Building a plan for managing changes in vietfracht

UPPSALA UNIVERSITÉT &
VNU UNIVERSITY OF ECONOMICS & BUSINESS
________ ______ __

"k

*

-k

____________

UPPSALA
UNIVERSỈTET

MASTER THESIS OF MPPM

Building a plan
for managing changes in Vietfracht

Author:

Ngo Xuan Hong

Supervisor:

Prof. Dr. Lars Torsten Erikkson

Locaì Supervisor: Dr. Do Tien Long
Class:

ỈMPPM INTAKE 7

Hanoi, January - 2015


ACK NO W LED G EM EN T
During 24 years working at Vietfracht, with 10 years o f being a member o f
the company’s directorate, I have always hoped to vvrite a scheme for
Vietfracht’s development in the íuture. Hortunately, with the knowledge that I
learnt from the teachers at MPPM 07 course and especially with the help and
encouragement from Prof. Dr. Lars Torsten Eriksson (Uppsala University,
Svveden), Dr. Do Tien Long (VNU University o f Economics and Business,
Hanoi National University), with the urge o f changing Vietfracht according to
the govem m ent’s businesses restructuring policy. Today, I have íìnished the
essay “ Building a plan for managing changes in Vietíracht” and I hope it
will be an important document to guide Vietfracht through crisis and continue
to grow in the time vvhen Vietnam is signiĩicantly integrating in the w orld’s
economy.
Pirstlv, I would love to express my sincere gratitude to Prof. Lars Torsten
Eriksson and Dr. Do Tien Long, who directly guided and helped me to
complete this Master Program in Public M anagement’s thesis. I aỉso vvant to
send my thanks to the teachers; VNƯ University o f Economics and
Business’s

(Vietnam

National

University’s)

administrators,

Uppsala

University (Sweden); leadership and staffs at Center fo r International

Training and Educatiotr, triends, colleagues who helped me during the time I
studied and completed the thesis.
I express heartíelt thanks to Vietfracht’s board o f directors, managers and
staffs, the companies, organizations and individuals... that assisted me in
collecting datas and documents for researching and vvriting the thesis.
Finally, I am grateful for my family and iriends’ encouragement and support,
vvhich helped me focusing on researching and completing my thesis.
Many thanks to you!

Hanoi, November lOth, 2014
VVriter
Ngo Xuan Hong


Abstract
Title: Building a plan fo r nianaging changes in Vieựracht
Level: Final assignment fo r M aster Program in Public Management
A uthors :NgoXuan Hong
Svvedish supervisor: Prof. Dr. Lars TorstenErikkson
Local supervisor: Dr. Do Tien Long
Date when the thesis is presented: 2014 - December
Aim: The research creates plan for developing Vietỉracht in the future. In
detail, the research is to analyze the present situation o f Vietfracht, things that
Vietíracht expect to change in the future, reasons for the changes, support and

protest forces tovvard the changes, the capacity and willingness o f Vietfracht’s
leaders in conducting the changes, the mechanisms and measures ưsed to
support the changes and the plan that Viettracht need to follow to achieve
tuture changes.
M ethod:T he research uses secondary data from the íìnancial statements,
annual managem ent reports o f Vietữacht, reports on reviewing the World
Economy and Vietnam ese Governm ent Reports on Vietnam Economy and
Society. Moreover, the research ưses primary data from interviews o f
Vietfracht’s key em ployees and leaders to clarify the support forces, the
protest íorces in the changing process, the capacity and the vvillingness in
changing o f V ietfracht’s leaders, and strengths, vveaknesses, opportunities and
threats o f the Corporation.
The researcher uses: (1) MIO Model to have a general insight on present
situation and analysis o f the future o f Vietíracht; (2) The PEST framework to
analyze

