Recommendation to improve freight forwarding procedure for imported goods in tnn logistics joint stock company

  • 44 trang
  • file .docx
-
MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING
VIETNAM MARITIME UNIVERSITY
STUDENT NAME: NGÔ QUỐC VIỆT
DISSERTATION
GLOBAL STUDIES AND MARITIME AFFAIRS
RECOMMENDATION TO IMPROVE FREIGHT
FORWARDING PROCEDURE FOR IMPORTED GOODS IN TNN
LOGISTICS JOINT STOCK COMPANY
HAI PHONG – 2015
MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING
VIETNAM MARITIME UNIVERSITY
STUDENT NAME: NGÔ QUỐC VIỆT
CLASS: GMA 02
DISSERTATION
GLOBAL STUDIES AND MARITIME AFFAIRS
RECOMMENDATION TO IMPROVE FREIGHT
FORWARDING PROCEDURE FOR IMPORTED GOODS IN TNN
LOGISTICS JOINT STOCK COMPANY
Supervisor: Ms. Pham Thi Yen
Division: Logistics
Faculty: Economics
HAI PHONG – 2015
Recommendation to improve freight forwarding procedure for imported goods in TNN Logistics
Joints Stock Company
PREFACE
Vietnam has been a member of WTO; this is a great opportunity for domestics
businesses to integrate to international environment and attract foreign investment.
This is also a challenge for companies to prove themselves in global background.
Beside advantages, they have to face the difficulties because of the severe
competition from foreign businesses as well as others inside Vietnam. Therefore, in
order to survive, companies need to enhance management ability so that they can
work out a long term strategy.
With the goal of understanding logistics environment in Vietnam, I choose the
topic: “The recommendations to improve freight forwarding procedure for
imported goods in TNN Logistics Joint Stock Company” with hope that I can
apply what I have learned into reality and obtain more experience, learn more
professional skills. In this dissertation, I focus on understanding the process of how
to import cargoes in Vietnam; what forwarders have to deliver goods to customers.
Customs clearance is a big step in the process with complicated steps. From that, I
can have better view and objective options about logistics in my country.
I declare that this report is my own unaided work. It has not been
submitted before.
If violated, I am solely responsible for and bear the punishments of the
Institution and University.
Student Name and Signature
Ngô Quốc Việt
i. Ngô Quốc Việt GMA 02 Page i
Recommendation to improve freight forwarding procedure for imported goods in TNN Logistics
Joints Stock Company
ACKNOWLEGEMENT
Firstly, I would like to express my sincere gratitude to my advisor Ms. Pham
Thi Yen for the continuous support of my dissertation and related research, for their
patience, motivation, and immense knowledge. Their guidance helped me in all the
time of research and writing of this thesis. I could not have imagined having a better
advisor and mentor for my dissertation.
Secondly, I would like to say thank you to all staff in TNN Logistics Company
those who have given me facilities to deepen my knowledge about logistics
industry. Thank to forwarders of company, I have gained my practical skills and
understanding about sea transport of Vietnam in general and logistics in Haiphong
in particular. This period of internship is very valuable for me to prepare myself in
the future.
