Recommendations to improve cfs warehouse operation at vietnam container shipping joint stock company green port
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MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING
VIETNAM MARITIME UNIVERSITY
STUDENT NAME: PHAM THI THUY ANH
DISSERTATION
GLOBAL STUDIES AND MARITIME AFFAIRS
RECOMMENDATIONS TO IMPROVE CFS WAREHOUSE
OPERATION AT VIETNAM CONTAINER SHIPPING JOINT
STOCK COMPANY - GREEN PORT
HAI PHONG – 2015
MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING
VIETNAM MARITIME UNIVERSITY
STUDENT NAME: PHAM THI THUY ANH
CLASS: GMA02
DISSERTATION
GLOBAL STUDIES AND MARITIME AFFAIRS
RECOMMENDATIONS TO IMPROVE CFS WAREHOUSE
OPERATION AT VIETNAM CONTAINER SHIPPING JOINT
STOCK COMPANY - GREEN PORT
Superviser : Doan Trong Hieu
Division : International Economics
Faculty : Economics
HAI PHONG – 2015
Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
PREFACE
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
Pham Thi Thuy Anh
Pham Thi Thuy Anh – GMA02 Page i
Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
ACKNOWLEGEMENT
Firstly, I would like to express my sincere gratitude to my advisor M.S Doan Trong
Hieu for the continuous support of my dissertation and related research, for his
patience, motivation, and immense knowledge. His 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 study.
Pham Thi Thuy Anh – GMA02 Page ii
Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
TABLE OF CONTENTS
PREFACE........................................................................................................................i
ACKNOWLEGEMENT................................................................................................ii
TABLE OF CONTENTS..............................................................................................iii
LIST OF ABBREVIATIONS........................................................................................v
LIST OF TABLES........................................................................................................vi
LIST OF FIGURES......................................................................................................vii
INTRODUCTION..........................................................................................................1
CHAPTER I: LITERATURE REVIEW........................................................................3
1.1 Introduction about CFS.........................................................................................3
1.1.1 Definition.......................................................................................................3
1.1.2 Role of CFS....................................................................................................3
1.1.3 Types of goods at the CFS.............................................................................5
1.1.4 Services provided in the CFS.........................................................................5
1.2 Regulations related to CFS....................................................................................6
1.2.1 Conditions to establish a CFS....................................................................6
1.2.2 Rights and responsibilities of CFS owners................................................7
1.2.3 Responsibilities of customs authorities..........................................................8
1.3 CFS performance measurement............................................................................9
CHAPTER II: SITUATION OF CFS WAREHOUSE AT GREEN PORT.................12
2.1 Introduction about Green Port.............................................................................12
2.1.1 History..........................................................................................................13
2.1.2 Functions......................................................................................................13
2.1.3 Terminal Layout...........................................................................................14
2.1.4 Organizational structure...............................................................................15
2.2 Introduction about CFS warehouse at Greenport................................................17
2.2.1 CFS Area......................................................................................................17
Pham Thi Thuy Anh – GMA02 Page iii
Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
2.2.2 Equipment and Facility................................................................................18
2.2.3 Organizational Chart....................................................................................18
2.3 CFS warehouse operating activities....................................................................20
2.3.1 Export consolidation operation....................................................................20
2.3.2 Import consolidation operation....................................................................26
2.3.3 Performance indicators of Green Port’s CFS...............................................31
CHAPTER III: RECOMMENDATIONS TO IMPROVE CFS WAREHOUSE
OPERATION AT GREENPORT.................................................................................34
3.1 Evaluation on the Green Port’s CFS...................................................................34
3.1.1 Evaluation the mathematical indicators.......................................................34
3.1.2 Evaluation the non-mathematical indicators................................................35
3.2 Recommendation to company.............................................................................38
3.2.1 Recommendation on increase storage and handling capacity......................38
3.2.2 Recommendation on the infrastructure and equipment................................41
3.2.3 Recommendation on human factor..............................................................42
3.2.4 Recommendations on service.......................................................................43
CONCLUSION............................................................................................................45
REFERENCES.............................................................................................................46
APPENDICES..............................................................................................................48
Pham Thi Thuy Anh – GMA02 Page iv
Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
LIST OF ABBREVIATIONS
CFS Container Freight Station
LCL Less Than Container Load
FCL Full Container Load
CY Container Yard
B/L Bill of Lading
D/O Delivery Order
CPL Container Packing Plan
THC Terminal Handling Charge
ECUSS Electronic Custom Software
WMS Warehouse Management System
Pham Thi Thuy Anh – GMA02 Page v
Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
LIST OF TABLES
Table 1: Green Port Terminal Layout...........................................................................14
Table 2: Equipment at the CFS.....................................................................................18
Table 3: The Number and Qualitification of CSF Employees.....................................19
Pham Thi Thuy Anh – GMA02 Page vi
Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
LIST OF FIGURES
Figure 1: CFS Activies According to the Flow of Goods..............................................5
Figure 2: Map of Green Port Location.........................................................................13
Figure 3: General Terminal Layout of Green Port.......................................................14
Figure 4: Green Port’s Organizational Structure..........................................................15
Figure 5: Warehouse Organizational Chart..................................................................19
Figure 6: Export Consolidation Operation Process......................................................20
Figure 7: The Illustration of Stacking Pallet Racking System at the CFS...................23
Figure 8: Import Consolidation Operation Process......................................................26
Figure 9: Cargo Volume through CFS at Green Port from 2011 to Sep.2015.............31
Figure 10: Comparing Selective Pallet Racking with Double Pallet Racking.............39
Figure 11: Requirements of Using Handling Equipments at the CFS..........................40
Pham Thi Thuy Anh – GMA02 Page vii
Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
INTRODUCTION
Thanks to the helpful location, Vietnam has a long sea border line. Under the
globalization, Vietnam maritime industry has been developed rapidly. According to
the data of Vietnam Marine Administration (Vinamarine) in 2014, Vietnam has 44
seaports with the cargo throughput of 370.3 million tons in 2014. The cargo volume
has grown by 8.1 percent from 2009 to 2014 of 8.1 percent. In which the container
volume increased by 16.7 percent to achieve 10.2 million TEUs in 2014. The
container throughput is estimated to increase with the rate of 8 to 9 percent annually
until 2020.
