Air cargo freight forwarding activities of delta international limited company at noi bai airport and solutions to improve delivery process

ACADEMY OF POLICY AND DEVELOPMENT INTERNATIONAL SCHOOL OF ECONOMICS AND FINANCE GRADUATE THESIS “Aircargo freight forwarding activities of Delta International Limited Company at Noi Bai airport and solutions to improve delivery process” Academic supervisor: MA Pham Thanh Ha Student: Nguyen Thi Hoang Yen Student’s code: 5073106036 Class: KTĐNCLC7A Hanoi, June 2020 2020 ACADEMY OF POLICY AND DEVELOPMENT INTERNATIONAL SCHOOL OF ECONOMICS AND FINANCE GRADUATE THESIS “Aircargo freight forwarding activities of Delta International Limited Company at Noi Bai airport and solutions to improve delivery process” Academic supervisor: MA Pham Thanh Ha Student: Nguyen Thi Hoang Yen Student’s code: 5073106036 Class: KTĐNCLC7A Hanoi, June 2020 ACKNOWLEDGMENT For over two months from January till March 2020, I did an internship at Delta international co., Ltd, a logistics company which serves a large number of customers and gains a high reputation both domestically and internationally This internship project is a part of my 4-year bachelor program which I conduct at Academy of Policy and Development In Delta, I worked an assignment which responds for handling the import and export activities and this really suits for my major in external economics Through the assignment, I did not only gain a lot of knowledgement but more importantly, I also had a great chance to sharpen my skills in a professional working environment, and other benefits that are far beyond what I could learn in a normal project Not less important than the im-export operation that I have learnt is the communication skills that I have been trained and practiced through giving presentations, discussing with the supervisors, experts in the fields and other staffs within and outside the company I am very appreciated to Ms Vo Thi Thai, my supervisor at Delta Co Ms Thai gave me very in-time valuable instructions and put me in contact with experts in the field who gave me extensive guidance regarding many practical issues I also would like to express my gratitude to MA Pham Thanh Ha, professor at Foreign Trade University, for her permission to be my academic supervisor and advisor and more importantly for her enthusiastic encouragements and precious instructions to help me complete this thesis She gave me in-time feedback on my research and helped me to organize logical structure and even timetable Last but not least, I would like to thank Delta international co., Ltd and Academy of Policy and Development for giving me this great oppoturnity in which I have developed myself both academically, professionally and socially INTRODUCTION The reasons to choose the topic Foreign trade plays a very important role in the era of globalization of economies Participation in integration and expansion of international trade relations has been an indispensable trend of nations Imports allow the addition of products that cannot be produced domestically or inefficiently produced Exports help boost domestic production and increase foreign exchange earnings Implementing this activity, each country can expand, dominate the regional market and reach the world market Besides, Logistics is a business field that contributes greatly in import and export activities of each country With a series of current trade agreements, Vietnam faces many opportunities to export goods to the world, so the development prospect of this industry is huge More specifically, Logistics contributes greatly to the growth of import and export business activities of enterprises Along with other economic sectors, the transportation industry in general and the aviation transport in particular have made great strides The domestic air transport network is covered, many international routes are expanded and upgraded As a result, the volume of import and export goods by air has increased significantly, trade turnover between Vietnam and other countries is increasing rapidly, the market is expanding, and international trade is growing Although import-export and forwarding of goods by air is very small, but due to the superiority of transport speed and safety, air transport plays a very important role… Recognizing the importance of air freight forwarding for the development of the country's economy in general and in Delta in particular, through internship to learn the business of forwarding services by air at Delta, combined with the specialized knowledge accumulated during the study process at the Academy of Policy and Development, I have confidently chosen the topic “Aircargo international freight forwarding activities of Delta International Limited Company at Noi Bai airport and solutions to improve delivery process” Research objectives and tasks 2.1 Research objectives The project was conducted to evaluate the status as well as propose recommendations to improve the difficulties that the company is facing in air freight forwarding activities in Noi Bai of Delta International Co., Ltd 2.2 Research tasks To achieve the above research goals, I focus on solving the following main tasks: - Give the summary of some theories related to freight forwarding logistics activities in general