting or importing into the territory of Vietnam Simply, if youhave goods to export or import, you must go through customs procedures, anddeclaring the declaration is one of the required jobs

1.6 Summary

In summary, air freight forwarding has become an increasingly important sectorwith the supply chain all around the world In order to achieve effective and efficientbusiness systems, take advantage of human source and innovation technology willbring more opportunity to enter new world Therefore, improving the efficiency ofservice quality is the prior action to meet the standard of the most fastidious customers

For four chapters below, Chapter II will present the literature review of thetheoretical framework on air freight forwarding In Chapter II, the primary topicdiscussed is the factors that affect the forwarding services In Chapter III, the thesisdiscussed the research methodology and detail information of how the study wasconducted The research results are analyzed in Chapter IV, followed by the findingsand recommendations in Chapter V

CHAPTER 2: REVIEW OF RELATED LITERATURE

I Theoretical and conceptual framework

2.1 General overview of forwarding

2.1.1 Freight forwarding

In international trade, goods need to be shipped to many countries ranging fromseller country to buyer country In order for the goods’ process to be circulated quickly,safely and economically without the involvement of the seller and buyer, it is necessary

to have the intermediaries related to the transport process, including trucking the goods

to the seaport, carrying out customs clearance procedures, loading and unloadingprocedures, shipping the goods to the consignee at the port of destination All theseactivities are generally referred to as "Forwarding"

According to Article 163 - Vietnam Commercial Law (May 23, 1997), “Freightforwarding is a commercial activity whereby the forwarders receive goods from thesender, organize transportation, storage, paperwork and other related services underauthorized by shippers, carriers and other forwarders”

In short, forwarding is a collection of operations and procedures related to thetransport process to track the commodities from the place of shipment (shipper) to theplace of delivery (consignee) The forwarding company can do services directly orthrough the agents or other third parties

2.1.2 Freight forwarder?

A freight forwarder is a business, acts as an intermediary between a shipper andtransportation services that organizes shipments for individuals and corporation to getgoods from the manufacturers to the customers at predefined destination The freightforwarders specialize in lowering costs and facilitating the logistics of transportation

A freight forwarder is responsible for the transportation of goods between onedestination and another Freight forwarding companies specialize in arranging the

The forwarder helps import and export business to save costs for buildingwarehouses, managing goods because it is possible to use warehouse and personnel ofthe forwarder.

2.2 The role of forwarder in international trade

Today, due to the development of transportation, especially multimodaltransport, the forwarder not only works as an agent, a trustee, but also a transportservice provider and the carrier The forwarder has services as the following functions:

2.2.1 Carrier

The forwarder acts as a carrier, it means that any person by whom or in whosename a contract of carriage of goods by sea has been concluded with a shipper Theytransport goods from port of loading to port of discharge under their own or charteredvessels The forwarder acts as contracting carrier if he signs a contract without directlytransporting it If he directly transports, he is the actual carrier

"Actual carrier" means any person to whom the performance of the carriage ofthe goods, or of part of the carriage, has been entrusted by the carrier, and includes anyother person to whom such performance has been entrusted

2.2.2 Customs Broker

Customs broker is the person who is licensed to help importers and exportersensure complete compliance with federal law Every country has different lawspertaining to their specific interests and customs brokers assist their clients bycooperating shippers and government agencies In some countries the license or theprofessional activity is mandatory and in others not

Customs broker will review packing lists and commercial invoices, organize andsubmit necessary documentation to ensure shipments meet all legal requirements andverify that taxes and duties have been properly calculated and paid A customs brokerwill make sure that the goods are correctly classified with the appropriate HarmonizedCode, allowing their clients to pay the lowest possible taxes and duties

2.2.3 Cargo Consolidator:

A freight consolidator is an operator who uses the carrier as a vehicle Hegroups a small of commodities from a range of individual exporters into a fullcontainer of cargo and loads these collected goods under his own name to ultimatelyreach one or more consignees’ end destination

It is very simple to ship goods via a freight consolidator agency An agent orrepresentative will guide you throughout the process until the goods are brought to thefinal destination As a collector goods, the forwarder can act as a carrier or just anagent

2.2.4 Agent

Not only does the forwarder have the responsibility of the professional carrierbut also, he acts as an intermediary between the shipper and the carrier as an agent ofthe carrier or of the shipper The forwarder, under the direction of the shipper, performsseveral tasks that related to import – export procedures, such as receiving goods,delivering goods, taking documentations, clearing customs procedures, warehousingthat basing on trust contract

2.3 Rights and obligations of freight forwarders

The freight forwarders have the following rights and obligations:

 Receive service commission and other reasonable expenses

 During the contract performance, the forwarder may work differently with theinstruction of the shipper in case there bring good benefits for the clients,however it should be notified to his customers as soon as possible

 When something occurs, it may lead to partial failure or all customer’sinstructions, the forwarder must immediately notify to his clients forinstructions

 In case there is an agreement on the specific time to perform obligation, theforwarder must fulfill their obligations within a reasonable time.