With the development of the national economy, Vietnam ports in general and
Northern ports in particular are expected to have many potentials to develop shipping
industry. One of the important ports contributing to the growth of this industry is
Green Port.
Green Port is the subsidiary of Vietnam Container Shipping Cooperation (Viconship).
Green Port is operated from Sept. 2004, mainly exploit containerized cargo. Green
Port provides a variety of services, from ocean shipping services to inland transport.
One of such is CFS services that I researched in this paper.
Necessity
CFS is customs area for loading and unloading containerized cargo. CFS plays an
essential part in the flow of exporting and importing goods. In the growing trend of
containerized service, CFS is estimated to be an important factor in the development
of maritime industry in the next years.
So, in two months of internship, with a wish to study the CFS operation activities, I
have chosen this topic: "Recommendations to improve CFS operation at Green
Port". This research will give an insight to the CFS activities at Green Port. And from
that, give proper solutions to increase the development of company.
Research Object
This study is conducted to study the CFS warehouse operation at Green Port and from
that evaluate the situation as well as find the possible ways to improve the operation in
the CFS at Green Port.
Pham Thi Thuy Anh – GMA02 Page viii
Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
Research Scope
This dissertation is the study of the CFS warehouse operation at Green Port which I
had witnessed during my internship from August to Octorber 2015
Methodology of the research
For study, this dissertation is gathered information from both primary and secondary
sources. From primary source, information is gathered by: visiting CFS warehouse at
Green Port and learn information about the CFS operation at Green Port; observing
the activities in managing CFS warehouse. From secondary source, information is
found and gathered in documents related to CFS warehouse operation, especially the
exported and imported goods process; dissertations, journals, books related to CFS
warehouse operation, services and activities in CFS warehouse.
Limitation of the research
During the process of studying this topic, there are some limitations and hinderances
in conducting the paper. Firstly, studying and evaluating the CFS operation of a
particular company need an amount of time. Due to the time limitation, this report is
conducted with the urgency. Information is gathered mostly by the process of
observation and studying in the appointed time. Therefore, it may lack some
information. Secondly, there are some problems in observing the real process of
operating CFS warehouse at Green Port. Because this report is conducted in the busy
time of the company, it is not easy to supervise CFS activities and collect data.
Besides, some information about the company is kept in secret for security.
Research Findings
This dissertation provides the understanding of CFS operation, studying the services
and activities at CFS warehouse, especially export and import activities and giving out
some recommendations to improve the CFS warehouse operation.
Structure of the research
Chapter I: Literature Review
Chapter II: Situation of CFS warehouse operation at Green Port
Chapter III: Recommendations to improve CFS warehouse operation at Green Port
Pham Thi Thuy Anh – GMA02 Page ix
Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
CHAPTER I: LITERATURE REVIEW
1.1 Introduction about CFS
1.1.1 Definition
CFS is the abbreviations for Container Freight Station. According to Business
Dictionary, CFS is a port facility for loading and unloading cargo containers from
ships and to ships.
Another definition of CFS is that CFS is a designated facility to consolidate or
consolidate freight shipments and such shipments are staged between “transport legs”.
CFS is used to transport containerized cargo, so it usually located to near an ocean,
port, or airport where such cargo is transported to and from.
According to Article 51, Circular 128/2013/TT-BTC, goods put into the CFS includes:
Imported goods which put into the CFS are goods that have been not completed
customs procedure. And they are still under the supervision and management of the
customs authority.
Exported goods which put into the CFS are goods that have been completed customs
procedure or registered the customs declaration at the sub-department of customs
outside the checkpoint area. However, the real verification is carried out at the CFS.
Goods in the CFS shall be kept no more than 90 days from the day they are put into
CFS. After 90 days, sub-departments of customs shall ask the CFS owner to move
such goods out of CFS, or treat them as abandoned, lost, mistaken, overdue goods
according to Article 45 of Law on Customs.
1.1.2 Role of CFS
Firstly, CFS helps good owners through LCL shipping method, reduce cost and utilize
the capacity of containers. Transporting cargo through container by sea, although
convent, needs a lot of fees. For the best choice of moving goods through the sea,
many shippers strive for loading full containers (FCL - full container loads). But, for
the shippers or goods owners whose goods are not able to stuff full container, to save
money and to utilize the capacity of containers, they have chosen to merge their
shipments and loaded together into containers. Such options are called LCL container.
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Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
LCL shipping is the best options for delivering cargo that below the typical weight at
which are able to be fully stuffed into containers. Nowadays, LCL is often chosen
among the small cargo owners. This raised a matter. It needs a place to helps goods
owners bring their shipments, merge and then stuff into container to send to the
delivering destination. Also at the receiving destination, it needs a place at which
containers is de-stuffed, retail shipments are stored and then separated shipments is
sent to the separated consignees. Such types of place to perform two aforementioned
acts is CFS. CFS is operated under the supervision of customs officers.
