CHAPTER 2: DHB LOGISTICS CO.,LTD INSIGHTS OF MARKETING
2.6. Situation of business activities of the company
DHB Co., Ltd provides services in freight forwarding business to meet the diverse needs of customers. Below is a summary of the company's revenue and service rates from 2015 to the end of 2017
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Table 2: Types of services and company revenues (2013 - 2018)
Unit: Milion VND
Types of services
2013 2014 2015 2016 2017 2018
Value Ratio Value Ratio Value Ratio Value Ratio Value Ratio Value Ratio Customs
declaration 575.5 33.1% 658.3 33.6% 716.6 33.4% 762 33.1% 1010.3 33.8% 1123.5 33.0%
Packaging &
Warehousing and distributing
616.5 35.5% 718.8 36.7% 778.9 36.3% 816.3 35.5% 900.6 30.1% 1032.3 30.3%
International sea transportation
211.7 12.2% 220.7 11.3% 247.4 11.5% 280.2 12.2% 500.7 16.7% 380 11.2%
Transportation
by air 200.2 11.5% 227.5 11.6% 245.9 11.5% 265 11.5% 369.6 12.4% 335.9 9.9%
Domestic container transportation
56.8 3.3% 53.6 2.7% 67.9 3.2% 75.3 3.3% 110.3 3.7% 120.3 3.5%
Multi - modal
transportation 77.3 4.5% 79.2 4.0% 89.8 4.2% 102.3 4.5% 99.9 3.3% 167.7 4.9%
Total 1738.2 100% 1958.2 100% 2146.5 100% 2301.1 100% 2991.4 100% 3402.4 100%
Source: Authors' calculations based on financial statements
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Figure 5: Revenue of services (2013 - 2018)
Unit: Million VND
575.5
616.5
211.7 200.2
56.8 77.3
658.3
718.8
220.7 227.5
53.6 79.2
716.6
778.9
247.4 245.9
67.9 89.8
762
816.3
280.2 265
75.3 102.3
1010.3
900.6
500.7
369.6
110.3 99.9
1123.5
1032.3
380
335.9
120.3
167.7
0 200 400 600 800 1000 1200
Customs declaration Packaging & Warehousing and distributing
International sea transportation
Transportation by air Domestic container transportation
Multi - modal transportation 2013 2014 2015 2016 2017 2018
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Note: In general, the revenue from the company's services is uneven.
Revenue from Customs declaration sends the highest position, then Packaging &
Warehousing and distributing, the lowest is Multi - modal transportation. The reason for the highest turnover of customs declaration is that this is still a potential industry because there are many enterprises specializing in import and export business without knowledge about maritime law. Therefore, they often go to such service companies to ensure the process of delivery as well as receiving goods, minimizing unnecessary costs.
Customs clearance services bring big revenue to the company and account for a high rate of 33.1% in 2013, 33.6% in 2014, 33.4% in 2015, 33.11% in 2016, 33.77% in 2017, 33.02% in 2018. In 2017, it increased VND 248.3 million compared to 2016, the corresponding application increased by 26.4%. In 2018, it increased by 113, 2 million VND compared to 2017, corresponding to an increase of about 10.1%. It can be seen that the customs clearance still accounts for a large proportion and the revenue still increases every year but the growth rate decreases. The company needs to review the orientation for services and develop new strategies in the difficult economic situation and fierce competition today.
DHB also pays attention to Packaging & Warehousing and distributing.
The advantage of company is large storage areas which are located near the main intersection and near the river, so it is convenient for receiving and storing goods for customers. Currently, the company is acting as an import and distribution agent to store goods for many overseas agents, so it has contributed greatly to increasing revenue for the company. In 2017 increased by 84.3 million Dong compared to 2016, corresponding to an increase of 10.3%. In 2018 increased by 131.7 million compared to 2017, corresponding to an increase of 12.6%.
Warehouse rental services increased slightly in three years.