 When transporting the goods, the forwarder must comply with the provisions oflaw and transport customs

2.4 Responsibilities of forwarder

The main responsibility of the freight forwarder is to arrange the movement ofthe cargo to its final destination point Apart from that, the freight forwarder mustreview the ready documentation including the commercial invoices and the airway bill,prepare and process the documents for international freight forwarding

When the forwarder acts as a trustee, the forwarder must also be responsible forthe losses caused by the third party In this case, the forwarder usually has anagreement with the customer about the full-service price (usually a package price), notjust a commission as an agent Forwarders often act as mandates when performingtasks such as cargo consolidator, transport goods or store goods in their ownwarehouse, or when using multimodal transport types

However, the forwarder is not responsible for any loss or damage failure ofgoods from the following cases:

 Customer's fault or the person entrusted by the customer

 Fraud customer’s package and inappropriate code

 The nature of goods

 War or strike

 The case of force majeure, e g: the severe weather

 In addition, the forwarder is not responsible for delays or wrong addresses

2.5 Steps of air freight forwarding

2.5.1 Prepare goods, make a booking allotment

 Receive the detail information about the commodities, including: name of thegoods, pieces, gross weight, dimensions, nature of goods, packed in cartons orpallet?

 Check the prices with the airline and other logistics costs that related to theshipment, including AMS, handling fee, MAWB fee

 Make a booking with the airline to need space and make booking confirmation

to the customers

 Prepare the necessary set of documentations to make customs clearance

 Declare and submit customs declarations together with other documents such assales contracts, commercial invoices, business licenses, detailed declarationsand export permits (if necessary)

2.5.2 Inspection, fumigation, tax calculation procedures

 Verify the necessary goods and make certificate, such as Certificate of Origin,Certificate of Quality, …

 Inspected actual goods by customs according to Customs Law

 Calculate taxes and issue tax notices, complete customs procedures according tothe information that declares on VNACCS software and HS Code

2.5.3 Trucking the commodities to the airport

 The forwarder will fill out and sign in Booking Note and hand it to the airlinerepresentative to sign with Cargo List

 The forwarder directly delivers the goods to the airline

 Notify the buyers of the delivery and cargo insurance if needed

 Track and trace the flight to notify to the customers whether their cargoes arearrived or not.

2.6 Factors affecting the air freight forwarding

2.6.1 The objective factors

According to VINANET News (09 Apr, 2019), the government applied 0% tax

on imported automobile components The Decree No 125/2017 / ND-CP of theGovernment gave 0% preferential import tax rate for imported car parts from 9 seats orless will apply absolute import tax of 10,000 USD/ car However, the firms mustcommit to manufacture and assemble cars to meet emission standards of level 4 inorder to apply the 0% preferential import tax rate for imported automobile components

In case an enterprise meets all the conditions of the contract and has paid the amount oftax larger than the amount of must – be- paid tax, the customs shall handle the overpaidtax amounts of enterprises in accordance with the Law on Tax Administration

b International law

Nowadays, the global economic integration brings a lot of advantages forVietnamese businesses, the scope of transporting goods is not just around nationalrange but also across the Vietnamese’s border Therefore, the enterprises not onlycomply with the legal law of its own country but also international law

International laws are set up to protect the right of related parties and IATAlikely plays a significant role in avoiding regulatory violations, emergency situations,

and package rejection or shipping delays IATA stands for the International AirTransport Association and is the official trade organization of the world’s airlines Forair carriers, IATA provides a polled resource for scheduling, traffic and routes,standardizing services and the creation of a worldwide public service for the airindustry For consumers, IATA sets the international standard for services and businesspractices amongst member airlines.

