Recommendations to improve the efficiency of fleet operation in binh minh international sunrise shipping joint stock company

MINISTRY OF TRANSPORTATION

MINISTRY OF EDUCATION & TRAINING

VIETNAM MARITIME UNIVERSITY

STUDENT NAME: NGUYEN THI THU HUONG

DISSERTATION
GLOBAL STUDIES AND MARITIME AFFAIRS

RECOMMENDATION TO IMPROVE THE EFFICIENCY OF
FLEET OPERATION IN BINH MINH INTERNATIONAL
SUNRISE SHIPPING JOINT STOCK COMPANY

HAI PHONG – 2015


MINISTRY OF TRANSPORTATION

MINISTRY OF EDUCATION & TRAINING

VIETNAM MARITIME UNIVERSITY

STUDENT NAME: NGUYEN THI THU HUONG
CLASS: GMA 02

DISSERTATION
GLOBAL STUDIES AND MARITIME AFFAIRS

RECOMMENDATION TO IMPROVE THE EFFICIENCY OF

FLEET OPERATION IN BINH MINH INTERNATIONAL
SUNRISE SHIPPING JOINT STOCK COMPANY

Supervisor:

Vu Thi Thu Hang

Division:

Global Studies and Maritime Affairs

Faculty:

Economics

HAI PHONG – 2015


Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

PREFACE
The dissertation was undertaken as the report of my internship at Binh Minh
international sunrise Shipping Joint stock Company. The research was difficult, but
conducting extensive investigation has allowed me to complete the target that I
identified. Fortunately, Ms. Vu Thi Thu Hang- my supervisor was always available
and willing to answer my questions. I would like to give a huge thank for her
excellent guidance and support during this process.
During the work with this thesis, I was fortunate to get help from the staff of
operating department in particular and all of employees at Binh Minh Company in

general for creating a friendly and supportive working environment. I would like to
thank you for your wonderful cooperation as well. Especially, I would like to thank
Mr. Nguyen Truong Giang- employee of operating department for his enthusiasm
providing practical knowledge and answering my questions in work during my
internships at company. I also give my thank for Mr. Vu Le Huy, who support and
have comment to me during this period.
The work outlined in this dissertation was carried out in the Binh Minh
Shipping Joint Stock Company, over the period from 10 August 2015 to 20
September 2015. This dissertation is the result of my work and the material
included in this thesis was taken from company's business figures in the period from
2012 to 2014.
Student Name and Signature

Nguyen Thi Thu Huong

Nguyen Thi Thu Huong – GMA 02

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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

TABLE OF CONTENTS
PREFACE ............................................................................................................... i
TABLE OF CONTENTS ........................................................................................ ii
LIST OF TABLES................................................................................................. iv
LIST OF FIGURES ............................................................................................... iv
INTRODUCTION ...................................................................................................1
CHAPTER I: LITERATURE REVIEW..................................................................3

1.1

Concepts of fleet and fleet operation ...........................................................3

1.1.1

Concept of shipping vessels .................................................................3

1.1.2

Types of ship operation ........................................................................3

1.1.3

Basic organizational process of shipping operation ..............................4

1.2 Indicators to assess the efficiency of fleet operations of shipping
enterprises. ...........................................................................................................6
1.2.1

The concept of the operation efficiency ................................................6

1.2.2

Indicators to assess the efficiency of fleet operations............................7

1.3 Orientations to improve the efficiency of fleet operations of shipping
enterprises ..........................................................................................................12
1.3.1

Increasing the number of running days of ship ...................................12

1.3.2

Reducing the voyage time of ship.......................................................13

1.3.3

Increasing indicators of ship operation in each trip .............................13

1.3.4

Cost savings in trip .............................................................................14

1.3.5

Increasing revenues of trip .................................................................14

1.3.6

Other measure ....................................................................................15

CHAPTER II: EVALUATION ABOUT THE EFFICIENCY OF FLEET
OPERATION AT BINH MINH COMPANY IN THE PERIOD FROM 2012 TO
2014.......................................................................................................................16
2.1 Introduction about Binh Minh International Sunrise Shipping Joint Stock
Company ............................................................................................................16
2.1.1

History of development ......................................................................16