and by air in particular - Introduct about Delta International limited company - Find out and assess the status of air freight forwarding activities of Delta Company in Noi Bai airport - Proposing some recommendations to eliminate existing difficulties in air freight forwarding activities of Delta Company Object and scope of the research 3.1 Object Aircargo international freight forwarding activities of Delta International Limited Company at Noi Bai airport 3.2 Scope of the research The study was conducted at Hanoi head office of Delta International Co., Ltd and Noi Bai International Airport from January to March 15, 2020 Research methods - Practical research: in the research process, I choose the method of practical impact on the object of the study to clarify the nature from which to follow observations and make field trips to the cargo handling areas at NCTS and ALS warehouses to draw lessons as well as experience on the rules of the research problem - Primary data collection: during the internship in the company by observing business activities and personal consultation, experience of employees with specific expertise in each field to collect more information to clarify the status of the delivery and delivery process at the company - Secondary data collection: In addition to the method of observing business activities, I also collected documents available at the company (document room, accounting department, sales room, field room ) and other information sources Information on the company's website - Methods of data analysis: The collecting data are analyzed and systematized by Excel software to calculate suitable criteria for the topic analysis Thesis’s structure This thesis consists of main chapters: CHAPTER I – OVERVIEW OF THEORETICAL BASIS OF FREIGHT FORWARDING ACTIVITIES IN GENERAL AND BY AIR IN PARTICULAR CHAPTER II - INTRODUCTION ABOUT DELTA INTERNATIONAL CO., LTD CHAPTER III - CURRENT SITUATION OF INTERNATIONAL FREIGHT FORWARDING ACTIVITIES OF DELTA INTERNATIONAL CO., LTD AT NOI BAI DURING THE LAST YEARS CHAPTER IV – GENERAL ASSESSMENT ABOUT INTERNATIONAL FREIGHT FORWARDING ACTIVITIES OF DELTA INTERNATIONAL CO., LTD AT NOI BAI DURING THE LAST YEARS CHAPTER V - PROPOSED SOLUTIONS CHAPTER I – OVERVIEW OF THEORETICAL BASIS OF FREIGHT FORWARDING ACTIVITIES IN GENERAL AND BY AIR IN PARTICULAR 1.1 General overview of freight forwarding 1.1.1 Definition of forwarder and forwarder 1.1.1.1 Definition of delivery In international trade, the movement of goods between countries has led to imports and exports being transported across borders Therefore, for the goods to reach the buyer, the goods have to go through a series of stages such as: import and export customs clearance, preparation of documents, hiring of means of transport, loading and unloading onto means All these jobs are called forwarding Freight forwarding service is a commercial activity whereby traders organize one or more jobs, including receipt of goods, transportation, warehousing, warehousing, customs clearance, other paperwork, and packaging, marking, delivery or other services related to the goods as agreed upon with the customer for remuneration (Article 233, Commercial Law 2005) Previously, the delivery could have been done by the shipper (the exporter), the consignee (importer) or the carrier However, along with the development of international trade, the division of international labor with the increasing level and scope of specialization, forwarding has also gradually been specialized, by organizations and businesses Professional forwarding team conducted and forwarding has officially become a profession In short: "Forwarding service is a service related to the transport process to organize the transport of goods from the place of receipt to the place of delivery" 1.1.1.2 Definition of forwarder Forwarder is the person who performs forwarding services as entrusted by the customer or the carrier In other words, dealers of forwarding services are called forwarders The forwarder may be the owner of the goods (when he personally performs the forwarding of his goods), the ship owner (when the ship owner acts on behalf of the goods owner), loading company or warehouse or professional forwarder or any other person providing such services According to Vietnamese Commercial Law article 164, freight forwarders are traders who have certificates of goods delivery service business registration (Article 164, Vietnamese Commercial Law 2005) According to the International Federation of International Freight Forwarders Association FIATA: “The forwarder is a person who takes care of the goods being carried under a consignment contract and acts in the interests of the consignor who is not the person himself carriage The forwarder also undertakes all the work related to the delivery contract such as preservation, transshipment storage, customs clearance, inspection” 1.1.2 Scope of forwarding services Except for a number of cases where the shipper / consignee himself wants to participate in any of the procedures and documents on his own, normally, the forwarder on his behalf takes care of the process of transporting goods through the stages The forwarder can the service directly or through the subcontractors or agents they hire, the forwarder also