Recommendations to improve freight forwarding procedure for exporting fcl cargoes in dong tai global logistics and trading co., ltd

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MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING
VIETNAM MARITIME UNIVERSITY
STUDENT NAME: PHAM THI DUNG
DISSERTATION
GLOBAL STUDIES AND MARITIME AFFAIRS
RECOMMENDATIONS TO IMPROVE FREIGHT FORWARDING
PROCEDURE FOR EXPORTING FCL CARGOES IN DONG TAI
GLOBAL LOGISTICS AND TRADING CO., LTD
HAI PHONG – 2015
MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING
VIETNAM MARITIME UNIVERSITY
STUDENT NAME: PHAM THI DUNG
CLASS: GMA 02
DISSERTATION
GLOBAL STUDIES AND MARITIME AFFAIRS
RECOMMENDATIONS TO IMPROVE FREIGHT FORWARDING
PROCEDURE FOR EXPORTING FCL CARGOES IN DONG TAI
GLOBAL LOGISTICS AND TRADING CO., LTD
Supervisor : Pham Thi Yen
Division : Logistics
Faculty : Economics
HAI PHONG –2015
Recommendations to improve freight forwarding procedure for exporting FCL
cargoes in Dong Tai Global Logistics and Trading Co., Ltd
PREFACE
The trade between a country and other one increasingly leads to the market
demands of freight forwarding service of imported and exported cargoes also
increasing in the world. As a result, Vietnam enterprises which have been operating in
this sector have more opportunities to develop and gain benefits. Being aware of this
high demand of market Dong Tai Global Logistics and Trading Co., Ltd was founded
and operated in the field of export and import service. The company would like to take
this opportunity to be seen as one of the most active forwarder in Vietnam. It is
diversified total logistics provider with mainstream activities in forwarding,
international ocean freight, air freight, warehousing & distribution, Logistics and
domestic transportation.
Recognizing the importance of freight forwarders services in trading imported
and exported goods combine with the learned knowledge in the internship time in the
company, I chosen to study the topic “Recommendations to improve freight
forwarding procedure for exporting FCL cargoes in Dong Tai Global Logistics and
Trading Co., Ltd”. From analyzing the strengths and weaknesses of the company,
some recommendations are proposed to improve freight forwarding procedures in the
company. The dissertation is structured as follows:
Chapter I: Literature review
Chapter II: Freight forwarding procedure for exporting FCL cargoes of Dong Tai
Global Logistics and Trading Co., Ltd
Chapter III: Recommendations to improve freight forwarding procedures for
exporting FCL cargoes in Dong Tai Global Logistics and Trading Co., Ltd
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 Dung
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ACKNOWLEDGEMENT
Firstly, I would like to express my sincere gratitude to my supervisor Pham Thi
Yen for the continuous support of my dissertation. Her guidance helped me in all the
time of research and writing of this dissertation. I could not have imagined having a
better advisor and mentor for my dissertation.
Secondly, I deeply thank Director – Mr Do Viet Thanh and staffs at Dong Tai
Global Logistics and Trading Co., Ltd for the help and guidance during internship.