2.1.2 Organizational structure of the company and main duties of
departments .....................................................................................................18
2.1.3 The situation of business and production activities of the company in
the period from 2012 to 2014 ..........................................................................20
7.201......................................................................................................................22
2.2 Evaluations about the efficiency of fleet operation at the company in the
period from 2012 to 2014 ...................................................................................24
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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

2.2.1

Introduction about the fleet of BMC Company ...................................24

2.2.2 Evaluations about the efficiency of fleet operation of the company in
the period from 2012 to 2014 ..........................................................................25
CHAPTER III: RECOMMENDATIONS FOR IMPROVING THE EFFICIENCY
OF FLEET OPERATION IN BINH MINH INTERNATIONAL SUNRISE
SHIPPING JSC ......................................................................................................34
3.1

Recommendations to improve the indicators of transport volume of fleet .34

3.1.1 Recommendations on market expansion and strengthening relations

with customers ................................................................................................ 35
3.1.2 Recommendations on improving the quality and focusing on product
prices...............................................................................................................36
3.1.3

Recommendations on management of the fleet activities....................36

3.2 Recommendations to improve the indicators of operation and use of fleet
vehicles ..............................................................................................................37
3.2.1

Recommendations to increase transport capacity of the vessel ...........37

3.2.2

Recommendations to increase using time indicators of the vessel ......38

3.3

Recommendations to increase economic indicators...................................40

3.3.1

Recommendations for increasing revenues of the fleet .......................40

3.3.2

Recommendations for reducing the costs of the fleet ..........................40

3.4

Recommendations on human resources ....................................................42

3.4.1

Recommendations for training and retraining of human resources......42

3.4.2

Recommendations on remuneration and attracting talent ....................43

3.4.3

Recommendations on coordinating work of crew members ................44

CONCLUSIONS ...................................................................................................45
REFERENCE ........................................................................................................46

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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

LIST OF TABLES
Table 2.1: Registered business lines of Binh Minh Company .................................16
Table 2.2: Production and business results from 2012-2014 ...................................21
Table 2.3: The fleet of Binh Minh Companyto 2014 ..............................................24

Table 2.4: Indicators of transport volume of BMC fleet from 2012-2014 ...............25
Table 2.5: Indicators of operation and use of fleet vehicles of BMC fleet from 20122014.......................................................................................................................28
Table 2.6: The indicators of financial results of fleet..............................................30

LIST OF FIGURES
Figure 2.1: Line graph of the Baltic Dry Index over the recent 5 years ...................32

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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

INTRODUCTION
1. Necessity
Vietnam is a country with a favorable geographical position in international
maritime traffic. Consequently, maritime sector has many advantages to develop in
order to serve the cause of national industrialization and modernization, contributing to
the country's rapid economic integration in the region and the world.
One of the essential socio-economic strategies of the Party and the state in the
early years of the 21st century is to develop the marine economy, which mainly
maritime transport. Therefore, Vietnam maritime industry is facing a tremendous task
is to build a national fleet that being capable of transport 30% of the volume of goods
import and export and over 90% of domestic cargo volume by 2015.
Fleet of Vietnam has joined the international market for several years but has
not achieved the significant position in the region area. The pace of development and
business management skills have not kept pace market mechanisms that leads to bad
impacts on the position and brand of national fleet. More worrying, current maritime

transport market in Vietnam also has been entered by the participation of dozens of
shipping companies around the world, so the challenges of competition always is a
raising question not only on international routes but also within the domestic market.
Binh Minh international sunrise shipping Joint Stock Company has established
in 2006. Since its establishment, the company's fleet has engaged in transportation on
international routes and achieved business efficiency in fleet operations. However, due
to the direct impacts of the economic slowdown on maritime transport, along with the
intense competition from foreign businesses having potential and reputation, it is
necessary to analyze and assess the advantages and drawbacks of the company to
propose effective means to improve the efficiency of ship operation in the future.
Therefore, I have chosen the subject:” Recommendations to improve the efficiency of
fleet operation in Binh Minh International Sunrise Shipping Joint Stock Company”
for my dissertation.