c Customer demand for services

In the forwarding activities, when international trade is growing, customersrealize that the agency's agent role is becoming very limited Customers want to bearranged the entire transport process as well as other related services such asconsolidating, buying insurance, hiring vehicles, taking full responsibility during thetransport process in order to avoid damages and losses Therefore, the forwarder notonly gives freight forwarding services but also provides related services in order toshorten the delivery time and minimize the expenses and maximize the profit

d The competition of forwarders

In the past ten years, the logistics industry has become more and more popularand has an increasing important strategic position in the Vietnam's economicdevelopment Realizing that this is a potential field, many Logistics companies havebeen launched to provide transportation, warehousing and distribution services forimport and export companies Currently, there are more than 300 enterprises andcompanies being established in the field of international freight forwarding in Vietnam.The development of many companies creates significant competitive pressures forother forwarders However, the booming of forwarding companies has facilitatedimport-export companies to have the best choice of services with the most premiumprices

2.6.2 The subjective factor

a Operational structure of enterprise

The organizational status of the enterprise will be much more effective if it iscompact, simple, suitable to the economic - technical characteristics, managementcapacity of the managers than an enterprise with a loose organizational structure, which

is inconsistent with the requirements of the corporate governance apparatus

b Capital and facilities

Besides using capital sources to upgrade material and technical equipment forenterprises operating in international freight forwarding, the capital must also be used

in the process of providing services such as pre- shipping allotment, customs clearanceprocedures, import and export taxes paying If there is no capital or insufficient capital,

a lot of difficulties in the process of business operations occurs

International freight forwarding requires that the business has a certain amount

of facilities to meet the increasing and rigorous demands of its customers, namely thewarehouse system, transport vehicles and special-use vehicles, equipped with moderncommunication means for communication such as computer systems connected to theInternet, international telecommunications means and management means Only whenthe enterprises meet the transport facilities conditions and modern technology devices

do they can compete successfully in the market to meet the demand of freightforwarding and strongly developing as today

c Staff qualification

Human Resource has greatly affected international freight forwarding in allaspect This is because this field requires the staff have a high level of professionalskills, excellent foreign language, legal framework knowledge and sensitivity.Customers only entrust and take full authority to the enterprises when they are ensuredwith their rights in the contract That is the reason why enhancing the employee’s skills

is the imperative actions to make profits There has been some short- term course toimprove soft skills, such as computer program

d Brand and reputation of businesses

The prestige, reputation or brand of business is one of the key factors for thesurvival of the business The service quality of a business with great prestige and agood brand name in the market will easily win customers to receive and choose moreservices of unbranded businesses The brand of the business is like a guarantee ofbusiness with customers in creating a certain advantage of service with services ofother businesses Especially for businesses involved in expanding international freightforwarding markets, the brand of enterprises will make it easier for enterprises to createtrust and favor more customers

II Research paradigm / conceptual paradigm

2.7 Service quality

2.7.1 Service

It is hard to define exactly the definition of service which is valid for the whole

of the service sector Regarding to the various types of service (using a vendormachine, healthcare consultation, sending letter, air transport, computer maintenance,renting a car…), such attempts have always failed Therefore, some service definitions

of well know authors are presented to offer a new goods-services definition below:

"A service is any act or performance that one party can offer to another that isessentially intangible and does not result in ownership of anything Its production may

or may not be tied to a physical product." (Kotler, 1987)

"A service is an activity or series of activities of more or less intangible naturethat normally, but not necessarily, take place in interactions between the customer andservice employees and/or systems of the service provider, which are provided assolutions to customer problems." (Gronröos, 1990)

Service is special product as it certainly has unique characteristics:

 Intangibility: Unlike physical products, service cannot be heard, tasted, seen,

provided; therefore, the purchaser only search for sign of quality through theprice, brand name or review.

 Perishability: Service is considered very perishable as it cannot be stored or

preserved Take film ticket for example, it will lose value as soon as the moviebegins

 Inseparability: A service is inseparable from provider Service occur

continuously, which means the process of providing and receiving service iscarried out simultaneously and at the same time with the presence of thecustomer Therefore, the quality of service is difficult to predict due to it bases

on subjective opinion of customers

 Variability: Service quality depends on providers, time and location For

instances, the delicious of the dishes is not good if the chef give wrong spices.Hence, it is important for suppliers if they want to improve the service quality.Organizations can improve quality service by investing in staff training,standardization and implementation processes, and monitoring and measuringcustomer satisfaction regularly

2.7.2 Quality

Like service, quality is not a simple matter to define The definition can varydepending on the different products, manufacturers and customer’s need Juran (1998)defines quality as factors of products which meet customer requirements and thereforeprovide client satisfaction Quality also means “freedom from deficiencies – freedomfrom errors that require doing work over again (rework) or that result in field failures,customer dissatisfaction, customer claims, and so on” The important awareness is thatnone products or services totally satisfy all customers Therefore, to ensure the servicesare on the standard, the enterprise must control all stages from manufacturers todistribution Because, just one disappointment may might damage the whole process.Quality create the differentiations with competitors and help to gain trust from loyal

customers If the quality basically satisfies the needs, clients will continue to useproducts in the future.