how

political

tầctors,

economic

tầctors,

social

íầctors

and

technological tactors are changing and are likely to change in the future then
draw out implications for Vietfracht bascd on those analysis; (3) SWOT
analysis to analyze strengths, weaknesses, opportunities and threats o f
Vietfracht,from that, it can help to choose a suitable strategy for the changes


in the íuture; (4) The Force Field Analysis Method to clariíy the support
tbrces, the protest tbrces in the changing process, the capacity and the
vvillingness in V ietfracht’s leader change; (5) The Change Kaleidoscope to
understand the capacity and vvillingness o f Vietfracht’s leaders in conducting
these changes, the mechanism s and measures that are used to support these
changes; (6) The C hange Model including 8 steps o f Kotter (1995) to build
the plan for changes o f Vietữacht.
R csult & C oncIusions:L eaders o f Vietfracht recognize that the company
needs to conducts five changes in the future.
Firstly,

V ietữ acht maintains and

improves business operations o f sea

transport sector at present by assigning additiona! tasks to the divisions or
departments o f Container agencies in branches and subsidiary companies in
order to tìnd out n e w c ustom ers for the com pany's Container tleet.

Secondly, the Corporation gradually liquidates and sells existing dry cargo
vessels o f the C o rporation w ith p rio ritiz in g old vessels hav ing p o o r technical
condition and vveak capability.

Thirdly, it applies methods o f loan purchase or hire purchase o f vessels in
order to form and d evelop the inland Container transport vessels, and an initial

amount o f at least 02 Container ships under 15 years old and 700 TEU size
built by Japan or Europe. The Corporation sets up the inland Container
shipping routes with w eek ly schedules and it m ust associates with Container

vvarehouses system o f the C orporation in Haiphong, Danang, Quynhon and
Hochiminh City.
Fourthly, the Corporation continues to gradually choose human resources with
high experience for operation, m an ag em en t, Container ship conduction in

order to meet complex jo b s for sea transport block and focus much on training
and retraining for existing employees to meet vvork requirements.
Lastly, Vietíracht positively uses the modern application o f information
technology and develo ps Service quality m anagem ent system to enhance the

competitive ability

in the maritime

requirements o f customers.

industry and meet the increasing


Suggestions fo r íu tu re research:use the research methods having stated in
this thesis to:
- Hxtend the scope o f researching with a group o f Vietnam’s shipping
companies. From that, build a plan o f restructuring the VietnarrTs shipping

companies to get over the global economy crisis, especially in this situation
vvhen Vietnam’s economy is still unstable and the companies's opportunities
to approach the sources are limited.
- Research more about the leader’s role in Vietnam’s shipping companies’
restructuring process. Focus more on analyzing of: (1) orientating the changes
hy building long-term plans and strategies; (2) controlling all effects and
manage the risks in the vvhole restructuring process.
Contribution o f the thesis: The thesis has some contributions.

Firstly, by building the plan for management changes, Vietíracht certainly
will face the diffĩculties to achieve new successes, become the leading
company in maritime and logistics industry in Vietnam, and be able to
compete with regional logistics enterprises. In other words, the thesis helps
managers o f Vietfracht to have a valid reterence instrument for proposing a
plan o f management changes in the future.
Secondly, there are a few researches o f studying on the Vietnamese maritime
industry in general and Vietíracht in particular. Thereíore, the thesis
contributes to an increase in literature o f evaluating the Vietnamese maritime
industry in general and planning management changes o f Vietíracht in
particular.
Thirdly, the thesis becomes a research and a construct for restructure project
o f the Vietnamese state-owned shipping companies.
Fourthly, the thesis contributes to acceleration o f the plan tor restructuring the
State Capital Investment Corporation (SCIC).
Lastly, the thesis is an important document to help investors have necessary
information to make right investment decisions on Vietíracht.
Key w ords: Vietíracht; Changes; Plan; Maritime; Logistics; Future &
Leadership.