i. Ngô Quốc Việt GMA 02 Page ii
Recommendation to improve freight forwarding procedure for imported goods in TNN Logistics
Joints Stock Company
TABLE OF CONTENTS
LIST OF ABBREVIATIONS..................................................................................................v
LIST OF TABLES..................................................................................................................vi
LIST OF FIGURES...............................................................................................................vii
INTRODUCTION....................................................................................................................1
CHAPTER 1: LITERATURE REVIEW..............................................................................2
1.1 Definition...............................................................................................................................2
1.1.1 Definition of freight forwarding...........................................................................................2
1.1.2 Definition of freight forwarder.............................................................................................2
1.2 Significance.................................................................................................................................3
1.3 Roles and Functions.....................................................................................................................3
1.4 Scope of operation.......................................................................................................................4
1.5 The rights and obligations of freight forwarder...........................................................................4
1.6 Benefits of freight forwarding to businesses................................................................................5
1.7 The factors affect freight forwarding activities of imported goods..............................................5
1.7.1 International background.....................................................................................................5
1.7.2 Macro- management mechanism of State.............................................................................6
1.7.3 The situation of domestic logistics........................................................................................6
1.7.4 Weather volatility.................................................................................................................7
1.7.5 Internal factors of company..................................................................................................7
CHAPTER 2: THE FREIGHT FORWARDING PROCEDURE FOR IMPORTED
GOODS.....................................................................................................................................9
2.1 Introduction about company........................................................................................................9
2.1.1 Company profile...................................................................................................................9
2.1.2 Business targets and business sector....................................................................................9
2.1.3 Company’s organizational structure..................................................................................11
2.1.4 Business results in 4th quarter 2015....................................................................................12
2.1.5 Development plan of company............................................................................................14
2.2 Freight forwarding procedure for imported goods.....................................................................16
2.3 Assessment of the freight forwarding procedure for imported goods in TNN Logistics Joint
Stock Company...............................................................................................................................23
2.3.1 Signing service contract.....................................................................................................23
2.3.2 The process of receiving documents from customer...........................................................24
2.3.3 The process of preparing documents..................................................................................24
2.3.4 The process of customs clearance......................................................................................24
2.3.5 The process of goods inspection.........................................................................................24
2.3.6 The seasonality of freight forwarding operation.................................................................25
2.3.7 Strengths.............................................................................................................................25
2.3.8 Weaknesses.........................................................................................................................26
i. Ngô Quốc Việt GMA 02 Page iii
Recommendation to improve freight forwarding procedure for imported goods in TNN Logistics
Joints Stock Company
CHAPTER 3: RECOMMENDATIONS TO IMPROVE FREIGHT FORWARDING
PROCEDURE FOR IMPORTED GOODS IN TNN LOGISTICS JOINT STOCK
COMPANY.............................................................................................................................27
3.1 Suggestions to improve freight forwarding procedure of company...........................................27
3.1.1 Creating coordination, close links between departments within company..........................27
3.1.2 Preparing imported documents..........................................................................................28
3.1.3 Improving service’s quality................................................................................................29
3.1.4 Training human resource to adapt new situation...............................................................29
3.2 Recommendations......................................................................................................................30
CONCLUSION.......................................................................................................................35
LIST OF REFERENCE........................................................................................................36
i. Ngô Quốc Việt GMA 02 Page iv
Recommendation to improve freight forwarding procedure for imported goods in TNN Logistics
Joints Stock Company
LIST OF ABBREVIATIONS
CFS Container Freight Station
ICD Inland Clearance Depot
D/O Delivery Order
OECD The Organization for Economic Co-operation and Development
APEC Asia-Pacific Economic Cooperation
ASEAN Association of Southeast Asian Nations
FCL Full Container Load
LCL Less Container Load
CFR Cost and Freight
CIF Cost, Insurance and Freight
i. Ngô Quốc Việt GMA 02 Page v
Recommendation to improve freight forwarding procedure for imported goods in TNN Logistics
Joints Stock Company
LIST OF TABLES
TABLE 1: Business result in 4th quarter, 2015............................................................13
i. Ngô Quốc Việt GMA 02 Page vi
Recommendation to improve freight forwarding procedure for imported goods in TNN Logistics
Joints Stock Company
LIST OF FIGURES
FIGURE 1: Company organization’s structure...........................................................11
FIGURE 2: Process of freight forwarding for imported goods...................................17
FIGURE 3: Process of customs clearance...................................................................19
i. Ngô Quốc Việt GMA 02 Page vii
Recommendation to improve freight forwarding procedure for imported goods in TNN Logistics
Joints Stock Company
INTRODUCTION
In order to build a strong and prosperous country in the context of
globalization, regionalization, international integration, we cannot overlook foreign
trade activities because it ensures the commodity circulation with friends around the
world; helps us effectively exploit internal and external potentials based on division
of labor and international specialization. However, when it comes to import and
export activities, we cannot ignore freight forwarding because they are inseparable
activities. The scale of import and export operation has been increasing in current
years; it is the main reason for the huge growth of forwarding actives, especially sea
freight forwarding in both width and depth. Besides, with 3000 km coastline and
many types of ports, Vietnam forwarding industry has been achieving significant
progresses. Quantity and value of cargoes through ports always account big
proportion of total value of international cargoes in Vietnam. Forwarding is the last
step but very important of commercial contracts. If it isn’t taken place in time, or
not logically, there will be stagnation, congestion which cause damage for both
seller and buyer. Realize the importance of forwarding, I applied for an internship at
TNN Logistics Joint Stock Company and write a dissertation with topic: The
recommendations to improve freight forwarding procedure for imported goods
in TNN Logistics Joint Stock Company
Because of the limitations in knowledge and experience, as well as the strict of
time, shortcomings are inevitable. I look forward to receiving the suggestion and
comments from lecturers.