2.7.3 Service quality assessment

It is not easy to give a complete definition of service quality because servicequality is intangible product and the customers only assess it after purchasing and usingthem Quality is rated not only on the result of the service but also on the wholeprocess Customer assess the service quality based on attitudes, subjective and theability to recognize

Because the service quality related to customer’s satisfactions and expectation

as well as their perception of the service, it is hard to assess Usually, there are threelevels of assessment of service quality:

 Good: when customers perceive the service beyond their expectation

 Satisfactory: when the service meets expectation

 Poor: when the service is below their expectation

The ultimate goal of all activities of the enterprises is to satisfy customers.Together with the gradually increasing higher demands, customers have moreopportunities to choose which company satisfied them the best, and they require betterservices, such as attitude of staff, fast inquiry response as well as modern equipment

The five-gap model is considered to be specific and detailed with identificationfive gaps that may cause customers to experience poor service quality This gapcompares between the customers’ expectation and reality and also take into account theservice provided, which identifies five gaps has been formulated by Parasuraman et al(1985, pp.41-50)

Gap 1: The gap between expectation of client and perception of management.

The basic point of this gap is that companies do not fully understand the necessarycharacteristics of their own organization’s service quality as well as service delivery to

Gap 2: The gap between perception of management and service quality

specification Even if management accurately perceive customer expectations there arestill chances of customer dissatisfaction that can be caused by the gap in planningquality of the service according to customer expectations

Gap 3: The gap between specification of quality and the delivery of service.

This happens when the staffs are unable to provide and meet the set service standard

Gap 4: The gap between the delivery of service and external communications.

This happens when the promotional campaign and advertisements do not meet reality,which will easily lose customers’ trust in the company image

Gap 5: The gap between perceived and expected service The service quality

assessment depends mostly on the fifth gap while this gap five is also affected by thefirst four gaps above If the customers do not feel any difference between theirexpectation and reality, that service would be rated excellent

Originally, the authors set out ten factors; however, it narrowed down to fivefactors: reliability, assurance, tangibles, empathy and responsiveness They are alsocalled as RATER Depending on the type of service quality measured, there will besome changes to the question and the addition of factors For example, the servicequality of banking sectors will be measured differently from logistics service quality.Therefore, qualitative research is very important to determine the model

The strength of this model is that the scale is available, just by changing severalquestions, the research is implemented And because this model is a general model, it isapplicable to most types of services.

However, it is noted that because this model is so popular, some lecturers arenot interested in this method That also means that other special models should beimplemented If applying new model structure research, it is better to combine it withother software However, this takes a lot of time to learn about the software, such asSEM, AMOS or SPSS

Parasuraman's research (1985) argues that service quality is the gap betweencustomer expectations of the service they are using and the actual perception of theservice they enjoy These researchers introduced 5 service quality factors Thequestions are designed to measure the above five factors in the model There are twoconcepts: the expected aspect and actual aspect of the service they are received Whenthe expected aspect is greater than the actual quality received, the quality of service iscalculated as low rate and via versus

Based on the Parasuraman definition of service quality and SERVQUAL model,the searcher assesses service quality including 25 variables of 5 components tomeasure the service quality as details in APPENDIXES 1

Reliability Factors

Reliability factor are the ability to implement what was promised

Assurance Factors

Assurance factors are the ability to create believe for customers throughcommunication (skills, expertise and knowledge)

• Does the behavior of staffs make customers trust?

• Do the employees have qualified expertise to solve all problems?