uses their agents abroad These services include: 1.1.2.1 On behalf of the shipper (exporter) • Choose the appropriate route, mode of transport and carrier, sav e freight with the selected carrier 10  Import permit issued by the Ministry of Industry and Trade for trade import goods (must have an import-export contract and L / C application letter)  Import permits granted by customs offices for goods imported in the form of non-commercial goods (gifts, sample goods and exhibition goods); If they are representative offices, they must apply for a permit at the Hanoi Customs Department; other types of companies at Noi Bai border gate customs - Bring the AWB, power of attorney to the handling room for imported goods of Noi Bai International Airport, complete the customs procedures, pay the demurrage, detention, storage charge (if any), get the goods delivery note and go to the warehouse to pick up the goods - After taking the goods out of the warehouse, operations staff proceeded to tally the shipment:  Checking process for shipments returned by carton:  Proceed to check the number and take photos of the goods  Check IRR  Tallying process for BUP: Goods in BUP form, with PE wrapped and mesh covered, net with seals under BUP BUP has the same BUP number on the bill and declaration (eg: PMC 71775QR) Ops staff recorded a clip from the time when BUP was pulled from the warehouse door to the location of BUP, took pictures of BUP under the witness of the parties (If BUP has signs of abnormalities requiring the warehouse to make extraordinary records) Unusual cases include:  BUP torn PE: Torn the outside net, the net is coincident, not covered  BUP has boxes that not covered by PE, appears wet condition  BUP has cartons that not covered by PE, torn cartons 43 Figure 2.1 Goods in BUP form - Then the operation department contacts Noi Bai border gate customs to register the declaration (3 copies) and ask for goods inspection The registration also takes place under two mechanisms: commercial and non-commercial in order to legalize imported goods and determine the extent of tax obligations to the state - For commercial goods: according to the tax table prescribed by the state - For non-commercial goods: Based on the type of goods to apply different tax rates, namely:  Diplomatic goods: may be entitled to exemption;  Fair and exhibition goods: there must be additionally temporary import/reexport procedures;  Personal liquidation goods or goods of agencies or business units: according to the tax table prescribed for each kind of goods 44 - Inviting Customs to check or bring to personal luggage inspection team (for individual goods) - After comparing the actual goods with the declaration on the customs declaration, the checking customs office will affix the stamp to certify that the goods have been inspected and pass this declaration to the tax team for calculating import tax When the tax payment procedure is completed, the freight forwarder will keep one copy and complete the process of receiving the goods at the airport - Operation staff of the import department proceeded to hire vehicles to deliver the goods directly to the guests' place Customers sign and reimburse the service charges, other related charges that the forwarder has advanced such as taxes, storage, - The CS staff informs the agent of the delivery situation to the customer (proof of delivery) and closes the file 3.2.2.2.2 Documentation accompanied by shipment - Airway bill; - Letter of attorney for Delta company; - Import customs declaration; - Import license 45 CHAPTER IV – GENERAL INTERNATIONAL FREGHT ASSESSMENT ABOUT FORWARDING ACTIVITIES OF DELTA INTERNATONAL CO., LTD AT NOI BAI DURING THE LAST THREE YEARS 4.1 Advantages In the market mechanism, Delta undertook a lot of domestic and foreign forwarding services from the first years of establishment The company has been the agent for many foreign firms, so Delta has a long experience in freight forwarding in general and air freight forwarding in particular The company has the following advantages: - Modern technical facilities, equivalent to the large forwarding companies in the world; - Staff team of skilled and experienced; - Have a very good relationship with carriers; - Having many longtime partners, many branches and representative offices form a vast network It can be said that with its experience, Delta has always been one of the leading companies in the field of freight forwarding and logistics Over the years, Delta has continuously improved, especially training a team of highly specialized and knowledgeable employees In addition, Delta is constantly expanding its agent system domestically and internationally 4.2 Disadvantages Besides the advantages gained, Delta also has its own difficulties Working with Delta's regular customer companies is a plus, but it is a downside The 46 company mostly focuses on working with old customers, exploiting new customers from old customers, so it has not yet focused on marketing activities to find new customers Although the revenue from old customers is stable, if the company does not implement strong customer search activities through channels or marketing activities, the scale of business expansion will take a long time Delta's staffs have good professional skills, but