Nguyen Thi Thu Huong – GMA 02

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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

2. Research Object
Research object of this dissertation is the efficiency of the fleet operation of
Binh Minh Joint Stock Company.
3. Research Scope
This research used data and figures on business as well as fleet operation results
of Binh Minh Joint Stock Company in the period time from 2012-2014.
4. Research Findings
The dissertation codified certain theoretical issues and practices related to the

efficiency of fleet operators and assessed the pros and cons in the operating fleet work
of Binh Minh Joint Stock Company. Thence, it can be drew comments as a basis for
proposing measures to improve the efficiency of ship operator of the company in the
future
5. Research Methods
The method of this dissertation is based on the study of economic and
techniques, combined with a systematic study about some theoretical issues and
practices related to effective fleet operation of the Binh Minh Company. These results
are considered through a variety of indicators to assess the efficiency of operationwith
a series of comparative and quantified method.

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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

CHAPTER I: LITERATURE REVIEW
1.1

Concepts of fleet and fleet operation

1.1.1 Concept of shipping vessels
According to Curriculum of operating fleet subject of Dr. Nguyen Huu Hung,
shipping vessels (also known as merchant ships), in order to be entitled to the national
and international regulations in the process of exploitation, are defined as follows:
-

According to The Hague Rule 1924: "Ship" means any vessel used for the
carriage of goods by sea.(Convention, 1924)

-

According to The HNS Convention (Hazardous and Noxious Substances by Sea
Convention) 3/5/1996: Ship means any seagoing vessel and seaborne craft, of
any type whatsoever.(GUIDE TO THE IMPLEMENTATION OF THE HNS
CONVENTION, 2005)

-

According to The Vietnam Maritime Law 2005: Ship is a vessel or other
floating mobile structure that is specialized in maritime operations (Nam, 1990)

1.1.2 Types of ship operation
a. Direct exploitation: Ship owners organize the shipping by their own vessel to
take the freight transport.
Today, in sea transport in the world, there are two types of shipping
organization:
-

-

Liner shipping: A cargo liner is a type of merchant ship which carries general
cargo and often passengers. Operator will organize liner shipping under the
loop between trips on the same fixed routes. A ship will transport many kinds
of good for many cargo owners in the same trip. This service requires the
connections between Feeders and Liner Hauls, runs between the Hub ports.
Tramp shipping: As opposed to freight liners, tramp ships trade on the spot

market with no fixed schedule or published ports of call. Operator must provide
the right ship in the right place at the best possible time for cargo owners. A

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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

ship usually transports only one kind of good for a cargo owner during a trip
following the contracts.
b. Indirect exploitation: Charterer agrees to hire a ship from its owner and the hire
money for this transaction is known as “freight” to the ship owner for the use of
his vessel.
There are two types of chartering ship according Vietnam Maritime Law 2005:
-

Bare Boat Charter: A bareboat charter is an arrangement for the chartering or
hiring of a ship or boat, whereby no crew or provisions are included as part of

-

the agreement; instead, the people who rent the vessel from the owner are
responsible for taking care of such things.
Time Charter: Charterer hires a vessel for a specific period of time; the owner
still manages the vessel but the charterer selects the ports and directs the vessel
where to go. The charterer pays for all fuel the vessel consumes, port charges,
and a daily hire to the owner of the vessel.

1.1.3 Basic organizational process of shipping operation
a. Tonnage offer and receiving cargo offers
In order to promote their services, operators will send tonnage offers to Ship
Brokers, Ship Agencies, and Cargo Owners through with the details of the ship as:
Technical parameters, insurance organizations of ship, the last port (at ship has finished
unloading), estimated time free…
Ship operators will collect cargo offers from Cargo Owners or Ship Brokers
through email, fax or website and select business opportunities that being consistent
with exploitation conditions. Cargo offers usually contain the following: name of
cargo, volumes need to be transported, departure and destination ports, freight
transport, laycan (period of time vessels must be at the loading port for the charterer
loading good and the time of cancellation of the contract)…
b. Making preliminary plans for arrange ships following cargo offers

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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

After choosing the appropriate cargo offerings, ship operators must make layout
shipping plans satisfying the following conditions:
-

Ship suits transportation route of cargo offer
Characteristics of ship exploitation must match to goods