3.3.2 The activities for change.................................................................................... 40
Chapter 4 C on clu sion s.............................................................................................. 47
4.1 Some reílections on the theory used ....................................................................... 47
4.2 Retlections on the practical contribution to Vietíracht and other companies.... 48
4.3 My reílections on lessons leaming in research....................................................... 50
Reterences........................................................................................................................ 55
Appendix 1.......................................................................................................................58
Ọuestionnaires used in intervievvs............................................................................. 58
Appendix 2 .......................................................................................................................59
Results o f interviews o f leaders..................................................................................59


TABLE AND FIGURES

TABLE

Table 1: Brief results o f business operation o f Vietíracht from 2008 to 2013 .3
Table 2: Comparison tbusiness operation results o f Vietfracht with its
competitors in 2 0 1 3 ....................................................................................................... 6
Table 3: The sea transport fleet o f Vietfracht........................................................ 15
Table 4: PEST analysis o f the extemal business environment o f Vietfracht..28
Table 5: SWOT analysis o f V ie tử a c h t....................................................................31

FIGURES
Figure 1: Total revenue, total cost and total proíìt from 2008 to 2013 of
V ietíracht..........................................................................................................................4
Figure 2: Vietfracht’s market in V ie tn a m ................................................................ 7
Pigure 3: The eight contextual features o f Change K aleidoscope................... 41

1

Chapter 1
Introduction
1.1 An overvie>v o f Vietíracht and its market
According to Vietíracht (2014a), detailed background o f Vietửacht as follows:
Sea transport industry plays a vital role in the socio-economic development o f
Vietnam because through large amount o f exports and imports by sea, it
contributes to trade promotion for Vietnam. Vietíracht was formerly named
Vietnam Foreign Trade Transportation Corporation, known as the stateowned company and established in 1963. In October 2006, the Corporation
was changed to the joint stock Company, and named Transport and
Chartering Corporation (Vietữacht). Vietữacht was offícially listed on the
Hanoi Stock Exchange with stock Symbol named VFR in 2006. With over 50
years o f operation and grovvth, Vietíracht has become one o f the leading
shipping íìrms in Vietnam. The leading position in operating the shipping
íìeld, the Corporation has achieved many value avvards from the Government
o f Vietnam such as First Class Labor Medal, Third Class independence
Medal, Ọualitìed and Prestigious Enterprise ot' Vietnam, Labour Heroic Unit,
The National Golden Cup tor Social Progress and Sustainable Development
and The Vietnam Famous Trademark Winner.
During the period o f 2005-2015, Vietíracht will enhance its business
operations in terms o f diversitìcation o f services, upgrading means o f
transportation, strong improvement o f office facilities, infrastructure, and
systems o f informatics, strong development o f human resources, and
enhancement o f establishment o f joint stock, joint venture and subsidiary
íìrms. Moreover, the Corporation always enhances quality services to satisíy

increasing needs o f customers and constantly strengthen its business activities
with its partners around the world.
Business scopes o f Vietíracht are to transport goods by sea and by land,

shipping, logistics and forwarding agents for air, sea and land, direct import


and export o f goods for transportation industry. Moreover, the company also
conducts business activities related to chartering and brokerage services,
intem ational express Service, booking agents for dom estic and international

airline, ship-chandler, entertainment services for passengers, tallying goods,
maritime brokerage, warehousing and accommodations for lease, real estate
business, leveling ground suríầce o f mineral exploitation and construction,
and customs clearance services.
The global íìnancial crisis and economic downtum from 2009 to the present
have been evaluated as the vvorst one since the Great Depression o f the period
o f 1929 - 1933. Maritime industry around the world has suffered serious crisis
and many large shipping companies have gone bankrupt or needed to have
govemment bailout to survive. One o f the main reasons is the imbalance o f
demand and supply. In the global economic crisis, massive development in a
sea transportation fleet vvhile there is only a lovv increase in needs of
transportation. In Vietnam, sea transportation companies have faced very
serious difficulties and many companies out o f them have gone hankrupt.
Like see transport corporations, sea transport fleet o f Vietfracht has had
prolonged difficulties intluencing on lives and works o f its employees and
beneíits o f its shareholders and its other stakeholders (Vietíracht, 2013). This
becomes a motivation íbr Vietíracht to build the plan íor management changes
in the Corporation in order to improve and enhance its protìtability in the.
The Vision o f Vietíracht is to alvvays try to become a leading business
company in Vietnam with a variety o f business fields, especially main
business activities íbcusing on maritime field. In other words, Vietfracht
expects to become one o f the leading shipping corporations in terms o f high
business performance, high quality services, high brand name, and high trust