the number of employees at the Hanoi branch is still small, so sometimes the workload is overloaded, processing the process takes more time Because of the small number of employees, each employee will undertake many tasks at the same time, leading to cases of process errors, information confusion between documents causing many professional problems in freight forwarding tasks Foreign companies and joint ventures have a much better advantage in finance and human resource than Delta as well as most other companies in transportation and freight forwarding field: - They have the financial strength, so they can invest in modern equipment, state of the art facilities, to improve the efficiency of forwarding activities; - With a vast number of agents and affiliates around the world, they can acquire the major customer source without spending so much time searching and marketing - They have had experts with professional qualifications, international certification in the field of logistics, long-term experience, and especially they have had a great reputation in the logistics market … Because of these reasons, in order to survive and develop, most forwarding companies in Vietnam, including Delta, have to cooperate and act as their agents to receive commissions at a negotiated rate … In addition, private companies such as Delta have to mobilize capital by themselves and receive very little support from the state When a force majeure 47 event occurs, the damage of customers will be compensated by the company itself The state does not intervene economically, only intervenes legally while in the same case in state companies, the state will take responsibility for compensation Therefore, for large shipments or high value shipments, customers often look to state-owned companies 4.3 Opportunity In the economic integration time, it is normal to exchange, trade and trade goods abroad Therefore, the transport of goods by air also evolved Specifically, most recently Malaysian cargo airline has opened a flight route to Vietnam In particular, in the coming years, the demand for goods transport in Vietnam will increase when large corporations such as Samsung and Canon expand production, the demand for import and export of goods into Vietnam is huge Therefore, Vietnam should have its own fleet of freight, or it will lose opportunities to foreign firms Indeed, this is indeed a very valuable opportunity for Vietnam's aviation industry to develop in a new direction: integration for mutual development Facing such opportunities will be a challenge for Vietnam but it is also an important and indispensable step for the long-term economic development of our country Delta International Co., Ltd can also take advantage of this opportunity to open more services such as transportation, export goods, etc On November 15, 2019, in Ho Chi Minh City, VietJetAir Cargo Joint Stock Company launched and announced its air cargo operations throughout VietJetAir's flight network, both domestically and internationally In addition to transporting cargo on VietJetAir passenger aircraft for domestic and international routes, VietJetAir Cargo will have special flights for cargo transportation domestic and international 48 According to economic experts, the volume of goods transported by air in Vietnam is not much but accounts for 25% of the total export value of the country Because, most of Vietnam's export products are electronics, garments, The strong development of import-export and logistics industry will be the premise for Delta Co., Ltd to transform and take advantage of strengths to bring the best forwarding services to customers in the future 4.4 Challenges When Vietnam is open for trade, there are many big challenges besides opportunities Foreign transport companies will expand their investment in Vietnam, they have large capital and operating costs of foreign companies in Vietnam are also lower than domestic companies, so businesses operating in the field of logistics will have to compete very fiercely with international rivals Delta International Co., Ltd, in particular, will also have to try their best, must find competitive advantages to be able to survive and develop in the logistics market Besides foreign logistics enterprises, Delta International Co., Ltd has to compete with domestic logistics enterprises The logistics industry is growing, so the business of domestic enterprises is also much more quality and professional Competitive pressure from both domestic and foreign countries will be a big challenge for Delta Although the laws on logistics have been better adjusted and reformed, there are still many shortcomings in customs administrative procedures Customs procedures in Vietnam still have to go through many steps with many papers, which will lead to limitations such as information confusion, costly and time consuming This makes the process of freight forwarding must go through many steps, extending the delivery process Delta Co., Ltd also faces this common 49 challenge without any solutions to limit it The company will have to shorten other steps, train its staff to handle operations faster to ensure the delivery quality and be able to compete with other competitors in the industry The deteriorating transport infrastructure in Vietnam