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Domestic container transport services are also interested and invested by the company. DHB is upgrading and buying more tractors and small trucks to meet the demand of domestic transportation. However, due to many factors, this industry's revenue tends to decrease, due to competitive prices, gasoline price increases, and traffic difficulty. Turnover rate in 2016-2017-2018 reached 12.18% - 16.74% - 11.17%. The company needs to take positive measures to improve its competitiveness.
2.6.2. Market structure of the company (2013 - 2018)
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Table 3: Market structure of the company (2013 - 2018)
Unit: Milion VND
Market
2013 2014 2015 2016 2017 2018
Value Ratio Value Ratio Value Ratio Value Ratio Value Ratio Value Ratio Domestic 984.6 56.64% 1095.6 55.95% 1180 54.97% 1202.1 52.24% 1320.4 44.14% 1400.1 41.15%
China 368.9 21.22% 412.3 21.06% 460.5 21.45% 510.3 22.18% 658.1 22.00% 768.2 22.58%
Korea 96.5 5.55% 123.5 6.31% 135.7 6.32% 152.2 6.61% 299.3 10.01% 388.2 11.41%
ASEAN 125.9 7.24% 136.3 6.96% 153.2 7.14% 197 8.56% 282.2 9.43% 350.5 10.30%
USA 55.1 3.17% 75.6 3.86% 80.3 3.74% 92.3 4.01% 171.2 5.72% 189.2 5.56%
Other
markets 107.2 6.17% 114.9 5.87% 136.8 6.37% 147.2 6.40% 260.2 8.70% 306.2 9.00%
Total 1738.2 100.00% 1958.2 100.00% 2146.5 100.00% 2301.1 100.00% 2991.4 100.00% 3402.4 100.00%
Source: Authors' calculations based on financial statements
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Figure 6: Market structure (2013 – 2018)
21% 57%
6%
7% 3% 6%
2013
Domestic China Korea
ASEAN USA Other markets
56%
21%
6%
7% 4% 6%
2014
Domestic China Korea
ASEAN USA Other markets
55%
22%
6%
7% 4% 6%
2015
Domestic China Korea
ASEAN USA Other markets
52%
22%
7%
9%
4% 6%
2016
Domestic China Korea
ASEAN USA Other markets
44%
22%
10%
9%
6% 9%
2017
Domestic China Korea
ASEAN USA Other markets
41%
23%
11%
10%
6%
9%
2018
Domestic China Korea
ASEAN USA Other markets
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Note: It can be seen that although the market value is increasing, the growth rate is decreasing. The development of existing markets is not good and uneven.
The domestic market always accounts for a large proportion of the total market value of the company, namely VND 1202.1 millon (52.24%) in 2016, 61320.4 (48.1%) in 2017, 1400.1 (41.15%) in 2018. In 2017, the value increased by VND 118.3 million (up 9.84%) compared to 2016, in 2018 it increased by VND 79.7 million (up 6.04%) compared to 2017. Although the domestic market still accounts for a large proportion, it has downtrend. This shows that the company is aiming to expand other markets, this is a good expression but the company also needs to pay attention to maintaining the domestic market with more incentives.
China also accounts for a significant proportion and little change in the total market value of 21.22% - 21.06% - 21.45% - 22.18% - 22.00% - 22.58%
in the 6 years 2013 - 2018. Compared to 2016, the value increased by VND 147.8 million (up 28.96%) in 2017. The year 2018 increased by VND 110.1 million (up 16.73%). China is a potential market with population and geographical distance near Vietnam so the company needs to pay attention to research and development of this market.
Korea is a small but promising market with a six-year increase rate of 5.55% - 6.32% - 6.31% - 6.61% - 10.01% -11.41%. In 2017, the value increased from 152.2 million VND to 299.3 million VND compared to 2016, equivalent to 147.1 million VND (up 96.65%). In 2018, compared to 2017, it increased by VND 88.9 million (up 29.07%). Currently DHB import and export to the market is growing very well, so the company should maintain positive expression.