Thus, CFS is a warehouse at which the shipping company deal with export and import
cargo. Export cargo is received and stored at the Where they are sorted, consolidated
stuffed into export containers and delivered to destination. Meanwhile, import
container which arrive from ships to CFS is de-stuffed. Import cargoes is take out of
the containers for sorting and delivery to consignees later.
CFS performs two main functions which are to collect and stuff LCL exported cargoes
into containers for exporting to ships and to store LCL imported cargoes which are
unloaded from multiple-owner containers and then delivery to different consignees.
CFS has also an important role in the ocean containerized freight, warehousing
services and port operation. CFS is an indispensable part of a modern container port. It
helps shippers utilize capacity of the container therefore reducing transport costs. Each
shipper is not needed to bear full container fees. Container delivering free is shared
among shippers. Moreover, CFS also helps cargo delivery and receiving process safer
and more comfortable.
Secondly, CFS helps shipping company quickly free goods at port, reduce port
congestion and promote export and import goods transportation. CFS is an extended
arm of the port. When containers are transported from ships into CY of the port,
import and export goods are kept until completed their examination and clearance. For
better utilize space and existing infrastructure, cargoes at port are needed to be
evacuated as soon as possible. Imported goods shifted from the CY of the port to the
CFS can help reduce port congestion. CFS is in charge of clearing goods, warehousing
and transporting cargoes from port to the shipper’s destination. CFS is an important
point in the trading export and import cargo process and helps CY of the port reducing
time of storing.
1.1.3 Types of goods at the CFS
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Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
All LCL goods which are not prohibited from exporting or importing, does not affect
the environmental sanitation and fire protecting regulation are allowed to be carried
out export/import procedure at the CFS
All foreign goods that are qualified to be carried out exporting procedure and putted
into CFS must be inspected. Good owners register at the office or border gate of the
provincial customs departments and such office, border gate will appoint their
inspectors to check cargo at the CFS. Imported goods in the CFS are inspected, tallied
and confirmed by the customs inspectors before taking out of CFS. Exported goods
are supervised by the customs authorities when loading to the ships.
1.1.4 Services provided in the CFS
CFS operation is the process of exploitation imported and exported goods from the
port to the CFS warehouse and from the CFS warehouse to the customer destination,
ensuring the integrity of goods in quantity and quality during the operation, storage
and preserving cargo which is stacked at the CFS.
Warehouse operation activities is divided into two main services, which are import
goods operation and export goods operation.
For exported goods, the activities inside CFS are: receiving, storing, packaging.
Sometimes, goods in transit can be divide or combine with exported containers or
Vietnam’s exported goods in the CFS.
For imported goods, imported goods are either be repacked and divided according to
import procedure or be combined with other shipments to be exported to a third
country. (Article 51, Circular 128/2013/TT-BTC)
Classified in the flow of goods in the CFS, CFS activities includes:
Receivi
ng Storage Packing
Put- Picking Shippin
away g
FIGURE 1: CFS Activies According to the Flow of Goods
Pham Thi Thuy Anh – GMA02 Page xii
Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
Beside the main services, in the process of exploiting goods, some CFS also have
value add services, such as:
+ Checking label code;
+ Labeling;
+ Classifying;
+ Repacking
1.2 Regulations related to CFS
Since the ocean container freight has formed, modern container ports has borne along
with the establishment of CFS. CFS is located within the port area. but, the demand
for CFS services has increased dramatically. LCL shipping services is needed more
and more. CFS warehouses in the ports are not enough to meet the customers' needs
and market demands. so, now there are many CFS warehouses outside border gate
was established. However, there are general provisions for all CFS whether located
inside or outside border gate that all of import and export cargoes in the CFS are under
the supervision, inspection and management of the customs, especially customs
department in charge of CFS.
1.2.1 Conditions to establish a CFS
To set up CFS, company must adhere to the following conditions:
- CFS is established in the following areas:
+ Seaports, international civil airport, domestic port of export and import goods,
road gate border, international railway station
+ Industrial zone, hi-tech industrial zone, non-tariff zone, and other areas as
prescribed by law.
- CFS warehouse must has an area of at least 1000m2, not include external
ground and auxiliary facilities
- Ensuring the working conditions for customs authorities such as having an
office building, having place for goods inspecting, etc.
- CFS must have fences separated to surrounding area, equipped with CCTV
systems
- Goods going in and going out CFS must be managed by the computer systems
and be connected with the monitoring system of customs officers.
- Having decision to establish CFS
Pham Thi Thuy Anh – GMA02 Page xiii
Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
Companies or enterprises established under the rules of law, had warehousing license
import and export licenses, had experience, capacity and reliability in the field of
logistics, had permission to use the planned warehousing areas, had storage systems
which separating from the surrounding area, had separated entrance gate, had enough
equipment, vehicles and other necessary conditions to make sure safety for goods and
human at the CFS and convenience for the inspection and supervision by customs
authorities are able to establish and run CFS warehouse.
General Department of Customs give CFS license by receiving document, checking
and reviewing the place want to get CFS license. Documents needed to submit when
applying CFS license are:
- An application for establishing CFS
- Decision to establish CFS
- Specialized license for operating warehouse and trading export/import goods
- Permission to use CFS location.
- CFS site plan.
- Fire Safety Certificate
1.2.2 Rights and responsibilities of CFS owners
a) Rights of CFS owners
- Goods owner transfers ownership of goods for CFS operators to pack, repack,
repair, store goods
- CFS operators have the right to consolidate, deconsolidate multiple-owner’s
shipments in one container, arrange and store shipments in the warehouse.
b) Responsibilities of CFS owners
- Fully implementing the provisions of the government about export/import
goods through CFS, ensuring cargo safety during the process of handling and
storing, following regulations of environmental sanitation and fire prevention.
