Recommendations to improve the freight forwarding services for lcl cargoes at duyen hai road transport co., ltd

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MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING
VIETNAM MARITIME UNIVERSITY
STUDENT NAME: NGUYEN LE HOANG
DISSERTATION
GLOBAL STUDIES AND MARITIME AFFAIRS
RECOMMENDATIONS TO IMPROVE THE FREIGHT
FORWARDING SERVICES FOR LCL CARGOES AT DUYEN
HAI ROAD TRANSPORT CO., LTD
HAI PHONG – 2015
MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING
VIETNAM MARITIME UNIVERSITY
STUDENT NAME: NGUYEN LE HOANG
CLASS: GMA 02
DISSERTATION
GLOBAL STUDIES AND MARITIME AFFAIRS
RECOMMENDATIONS TO IMPROVE THE FREIGHT
FORWARDING SERVICES FOR LCL CARGOES AT DUYEN
HAI ROAD TRANSPORT CO., LTD
Supervisor: Doan Trong Hieu
Division: Economics of International Trade
Faculty: Economics
HAI PHONG – 2015
RECOMMENDATIONS TO IMPROVE THE FREIGHT FORWARDING SERVICES FOR LCL
CARGOES AT DUYEN HAI ROAD TRANSPORT CO.,LTD
PREFACE
Nowadays, in the context of development, industrialization and globalization are
happening strongly and fast in all over the world, which create many potential chances
for developing countries such as Vietnam. In relations between countries and
countries, economic issues are always the most important factors to be discussed.
Foreign trade is a sustainable way for Vietnam to develop since we join the WTO.
There are no other choice is to boost exports, give priority to the export and import
operations to create a competitive advantage for them. Foreseeing the importance of
training and high-quality workforce recruitment in the foreign trade sector, many
companies have taken the initiative to contact cooperation with universities, help
creating conditions for students practice and working in the real environment
combined with the knowledge about foreign trade techniques they were taught at
school.
Vietnam Maritime University is one of these universities which already applied this
model successfully. Thanks to the help from the International School of Education
(ISE), ISE students has been given chances to practice in import and export business,
logistics and transportation companies to be able to apply the knowledge learned into
real business. During the practice times, I had a chance to practice at Duyen Hai Road
Transport Co., LTD (TASA TRANSPORT), one Member Company of DUYEN HAI
MULTIMODAL TRANSPORT JSC (TASA DUYEN HAI). Duyen Hai Road
Transport Co., LTD is a company which specialized in road transportation, freight
forwarding process, import and export through Haiphong port and the other ports in
surrounding area. In this time, I was allow to know not only about freight forwarding
services, how does it operate but also know many things in real life that I never know
before. Now, I would like to present my dissertation about recommendations to
improve the LCL freight forwarding services at Duyen Hai Road Transport Co., LTD.
I also want to give my thanks to the general director and all the staff of Duyen Hai
Road Transport Co., LTD who allowed me to practice at the company
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
Nguyen Le Hoang
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ACKNOWLEGEMENT
Firstly, I would like to express my sincere gratitude to my advisor Prof. Doan Trong
Hieu for the continuous support of my dissertation, 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...
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CARGOES AT DUYEN HAI ROAD TRANSPORT CO.,LTD
TABLE OF CONTENTS
Preface.............................................................................................................................i
Acknowledgement..........................................................................................................ii
List of abbreviation........................................................................................................v
List of table....................................................................................................................vi
INTRODUCTION .......................................................................................................1
1. The importance of the topic........................................................................................1
2. Research structure......................................................................................................1
3. Research Object..........................................................................................................1
4. Research Scope...........................................................................................................1
5. Research Method........................................................................................................2
CHAPTER 1: LITERATURE REVIEW...................................................................3
1.1 Definition of freight forwarding services ................................................................3
1.2 Freight forwarder......................................................................................................3
1.3 Forwarder responsibility and rights..........................................................................4
1.4 Forwarder liability....................................................................................................5
1.5 LCL freight forwarding process...............................................................................6
1.5.1 The definition of LCL cargo.................................................................................6
1.5.2 Consolidator..........................................................................................................6
1.5.3 General LCL forwarding process..........................................................................6
1.6 Legal basis framework...........................................................................................11
CHAPTER 2: THE SITUATION OF LCL FREIGHT FORWARDING
SERVICES AT DUYEN HAI ROAD TRANSPORT CO., LTD...........................12
2.1 Introduction about company...................................................................................12