in the maritime industry in Vietnam. Business objectives o f Vietíracht are to
focus on providing high-quality services for customers, create good jobs for
citizens where it is operating, create positive working environment for all its


3

em ployees to enhance physical resources and m ental encouragem ent for its

employees, increase its employees’ working pertbrmance, provide many
beneíìts for its shareholders, protect the environment, enhance the economic
and social development in communities vvhere it is operating, comply with all
regulations and laws o f Vietnamese government and balance beneíìts o f all its
stakeholders. Moreover, business principles o f the Corporation are to pay
much

attention

to

innovation,

renovation

in

business

development,

proíessional business activities according to international laws, enhancement
o f toreign relations and increases in business co-operation with its partners so
that these things enhance its business períbrm ance, m aintain and develop its

brand name in its industry, ceaselessly increase stock values for its
shareholders and benefits for its other stakeholders.
In 2013, the Corporation has a very srnall proíit o f business operation vvith
VND 220 million and other iníbnnation o f tìnancial results is indicated in
table 1.

Table 1: Brief results of business operation of Vietíracht from 2008 to 2013
Kinancial
iníormation

2008

2009

2010

Total
revenues
(VND)

251.577,000.000

262,113,000,000

297,470,000.000

Total costs
(VND)

218.822.000.000

245,400,000,000

Total proílts
(VND)

32,755.000,000

16,713,000,000

2012

2013

552,210,000,000

432,630,000,000

354,840,000,000

271,730,000,000

438.260.000,000

428.950,000,000

354,620,000,000

25,740.000.000

113,950,000,000

2,710,000.000

2011

220.000.000

Source: Annual reports o f Vietíracht from 2008 to 2013
According to annual reports o f Vietíracht from 2008 to 2013, although the
global economic crisis has occurred since 2008, total revenues o f the
company fast increased because the company had many suitable and effective
business approaches such as tocusing on effective business operations, and
enhancing marketing strategies to enhance customer base. Hovvever, its total
revenues from 2011 to 2013 strongly reduced because the global economic
crisis had high iníluences on Vietnam in general and Vietíracht in particular.


4

From 2008 to 2011, total costs o f the company fast increased but its total cost
from 2011 to 2013 strongly reduced thanks to control and management o f
business costs. Total proĩits o f the company in 2009 reduced in comparison
with 2008 but total protìts o f the company started increasing from 2009 to
2011 with high speed. Hovvever, from 2011 to 2013, total proíìts started
reducing strongly. In general, the company had high proíìts from 2008 to

2011 but it had ineffective proíits in 2012 and 2013. The graph 1 indicates the
detailed relationship o f total revenues, total costs and total prolìts of
Vietíracht. In short, the company started having ineffective íĩnancial results
since 2012 and thus changes become necessary tbr Vietfracht to develop its
business growth in the future.