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TABLE OF CONTENT
PREFACE........................................................................................................................i
ACKNOWLEDGEMENT..............................................................................................ii
TABLE OF CONTENT................................................................................................iii
LIST OF ABBREVIATIONS........................................................................................v
LIST OF TABLES........................................................................................................vi
LIST OF FIGURES......................................................................................................vii
INTRODUCTION..........................................................................................................1
1. Necessity...............................................................................................................1
2. Methodology..........................................................................................................1
3. Research scope.......................................................................................................1
4. Research findings...................................................................................................2
CHAPTER 1: LITERATURE REVIEW.......................................................................3
1.1 Definitions of freight forwarding services and freight forwarder.......................3
1.1.1 Freight forwarding services..........................................................................3
1.1.2 Freight forwarders.........................................................................................3
1.2 The rights and obligations of the forwarder........................................................5
1.3 The relationship of freight forwarder and related parties.....................................6
1.4 Legal basis...........................................................................................................7
1.4.1 Nation law.....................................................................................................7
1.4.2 International law...........................................................................................7
1.5 Procedure of freight forwarding for exporting FCL cargoes..............................8
1.5.1 The role of freight forwarding of cargoes by sea..........................................8
1.5.2 Definition of FCL..........................................................................................8
1.5.3 Process of freight forwarding for exporting FCL cargoes.............................8
1.5.4 Documentaries in export................................................................................8
CHAPTER 2: FREIGHT FORWARDING PROCEDURE FOR EXPORTING FCL
CARGOES IN DONG TAI GLOBAL LOGISTICS AND TRADING CO., LTD.....11
2.1 Introduction about company..............................................................................11
2.1.1 General information.................................................................................11
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2.1.2 Organization................................................................................................13
2.1.3 Personnel.....................................................................................................15
2.1.4 Business model...........................................................................................19
2.1.5 Business results in 2012-2014....................................................................19
2.2 Freight forwarding procedure for exporting FCL cargoes in Dong Tai Global
Co., Ltd......................................................................................................................21
2.2.1 Freight forwarding procedure for exporting FCL cargoes at Dong Tai
Global Co., Ltd......................................................................................................21
2.2.2 Explain the process.....................................................................................22
CHAPTER 3: RECOMMENDATIONS TO IMPROVE FREIGHT FORWARDING
PROCEDURE FOR EXPORTING FCL CARGOES IN DONG TAI GLOBAL
LOGISTICS AND TRADING CO., LTD....................................................................28
3.1 Strengths and weaknesses................................................................................28
3.1.2 Strengths...................................................................................................28
3.1.2 Weaknesses.................................................................................................29
3.2 Recommendations to improve freight forwarding procedure for exporting FCL
cargoes in Dong Tai Logistics and Trading Co., Ltd................................................30
CONCLUSION............................................................................................................33
REFERENCES.............................................................................................................34
ANNEX........................................................................................................................35
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LIST OF ABBREVIATIONS
B/L Bill of Lading
C/O Certificate of Origin
CFS Container Freight Station
CY Container Yard
FCL Full container load
FIATA International Federation of Freight Forwarders Associations
THC Terminal Handling Charge
VCCI Vietnam Chamber of Commerce and Industry
VIFFAS Vietnam Freight Forwarders Association
VLA Vietnamese Logistics Association
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LIST OF TABLES
TABLE 2.1: The classification of employees by education level…………...……….15
TABLE 2.2 Business result in 2012-2014 and estimated in 2015…………………...20
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LIST OF FIGURES
FIGURE 1.1: The relationship between forwarder and related parties…………..……7
FIGURE 2.1: Organizational chart…………..….………...………………………….13
FIGURE 2.2: The classification of employees by gender………………………..…..16
FIGURE 2.3: The procedure of freight forwarding for exporting FCL cargoes……..21
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INTRODUCTION
1. Necessity
It is clear that the role of export in economic development is become
important. Many exporters utilize a freight forwarder to act as their shipping agent
to comply with export documentation and shipping requirements. Freight
forwarding companies (as known as transportation companies or logistics
companies or logistics companies) were established to advise and assist exporters
on how to move cargoes in the most efficient way from one place to another place.
Freight forwarding is diversified with participation of various economic sectors and
services. It is the fact that freight forwarding is still new concept in Vietnam.
Freight forwarding companies find some difficulties because of lacking extensive
knowledge of documentation requirements, regulations, transportation costs and
banking practices that lead to in efficiency in exporting process. Therefore,
researching to enhance forwarding procedure for exporting FCL cargoes is
necessary for company to create competition in domestic as well as global market.
2. Methodology
The internship at Dong Tai Global Logistics and Trading Co., Ltd has given
me a chance to practice the process of freight forwarding for exporting FCL
cargoes. Also, I have gained the experiences and valuable knowledge related to
freight forwarding. In order to do this dissertation, I use the following research
methods:
- Observation: this method was used to scrutinize things that cannot be easily
sported out such as the activities and attitude of staff.
- Participation: in order to understanding the freight forwarding procedure of
exported cargoes, I participated in the daily activities of the company.
Particularly, I had chances to go to shipping lines such as SITC, Nam Sung,
NYK, VICONSHIP; customs departments, for example, border-gate customs
sub-department; ports; depots and related institution as Phytosanytary sub-
department area I.