-

Ship can arrive loading port in accordance with the requirements of the laytime
(the permitted period the charterer used for handling cargo) of the charterparty

c. Mapping the cargo flow diagram, the ship flow diagram and the technological
diagram of trip
When more than one or more transportation needs appear, the ship operator base
on volume, transport distance between the port of loading and port of discharge of each
consignment to establish diagrams:
-

Cargo flows: are defined by names of cargoes, volume, and transport distance
between ports as required by cargo offers

-

Ship flow show vessel names, voyage from the port free to loading and
unloading port. It is the basis for selecting the appropriate ship for the trip

-

Technological diagram represents the operational process of the ship on the
way and in ports according to the each layout plan. It is the basis for
determining wasted time and cost of exploitation for each boat trip on each
route

d. Estimating the economic efficiency trip and selecting reasonable plan
The sailing cost includes 2 main groups of fixed costs and variable costs. The
purposes of calculating the total cost is to build reasonable rates when the ship owner is

entitled to freight.
e. Contracting voyage charter party
Ship owners negotiate with charterers all key provisions of the voyage charter
party, such as freight, handling costs and payment. After all the terms are agreed by
two parties, the transportation contract will be signed in two formats: fixture note or
official contract
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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

f. Contract performance
To perform signed voyage charter party, ship operator implements the following
major works:
-

Looking for ship’s agent serving ship at the ports

-

Making sailing instruction

-

Sending note of arrival at the loading and unloading ports

-

Sending notice of readiness
Take the cargo in his charge for carriage

-

Issuing Mate’s receipt

-

Issuing bill of lading for shipper
Making cargo manifest at loading and unloading ports
Issuing the delivery order at unloading port and delivery cargoes to recipient
Voyage final settlement
Making freight invoice

g. Contract liquidation
After the end of the unloading and delivery, the parties will conduct to liquidate
the contract.
1.2

Indicators to assess the efficiency of fleet operations of shipping
enterprises

1.2.1 The concept of the operation efficiency
Conceptual operation efficiency has many different understandings, depending
on the perspective of study. The most common point and the most correctly
understanding the nature is that the economic efficiency would be the basis for
determining the criteria and indicators to assess performance, also identifying the
requirement for setting out targets and measures to improve exploitation efficiency.

Operation efficiency can be understood in two ways:
-

The quantity used to measure: Operation efficiency = Revenue- Cost

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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

-

The quantity used to compare: Operation efficiency =( Revenue/Cost) or
(Profit/Cost)

In the two interpretations, bigger the quantity is, better production and business
situation get.
1.2.2 Indicators to assess the efficiency of fleet operations
a. Assessment of the implementation of transport volume indicators of fleet
- The volume of freight: the volume of goods that was transported in the period (
regardless of how much the length of shipping distances are) are the actual
weight of goods transported, including packing if have (the unit: Ton). The
volume of goods transported is counted only after the end of the transport
process, were transported to the place of delivery according to the provisions in
the contract of carriage and completed the actual procedures in order to
calculate the volume of goods transported.
𝑚

Q=

𝑄𝑖 (T)
𝑖=1

Q: The volume of freight of ship (T)
𝑄𝑖 : The volume of freight that ship carried in the ist hydraulic road section (T)
-

The volume of freight traffic: Cargo volume is calculated by both factors: the
volume of goods transported and the actual transport distance. The unit is tonkilometer (T.Km).
𝑚

QL =

(𝑄𝐿)𝑖 (TKm)
𝑖=1

QL: The volume of freight traffic of ship (T.Km)
𝑄𝑖 : The volume of freight that ship carried in the ist hydraulic road section (T)
𝐿𝑖 : The transport distance of ship in the ist hydraulic road section (Km)
-

The average transport distance (Km)

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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

𝑡=

𝑚
𝑖=1 𝑄𝑖 𝐿𝑖
𝑚
𝑖=1 𝑄𝑖

(Km)

𝑄𝑖 : The volume of freight that ship carried in the ist hydraulic road section (T)
𝐿𝑖 : The transport distance of ship in the ist hydraulic road section (Km)
b. Assessment of operating and using fleet vehicles indicators
-