Figure 1: Total revenue, total cost and total proíit from 2008 to 2013 of
Vietĩracht


5

600,
500,
400,
□ Revenu

300,

■ Cost
□ Protit

200
100 ,

2008

2009

2010

2011

2012

2013

The year 2013 generally completed most plans proposed in 2012. In terms o f
costs, the corporate reduced management costs o f 27.2 percent (about VND
1.57 billion) in comparison with 2012. In tenns o f profits, services including
warehouses, freight forwarding, offices for rent, and íĩnancial investment are
profítable and the business operation tlelds signitìcantly contributed to its
general proíìts. However, inaritime transport still continueđ to lose in 2013.
With proíits o f VND 2.2 million, the Corporation had a very signitìcant
decrease o f about 92 percent in its proíits compared to 2012 (about VND 2.7
billion). In the Vietnamese maritime industry, all shipping companies faced
signiíìcant difficulties in their business activities related to maritime services
because o f bad effects o f the global economic crisis since 2009. Hovvever, in
comparison with other shipping companies in Vietnam, business operation
results o f Vietfracht in 2013 were in the good level. The stock price o f the
Corporation is in the high level in compared to the average level o f the

maritime industry (see table 2).


6

Table 2: C om parison ibusiness operatỉon results o f Vietíracht with its
competitors in 2013
Kinancial

V ietĩracht

v osco

150,000,000,000

1,400,000,000,000

354,840,000,000

2,065,000,000,000

1,109,000,000,000 681,000,000,00(

220,000,000

-198,000,000,000

-223,000,000,000 - 107,000,000,00(

Vitranschat

Vinaship

iformation
Share
Capital

590,000,000,000

200,000,000,00(

(VND)
Total
revenues
(VND)
otal profíts
(VND)
Source: Vietfracht (2013)
According to Vietíracht (2014b), the Corporation has 09 branches and
representative offices that ensure the availability o f its services serve all
customers in Vietnam. There are 08 markets in Vietnam that Vietfracht has a
strong presence including Hanoi City (its headquarters), Hochiminh City,
Vungtau City, Ọuangninh province, Haiphong City, Danang City, Quangngai
province and Ọ uynhon City.


7

Figure 2: Vietfracht’s markct in Vietnam

Source: Vietĩracht (2014b)
1.2 Research purpose and questions
1.2.1 Research purpose
On the basis o f assessing the current situation o f Vieítracht, the researcher can
tìnd out the strengths, vveaknesses, opportunities and threats to create a plan
for developing Vietírachtin the future. The researcher can apply the learnt
theories and actual experience to propose the solutions to improve Vietữacht
business pertormance in the future.
1.2.2 Research questions

The research needs to ansvver tìve research questions as follows:
1. What is the present situation o f Vietfracht?
2. What does Vietíracht expect to change in the future? And why does
Vietíracht need to conduct the changes?
3. What are support and protest íòrces in these changes? And vvhat are the
capacity and vvillingness o f Vietfracht’s leaders in conducting these
changes?
4. What are the mechanisms and measures that are used to support these changes?


8

5. What pracess or plan does Vietiracht need to follow to achieve íùture changes?
1.3 Research data and methods
The research uses both secondary data and primary data to ansvver research
questions. Secondary data is the data available tơ the researcher because it has
been collected by other researchers for other research aim (Saunders et al.,
2009). There are three types o f secondary data consisting o f data collected
from multiple sources, documentary data and survey-based secondary data.
Therefore, through use o f the secondary data, the researcher can gain some
advantages such as the researcher saves time and money to collect the
secondary data, the researcher does not faces problems relevant to geography
and ti me and the researcher can assess the secondary data beíore using it
(Srivasta and Rego, 2011). The research uses secondary data from the
íĩnancial statements, annual management reports o f Vietửacht, reports on
revievving the World Economy and Vietnamese Government Reports on
Vietnam Economy and Society. The researcher does not face any difficulties
related to tlnding the secondary data because it is available to the researcher.
Moreover, the secondary data is valid and reliable such as the tìnancial
statements, and annual management reports o f Vietíracht are audited by