ii. Ngô Quốc Việt GMA 02 Page 1
Recommendation to improve freight forwarding procedure for imported goods in TNN Logistics
Joints Stock Company
CHAPTER 1: LITERATURE REVIEW
1.1 Definition
1.1.1 Definition of freight forwarding
According to The International Federation of Freight Forwarders Associations
(FIATA), “Freight Forwarding Services means services of any kind relating to the
carriage, consolidation, storage, handling, packing or distribution of the goods as
well as ancillary and advisory services in connection therewith, including but not
limited to customs and fiscal matters, declaring the goods for official purposes,
procuring insurance of the goods and collecting or procuring payment or documents
relating to the goods.” According to 2005 Vietnam commercial law, freight
forwarding is commercial acts; forwarders receive cargoes from shippers, organize
transportation, warehouse, depot and related paperwork and services in order to
deliver cargoes to buyers under the mandate of shippers, transporters or other
forwarders.
In a brief way, freight forwarding is a set of operations related to the process
of transportation to deliver the goods from seller to buyer. Forwarders can do
services directly or through agency and hire services from the third partner.
1.1.2 Definition of freight forwarder
Freight forwarder is a firm or a person specializing in arranging storage and
shipping of merchandise on behalf of its/his shippers. It usually provides a full
range of services including: tracking inland transportation, preparation of shipping
and export document, warehousing, booking cargo space, negotiating freight
charges, freight consolidation, cargo insurance, and filing of insurance claims.
In the international business, transporting cargoes from seller to buyer usually
goes through more than one mode of transportation with documents of export,
import and other related papers. Therefore, forwarders appear with the mission of
arranging problems associated with procedures and modes of transportation in order
to deliver goods from a country to another quickly at low cost
According to 2005 commercial law, forwarder is defined as bellow:
Article 164: Person who’s working as freight forwarder is a businessman
having business certificate of freight forwarding services
ii. Ngô Quốc Việt GMA 02 Page 2
Recommendation to improve freight forwarding procedure for imported goods in TNN Logistics
Joints Stock Company
1.2 Significance
To make the social production develop efficiently, the ancient economists
worked out the idea of labor specialization. There must have a cooperative
relationship with each other through economic activities, especially the movement
of capital, labor and exchange of merchandise within regions and countries. From
that, nations can expand production, capabilities and consumption, and improve
people's lives. Freight forwarding is an important link in the process of reproduction
for transport industry in particular and import-export activities in general; making
commodity circulation worldwide, contributing to boost the production, improve the
quality and low down the costs.
Forwarding network is covering the globe with bustling activities. The
forwarding agencies together create networks in airports, sea port, cities… taking
responsibilities of a massive volume of imported-exported cargoes. The advent of
forwarders helps importers and exporters simply the issues they should deal with.
Forwarder firms are more specialized so the time of working will be shortened.
1.3 Roles and Functions
Freight forwarding activities of imported and exported cargoes are necessary
in the implementation of sales contract between exporter and importer; it helps two
sides meet the demand of punctuality under provisions in contract, and makes the
customs procedure become faster.