- Import and export goods at the CFS needs to be carried out export/import
procedures. Export and import cargoes should be classified in two separate
zones and have site plans to examine. Especially area for export cargoes must
be fenced into two areas for distinguishing goods that are finished customs
procedures and goods customs that are not finished procedures. On each
Pham Thi Thuy Anh – GMA02 Page xiv
Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
shipment must have the name of the ship, voyage, day in CFS or day out CFS,
name of consignees, marks of goods.
- CFS must have sufficient equipment for handling and packing cargoes, have
adequate lighting and office for relevant authorities to work. CFS owners are
responsible for proving areas and facilities for customs authorities to inspect
cargoes and supervise the management of CFS.
- CFS must have experienced staff that specialize in freight forwarding business
and have IT knowledge to manage CFS and ensure the relations among ship -
ship agent - freight forwarder - port and other agencies.
- CFS must have bookkeeping system to check and track goods out/in the CFS.
- Staff replacement or staff changes must be notified to the customs authorities
by documents.
- Time allows to work at CFS is 8 hours per day and it must be publicized at the
CFS. In case, CFS want to work overtime, it must have the consent of the
customs authorities.
- CFS owner has responsibility to sum up and report to customs authorities about
the inventory situation and the details of each inventory shipment. Each 3
months, CFS operators must report to the customs officers about the situation
of goods inside the CFS and the business activities of company. Each 6
months, CFS must prepare a reports to liquidate unwanted goods.
1.2.3 Responsibilities of customs authorities
Each CFS that is given operating licenses is monitored by customs authorities. In
keeping with the pattern of each port, each warehouse, customs authorities in charge
of CFS is often arranged into a team under the customs border gate, under the
supervision of warehousing. Each CFS often has from one to two customs officers
depending on the performance of each CFS and requirements, conditions at the certain
period. Main responsibilities of customs authorities in charge of CFS include:
- Supervising the process of receiving, delivering or storing export/import goods
at CFS and other related activities at the CFS
- Organizing goods inspection, sealing containers even when warehouse has
none cargo.
- Escorting import containers from the border gate to the CFS and export
container from the warehouse to the border gate to load to the ship, supervising
Pham Thi Thuy Anh – GMA02 Page xv
Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
the process of packing goods into container and repacking container,
monitoring the process of putting cargo in to the CFS.
- Examining closely receiving and delivering cargo process, through which
detect and prevent the wrong actions, smuggling attempts and trade fraud.
- Supervising the delivery and receive goods process between CFS and
consignees.
- Summing up about data of import and export goods and reporting data
periodically to customs department.
- Building the good relationships with CFS owners and good owners.
- Following customs requirements and completing works well.
1.3 CFS performance measurement
Warehouse performance is the state of operating warehouse. And the way of
evaluating the warehouse performance is warehouse performance measurement.
According to Neely, performance measurement is the process of quantifying the
efficiency and effectiveness of an activity. Performance measurement is taken to find
whether the warehouse is operated efficiently. If not, it helps to show the causes
bringing to poor performance and find proper solutions.
Warehouse operation do well or worst depend on a variety of factors or also called
performance indicators. Indicators is found to calculate and compare with the
expected values. If the results are worst, poor performance is shown.
There are several theories to decide the warehouse performance indicators. In the
research “proposed solutions to impove the efficency of production and business in
CFS warehouse at Chua Ve terminal” of Nguyen Duc Trung, there are some often
used factors in evaluating the warehouse operating activities:
a. Cargo throughput: is the total volume of goods going through warehouse in a
period (usually a year). For CFS warehouse, cargo throughput can be
calculated by total import and export cargo that CFS operators handled in a
certain time.
This indicator reflects the total number of cargo going through warehouse, if the
output of goods is going higher by years, it will show the development of the
warehouse, and vice versa
Pham Thi Thuy Anh – GMA02 Page xvi
Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
b. Warehouse capacity: is the total volume of goods can be stored in the
warehouse.
This indicator shows the warehouse capacity, or the maximum number of cargo stored
in warehouse. The higher the capacity index, the higher capacity of storage, and vice
versa. However, capacity depends on many other factors such as the way of arranging
of goods, the choice of pallet racking.
c. Warehouse storage rate: is the ratio between the volume of goods through
warehouse and the total volume of goods through port.
∝=
∑ Qw
∑Qp
In which: Q w is the volume of goods through warehouse
Q p is the volume of goods through port.
This indicator shows relationship between warehouse and port.
d. Warehouse turnover time: is the ratio between total warehouse volume of
goods going through warehouse and the warehouse capacity in a specific time
(usually in one year)
n=
∑ Qw
C
In which: Q w is the volume of goods through warehouse
C: is the capacity of warehouse
This indicator reflects the number of times the warehouse reaches it maximum storage
capacity. The higher indicator, the higher warehouse productivity using higher and
vice versa.
e. Average volume of goods through warehouse per day:
q w=
∑ Qw
t
In which: Q w is the volume of goods through warehouse
Pham Thi Thuy Anh – GMA02 Page xvii
Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
t is the time warehouse run in a year
t=T w −T s
In which: T w is the number of days in a year (365 days)
T s is the number of days that stop working due to weather
Besides, Colson and Dorigo in their report also offer a list of decision criteria to
evaluate warehouse performance. Their chosen indicators consist of a variety factors
that can be grouped into the following categories:
- Location: geographical distance to highway connection, train, waterways
- Infrastructure and facilities: storage surface and volume, separation of storage
areas, possibility for temperature control, control for temperature humidity,
ventilation, offices on site, use of technology (RFID/Bar-coding), modem
connection, handling equipment
- Service: quality of service, cost of service, customer services, certification (ISO
9001/9002, SQAS, HACCP), assistance with customs.