Coefficient of taking advantage of Deadweight cargo carrying capacity when
the ship began to depart:
0≤𝛼=

𝑄𝑥
≤1
𝐷𝑖

𝑄𝑥 : Volume of cargo loaded onto ships to carry at port of departure (T)
𝐷𝑖 : Deadweight cargo carrying capacity in the ist trip (T.Km) (the volume of
goods that ship can load in accordance with transportation signs, operating regions and
seasonally regulations)

𝐷𝑖 = DWT - total weight of fuel, fresh water, crew members…, which ships
carry
-

Coefficient of taking advantage of Deadweight cargo carrying capacity over the
distance of ship:
0≤𝛼=

𝑚
𝑖=1 𝛼1 𝑙ℎ𝑖
𝑛
𝑚
𝑙
𝑖=1 𝑙ℎ𝑖 +
𝑗 =1 𝑘ℎ𝑗

≤1

𝛼: Coefficient of taking advantage of Deadweight cargo carrying capacity when
the ship began to depart in the ist hydraulic road
i: Index of distance that the train runs carrying cargoes
j: Index of distance that the train runs empty
n: The number of distance that the train runs empty
m: The number of distance that the train runs carrying cargoes
𝑙ℎ𝑖 : The distance that train runs empty in the ist hydraulic road section
𝑙𝑘ℎ𝑗 : The distance that train runs carrying cargoes in the ist hydraulic road
section
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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

-

Coefficient of utilization:
𝜀𝑣𝑑 =

𝑛
𝑖=1 𝐷𝑡𝑖 𝑇𝑘𝑡𝑖
𝑛
𝑖=1 𝐷𝑡𝑖 𝑇𝑐ó𝑖

𝐷𝑡 : Deadweight cargo carrying capacity of the ist ship
𝑇𝑘𝑡 : The utilization time of the ist ship in the fleet
n: The number of available ships in the fleet
𝑇𝑐ó : The available time of the ist ship in the fleet
-

Coefficient of performance:
𝜀𝑣ℎ =

𝑛
𝑖=1 𝐷𝑡𝑖 𝑇𝑐𝑖
𝑛
𝑖=1 𝐷𝑡𝑖 𝑇𝑘𝑡𝑖

𝐷𝑡 : Deadweight cargo carrying capacity of the ist ship

n: The number of available ships in the fleet
𝑇𝑘𝑡 : The utilization time of the ist ship in the fleet
𝑇𝑐 : The performance time of the ist ship in the fleet
-

The average operating speed:
𝑣𝑘𝑡 =

𝑛
𝑖=1 𝐷𝑡𝑖 𝐿𝑐𝑖
𝑛
𝑖=1 𝐷𝑡𝑖 𝑇𝑘𝑡𝑖

𝐷𝑡 : Deadweight cargo carrying capacity of the ist ship
n: The number of available ships in the fleet
𝐿𝑐 : The running distance of the ist ship in the fleet
𝑇𝑐𝑖 : The running time of the ist ship in the fleet
-

The productivity of the transport ship includes two indicators:
The productivity of one ship ton in the operation day:

𝜇𝐾𝑇 =

𝑛
𝑄𝑙
𝑖=1 𝑖 ℎ 𝑖

𝐷𝑡 𝑡 𝑐𝑑

(T.Km/ship ton- operation day)

And the productivity date of one ship ton in the running day:
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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

𝜇𝐾𝑇 =

𝐷𝑡 (

𝑛
𝑄𝑙
𝑖=1 𝑖 ℎ 𝑖
𝑛
𝑛
𝑡
+
𝑡 𝑐𝑘𝑗
𝑖=1 𝑐ℎ 𝑖
𝑗 =1

(T.Km/ship ton- running day)

)

𝑡𝑐𝑘𝑗 : The running time that trains run empty in the jst hydraulic road section
𝑡𝑐ℎ𝑖 : The running time that trains run carrying cargoes in the ist hydraulic road
section
𝑡𝑐𝑑 : The voyage time of ships
i: Index of distance that the trains run carrying cargoes
j: Index of distance that the trains run empty
m: The number of hydraulic road section that ships run empty
n: The number of hydraulic road section that ships run carrying cargoes
𝑙ℎ𝑖 : The distance that trains run carrying cargoes in the jst road section
c. Assessment of the financial results of vessel operation activities
Revenues (F or F′), cots (C or C′ ) and financial results (∆𝐹 or ∆𝐹′) of the ship
operations are the economic indicators in quantity. It reflects the results of ship
production activities in one trip or in a calculation period.
-