Empathy Factors

Empathy factors are the concern and the service of a company for eachcustomer

Tangibility Factors

Tangibility factors are the facilities, equipment to support services

According to the research of scientists, the ranking of the above criteria isranked as follows:

 Reliability – the most important factor (32%)

CHAPTER 3 RESEARCH METHODOLOGY

The purpose of this chapter is to explain in detail the research methods and themethodology implemented for this study The chapter will explain first of all the choice

of research approach, then the research design, as well as the advantages anddisadvantages of the research tools chosen This will be followed by a discussion ontheir ability to produce valid results, meeting the aims and objectives set by thisdissertation The chapter then goes on to discuss the sample size and the samplingstrategy applied by the author, and the data analysis methods which have been used Itconcludes with a brief discussion on the ethical considerations and limitations posed bythe research methodology, as well as problems encountered during the research

3.1 Research Approaches

This thesis mainly used the deductive research approach and the quantitativemethodology to discuss the air freight forwarding quality services of ACT Company

3.1.1 Deductive research approach

Deductive research method means “the reasoning from the particular to thegeneral If a causal relationship or link seems to be implied by a particular theory orcase example, it might be true in many cases A deductive design might test to see ifthis relationship or link did obtain on more general circumstances”

In terms of the defined research, air freight forwarding, and consolidation arealready one of the identified constructs in existing theories and literature That enablesthe researcher to formulate the test for the quality of ACT services throughquestionnaires, then analyze and make some suggestions to improve the quality.Therefore, choosing this approach to research the ideas mentioned in the literaturereview about consolidation services is an appropriate one

3.1.2 Quantitative methodology

According to Questionpro website, quantitative research gathers data to showstatistical, mathematical or computational techniques “Quantitative research gathers

information from existing and potential customers using sampling methods andsending out online surveys, online polls, questionnaires etc., the results of which can bedepicted in the form of numerical”

The data collected is explained the phenomenon, and it can be gathered throughsurvey This research is to collect the opinions of respondent, so choosing thequantitative method is a suitable one

3.2 Research design

The main aim of the research design is to convince that the chosen approach andresearch design will give the most appropriate results It includes enough details tosuggest some recommendations on the problem investigated, the theoretical framework

of a study, and its purpose to answer the core research questions

Generally, “a quantitative approach is appropriate when a researcher seeks tounderstand relationships between variables” (Creswell, 2013) “Besides, a qualitativestudy is appropriate when the goal of research is to explain a phenomenon by relying

on the perception of a person’s experience in a given situation” (Stake, 2010) In thisthesis, because the purpose of this study was to present the reality of air freightforwarding operation activities at ACT Logistics Company, quantitative methodologywas chosen as the most appropriate choice

The quantitative research methodology is chosen because it is suitable to answerthe questions and the purposes of the study The survey questionnaire is collected andanalyzed from only a few people that are representative of the entire group to assess thepublic opinion using sampling methods

3.3 Delimitation of the study

There are many logistics activities in the field of import- export Due to thelimitation of research capacity and the time of study, the thesis focuses only onanalyzing and evaluating importing the cargo, which have the direct flight and on Asia

Company However, the essay focuses only on flights and airlines where the cargo isalways shipped on daily Flight details and locations will be listed in the table below.

Table 3 1: The route from HAN with ASIA

(Source: ACT Planning Development Research, 2016)

3.4 Population, sample and sampling technique

3.4.1 Population of the study

The target population for this research is defined to include the logisticscompany and the airlines in Vietnam The customer of ACT Company is the logisticscompany – the agent that also has functions of ACT However, ACT is theintermediary between that logistics company and the airline ACT Logistics Companyco-operates with the airlines to define the best rate for each level There have beenseven rates that are defined by the airline as follows:

- 45, + 45, +100, +300, + 500, + 1000, +3000

In this thesis, the population comprised all logistics company that have abusiness relationship with ACT Company Therefore, it is easy to collect the data andwilling to participate in the study

3.4.2 Sample of the population

For some studies, the population may be small enough to warrant the inclusion

of all of them in the study But a study may entail a large population which cannot all

be studied

A sample in this study is, therefore, a small group of elements drawn through adefinite procedure from an accessible population The elements making up this sampleare those that are studied

The sample of the population of this study stood at 50 Logistics Company fromthe company’s customers and sales’ customers

3.4.3 Sampling Techniques

A sampling technique was used to select the respondents of the research Thesample was concentrated on the company’s customers and sales’ customers of ACTLogistics Company Selection customers was by collect the background information ofall ACT customers The sampling technique was employed to select 55 customers fromall the participants chosen to conduct the survey