Also, in the research of Autry and Daugherty, efficiency of warehouse operation has
relation with the personnel of warehouse. The management of human resources, the
working environment and worker satisfaction is also one of value to evaluate the
performance of warehouse.
In conclusion, warehouse operation can be evaluated by the factors of quality,
location, infrastructure, service, human resources.
Pham Thi Thuy Anh – GMA02 Page xviii
VIETNAM MARITIME UNIVERSITY
STUDENT NAME: PHAM THI THUY ANH
DISSERTATION
GLOBAL STUDIES AND MARITIME AFFAIRS
RECOMMENDATIONS TO IMPROVE CFS WAREHOUSE
OPERATION AT VIETNAM CONTAINER SHIPPING JOINT
STOCK COMPANY - GREEN PORT
HAI PHONG – 2015
MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING
VIETNAM MARITIME UNIVERSITY
STUDENT NAME: PHAM THI THUY ANH
CLASS: GMA02
DISSERTATION
GLOBAL STUDIES AND MARITIME AFFAIRS
RECOMMENDATIONS TO IMPROVE CFS WAREHOUSE
OPERATION AT VIETNAM CONTAINER SHIPPING JOINT
STOCK COMPANY - GREEN PORT
Superviser : Doan Trong Hieu
Division : International Economics
Faculty : Economics
HAI PHONG – 2015
Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
PREFACE
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
Pham Thi Thuy Anh
Pham Thi Thuy Anh – GMA02 Page i
Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
ACKNOWLEGEMENT
Firstly, I would like to express my sincere gratitude to my advisor M.S Doan Trong
Hieu for the continuous support of my dissertation and related research, for his
patience, motivation, and immense knowledge. His 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 study.
Pham Thi Thuy Anh – GMA02 Page ii
Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
TABLE OF CONTENTS
PREFACE........................................................................................................................i
ACKNOWLEGEMENT................................................................................................ii
TABLE OF CONTENTS..............................................................................................iii
LIST OF ABBREVIATIONS........................................................................................v
LIST OF TABLES........................................................................................................vi
LIST OF FIGURES......................................................................................................vii
INTRODUCTION..........................................................................................................1
CHAPTER I: LITERATURE REVIEW........................................................................3
1.1 Introduction about CFS.........................................................................................3
1.1.1 Definition.......................................................................................................3
1.1.2 Role of CFS....................................................................................................3
1.1.3 Types of goods at the CFS.............................................................................5
1.1.4 Services provided in the CFS.........................................................................5
1.2 Regulations related to CFS....................................................................................6
1.2.1 Conditions to establish a CFS....................................................................6
1.2.2 Rights and responsibilities of CFS owners................................................7
1.2.3 Responsibilities of customs authorities..........................................................8
1.3 CFS performance measurement............................................................................9
CHAPTER II: SITUATION OF CFS WAREHOUSE AT GREEN PORT.................12
2.1 Introduction about Green Port.............................................................................12
2.1.1 History..........................................................................................................13
2.1.2 Functions......................................................................................................13
2.1.3 Terminal Layout...........................................................................................14
2.1.4 Organizational structure...............................................................................15
2.2 Introduction about CFS warehouse at Greenport................................................17
2.2.1 CFS Area......................................................................................................17
Pham Thi Thuy Anh – GMA02 Page iii
Recommendations to improve CFS warehouse operation at Vietnam Container
Shipping Joint Stock Company - Green Port
2.2.2 Equipment and Facility................................................................................18
2.2.3 Organizational Chart....................................................................................18
2.3 CFS warehouse operating activities....................................................................20
2.3.1 Export consolidation operation....................................................................20
2.3.2 Import consolidation operation....................................................................26
2.3.3 Performance indicators of Green Port’s CFS...............................................31
CHAPTER III: RECOMMENDATIONS TO IMPROVE CFS WAREHOUSE
OPERATION AT GREENPORT.................................................................................34
3.1 Evaluation on the Green Port’s CFS...................................................................34
3.1.1 Evaluation the mathematical indicators.......................................................34
3.1.2 Evaluation the non-mathematical indicators................................................35
3.2 Recommendation to company.............................................................................38
3.2.1 Recommendation on increase storage and handling capacity......................38
3.2.2 Recommendation on the infrastructure and equipment................................41
3.2.3 Recommendation on human factor..............................................................42
3.2.4 Recommendations on service.......................................................................43
CONCLUSION............................................................................................................45
REFERENCES.............................................................................................................46
APPENDICES..............................................................................................................48
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LIST OF ABBREVIATIONS
CFS Container Freight Station
LCL Less Than Container Load
FCL Full Container Load
CY Container Yard
B/L Bill of Lading
D/O Delivery Order
CPL Container Packing Plan
THC Terminal Handling Charge
ECUSS Electronic Custom Software
WMS Warehouse Management System
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LIST OF TABLES
Table 1: Green Port Terminal Layout...........................................................................14
Table 2: Equipment at the CFS.....................................................................................18
Table 3: The Number and Qualitification of CSF Employees.....................................19
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LIST OF FIGURES
Figure 1: CFS Activies According to the Flow of Goods..............................................5
Figure 2: Map of Green Port Location.........................................................................13
Figure 3: General Terminal Layout of Green Port.......................................................14
Figure 4: Green Port’s Organizational Structure..........................................................15
Figure 5: Warehouse Organizational Chart..................................................................19
Figure 6: Export Consolidation Operation Process......................................................20
Figure 7: The Illustration of Stacking Pallet Racking System at the CFS...................23
Figure 8: Import Consolidation Operation Process......................................................26
Figure 9: Cargo Volume through CFS at Green Port from 2011 to Sep.2015.............31
Figure 10: Comparing Selective Pallet Racking with Double Pallet Racking.............39
Figure 11: Requirements of Using Handling Equipments at the CFS..........................40
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INTRODUCTION
Thanks to the helpful location, Vietnam has a long sea border line. Under the
globalization, Vietnam maritime industry has been developed rapidly. According to
the data of Vietnam Marine Administration (Vinamarine) in 2014, Vietnam has 44
seaports with the cargo throughput of 370.3 million tons in 2014. The cargo volume
has grown by 8.1 percent from 2009 to 2014 of 8.1 percent. In which the container
volume increased by 16.7 percent to achieve 10.2 million TEUs in 2014. The
container throughput is estimated to increase with the rate of 8 to 9 percent annually
until 2020.