2.1.1 Introduction about Duyen Hai Multimodal Transport JSC (TASA Duyen Hai) 12
2.1.2 History.................................................................................................................13
2.1.3 Functions.............................................................................................................13
2.1.4 Organization........................................................................................................14
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CARGOES AT DUYEN HAI ROAD TRANSPORT CO.,LTD
2.1.5 Member Companies............................................................................................14
2.1.6 Personnel.............................................................................................................16
2.1.7 Introduction about Duyen Hai Road Transport Co., ltd......................................17
2.2 The situation of LCL cargo freight forwarding services at Duyen Hai Road
Transport Co., ltd..........................................................................................................19
2.2.1 The LCL cargoes freight forwarding process......................................................19
2.2.2 The LCL business result at Duyen Hai Road Transport Co., ltd Company........29
CHAPTER 3: EVALUATION AND RECOMMENDATIONS............................30
3.1 Goals and directions...............................................................................................30
3.2 Evaluation about LCL forwarding activities at TASA...........................................30
3.3 Recommendations..................................................................................................32
CONCLUSION...........................................................................................................38
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CARGOES AT DUYEN HAI ROAD TRANSPORT CO.,LTD
LIST OF ABBREVIATIONS
LCL Less than container load
CFS Container Freight Station
D/O Delivery Order
B/L Bill of Lading
C/O Certificate of origin
EIR Equipment Interchange Receipt
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LIST OF TABLES
Table 1: The number of staffs TASA TRANSPORT Company
Table 2: Standard of Containers.
Table 3: LCL cargo forwarding business result (2011-2014)
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INTRODUCTION
The importance of the topic
In the context of globalization in all over the world, economic integration between
countries with each other is increasing strongly. Economic integration rises up
quickly also bring the chance to increase the export activities and import activities
more than ever before. With the development of foreign trading, forwarding
services also expands and both in quality and quantities and take an important role
in cargo transportation. The forwarding services can me see to be link to connect
sellers and buyers, manufacturers and customers.
In Vietnam, although foreign trading activities only happens in some decades
recently, they also play an important part to the development of the economy and
open more relationships in many fields between Vietnam and other countries.
Forwarding process is not only a continuous economic process but also a big part of
trading, increase the efficiency of foreign trading.
Understand the importance of freight forwarding services; I would like to choose
the topic: “Recommendations to improve LCL freight forwarding services at Duyen
Hai Road Transport Co., ltd” to write in this dissertation.
Research Structures
1. Introduction
2. Chapter 1: Methodology
3. Chapter 2: The situation of LCL forwarding services at Duyen Hai Road
Transport Co., LTD
4. Chapter 3: Evaluation and recommendations
5. Conclusions
Research Object
Besides learning about Duyen Hai Road Transport Co., ltd, the research object of
this dissertation is to clarify the cargo forwarding activities, the reality or current
status of LCL cargoes activities at Duyen Hai Road Transport Co., ltd. From these
activities to point out the advantages and disadvantages, the difficulties, strength
and limitations of the company with LCL cargoes activities, and in the last part
solutions and recommendations to solve will be proposed.
Research Scope-subject
Research Subject: the freight forwarding services for importing and exporting LCL
cargoes at Duyen Hai Road Transport Co., ltd
Research Scope: The reality and current status of operative LCL cargoes activities
at Duyen Hai Road Transport Co., ltd
Research Method
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Analysis: Data of the research is collected by many ways. In this research, the most
commons ways to collect numbers and evaluate the operations are interviewing the
forwarder staffs and comparisons numbers from annual reports. By these ways,
comments and evaluations about the operations of the company can be proposed.
 Interviewing the staff forwarders directly
 Comparisons statistics from annual reports
 Observation from practical cases or in daily works
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CHAPTER 1: LITERATURE REVIEW
1.1 Definition of freight forwarding services
In the international trading, cargoes must be transported to many countries, from the
manufacturers to the buyers. In these cases, forwarders are the person who organize
the process of transportation and finish all the documents related.
Freight forwarding services associated and parallel with the process of
transportation, through the forwarding of the transport operation was conducted:
collecting goods, transportation, handling, storage, transport, packaging and
procedures, internal documents... With such a wide function, so there are plenty
definition of forwarding services
According to the rules form of the FIATA about the freight forwarding service,
"Freight forwarding service is defined as any kind of services related to
transportation, consolidation, warehousing , loading, packing or distribution of
goods as well as consulting services related to the above services, including customs
issues, finance, insurance, billing, collecting documents related”.