Cost of fleet operation usually consists of 2 groups: Vietnamese currency costs
(R) and foreign currency costs (R′ ). It is determined by the following formula:
𝑚

R=

𝑟𝑖 (VNĐ)
𝑖=1
𝑛

R′ =

𝑟𝑛𝑡𝑗 (USD)
𝑗 =1

R, R′: The costs of ship operation by Vietnamese and foreign currency
i, j: Indicators of the cost items of the Vietnamese and foreign currencies
m, n: The number ofthecost items by the Vietnamese and foreign currencies
ri , rntj : The costs by Vietnamese and foreign currencies of the i, j items

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Recommendations to improve the efficiency of fleet operation in Binh Minh International
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It can be converted mining costs for sea transport fleet in a money unit to
calculate, using the following formula:
C=R+JR’ (VNĐ)
R

C′ = R′ + (USD)
J

J: The exchange rate at the time of calculation (VND/USD)
-

The revenues of ship operation on domestic and international routes are
calculated by following formula:
m

F=

fi Q i (VNĐ)
i=1
m

F′ =

fntj Q j (USD)
j=1

F = F + F. J(VNĐ)
F′ = F′ +

F′
(USD)
J

F, F’: The revenues of ship operation by Vietnamese and foreign currencies
i, j: Indicators of the revenue items of the Vietnamese and foreign currencies
fi , fntj : The freight by Vietnamese and foreign currencies of the i, j items
m, n: The number of the revenue items by the Vietnamese and foreign
currencies
Q i , Q j : The volume of transported cargoes according i, j revenue items
-

The financial results of ship operation on domestic and international routes are
calculated by following formula:
∆F =

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F − C (VNĐ)

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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

∆F′ =

F ′ − C′ (USD)

F = F + F. J(VNĐ)
F′ = F′ +

F′
(USD)
J

These indicators are used to assess the effectiveness of the ship, used to
compare and find the most profitable way in the business. With an operating fleet,
these indicators are the most accurate assessments for effective exploitation or not, or
how high efficiency is optimal. However, there is also other way to evaluate the
effectiveness of exploitation:
The effectiveness of exploitation =

The fleet is effectively exploited when:

F
R

> 1 or

F
R

F′
R′

or =

F′
R′

> 1 and this ratio is as

high as possible.
1.3

Orientations to improve the efficiency of fleet operations of
shipping enterprises

1.3.1 Increasing the number of running days of ship
Running days are referred to the days at which the ship is operated effectively
and without interruption by activities of ship as: anchoring for waiting cargoes,
procedure work, sheltering monsoon or storm, waiting for changing crew plan or
technical repairs.
In order to increasing the number of running days in operation, shipping
enterprises have to limit day off times by implementing accurately and rationally
transportation plans. Logistics plans (as supplying fuel, food, fresh water, changing

crews, cleaning cargo holds or repairing plan) must be implemented concurrently at the
times cargo to be loaded and unloaded or ship waits for free berths or procedure work.
It needs to be searched good and reputable local ship’s agents in serving ship at
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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

departure and destination ports. Plans for the loading and unloading works and the
other required services should be projected explicitly and specifically before the ship
arrives with the fastest time possible.
Officials and ship operators also need to plan the voyages exactly with the less
risk; officers and crew members implement on board plans on the loading and
unloading cargoes efficiently and quickly.
1.3.2 Reducing the voyage time of ship
Voyage time of ship depends on numerous factors and effects to the efficiency
of fleet operation. On the same route, knowing how to organize the way well will
decline sailing time; organizing cargo handling work well will reduce the time ship at
port; organizing agent work well will reduce waiting time service.
Thus, to reduce the voyage time required to plan trips specifically and explicitly
and implement exactly schedule set out. Utilizing the skilled team of Sailor and crew
members is for purpose operating ship under the shortest path, maximizing speed train
and taking advantage of wave and wind power for trip. It needs to be calculated
exploitation seasons to take advantage of cargo and weather, while avoiding areas with
bad weather and sea monsoon.
1.3.3 Increasing indicators of ship operation in each trip
Maximizing coefficient taking advantage of Deadweight Cargo Carrying