With the development of the national economy, Vietnam ports in general and
Northern ports in particular are expected to have many potentials to develop shipping
industry. One of the important ports contributing to the growth of this industry is
Green Port.
Green Port is the subsidiary of Vietnam Container Shipping Cooperation (Viconship).
Green Port is operated from Sept. 2004, mainly exploit containerized cargo. Green
Port provides a variety of services, from ocean shipping services to inland transport.
One of such is CFS services that I researched in this paper.
Necessity
CFS is customs area for loading and unloading containerized cargo. CFS plays an
essential part in the flow of exporting and importing goods. In the growing trend of
containerized service, CFS is estimated to be an important factor in the development
of maritime industry in the next years.
So, in two months of internship, with a wish to study the CFS operation activities, I
have chosen this topic: "Recommendations to improve CFS operation at Green
Port". This research will give an insight to the CFS activities at Green Port. And from
that, give proper solutions to increase the development of company.
Research Object
This study is conducted to study the CFS warehouse operation at Green Port and from
that evaluate the situation as well as find the possible ways to improve the operation in
the CFS at Green Port.
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Research Scope
This dissertation is the study of the CFS warehouse operation at Green Port which I
had witnessed during my internship from August to Octorber 2015
Methodology of the research
For study, this dissertation is gathered information from both primary and secondary
sources. From primary source, information is gathered by: visiting CFS warehouse at
Green Port and learn information about the CFS operation at Green Port; observing
the activities in managing CFS warehouse. From secondary source, information is
found and gathered in documents related to CFS warehouse operation, especially the
exported and imported goods process; dissertations, journals, books related to CFS
warehouse operation, services and activities in CFS warehouse.
Limitation of the research
During the process of studying this topic, there are some limitations and hinderances
in conducting the paper. Firstly, studying and evaluating the CFS operation of a
particular company need an amount of time. Due to the time limitation, this report is
conducted with the urgency. Information is gathered mostly by the process of
observation and studying in the appointed time. Therefore, it may lack some
information. Secondly, there are some problems in observing the real process of
operating CFS warehouse at Green Port. Because this report is conducted in the busy
time of the company, it is not easy to supervise CFS activities and collect data.
Besides, some information about the company is kept in secret for security.
Research Findings
This dissertation provides the understanding of CFS operation, studying the services
and activities at CFS warehouse, especially export and import activities and giving out
some recommendations to improve the CFS warehouse operation.
Structure of the research
Chapter I: Literature Review
Chapter II: Situation of CFS warehouse operation at Green Port
Chapter III: Recommendations to improve CFS warehouse operation at Green Port
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CHAPTER I: LITERATURE REVIEW
1.1 Introduction about CFS
1.1.1 Definition
CFS is the abbreviations for Container Freight Station. According to Business
Dictionary, CFS is a port facility for loading and unloading cargo containers from
ships and to ships.
Another definition of CFS is that CFS is a designated facility to consolidate or
consolidate freight shipments and such shipments are staged between “transport legs”.
CFS is used to transport containerized cargo, so it usually located to near an ocean,
port, or airport where such cargo is transported to and from.
According to Article 51, Circular 128/2013/TT-BTC, goods put into the CFS includes:
Imported goods which put into the CFS are goods that have been not completed
customs procedure. And they are still under the supervision and management of the
customs authority.
Exported goods which put into the CFS are goods that have been completed customs
procedure or registered the customs declaration at the sub-department of customs
outside the checkpoint area. However, the real verification is carried out at the CFS.
Goods in the CFS shall be kept no more than 90 days from the day they are put into
CFS. After 90 days, sub-departments of customs shall ask the CFS owner to move
such goods out of CFS, or treat them as abandoned, lost, mistaken, overdue goods
according to Article 45 of Law on Customs.
1.1.2 Role of CFS
Firstly, CFS helps good owners through LCL shipping method, reduce cost and utilize
the capacity of containers. Transporting cargo through container by sea, although
convent, needs a lot of fees. For the best choice of moving goods through the sea,
many shippers strive for loading full containers (FCL - full container loads). But, for
the shippers or goods owners whose goods are not able to stuff full container, to save
money and to utilize the capacity of containers, they have chosen to merge their
shipments and loaded together into containers. Such options are called LCL container.
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LCL shipping is the best options for delivering cargo that below the typical weight at
which are able to be fully stuffed into containers. Nowadays, LCL is often chosen
among the small cargo owners. This raised a matter. It needs a place to helps goods
owners bring their shipments, merge and then stuff into container to send to the
delivering destination. Also at the receiving destination, it needs a place at which
containers is de-stuffed, retail shipments are stored and then separated shipments is
sent to the separated consignees. Such types of place to perform two aforementioned
acts is CFS. CFS is operated under the supervision of customs officers.