3.5 Respondent of the study

The sample was drawn from a population of the logistics companies who havelong time business relationship with ACT Company All of ACT’s customers aremaybe the large and high reputation in logistics fields and their customers are also thelarge import – export companies in Vietnam and all over the world They have a huge

of cargo to be transported daily; however, sometimes, they just have a small package to

be delivered The characteristics of these commodities are small volume but need to beexpress transported That is the reason why that logistics company needs the third party

to be offered the reasonable rate

Some logistics companies were asked to respond the questionnaire via email tohelp them to fulfill the questionnaire and evaluate the reputation and quality of services

of ACT Company All the responses of the forwarders are recorded However, random

is conducted to evaluate the quality services of ACT Company

3.6 Research Instrument

Research instruments refer to the devices that are used to collect data such asquestionnaires, tests, interviews, etc In which, questionnaire is defined as “a method ofgathering information from respondents about attitude, knowledge, belief and feeling”.The instrument used was a researcher making a predetermined questionnaire checklist

to gather the customers’ feedback

Questionnaires

For the limitation of the research, the online questionnaire survey are designedand separated into two parts: respondent’s background information questions andrating scale questions

The questionnaire for background information from the companies consisted ofsix multiple choice questions, related to the information of the respondents This part ofthe questionnaire consisted of demographic questions, related to age, gender, andquestions related to the professional role of the participants, such as length of theirrelationship with ACT, exact position and the service usages

The second part of the questionnaires consist of the scale of rating to evaluatethe customer satisfaction of air freight forwarding service quality The questions areorganized into two groups: 25 rating scale questions about customer satisfaction fromlevel 1 to level 5 (from strongly dissatisfied to strongly satisfied) and 2 open-endedquestions

3.7 Data Gathering Procedures

About the questionnaire, the researcher use simple but easy questions in order tomake no time for customers to fill in After gathering data, the researcher collects it forchecking the score and to apply the statistical treatment to process data

Most of the communication with the participants took place via email Beforethat, the researcher collected the database of customers supplied by ACT Company Atfirst, the researcher conducted a set of questionnaire survey based on the five factors ofSERVQUAL model Then, sending this enquiry to the customer and ask for permission

to answer this questions For confidentiality, the Gmail of the customers are notdisclosed The questionnaires were distributed and completed in one month They werethen recorded and analyzed by the researcher The interviews were completed withinfour weeks

The draft of the questionnaire based on the observation and knowledge duringthe time working here During the preparation, the requirement in the designing ofgood data collection instrument was considered For instance, some questions are short– answers to collect the opinion of the respondents Open – ended options wereprovided to collect supportive comments related to the topics The questionnaire wasdesigned to gather information about the quality services of ACT Logistics Company

3.8 Statistical Treatment of Data

The gathered data are grouped, tabled and carefully organized into tables Theeasiest and fastest way of gathering information is through questionnaire In thisresearch, the data will be collected using questionnaire survey

Every question was rated on the scale as follows:

3.9 Limitations of Research Methodology

This methodology has several problems and challenges which the researcherencountered while conducting the research for this dissertation

The first limitation was recruiting the participants for this survey The creation

of the questionnaire survey took quite long time, and it take time to wait the feedback

of the customer Besides, the sample of this survey is not large enough to make aconclusion Thus, accessing to the participants and collecting to survey result of thisresearch was a major challenge

Another challenge of research methodology was the strict of time and cost,which determined the choice of more efficient method, such as the questionnaire,instead of more time consuming focus on other research types, such as face-to-faceinterview

In term of methodology chosen, there are several limitations which need to bementioned The first one is the fact that because of small sample and only a fewrespondents answer all the questions, the data collected and the findings made cannot

be extrapolated on a broader scale In other words, the conclusion might be not exact

3.10 Summary

In summary, the chapter give detail information about research approach andmethodology on this research Further explanation is provided on the survey to designthe sample of data The main propose of this chapter is to set out the research design totest whether the air freight forwarding services that ACT provides is suitable and goodenough for forwarders

This chapter defines the research methodology used for the research It discusses

on the methodology, quantitative methodology, survey design and specific approaches.Quantitative methodology is the main approach of this study In addition to that, itdefines the sample and sampling technique, the respondents of the study, the research

instrument, the data gathering procedures and the statistical treatment Deductiveapproach is also used to analysis the data and statistics and give the conclusion.

CHAPTER 4: RESULTS AND STATICTICS ANALYSIS

This chapter will analyze the detail information about the result from the survey.From the target 76 potential respondents, a total 55 responses were received, whichaccounts for 72.4% response rate for the survey Out of 76 respondents, 92%completed all the questions and 8% have not finished some of the questions Theresponses gather from survey have been listed and calculated by the researcher This