3. Research scope
Dong Tai Global Logistics and Trading Co., Ltd provides various services of
freight forwarding. However, the main scope of this dissertation is research on the
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Recommendations to improve freight forwarding procedure for exporting FCL
cargoes in Dong Tai Global Logistics and Trading Co., Ltd
freight forwarding procedure for exporting FCL cargoes in Dong Tai Global
Logistics and Trading Co., Ltd.
4. Research findings
The dissertation researches on the freight forwarding procedure for exporting
FCL cargoes at Dong Tai Global Logistics and Trading Co., Ltd. By the evaluation
of this procedure, figure out strengths as well as weaknesses existed in order to give
some recommendations to improve the freight forwarding procedure for exporting
FCL cargoes, contribute to the development of the company.
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CHAPTER 1: LITERATURE REVIEW
1.1 Definitions of freight forwarding services and freight forwarder
1.1.1 Freight forwarding services
Freight forwarding carries with it a broader sense; it is the organization of
transport, care of goods to be shipped, then unloading, warehousing, transport,
packaging, procedures, and documents. Therefore, there are many definitions of
forwarding. According to International Federation of Freight
Forwarders Associations (FIATA, 2004), 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”.
Vietnam Commercial Law in 2005 (from article 233 to article 240) regulating
Freight Forwarding and Logistics services are “commercial activities whereby
traders organize the performance of one or many jobs including reception,
transportation, warehousing, yard storage of cargoes, completion of customs
procedures and other formalities and paperwork, provision of consultancy to
customers, services of packaging, marking, delivery of goods, or other services
related to goods according to agreements with customers in order to enjoy service
charges.”
1.1.2 Freight forwarders
According to FIATA, Freight Forwarder means the person concluding a
contract of Freight Forwarding Services with a Customer. According to Vietnam
Commercial Law (2005), people doing freight forwarding service as traders who
have certified business registration of freight forwarding service.
From the above definitions we can draw comments: The forwarding activities
under the contract signed with shippers entrusted, to protect the interests of
shippers. The delivery care about transport, but not exactly be the carriers. They can
use or hire transport and also have means of transportation, can participate
transportation, but for trustee shippers. Along with the organization of transport,
forwarding people also do many other things in scope mandated by shippers to take
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the goods from one place to another under the terms already committed. Although
in different countries, the name of the delivery people may be different, however we
all carry a common name in international transactions as international freight
forwarder, and do a similar service, which is service delivery.
 The scope of main activities of freight forwarders
A. Operating on behalf of the exporter - the shipper
- Selecting means of transport, monitoring entry plan and scheduling receive
and deliver cargoes
- Sorting and packing of goods for transport with the most beneficial effects
- Delivering cargoes to the carrier, on yards of the carrier (CY)
- Preparing documents
- Research the basic content of the L/C, the conditions of carriage, research
policies in managing import and export goods in order to establish a bill of
lading and related documents
- Undertake some other works include: Storage, sorting packaged goods and
goods weighing measurement, type the code symbol marks.
- Advising people to buy insurance or export under the entrusted of the export
insurance
- Taking certificates and insurance policies
- Doing the work related to transportation of customs procedures, logistics,
loading, finance, cost, and currency exchange
- Monitoring the transport process through the relationship with the carrier and
promptly notify damage to the shipper
B, Operating on behalf of the importer - consignee
- Monitoring and supervising the ship schedules and is expected time to entry
ports
- Supervising the transport of goods
- Receiving and checking the related documents
- Arrange the customs formalities, to pay the fee
- Organizations receiving cargoes
- Understand custom produces to advise importers
C, Operations as the carrier
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The forwarders may operate as a carrier, which means that they are responsible for
receipt, supervision and preservation of goods and responsible for delivering goods
to the consignee on time. Given the role of the carrier, the forwarders, after taking
responsibility for goods transport, the forwarder is obliged to provide to the shipper
a bill of lading perfect, responsible for goods when the goods are under the
responsibility of the carrier.
D, Ensure some tasks and other services
- Paying attention to ensure of the transport of goods from a place to another
place, mainly as: caring for the transport of oversize and overweight, the
transportation of live animals and ensure the safety of epidemic prevention
- Organizing transport of dangerous goods in accordance with the international
conventions on transport of dangerous goods
- Apart from the services mentioned above, the delivers can take on other
services that may arise during transport and import and export activities such
as inform their customers about consumer demand, competitive situation, the
situation changes in the policies of the Government on goods imported and
exported.