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For ASEAN market, the value increased over the years 197.0 million in 2015, 282.2 million in 2017, 350.5 million in 2017. In 2016, it increased by 85.2 million Dong (up 43.25%) compared to 2016. In 2018, it increased by 68.3 million Dong. (increase by 24.20%) compared to 2017. This market growth rate is very high in 2017 (43.25%) and in 2018 reaches 24.20%. Because this is a market in the ASEAN region, the preferential import and export policies are very good so the company has been on the right track to rapidly develop this market.
The United States is a fast-growing market in 2016 but slowed down in 2018. The year 2017 increased by VND 78.9 million (85.48%) compared to 2016. In 2017, it increased only 18 million compared to 2016, equivalent to 10.51%. This is a bad sign that the company needs to review the business policy of this area.
Other markets (such as Thailand, India, Germany, New Zeland, etc.), while accounting for small values, are growing rapidly. In 2016 increased 113 million (up 76.77%) compared to 2016. In 2018, it increased by 46 million (up 17.68%). This is a bad sign that the company needs to review the business policy of this area.
2.6.3. Business results of the company (2013-2018)
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Table 4: Company's business results (2013-2018)
Source: Authors' calculations based on financial statements
Figure 7: Company's business results 2013-2018
Unit: Milion VND Targets
2013 2014 2015 2016 2017 2018
2014/2013 2015/2014 2016/2015 2017/2016 2018/2017
Absolute Relative Absolute Relative Absolute Relative Absolute Relative Absolute Relative
Revenue 1738.2 1958.2 2146.5 2301.1 2991.4 3402.4 220 12.66% 188.3 9.62% 154.6 7.20% 690.3 30.00% 411 13.70%
Cost 1482 1625 1709 1725.7 2310.1 2654.9 143 9.65% 84 5.17% 16.7 0.98% 584.4 33.86% 344.8 14.90%
Profit 256.2 333.2 437.5 575.4 681.3 747.5 77 30.05% 104.3 31.30% 137.9 31.52% 105.9 18.40% 66.2 9.70%
Unit: Milion VND
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1738.2
1482
256.2 1958.2
1625
333.2 2146.5
1709
437.5 2301.1
1725.7
575.4 2991.4
2310.1
681.3 3402.4
2654.9
747.5
0 500 1000 1500 2000 2500 3000 3500 4000
Revenue Cost Profit
2013 2014 2015 2016 2017 2018
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- Revenue: The company's revenue is increasing. In the 6 years from 2013 to 2018, revenue increased from VND1738.2 million to VND3402.4 million. In the year of 2016, it increased by VND 690.3 million (up 30%), particularly there was strong growth compared to the results of 2017. In 2018, revenue increased by VND 411 million (13.74%) compared to that in 2017. Although the revenue increased but the growth rate decreased was a bad expression.
- Cost: In 2017, the cost increased from VND 1725.7 million to VND 2310.1 million compared to that in 2016, equivalent to an increase of VND 584.4 million (up 33.9%). It can be seen that the company's cost is much larger in 2017 due to inappropriate cost management. The reason is partly due to inflation in the economy, besides, the company also needs to have policies to cut unnecessary expenses. From 2016-2018, the cost increased from VND 2310.1 million to VND 2654.9 million, equivalent to VND 344.8 million (up 14.9%). Costs have fallen more than the period 2013-2018 and lower than the reduction rate of revenue, which is a positive sign of cost cutting.
- Profit: In the period 2016-2017: Profit increased from VND 575.4 million to VND 681.3 million, about VND 105.9 million (corresponding to an increase of 18.4%). Profit in 2017 increased fairly high, this is a positive sign. In the period 2017-2018: Profit increased from VND 681.3 million to VND 747.5 million, equivalent to VND 66.2 million (up 9.7%). Although growth is quite high, but only about half of the period 2016-2017.
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In general, during the period 2013-2018 both revenue, cost and profit of DHB increased. But the growth rate of costs is faster than the rate of revenue and profit growth. Specifically, 2017 expenses increased by 1.13 times compared to revenue and 1.84 times compared to profit. In 2018 the cost increased by 1.08 times compared to the revenue and 1.53 times compared to profit. These show that business results are not good, the company need to cut costs.