Today, the commercial trade between nations is more and more developing in
greater quantity and diversity, and Vietnam is on the way to integrate the world
economy. There are more and more contracts inside and outside country are signed,
pushing up the economy, bringing the foreign currency sources for national budget
and the survival of the companies.
To perform well and fulfill contract, we can’t but mention the role of
forwarding companies. Along with the growth of importing and exporting trade,
forwarding is becoming more important and the number of forwarders is increasing
that makes the goods circulation easier. However, forwarding is quite complicated;
it requires forwarders to have specialized knowledge and dynamic agility. If a
forwarder is weak at profession, the shipment can be delayed and there will be
difficulties such as slow delivery. This can make businesses or shippers lack
materials for manufacture, no goods to sell or have to pay the fee for inventory…
ii. Ngô Quốc Việt GMA 02 Page 3
Recommendation to improve freight forwarding procedure for imported goods in TNN Logistics
Joints Stock Company
1.4 Scope of operation
Unless consignor or consignee conduct recieving, delivering and other related
procedures by themsleves, forwarder wil be on behalf of them do all. Freight
forwarders can provide their services through foreign agencies, affiliates or throught
subcontractors.
 On behalf of exporter
As the request of consignor, freight forwarder will:
- Choose the route, method of trasport, transportor
- Recieve cargoes and supply related document
- Check all terms in letter of credit, as well as all regulations of State for
cargoes delivery in exporting country, importing country and transit country
- Package cargoes properly, conviniently to transport to importing country
- Arrange storage if necesssary
- Weighing the goods
- Buy insurance if being requested
- Transport to station, port and conduct customs clearance
- Arrange vehicles if necesssary
- Monitor the trasportation through the raltionship with trasnsportor and the
agency in foreign country
- Recognition of losses and help consignor complain
 On behalf of importer
As the request of consignee, forwarder will:
- Receive cargoes and check documents relating transportation
- Pay freight rates
- Conduct customs declearation and related procedures
- Arrange storage and transit if necesssary
- Delivery of goods
- Help consignee deal with complains
1.5 The rights and obligations of freight forwarder
ii. Ngô Quốc Việt GMA 02 Page 4
Recommendation to improve freight forwarding procedure for imported goods in TNN Logistics
Joints Stock Company
Article 167, Commercial law stipulates that forwarder has following rights and
obligations:
- Fully implement obligations under the contract
- During the performance of contracts, if any plausible reason for the benefit
of customers, it can be done different from the customer's instructions, but must
immediately notify the customer
- After signing the contract, if cannot perform or arrange time to perform
obligations for customers, must inform customers to ask for more instructions.
- Must perform duties in a reasonable time if the contract is not mentioned
about time of performance of obligations to customers.
- The forwarder is enjoyed remuneration and other reasonable earnings
1.6 Benefits of freight forwarding to businesses
Using freight forwarding services brings businesses the follow benefits:
- Reduce risks for shipment during transportation period. Forwarders often
have experience and knowledge in hire means of transport so they know which
shipping line is reliable with reasonable price and specific schedule.
- Save time and extra cost for shipper. Using forwarding service will reduce
the personnel for business. On the other hand, because of being specialize in this
field so forwarder usually carries out processes fast; avoid delay in progress of
complementing contracts.
- Forwarder can be on behalf of businesses to do complaints procedure to
carriers or insurance company about cargos damage and losses.
- Forwarders can also help businesses fill in the documents as well as tax code
properly so that tax they have to pay is at minimum.
1.7 The factors affect freight forwarding activities of imported goods
1.7.1 International background
These are delivery and receive the international cargoes so it is strongly
influenced by international situation. Just a small change in the import-export
policies in a nation which is in relationship with company can increase or decrease
the volume of cargoes. Recently, there are movements in the world, conflict in
South China Sea, the escalated tension between China and Japan… which have
huge impacts on good circulation
ii. Ngô Quốc Việt GMA 02 Page 5
Recommendation to improve freight forwarding procedure for imported goods in TNN Logistics
Joints Stock Company
In sea freight forwarding, the most important is situation liberalizing maritime
transport services in WTO. In multilateral cooperation, maritime transport is a
sensitive industry and draws attention of many countries; however, the process of
liberalizing this field encounters many difficulties because some nations counter
this proposal, they want to apply own law in order to protect domestic maritime
industry.