In another ways, freight forwarding services can be understood as the sequence of
activities to transport the good from the consignor to the consignee safely with
responsibilities and obligations of freight forwarders. This workflow has been
implemented through many stakeholders such as customs, port authorities, shipping
line
Freight forwarding services was first mentioned in Vietnam Commercial Law 1997.
In the article 163 of Vietnam Commercial Law 1997, freight forwarding services is
defines as a commercial activity. Which the forwarders receive cargoes, organize
the types of transportations, warehousing, finish all the documents and related
services, packaging, loading and unloading… from the consignors to the
consignees.
-Freight forwarding services activities is done based on three main elements:
cargoes, facilities and human resources
-In addition to the procedures work as brokers, save freight, forwarders also carry
other services, such as consolidation, split line, loading and unloading…
-Freight forwarding services is seasonal activities so that they depend on domestic
export and import
1.2 Forwarders
People who conduct the freight forwarding services called as the forwarders or
freight forwarders, forwarding agents. According FIATA, "forwarder is the person
who endeavored to goods transported under trust contract and act for the benefit of
the settler. The forwarder also responsible for all the services related to forwarder
contracts as storage, warehousing, customs procedures, cargo check”.
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The forwarder may be the shipper (when shippers undertakes work themselves its
freight forwarding), ship owner (as ship owners on behalf of shippers perform
forwarding services), the company handling or warehouse, freight forwarder or any
other professional person have business registered freight forwarding services.
A freight forwarder will usually act as an agent rather than an active carrier. In this
way, a forwarding agent can be understood like a third party logistics provider who
works to dispatch shipments. Freight forwarding positions involve booking and
arranging space for shipments on carriers such as vessels, trucks... and this shows
the commercial position of a forwarder in relation to their clients.
Nowadays, forwarders take an important role in commercial and transportations.
Freight forwarders not only finish the custom procedures or contact with the ship,
but also supply the whole services of transportation.
Services that forwarders often serve:
- Preparing goods for transportation
- Organizing cargo transportation within the port
- Organizing cargo handling
- Consulting customers about cargo transportation
- Carrying out there procedure of sending or receiving goods
- Custom clearance services
- Paying the costs (Insurance, THC, inventory cost…)
- Consolidating, packing
- Checking the document related to cargo transportation
1.3 Forwarder responsibilities and rights
No matter which positions of a forwarder (forwarding agent or under entrustment
contract), the forwarder must obey these responsibilities and rights:
- Forwarders have the rights to get wages and other reasonable income.
Remuneration agreed by the parties and specified in the contract. Remuneration
levels can be determined by the absolute amount or proportion on commodity
prices. Remuneration levels agreed by the parties and depends on the content, the
complexity of the job freight forwarding customers entrust people do freight
forwarding services performed.
Beside remuneration, the logistics services customers can request payment of
reasonable expenses related to the performance of the service if this is agreed by the
parties in the contract.
- Fulfill your obligations under the contract; perform exactly everything in the
contract agreements
This is the most basic obligations of logistics services. The service implementation
must perform the work related to packaged goods, letters and symbols, delivery or
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receipt of goods in accordance with the conditions agreed with customers. The
conditions may be recognized in signed contract between the customer service or
customer specific guidelines on the basis of the general provisions of the contract.
Forwarding workers have the right to refuse to comply with these instructions
which is inconsistent with the conditions of contract logistics services, signed with
customers or illegal guides.
- In the course of performing the contract, if there is good reason for the benefit of
the customer, the other can be done with the customer's instructions, but the
forwarder must immediately notify the customer.
- After signing the contract, if it cannot perform the client's instruction, it must
notify the client to ask for further instructions.
- To fulfill its obligations within a reasonable time if the contract does not agree on
the duration of the obligation to the customer.
1.4 Forwarder liability
When the forwarder is forwarding agent position
Depending on the function of the forwarder, the forwarder should fully implement
their obligations under the contract signed and shall be responsible for:
- Delivery improper instructions
- Failure to purchase insurance for the goods despite instructions.
- Failure to make customs procedures
- Transporting goods to the wrong place regulations
- Delivery wrong receiver
- Delivery without collecting from the consignee
Responsibility for customs
Almost in all the countries who have the license delivery work carried out customs
declaration must be responsible before the customs authorities regarding
compliance with customs regulations on the right to declare the quantities and
values commodity name to avoid losses to the government. If you violate these
rules may consignor will be fined but the fine was not reclaim from the customer.
Liability for third parties
Forwarders vulnerable third-party companies such as loading and unloading, port
authorities.... As the related goods during transportation, complain about:
+ Loss of material assets of third parties and the consequences of such loss.