Capacity (α): selecting plan has α = 1 for 𝑄ℎ =𝐷𝑡 . Meanwhile the volume of goods
transported on board (𝑄ℎ ) will be equal to Deadweight Cargo Carrying Capacity of
ship (α). Ship owners will gain maximum transport freight of trip.
Limited the number of changes in cargo turn at voyage (β) in order to take
advantage of the continuous operation of ship: selecting plan has β = 1 for limiting the
time ship docked other ports to stevedoring. In the case of ship have to dock many
ports in the same voyage, waiting time will increase because of waiting for the loading
or unloading plan of port, incurred more risks than normal trip.

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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

Maximizing the transport productivity is purpose to maximize the volume
shipped in the transit time and distance. Operator also should restrict the train runs
empty during exploitation time.
1.3.4 Cost savings in trip
During each trip, the large amounts of money are used to pay for a lot of charges
as: crew wages, fuel and food procurement, insurance coverage, port costs. To ensure
profitability targets, ship owners have to save costs at a minimum. This business
requires good management in cost items through the collection and analysis of the
causes of fluctuations in costs, from which to draw reasonable measures to save.
Fuel cost is the main type of cost accounting in operation. Therefore, if tightly
controlled, it will increase the revenue and profit of trip. This cost is lost mainly by
crew members taking advantage of lax management of the business, declaring journey
dishonestly, giving the level is too high compared with the fact for private profiteers.

Measures for shipping enterprises are making use of crew members are qualified and
professional ethics to operate the ship under the shortest schedule, right route and being
honesty in work.
In addition, enterprises should look for agencies and ports with the reasonable
cost to serve ships. It requires exploiting staff must have certain knowledge,
understanding and capability to seek the services of good quality in their price class.
Furthermore, reducing waiting time, stevedore time along with effective usage
of cargo handling equipment also contribute to reducing costs of berth, mooring,
anchoring. It requires crew members must work diligently in loading and unloading
work, arrange exactly plans, maintenance and take care of lifting equipment is always
ready to operate.
1.3.5 Increasing revenues of trip
Revenue of voyage is the entire amount money enterprises obtained from
providing transportation services for customers in a certain time period. To increase
sales efficiency, businesses need to take full advantage of carrying capacity and
Coefficient of utilization of ship. In addition, they can focus on operating into the
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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

original goods owners and cargo orders have good freight rates as well as low percent
commission to brokers, quick loading and unloading time, and the low level of risk.
Qualifications of ship's officers must satisfy the arrangement cargo diagram to load
cargo as much as possible if permitted (even loaded on deck).
Other measure to increase sales during the trip is enterprises need to focus on
calculating specifically and definitely dispatch money following the contract. It

requires the complete collection relevant documents to calculate and prove as Notice of
readiness, Timesheet, Statement of Facts…
1.3.6 Other measure
-

Organization and management measures: organization of production under the
optimize plan; enhancing the effectiveness of management in all three
elements: basic level of management staff, technical equipment level to
management and management methods.

-

Measures to strengthen the extraction: it should be well done in three issues:
staff qualifications exploitation, investment in technology innovation and
technical team - technical workers innovation.

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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

CHAPTER II: EVALUATION ABOUT THE EFFICIENCY OF
FLEET OPERATION AT BINH MINH COMPANY IN THE
PERIOD FROM 2012 TO 2014
2.1

Introduction about Binh Minh International Sunrise S hipping

Joint Stock Company

2.1.1 History of development
Name: Binh Minh International Sunrise Shipping Joint stock Company (BMC)
Head office: No 9.9 HoangDieu Street, MinhKhai Quarter, HongBang District,
HaiPhong City, Vietnam.
E-mail:
Telephone number: (031).3569 586
Fax: 0313 569 587