In fact, the business environment for freight forwarding is being improved and
significantly liberalized. The main reason is the supports for liberalization is still
happening in international cooperation forums such as The Organization for
Economic Co-operation and Development (OECD), Asia-Pacific Economic
Cooperation (APEC), or ASEAN.
1.7.2 Macro- management mechanism of State
This is a very important factor to forwarding activities. If government has
open policies, it will promote the development of forwarding industry.
When it comes to macro-management mechanism, we cannot just mention
policies about sea transport or forwarding. Mechanism includes all polices relating
import and export activities. Vietnamese government has issued many policies
facilitating import and export activities such as applying 0% tax for exports,
innovating customs law, VAT law and so on.
Besides, the policy to restrict import such as applying high tax for imports
makes the volume of imports decrease so the forwarding activities for imported
shipment also go down.
About customs policy, in the past, customs officers would help shippers to
fulfill customs declaration. Now that responsibility belongs to shippers; this makes
the customs declaring service develop while forwarders are competent in this work
so the status of forwarder is increasing.
1.7.3 The situation of domestic logistics
Although just appeared in Vietnam since the commodity economy was born,
especially the trade between Vietnam and other countries in the world was
developing; logistics has been gradually contributing to the economic development
of country. According to the Ministry of Industry and Trade, logistics in Vietnam
accounts for 15-20% of GDP (about 12 billion US dollars) - a huge sum of money
and attaching to whole circulation, distribution of the economy. If just taking a look
at transport – the most important stage of logistics, it accounts for 40-60% of total
ii. Ngô Quốc Việt GMA 02 Page 6
Recommendation to improve freight forwarding procedure for imported goods in TNN Logistics
Joints Stock Company
cost; this is a huge service market. The growth rate of this industry in recent years is
20-25% in average and now there are about 800 companies working in logistics at
different scales. The potential development of logistic services is even greater when
Vietnam trade turnover is considered to have the fastest growth rate in the region to
almost 18-20% per year and a turnover of almost 130 billion USD
According to the Vietnam Maritime Administration, the most important sector
in logistics is shipping transport. There are up to 90% of Vietnam's exports and
imports are transported by sea. However, domestic enterprises can only meet 18%;
the remaining belongs to foreign companies.
Recently, Vietnam has been developing third party logistics and achieved
initial success. Those who do domestic 3PL understands every road, every bridge,
every clause of law in Vietnam, and have been succeeded as Vietranstimex,
Vinatrans, Sotrans, Vietfracht and so on.
1.7.4 Weather volatility
Freight forwarding activities relate transport and conduct services to make
sure shipment is transported from shippers to receiver so it is clearly influenced by
weather conditions. During the period of time on sea, if sea is calm, cargoes will be
much safety secured. In contrast, if there are storms, earthquake or tsunami, the risk
of being damaged is very high.
- Not only natural disasters, may be just the change in temperature between
two regions can affect shipment, for instance, commodity is vaporized, there need to
be special methods to storage. That heightens the costs quit much.
1.7.5 Internal factors of company
Company’s operations are upon capital sources, facilities, organizational
regime, company’s policies, personnel’s qualification. These are critical factor to
business result.
For example, a company which has spacious facilities, modern means of
transport will firstly creates consumers’ trust; moreover, it can meet the higher and
higher demand of forwarding. Besides, a company with high capital ability has
huge advantage in business
A part from that, company’s policies also influences forwarding operations. In
sea transport, the number of stable customers is quite high, if company has
ii. Ngô Quốc Việt GMA 02 Page 7
Recommendation to improve freight forwarding procedure for imported goods in TNN Logistics
Joints Stock Company
incentives to customers, they are not only loyal to company but staff also benefit
during negotiation and signing contracts.