Thus, CFS is a warehouse at which the shipping company deal with export and import
cargo. Export cargo is received and stored at the Where they are sorted, consolidated
stuffed into export containers and delivered to destination. Meanwhile, import
container which arrive from ships to CFS is de-stuffed. Import cargoes is take out of
the containers for sorting and delivery to consignees later.
CFS performs two main functions which are to collect and stuff LCL exported cargoes
into containers for exporting to ships and to store LCL imported cargoes which are
unloaded from multiple-owner containers and then delivery to different consignees.
CFS has also an important role in the ocean containerized freight, warehousing
services and port operation. CFS is an indispensable part of a modern container port. It
helps shippers utilize capacity of the container therefore reducing transport costs. Each
shipper is not needed to bear full container fees. Container delivering free is shared
among shippers. Moreover, CFS also helps cargo delivery and receiving process safer
and more comfortable.
Secondly, CFS helps shipping company quickly free goods at port, reduce port
congestion and promote export and import goods transportation. CFS is an extended
arm of the port. When containers are transported from ships into CY of the port,
import and export goods are kept until completed their examination and clearance. For
better utilize space and existing infrastructure, cargoes at port are needed to be
evacuated as soon as possible. Imported goods shifted from the CY of the port to the
CFS can help reduce port congestion. CFS is in charge of clearing goods, warehousing
and transporting cargoes from port to the shipper’s destination. CFS is an important
point in the trading export and import cargo process and helps CY of the port reducing
time of storing.
1.1.3 Types of goods at the CFS
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All LCL goods which are not prohibited from exporting or importing, does not affect
the environmental sanitation and fire protecting regulation are allowed to be carried
out export/import procedure at the CFS
All foreign goods that are qualified to be carried out exporting procedure and putted
into CFS must be inspected. Good owners register at the office or border gate of the
provincial customs departments and such office, border gate will appoint their
inspectors to check cargo at the CFS. Imported goods in the CFS are inspected, tallied
and confirmed by the customs inspectors before taking out of CFS. Exported goods
are supervised by the customs authorities when loading to the ships.
1.1.4 Services provided in the CFS
CFS operation is the process of exploitation imported and exported goods from the
port to the CFS warehouse and from the CFS warehouse to the customer destination,
ensuring the integrity of goods in quantity and quality during the operation, storage
and preserving cargo which is stacked at the CFS.
Warehouse operation activities is divided into two main services, which are import
goods operation and export goods operation.
For exported goods, the activities inside CFS are: receiving, storing, packaging.
Sometimes, goods in transit can be divide or combine with exported containers or
Vietnam’s exported goods in the CFS.
For imported goods, imported goods are either be repacked and divided according to
import procedure or be combined with other shipments to be exported to a third
country. (Article 51, Circular 128/2013/TT-BTC)
Classified in the flow of goods in the CFS, CFS activities includes:
Receivi
ng Storage Packing
Put- Picking Shippin
away g
FIGURE 1: CFS Activies According to the Flow of Goods
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Beside the main services, in the process of exploiting goods, some CFS also have
value add services, such as:
+ Checking label code;
+ Labeling;
+ Classifying;
+ Repacking
1.2 Regulations related to CFS
Since the ocean container freight has formed, modern container ports has borne along
with the establishment of CFS. CFS is located within the port area. but, the demand
for CFS services has increased dramatically. LCL shipping services is needed more
and more. CFS warehouses in the ports are not enough to meet the customers' needs
and market demands. so, now there are many CFS warehouses outside border gate
was established. However, there are general provisions for all CFS whether located
inside or outside border gate that all of import and export cargoes in the CFS are under
the supervision, inspection and management of the customs, especially customs
department in charge of CFS.
1.2.1 Conditions to establish a CFS
To set up CFS, company must adhere to the following conditions:
- CFS is established in the following areas:
+ Seaports, international civil airport, domestic port of export and import goods,
road gate border, international railway station
+ Industrial zone, hi-tech industrial zone, non-tariff zone, and other areas as
prescribed by law.
- CFS warehouse must has an area of at least 1000m2, not include external
ground and auxiliary facilities
- Ensuring the working conditions for customs authorities such as having an
office building, having place for goods inspecting, etc.
- CFS must have fences separated to surrounding area, equipped with CCTV
systems
- Goods going in and going out CFS must be managed by the computer systems
and be connected with the monitoring system of customs officers.
- Having decision to establish CFS
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Companies or enterprises established under the rules of law, had warehousing license
import and export licenses, had experience, capacity and reliability in the field of
logistics, had permission to use the planned warehousing areas, had storage systems
which separating from the surrounding area, had separated entrance gate, had enough
equipment, vehicles and other necessary conditions to make sure safety for goods and
human at the CFS and convenience for the inspection and supervision by customs
authorities are able to establish and run CFS warehouse.
General Department of Customs give CFS license by receiving document, checking
and reviewing the place want to get CFS license. Documents needed to submit when
applying CFS license are:
- An application for establishing CFS
- Decision to establish CFS
- Specialized license for operating warehouse and trading export/import goods
- Permission to use CFS location.
- CFS site plan.
- Fire Safety Certificate
1.2.2 Rights and responsibilities of CFS owners
a) Rights of CFS owners
- Goods owner transfers ownership of goods for CFS operators to pack, repack,
repair, store goods
- CFS operators have the right to consolidate, deconsolidate multiple-owner’s
shipments in one container, arrange and store shipments in the warehouse.
b) Responsibilities of CFS owners
- Fully implementing the provisions of the government about export/import
goods through CFS, ensuring cargo safety during the process of handling and
storing, following regulations of environmental sanitation and fire prevention.