Line of business
Table 2.1: Registered business lines of Binh Minh Company

No

Name of branch

Branch code

- Trade and service in goods transport by near shore and

1

ocean
- Service of transport of passengers by roadway and
waterway
- Management and exploitation of marine vessels
- Shipping agency service
- Trade in metal, material, machine, equipment for

maritime, means of transport of waterway

2

Retail of car (kind up to 12 seats)

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45120

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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

Wholesaler of spare part of automobile and other motor

3

45301

vehicles

4

Agent of spare parts of automobile and other motor
vehicles

45303

5

Wholesaler of machine, equipment, spare part of
machine of exploitation and construction

46591

6

Wholesaler of coal and other hard fuel

46611

7

Wholesaler of petroleum and relevant products

46613

8

Wholesaler of gas and relevant products

46614

9

Wholesaler of iron, steel. /.

46622

Source: FromBinh Minh Company


-

The main fields of activity today:

Contract management and exploitation of marine transport vessels inland and
international routes
Imports of machinery and equipment for shipbuilding
Exports of clinker volumes of 500,000 tons / year to countries as China,
Bangladesh


Charter capital: 20,000,000,000 VND (in words: Twenty billion VND)

Share nominal value: 1,000,000 VND
Number of share and value of share that has been contributed:
Number of share: 20,000 shares
Share value: 20,000,000,000 VND
Binh Minh International Sunrise Shipping Joint Stock Company was founded in
2006, with a team of experienced and professional competence staff in the field of ship
management has gradually established relationships and created long-term partnership
with many prestigious partners in the countries of the region, thereby creating a firm
premise for the Company can provide ship management services comprehensively
include technical management, crew management, accounting and financial
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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

management, chartering. The company could serve all those owners wishing to ship
management as bareboat charter, time charter vessels, and demand for imported
shipbuilding equipment package ... with the motto “cooperation for development”.
The company focuses on expanding the investment scale of operations, business
lines, enhancing competitiveness in the market in the areas of machinery and
equipment import multiple categories, chartering, leasing of ship, customs brokerage,
strengthening import and export activities.
Director of the company towards new construction work environment includes
dynamic working, solidarity and jointly developed people.
As a company specializing in Ship Management, company has advocated
building security and safety management systems according to the ISM system to
provide maritime transport services with high efficiency, safety and environmental
protection, to minimize the risks and ensure the interests of customers.
2.1.2 Organizational structure of the company and main duties of departments
Mr. Vu Xuan Binh- director is considered the legal representation in all
activities of the company, responsible for the company's charter and the law on the
operation of the company. Director performs the rights and duties as follows:
-

Formulating development strategy and annual and long-term plans of the
company
Holding operation activities of the company under the charter and regulations
of organization and production activities of the company
Promulgating economic and technical norms and standards of products, unit

wage of the company
Reporting to the competent authority on the results of operations and business
of the company

a. Operation – import-export department
- Advising director on commercial work and fleet business in order to bring the
highest economic efficiency for company

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Recommendations to improve the efficiency of fleet operation in Binh Minh International
Sunrise Shipping Joint Stock Company

-

Organizing marketing network to source for the company's fleet following
transport schedule

-

Developing plans to exploit the ship and organizing the transport contract
signed

-

Participating in solving tasks related to production and business operations of
the fleet

b. Technical department
- Monitoring and researching the issues related to techniques and material
management as well as repair and maintenance of the fleet from 8,821 DWT to
56,320 DWT
-

Managing the security and safety system for ships and company under the
ISM Code and ISPS Law

c. Human resource department
- Managing documents, papers,

books

administration

and

the

seal.

;implementation of the archive normal and important documents
-

Arranging personnel suitable and for operational requirements and business
development of the Company
Labor management, staff wages - employees with accounting department
Managing records of staff throughout the company, handling procedures and

policies related to personnel issues - labor - wages

d. Safety and legislation department
- Responsible for Legal work for all activities of the company
-

Responsible for updating the legal information , reviewing and evaluating the
legal risks of internal regulations and the latest documents and regulations of
the state related to business activities of the Company to directly advise the
Company Board of Directors and the relevant parts

-

Join the settlement of disputes in order to protect the legitimate rights and
interests of the Company; join the inspection rationality and legality of the
contracts signed with economic agencies and other partners, the documentation
consistent with current law

e. Accounting department
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