is also a challenge for Delta International Co., Ltd The location of the warehouse system is another challenge for forwarding companies in general and Delta International Co., Ltd in particular The distance between the airport and the warehouse is far away Traffic situation in Hanoi is at an alarming rate because of frequent traffic jams and traffic jams that last every day of the day This affects the process of transporting goods, causing delays and loss of time, leading to the quality of the delivery process is also reduced Besides, currently all customer information and all product information are stored on the internet Delta Company does not have a thorough security system, so in case of being infected with a virus or being played badly by the opponent, the possibility of information leakage is very high, causing many bad problems for the company and distrusting customers This risk not only makes the company lose credibility in the market but also causes economic losses to the company 50 CHAPTER V - PROPOSED SOLUTIONS 5.1 Development orientation of the company to 2025 The freight forwarding industry is booming and growing, to keep pace with the industry's growth as well as having enough potential to compete with other forwarding companies, management and key personnel have set out some development directions of the company in the next years: Firstly, regularly assess work performance, positive and negative points to learn from experience and improve the delivery process A good, accurate and quick process will help the company complete the order in high quality and create customer trust Secondly, to train professional staff both in terms of expertise, knowledge and skills Because employees are the most valuable resource to help the company grow and succeed Thirdly, expand relationships to find new customers and turn new customers into repeat customers From there, the company will have more orders and opportunities to expand its business Fourthly, improve and equipped necessary facilities in organizing freight forwarding to improve service quality 5.2 Strengthen market research and marketing activities If Delta International Co., Ltd wants to improve the prestige and quality of forwarding services, it is necessary to develop reasonable and right company development strategies The company needs to research the market to identify the needs of existing customers Not only that, the company should also learn about competitors in the logistics industry, from foreign competitors to domestic competitors to devise competitive measures and strategies 51 Because the marketing activities of Delta International Co., Ltd are limited, the company should promote marketing activities so that people know the company more and find new customers Delta International Co., Ltd has carried out many sales activities to reach customers but it has not been much effective Therefore, the company must combine sales and marketing activities to optimize customer search activities The company can use digital marketing tools, marketing on internet newspapers, paper newspapers, to promote the company's image Moreover, the company can conduct sales activities by email, by phone or send employees to the company to introduce the service If these solutions are applied simultaneously and properly, the number of customers of the company will increase 5.3 Complete customer service - Upgrade infrastructure to provide customers with the best facilities, diversify service options to suit customer needs; - Training human resources more professionally, to provide friendly, thoughtful, accurate and efficient services; - Listen to the customers' feedbacks to improve the incomplete services and promote the perfect services 5.4 Apply flexible freight policy At present, Delta International Co., Ltd mainly focuses on old customers and exploits new customers from existing ones Therefore, in order to maintain a good relationship with old customers, the company should have preferential policies for customers who have used Delta services Besides, the company should also formulate a reasonable discount policy for existing customers when they introduce new customers to the company 52 5.5 Strengthen human training activities In the future, Delta International Co., Ltd will have more new customers, which means that the volume of goods is increasing as well as the workload is increasing However, the number of employees at the company is still small, so it may not be possible to undertake all the work, affect the quality of service and may lose both new customers and new customers Therefore, the company must devise a plan to recruit more employees to ensure the work schedule as well as ensure the accuracy of the delivery process In addition, when recruiting more employees, the company must organize regular training and regular supervision to help employees get used to the job and not make mistakes Not only new employees, but the company must also design sharing sessions, providing knowledge to existing employees Because human resources are the most valuable assets of the company, the company needs to implement the reward regime for each employee and excellent employees in the quarter and year to motivate employees to work and increase the engagement bundles, tributes