1.2 The rights and obligations of the forwarder
 The rights of the forwarder
- The forwarders have rights to claime wages and reasonable expenses arise
under the contract for the benefit of customers on prices and payment
methods for the two sides agreed.
- The forwarders have the right to retain or reclaim brokerage commissions.
- The forwarders has the right to hold the shipment and documents related to
the goods to ensure that the customer's debt until paid
 The obligations of the forwarder
- Forwarders will perform the tasks completely and accurately as required on
the agreements with their customers in a reasonable time.
- In case of not implementing follow the request of customers but perform the
tasks in the aim of customer interests, the forwarders do not incur any
liability as well as other costs.
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- Forwarders are responsible if they do not used all reasonable measures in the
implementation of freight forwarding service. In this case, the forwarders
have to compensate the customer for the loss and damage goods as well as
for the direct financial losses.
- Forwarders are not responsible for acts and shortcomings of third parties,
such as the carrier, warehousing, port authorities, unless the freight
forwarders are not really carefully in selecting, guiding or monitoring of the
third party.
1.3 The relationship of freight forwarder and related parties
As mentioned above, the freight forwarder is a receiver shippers mandate to
care of the transportation of goods from one place to another place. However, the
process of transporting cargoes is controlled many authorities through several
stages. Therefore, the freight forwarder undertakes the tasks related to multiple
parties.
Forwarders not only work with the shipper and the consignee but also
transactions with third parties in the service process our customers.
a. The Government and the other department parties
- The Customs office for customs declarations
- Port Authority for carrying out procedures through the Port
- The central bank for exchange
- Ministry of Health for health permits, phytosanitary
- Consular officials to obtain a certificate of origin
- Import Authority controls
- The transport license
b. The private party
+ The carrier or other agents, such as:
- Ship owner
- People supplying road, rail, air transportation
- The inland transportation business in terms of schedule and save shipping
charges.
+ The warehouse to store goods
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+ The insurance for goods
+ Organizating packed goods
+ Commercial banks to carry out documentary credit
The diagram below shows the relationship of the forwarding and related
parties.
The government and competent authorities
Port authority Customs authority
Export-import control,
Exchange control,
Transportation, licesing
The carrier and other agents
Consignor/consignee Forwarder Ship owner
People supplying road, rail
air transportation
Warehouseman
Organized packing
Bank
Cargo insurance Legal proceedings
People are resposibility for
people liability insurance
Figure 1.1: The relationship between forwarder and related parties
(Source: Collected by author)
1.4 Legal basis
1.4.1 Nation law
Forwarding business activities are regulated by some nation laws. The first is
Commercial Law 2005 (from article 233 to article 240) and Degree number 140-
2007 ND-CP, 09.05.2007. The second one is Common Law: Civil 2005, Investment
Law 2005, Competition Law 2004, Enterprise Law 2005 and other related laws.
There are also specialize laws which define clearly legal basis in each activity.
1.4.2 International law
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The system of international law relating to transportation of goods by sea
concluding: Hague Rule 1924, Humburg Rule 1978 and Rotterdam 2010. Another
international regulation is Incoterms 2010 standard interpretation of trade terms of
the International Chamber of Commerce. This basis defines clearly the rights, the
obligations and the risk of the buyer and seller in international trade. Besides, each
nation may build its own law to adjust duties and responsibilities of the parties.
However, in case of having a conflict, international law would be applied to resolve
disputes.
1.5 Procedure of freight forwarding for exporting FCL cargoes
1.5.1 The role of freight forwarding of cargoes by sea
Sea transport is essential to the world’s economy as over 90% of the world’s
trade is carried by sea and it is, by far, the most cost-effective way to move a large
quantity of goods and raw materials around the world. Sea transportation plays an
important role in transaction of cargoes. Without shipping the export of goods on
the scale necessary for the modern world would not be possible. Seaborne trade
continues to expand, bringing benefits for consumers across the world through
competitive freight costs. Thanks to the growing efficiency of shipping as a mode of
transport and increased economic liberalization, the prospects for the industry's
further growth continue to be strong.
1.5.2 Definition of FCL
FCL stands for Full container load. FCL term is used in ocean freight services
describing full container shipping from one place to another place. Shipments
whose volume and weight are close the limits of a container or for which the
shipper requests that it be the only cargo in a container.