extemal auditors and the World Economy and Vietnamese Government
Reports on Vietnam Economy and Society are provided by the Vietnamese
govemment.
Primary data is directly gathered by a researcher through various tool o f
collecting data such as questionnaire and intervievvs. The researcher collects
primary data through interviews because the technique o f collecting data
helps the researcher has deep information about study subjects (Biggam,
2008). The researcher conducts intervievvs o f Vietfracht’s key employees and
leaders to clariíy the support íorces, the protcst torces in the changing process
and the capacity and the vvillingness in changing o f Vietfracht’s leaders. In
addition, through intervievvs o f Vietfracht’s leaders, the researcher can deeply


understand

strengths,

vveaknesses,

opportunities

and

threats

of

the

Corporation. The researcher intervievvs 04 leaders o f VietlVacht inclnding 03

deputy directors, and one chairman o f board o f directors and 06 employees o f
V ietữacht working at Sea Transport and Logistics block, and Services block.
According to Kumar (2002), there are sometimes unexpected elements that
can intluence on the quality o f iníormation collected in intervievvs. For
example, ambiguity in wordings o f questions in interviews, the nature o f the
interaction betvveen interviewees and interviewer, applied instruments o f
recording data, physical setting o f collecting data and the aim o f the
interaction between interviewer and interviewees can intluence on the quality
o f responses during the interview. The primary data is provided by leaders
and

employees

o f Vietfracht

who

have

great

experiences and

deep

understanding about the current business situation o f Vietíracht. In during the
interviews, the researcher uses note-taking approach to record information or
primary data provided from interviewees and interviews the leaders and
employees o f the com pany in comíortable physical setting so that the
intervievvees feel com tbrtable in expressing the iníòrmation from thcir real

thoughts. The aim o f the thesis is build a plan for development o f the
Vietíracht in the ÍTiture. Thereíore, leaders and employees express their real
ideas about the current situation o f V ietữacht and then all their ideas become
valid and reliability to use in the thesis. Aíter collecting primary data, the
researcher analyses the data objectively to achieve valid research íìndings.
However, intervievvs o f 04 leaders o f Vietfracht and its 06 employees cannot
cover all opinions o f all leaders and employees o f the company.


10

Chapter 2
Analysis o f present situation and expected íuture changes o f Vietírachtby
using MIO Model
The MIO Model is widely used for the management to have a general insight
on present situation and analysis o f the future o f their company. The model is
developed by Hriksson and H auer (2004) to find three interdependent issues
including extemal elements (market), the positioning o f products or services
(ỉnteraction) and internal element (organization).
2.1 A description o f the present situation
2.1.1 The present market
According to Vietíracht (2013), the w orld’s economy had a slight recovery in
2013 after the period o f signitìcant econoinic crisis with the 2012 year o f the
most signiíìcant difficulty o f economy. The global Gross Domestic Product
(GDP) in 2013 raised about 2.4% and the increase was the first one after
many years ceaselessly reduced. The slight economy recovery occurred in
many areas around the world in 2013. For example, in the United States, its
economy had signiíìcantly positive changes in 2013 such as unemployment
rate signitìcantly reduced, the

u.s stock market became cffervescent, business

profits o f companies in the United States had increases, and real estate market
started recovering. In Japan, its economic recovery was quite high in 2013,
such as export o f the country increased quite highly, proíìts o f companies in
the country highly increased, stock prices in the Japanese stock market
increased about 50 percent. The G D P o f European areas íìrst increased after
the decade o f reduction such as the United Kingdom increased 1.9 percent
that was the highest rate during the last six years. In addition, the economy o f
emerging countries in Asia had slight economic recovery in 2013. Hovvever,
the level o f the global economic recovery is not still considered as firm
recovery because o f risks and unstable elements. Issues that draw much
attention o f shipping companies in Vietnam are political conílicts and military