+ The third party injury or illness and the consequences of that.
When the forwarder is related by entrustment contracts
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The forwarders often act as entrustment contracts when collecting the LCL cargoes.
Besides the same liability like the forwarding agent, the forwarders must response
for the loss of people's assets and the third party that the forwarder caused.
1.5 LCL freight forwarding process
1.5.1 The definition of LCL cargo
LCL means Less Container Load
If a shipper does not have enough cargoes to accommodate in a fully loaded
container, they can arrange with a consolidator to book his cargo. This type of
shipment is called LCL shipment. The said consolidator arranges a full container
(FCL) with a main shipping carrier, and consoles the shipments of other shippers.
Means the freight forwarder who books a full container accepts goods from
different shippers and consolidates all such goods in to one container as a Fully
Loaded Container – FCL. The freight forwarder sorts out these goods at destination
or at transshipment points, meant for different consignees at different ports.
1.5.2 Consolidator
When there are enough cargoes for a container, cargoes will be arranged, packaged,
and loading to the container. This process is called consolidation. The company,
person who provide this type of service is consolidator. Their job is to search
potential customer with LCL cargoes in the shipping lines they provide. At the port
of destination, the consolidator representatives unload container, divided each
shipment and delivery to the consignee respectively.
In fact, the LCL shipments in the container do not always go to the same destination
port. Many times, they are only general container transport on certain journey, then
are removed and placed in other containers (reload) before moving on. The
reloading is usually conducted at the transshipment port (transit port), such as
Singapore, Hamburg, Busan, Hong Kong…
1.5.3 LCL forwarding general process
 Export cargoes
- The consignor must provide these kinds of document
Business registration form
License to export, quota export
Letter of credit
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Insurance of cargoes
Cargo list
Shipping order
- Consolidation
After providing these documents, the forwarder will collect all the cargoes and
begin consolidating. Times and place arranged in the contracts. The consignors or
forwarders will transport the cargoes to the CFS or ICD pointed.
Shippers or the Consignor shall contact shipping firms by mail or phone (depending
on shipping firms) to request for the shell.
After finishing contact, shippers go to the shipping firms with a referral from the
company, and then shipping firms will provide the EIR (equipment interchange
report).
Choose the sell. The decision often made by the shipping firm’s appoint, if there is
no appoint, the forwarder must choose the container which suitable for goods about
the temperature, humidity…
Let the driver of the company go to the container yard and take it back for
packaging goods.
- Customs procedures
The consignors invite the custom officer to check the consolidation process. Then,
the cargo will be lead seal. Prepare clearance document and send to the custom
authorities.
The forwarder sends those documents to the custom authorities for allowance.
These documents include:
o The export declaration: 2 originals
o Commercial Invoice: 1 original
o Packing list: 1 original
o Foreign trade contract: 1 copy
o Sales Contract: 1 copy
o Business license of the company
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o Invoices between the companies
Then, the forwarder submit the export tax
Shipper transports goods to the ship owing to loading must before closing time and
take the Mate’s Receipt and use this Mate’s Receipt to exchange the Bill of
lading. After having bill of lading, the consignor quickly establish bill, packing list,
certificate of origin, certificate of quality to provide the bank or the consignee, then
the payment will be sent.
 Import cargoes
There are 5 major steps in the import section
o Checking information for importers
o Exchange B/L and take D/O at the shipping agents
o Finish the custom procedures for the goods
o Transport good from warehouse or port
o Deliver the shipment of containers to the importer warehouse and return the
empty container. Then the buyer go to CFS to take the cargoes
•Receive and check the documents for importers
The company will receive the original documents from the bank (before the
ship arrives) include:
- Commercial invoice
- Bill of lading (B/L)
- Packing list
- Certificate of origin
- Certificate of weight and quality v
- Phytosanitary certificate
- Certificate of fumigation for wood product
After receive the documents, the staff of the company will check the
information about the date, seal, serial number… to see they are suitable or not.
•Exchange B/L and take D/O at the shipping agents
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At first, the company will receive the Arrival note from the shipping line
when the ship arrives to the destination port. The staffs of the company will read
through that arrival note and notify some important information such as: the address
of the shipping agents where to takes D/O, the phone number, the quality and the
weight of the shipment (to find out the amount of money to pay to take the D/O).So
that the company can prepare enough money and save time.