1.5.3 Process of freight forwarding for exporting FCL cargoes
Shipper or person who is entrusted by shipper send Booking request to
shipping line. Shipping line sends back shipper a booking confirmation. Shipper
bring the booking confirmation to shipping line to receive seal and take empty
containers out of container depot and deliver to their place for cargo packing.
Shipper invites representative of customs, check and monitors the process of
stuffing cargoes to containers then seal container. Shipper deliver container to CY
before closing time.
1.5.4 Documentaries in export
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Exporters should seriously consider having the freight forwarder handle the
formidable number of documentary that export requires; freight forwarders are
specialists in this process. The following documents are commonly used in
exporting; which of them are actually used in each case depends on the
requirements of both our government and the government of the importing country.
* Sale contract: A legal documentary that being signed and agreed officially
between buyer and seller and would become the legal arrangement for both parties
when cargoes are transported.
* Commercial invoice: Commercial invoice is a bill for goods from the buyer
to the seller. A commercial invoice should include basic information about the
transaction, including a description of the goods, the address of the shipper and
seller, and the delivery and payment terms. The buyer needs the invoice to prove
ownership and to arrange payment. Some governments use the commercial invoice
to assess customs duties.
* Bill of lading: A bill of lading is a required document to move a freight
shipment. It works as a receipt of freight services, a contract between a freight
carrier and shipper. The B/L is a legally binding document providing the driver and
the carrier all the details needed to process the freight shipment and invoice it
correctly.
* Certificate of origin: Certain nations require a signed statement as to the
origin of the export item. Such certificates are usually obtained through a
semiofficial organization such as a local chamber of commerce. A certificate may
be required even though the commercial invoice contains the information.
* Inspection certification: Some purchasers and countries may require a
certificate of inspection attesting to the specifications of the goods shipped, usually
performed by a third party. Inspection certificates are often obtained from
independent testing organizations.
* Insurance certificate: If the seller provides insurance, the insurance
certificate states the type and amount of coverage. This instrument is negotiable
between the seller and the buyers.
* Packing list: Considerably more detailed and informative than a standard
domestic packing list, an packing list itemizes the material in each individual
package and indicates the type of package: box, crate, drum, carton, and so on. It
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shows the individual net, legal, tare, and gross weights and measurements for each
package. Package markings should be shown along with the shipper's and buyer's
references.
Documentation must be precise. Slight discrepancies or omissions may
prevent merchandise from being exported, result in exporting firms not getting paid,
or even result in the seizure of the exporter's goods by local or foreign government
customs. Collection documents are subject to precise time limits and may not be
honored by a bank if out of date. The documentation is routine for freight
forwarders or customs brokers acting on the firm's behalf, but the exporter is
ultimately responsible for the accuracy of the documentation.
The number of documents the exporter must deal with varies depending on the
destination of the shipment. Because each country has different import regulations,
the exporter must be careful to provide proper documentation.
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CHAPTER 2: FREIGHT FORWARDING PROCEDURE FOR
EXPORTING FCL CARGOES IN DONG TAI GLOBAL
LOGISTICS AND TRADING CO., LTD
2.1 Introduction about company
2.1.1 General information
- Name of company: Dong Tai Global Logistics and Trading Co., Ltd
- Operational headquarter: 104+200, Nguyen Binh Khiem, Hai An, Hai Phong
- Tel: (84) 313 979356/ 357/ 595/ 351 - Fax: (84) 313 979 494
- Director: Mr. Do Viet Thanh
- Tax ID: 0200438841
- Logo:
- Slogan: “One call, all services”
- Main activities: supplying air freight, sea freight, warehousing, inland
trucking, project cargoes, customs clearance, supervisor, packing/
lasing/loading service
 History and development
Dong Tai Global Logistics and Trading Co., Ltd is known as a member of
Dongsue Logistics Korea. The company is officially founded on December 21,
2009 has been operated in accordance with current regulations of the Government.
The director is Mr. Do Viet Thanh.
In 2009, the company was officially established, and became an agent of
Dongsue. After three years of operation, the company has opened an office in Hanoi
with the functions of the business office and handling cargo air transport through
Noi Bai airports. In 2014, with the development of forwarding services, the
company oriented to Asian and international markets. With world trends and future
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