of employees to the company 5.6 Building and perfecting the warehouse system The number of customers and the quantity of imported goods in Hanoi City is growing, but Delta International Co., Ltd only has only a few warehouses in the North In my opinion, Delta Company should invest to build more warehouses in Hanoi city to ensure the number of imported goods as well as minimize the time to transport goods between Noi Bai airport and warehouse in Hanoi 5.7 Apply the progress of information technology in the freight forwarding task Information technology is currently on the rise, the 4.0 revolution is also becoming popular Delta International Co., Ltd wants to improve the quality of forwarding services, it is necessary to invest and apply modern advanced technologies to the steps in the process of forwarding goods For example, tracking 53 the goods to notify customers, the company can apply a management system between the company, where images are automatically saved and sent to customers, reducing work time This, focus manpower for the harder work to improve service quality 5.8 Minimize and attempt to address errors and risks during the freight forwarding process When carrying out the procedures for making documents in delivery, errors are often occurred, so company employees must spend time and effort to perform this step, ensuring the information between documents is accurate, coincide with each other The company must minimize errors because it will lead to the risk of penalties, costs and affect the entire process To this step in an optimal way, the company should assign some employees to perform together, check the documents and declarations, then this person can help others detect errors to increase accuracy in the task The transportation system in Vietnam, especially in the Hanoi city is often congested, so when shipping often takes more time, goods arrive later than planned, affecting other delivery procedures In order to deal with this risk relatively, the company should require the transporter to reserve additional shipping time, which can tackle by avoiding transporting during the rush hour The risk of customer information security may be due to inadequate security system of the company or employees not paying attention, working personal tasks, unnecessary internet access during working hours Therefore, in order to ensure the confidentiality of information and avoid disclosure of information that discredit the company to its customers, the company must have strict staff management policies The company must manage employees' working time, use tracking software to know what employees are doing, and the right job 54 The company should develop clear regulations and policies when employees violate In addition, the company should also use computer software with high security and copyright to optimize the security of information 55 CONCLUSION Air freight forwarding is a new field, but there is always a lot of potential in our country This activity only develops when foreign trade activities grow In order to fully exploit this potential area, forwarding companies in general and Delta International Co., Ltd in particular need to make more efforts in advising customers on the benefits of air cargo transport for the high-value goods, fresh goods, dangerous goods, to not only well exploit air transport in our country but also facilitate foreign trade activities to develop more Because foreign trade is always an economic sector that is put on the top of the integration trend, which is the key to the economic development of a country, especially for our country today, when the economy still has a trade deficit, boosting exports to meet import demands for accelerating the process of industrialization - modernization of the country, especially in the context that our country has become the 150th member of the world trade organization - WTO, play a crucial role Many foreign businesses will invest in Vietnam, foreign airlines will set up flights from Vietnam, this is also an opportunity and challenge for Delta companies as well as domestic businesses operating in the freight forwarding Although the training process at Delta International Co., Ltd is not long, it helped me realize many things not only about professional knowledge but also one of the first experiences in a professional working environment The internship helped me to cultivate both teamwork and independence skills, office computer skills, more foreign language terms related to my specialty, the ability to communicate and build relationships with everyone around me, these are essential items for me as well as other students after graduation 56 57 ... OF POLICY AND DEVELOPMENT INTERNATIONAL SCHOOL OF ECONOMICS AND FINANCE GRADUATE THESIS “Aircargo freight forwarding activities of Delta International Limited Company at Noi Bai airport and solutions. .. status of air freight forwarding activities of Delta Company in Noi Bai airport - Proposing some recommendations to eliminate existing difficulties in air freight forwarding activities of Delta Company. .. Delta Company Object and scope of the research 3.1 Object Aircargo international freight forwarding activities of Delta International Limited Company at Noi Bai airport 3.2 Scope of the research The