- Import and export goods at the CFS needs to be carried out export/import
procedures. Export and import cargoes should be classified in two separate
zones and have site plans to examine. Especially area for export cargoes must
be fenced into two areas for distinguishing goods that are finished customs
procedures and goods customs that are not finished procedures. On each
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shipment must have the name of the ship, voyage, day in CFS or day out CFS,
name of consignees, marks of goods.
- CFS must have sufficient equipment for handling and packing cargoes, have
adequate lighting and office for relevant authorities to work. CFS owners are
responsible for proving areas and facilities for customs authorities to inspect
cargoes and supervise the management of CFS.
- CFS must have experienced staff that specialize in freight forwarding business
and have IT knowledge to manage CFS and ensure the relations among ship -
ship agent - freight forwarder - port and other agencies.
- CFS must have bookkeeping system to check and track goods out/in the CFS.
- Staff replacement or staff changes must be notified to the customs authorities
by documents.
- Time allows to work at CFS is 8 hours per day and it must be publicized at the
CFS. In case, CFS want to work overtime, it must have the consent of the
customs authorities.
- CFS owner has responsibility to sum up and report to customs authorities about
the inventory situation and the details of each inventory shipment. Each 3
months, CFS operators must report to the customs officers about the situation
of goods inside the CFS and the business activities of company. Each 6
months, CFS must prepare a reports to liquidate unwanted goods.
1.2.3 Responsibilities of customs authorities
Each CFS that is given operating licenses is monitored by customs authorities. In
keeping with the pattern of each port, each warehouse, customs authorities in charge
of CFS is often arranged into a team under the customs border gate, under the
supervision of warehousing. Each CFS often has from one to two customs officers
depending on the performance of each CFS and requirements, conditions at the certain
period. Main responsibilities of customs authorities in charge of CFS include:
- Supervising the process of receiving, delivering or storing export/import goods
at CFS and other related activities at the CFS
- Organizing goods inspection, sealing containers even when warehouse has
none cargo.
- Escorting import containers from the border gate to the CFS and export
container from the warehouse to the border gate to load to the ship, supervising
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the process of packing goods into container and repacking container,
monitoring the process of putting cargo in to the CFS.
- Examining closely receiving and delivering cargo process, through which
detect and prevent the wrong actions, smuggling attempts and trade fraud.
- Supervising the delivery and receive goods process between CFS and
consignees.
- Summing up about data of import and export goods and reporting data
periodically to customs department.
- Building the good relationships with CFS owners and good owners.
- Following customs requirements and completing works well.
1.3 CFS performance measurement
Warehouse performance is the state of operating warehouse. And the way of
evaluating the warehouse performance is warehouse performance measurement.
According to Neely, performance measurement is the process of quantifying the
efficiency and effectiveness of an activity. Performance measurement is taken to find
whether the warehouse is operated efficiently. If not, it helps to show the causes
bringing to poor performance and find proper solutions.
Warehouse operation do well or worst depend on a variety of factors or also called
performance indicators. Indicators is found to calculate and compare with the
expected values. If the results are worst, poor performance is shown.
There are several theories to decide the warehouse performance indicators. In the
research “proposed solutions to impove the efficency of production and business in
CFS warehouse at Chua Ve terminal” of Nguyen Duc Trung, there are some often
used factors in evaluating the warehouse operating activities:
a. Cargo throughput: is the total volume of goods going through warehouse in a
period (usually a year). For CFS warehouse, cargo throughput can be
calculated by total import and export cargo that CFS operators handled in a
certain time.
This indicator reflects the total number of cargo going through warehouse, if the
output of goods is going higher by years, it will show the development of the
warehouse, and vice versa
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b. Warehouse capacity: is the total volume of goods can be stored in the
warehouse.
This indicator shows the warehouse capacity, or the maximum number of cargo stored
in warehouse. The higher the capacity index, the higher capacity of storage, and vice
versa. However, capacity depends on many other factors such as the way of arranging
of goods, the choice of pallet racking.
c. Warehouse storage rate: is the ratio between the volume of goods through
warehouse and the total volume of goods through port.
∝=
∑ Qw
∑Qp
In which: Q w is the volume of goods through warehouse
Q p is the volume of goods through port.
This indicator shows relationship between warehouse and port.
d. Warehouse turnover time: is the ratio between total warehouse volume of
goods going through warehouse and the warehouse capacity in a specific time
(usually in one year)
n=
∑ Qw
C
In which: Q w is the volume of goods through warehouse
C: is the capacity of warehouse
This indicator reflects the number of times the warehouse reaches it maximum storage
capacity. The higher indicator, the higher warehouse productivity using higher and
vice versa.
e. Average volume of goods through warehouse per day:
q w=
∑ Qw
t
In which: Q w is the volume of goods through warehouse
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t is the time warehouse run in a year
t=T w −T s
In which: T w is the number of days in a year (365 days)
T s is the number of days that stop working due to weather
Besides, Colson and Dorigo in their report also offer a list of decision criteria to
evaluate warehouse performance. Their chosen indicators consist of a variety factors
that can be grouped into the following categories:
- Location: geographical distance to highway connection, train, waterways
- Infrastructure and facilities: storage surface and volume, separation of storage
areas, possibility for temperature control, control for temperature humidity,
ventilation, offices on site, use of technology (RFID/Bar-coding), modem
connection, handling equipment
- Service: quality of service, cost of service, customer services, certification (ISO
9001/9002, SQAS, HACCP), assistance with customs.
Also, in the research of Autry and Daugherty, efficiency of warehouse operation has
relation with the personnel of warehouse. The management of human resources, the
working environment and worker satisfaction is also one of value to evaluate the
performance of warehouse.
In conclusion, warehouse operation can be evaluated by the factors of quality,
location, infrastructure, service, human resources.
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