Besides, when come to the shipping agents, the forwarder has to prepare:
- Letter of recommendation (with company seal)
- Original bill of lading or arrival notice
- ID card copy
When the forwarder come to the shipping agents, the staffs of the shipping
agent will check the information of the documents. Then they will give forwarding
staff a debit note to sign his name, write the phone number and the tax code. After
that, the forwarding staff will bring the debit note to the Cashier at which he has to
pay some costs. After paying, he will receive VAT invoice (or receipts) and
comeback to the first staff to the D/O.
Some costs, fees occur in the invoice
- Terminal Handling Charge fee
- Container imbalance charge
- Cleaning container cost
- D/O fees.
If the importers want to pull the container to the private warehouse, the
forwarding staffs have to make the procedure of borrowing container. So to borrow
the container, the forwarding staffs have to bring the letter of recommendation,
D/O, provide the tax code and pay in advantage the deposit of borrowing container
(it is from 2 million to 4 million VND per 20feet container). After paying, the staffs
will receive the borrowing container note that proves he has paid the deposit of
borrowing container.
•Finish the custom procedures for the goods
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In order to make customs clearance for shipments, the forwarding staffs have
to conduct the electronic customs declaration by software named ECUS K4. The
company fills all the information, all the section in the declaration. After completing
the declarations, the company transmits them to the regional customs branch and
waits for the response from Customs. When you receive a response from Customs,
depending on the result of line selectivity, the company will continue the next steps.
•Transport good from warehouse or port
After completing the above steps, the forwarder goes to the warehouse or
port to change the order. In order to finish, they must bring:
+ D/O of the shipping line: 1 original
+ The borrowing container note if the shipments are FCL (Full container
load)
The forwarding staffs submit the documents to the staffs in the port office
and pay the lifting payment, handling cost. Then they will receive the delivery note
(or stock issue) and equipment interchange receipt (EIR) for the container.
After having them, the forwarder comes to the Customs of the warehouse
(port) and the gate Customs office to check delivery notes and customs clearance
declarations. The Customs officer will stamp the EIR and the declarations. Then
forwarder will give EIR and customs declaration to the driver to take the shipment.
At the warehouse, cargoes will be unloaded from the containers and wait the
buyer going to take.
•Deliver the shipment of containers to the importer warehouse and return the empty
container. Then the buyer goes to CFS to take the cargoes
After finish all the documents, all the tax and payments, the sellers go
quickly to the CFS to take the cargoes.
The driver takes the empty containers to the location (it is often the port or
depot) which is written in the borrowing container note. At there, the driver will go
to the port office to perform the procedures of returning the container. The
representatives of the shipping line at the port will confirm the returning the empty
containers with the returning container note.
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After giving back the container to the CY at port and receiving the returning
note, the forwarder comes back to the shipping line office. At here the forwarder
shows the borrowing container note and the returning note to the office staff of the
shipping line. After that he can receive the deposit which he had paid to borrow the
container.
1.6 Legal basis framework
The forwarding services (include both export and import) must be based on legal
basis, such as the international legal (The convention on bill of lading, freight, the
convention of the international trading contracts…), Vietnamese Law of trading,
forwarding… in order to ensure the rights of all exporters and importers.
International Laws
- Conventions Vienna (1980) about international trading
- Conventions Brussels unified the type Bill of Lading
- Conventions of United Nations about sea transportation (1978)
National Laws
- Maritime Law 1990
- Customs Law
- International trading Laws 2005
- Convention 2007 ND-CP about the condition of Logistics business
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CHAPTER 2: THE SITUATION OF LCL FREIGHT
FORWARDING SERVICES AT DUYEN HAI ROAD
TRANSPORT Co., LTD
2.1 Introduction about company
In this chapter, there will be two general part, introduction about the company and
freight forwarding activities, especially LCL cargo activities at the Company.
2.1.1 Introduction about Duyen Hai Multimodal Transport JSC (TASA Duyen
Hai)
-Vietnamese name: CÔNG TY CỔ PHẦN VẬN TẢI ĐA PHƯƠNG THỨC
DUYÊN HẢI
-English name: DUYEN HAI MULTIMODAL TRANSPORT JOINT STOCK
COMPANY
-Abbreviation name: (TASA DUYENHAI)
-Stock code: TCO
-Headquarters: 189 Dinh Vu route, Hai An District, Haiphong.
-Telephone/Fax: + 84-31-3978895
-Email: [email protected]
-Website: www.tasaduyenhai.com
- Charter capital: 140.300.000.000 VND
-Bank: Joint Stock Commercial Bank for Investment and Development of Vietnam
(BIDV bank)
- Account Number: VND 3231000000696
-Logo
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