Another important factor is personnel qualification. They need to have
knowledge about law, international commercial procedures and experience. Just a
small piece of carelessness can cause an unexpected conflict.
ii. Ngô Quốc Việt GMA 02 Page 8
Recommendation to improve freight forwarding procedure for imported goods in TNN Logistics
Joints Stock Company
CHAPTER 2: THE FREIGHT FORWARDING
PROCEDURE FOR IMPORTED GOODS
2.1 Introduction about company
2.1.1 Company profile
Company name: TNN Logistics Joint Stock Company
Headquarter: Room 602, 6th Floor, DG tower, 15 Tran Phu, Luong
KhanhThien District, Ngo Quyen, Haiphong.
Telephone number: 031 3652 145
Fax: 031 3652 147
Email: [email protected]
Office in Hanoi: Room 5, AC Tower, Duy Tân Street, Cầu Giấy District, Hà
Nội
Tel: 043.7955114
Fax: 043.7956987
Office in Ho Chi Minh: 18B Lưu Trọng Lư, Tân Thuận Đông Street, 7 th
District, Ho Chi Minh
Tel/Fax: 08 222 97 694
TNN logistics joint-stock company is founded in 2003 in Haiphong; it is a
member of International Federation of Freight Forwarders Association (FIATA),
Vietnam Freight Forwarders Association (VIFFAS) and Vietnam Chamber of
Commerce and Industry (VCCI). At present, TNN has become popular in the
market and is regarded as one of successful companies in logistics.
2.1.2 Business targets and business sector
- Business target:
TNN Logistics Joint Stock Company is founded to efficiently use the
resources for investment and business activities in maritime fields in order to
maximize profits legally; create stable jobs for employees; increase dividends for
ii. Ngô Quốc Việt GMA 02 Page 9
Recommendation to improve freight forwarding procedure for imported goods in TNN Logistics
Joints Stock Company
shareholders; contribute to State budget and develop company more successfully.
The development goals of TNN is to become a credible Vietnam logistics company
in ASEAN with mission towards development, providing effective logistics
solutions and helpful to customers; commit to shared interests between customers,
employees, shareholders and the community; as well as be a business
establishments based on the quality of human resources and provide the resources
and training opportunities for the community. With the application of advanced
software technology and quality management system ISO 9001-2008 in the
management along with experienced, well-trained staff, company is proud to offer
standard service with reasonable prices specializing in providing integrated logistics
solutions package for multinational corporations to serve customers quickly and
professionally in accordance with the motto "Make the best of what we have."
Over the years, TNN Logistics Joint Stock Company has been constantly
growing in all aspects of the business sector and the scope of activities with the
Office in Hanoi and Ho Chi Minh City.
Business sector:
a) Logistics services mainly include:
- Warehousing services and goods storage
- Transport services and Customs Clearance
- Other auxiliary services including activities of receiving, storing and
managing information related to the transportation and storage of goods
b) Logistics services related transportation:
- Trucking services
- Cargo tallying service
c) Other related logistics services:
- Management and distribution of paint
- Commercial retail services including inventory management, gathering,
aggregation, classification of goods, distribution and delivery
- Other transport supporting services
ii. Ngô Quốc Việt GMA 02 Page 10
Recommendation to improve freight forwarding procedure for imported goods in TNN Logistics
Joints Stock Company
Company can register more businesses under the resolution of the Board of
directors and the scope of law
2.1.3 Company’s organizational structure
B G r e a t
o A s s e
aa mm rr bb ll yy
d o f
So h a r e
h f o l d e r
M s
a
n
a
g
e r
s
Figure 1:Company organization’s structure
Source: Collected by Author
a) Marketing Department is responsible for the following functions:
- Conduct marketing research and process information, learn about the
customers
- Set up market profile and revenue forecast
- Survey the behavior of potential customers
- Segment the market, identify targets, position the brand
- Product development, product improvements to the properties that the
market wants
b) Operation Department takes responsibilities of:
- Take over the missions from general coordinator, assign them to
fieldworkers.
ii. Ngô Quốc Việt GMA 02 Page 11