11

contlicts betvveen China and North Africa, political conflicts in Northeast
Asia, and recently serious political crisis in Ukraine.
The global economic crisis and the vveaknesses o f support policy o f the
Vietnamese govemment has made inílation rate highly increase, and has
signitìcantly affected stability o f macroeconomics. Moreover, they have made
the Vietnamese economic slowly increase and have caused many difficulties
for business activities and Vietnamese people’s life. The global maritime
market in 2012 was to íầce difficulties and the maritime industry had the
highest crisis in the year. ỉn 2013, the global maritime industry faced difficult
situation o f reducing maritime demands o f customers. The Baltic Dry Index
(BDI) was about 800 points in the íirst three quarters o f the 2013 year in
comparison with 647 points o f the year 2012. In the íburth quarter o f the 2013
year, the BDI started slightly increasing. However, the slight increase o f the

BDI was not stable and only íbcused on segmentation o f large vessels like
Capsize and Panamax in 2013. Moreover, the maritime markets for the
smaller size like vessels o f Vietíracht had very lo\v recovery and the maritime
m arkets for tankers and Container were bad in 2013. In the 2013 year, oi 1

prices were high and maritime costs increased. The difficult situation caused
many difficulties for maritime companies around the world including
Vietnam. In Asia, one the largest íleets o f Japan - Nippon Yusen Kabushiki
Kaisha (NYK) in the fírst three quarter o f the 2013 year had losses o f 2.5
billion Yen in terms o f Container transports. Other brand names such as Yang
Minh, and Evergreen in Taivvan faced many diffículties in business activities
and had high losses. One o f the largest brand names in the maritime industry
o f South Korea - Hanjin faced many signiíìcant difficulties such as losses o f
u s s 391 million in the first three quarters o f the 2013 year and currently
paying very high interest rates for borrowing previous bank loans in order to
invest in too m any vessels that had conducted in the previous period o f

economic crisis. In China, in 2013, two o f the largest brand names in the


12

maritime indưstry including

cosco

and China Shipping íầced many similar

difficulties and the Chinese governm ent required the two fleets to restructure
business operations. In Vietnam,

vosco

had losses o f VND 194 billion,

V IT R A N C H A R T had losses o f VND 224 billion, VINASHIP had losses o f
VND 108 billion and Dong Do Company was delisted in thc Vietnamese
Stock Exchange because its consecutive losses in three years with an amount
o flo s s m oney h ig h er than share Capital (Vietíracht, 2013).
Vietnam vvith the developing economy faces many tlerce competitions in the
globalization era and the country has limited human resources to conduct
developm ent o f social security and national deíence security. Hovvever, the
Vietnamese governm ent has had timely decisions o f adịusting objectives and
tasks that tocus much attention to reduction o f inílation rate, stability o f
macroeconomics. The adjustment o f the Vietnamese govemm ent has helped
the Vietnam ese econom y recover. Some economic targets o f the year 2013
included the G DP increased 5.42 percent, an increase 5.25 percent in
comparison with the last year, the Consumer Price Index (CPI) was 6.04
percent (the lovvest level in the last ten years), total export and import
turnover increased 15.4 percent with trade surplus
Foreign Direct Investment (FDI) was

us$ 21.6

us$

0.86 hillion, the

billion (the highest level in

the last five years), the íòreign exchange rate vvas quite stable (domestic
currency only reduced 1 percent in comparison with the last year), the foreign
currency reserves increased, interest rates reduced in the year vvith 7-8 percent
in comparison vvith 14% in the last year, the Vietnamese stock index grevv
about 20.62 percent (the most highest stock grovvth in Southeast Asia and the
real estate market started recovering (Vietfracht, 2013).
Although Vietnam had the economic growth in 2013, the quality o f economic
growth o f the country is evaluated as the unstable one, and the competition
capability

o f the

economy

is

low

because

Vietnam

is facing many

disadvantages such as over-expenditure o f national budget, high public debts,


13

very slovv economic restructuring process. Moreover, Vietnam faces many

difficuỉties in terms o f restructuring business activities o f the corporations,
state-owned companies, building useful business environmenl for companies
in Vietnam. As a result, there vvere 61.000 companies that were dissolved or
stopped their business activities temporarily in 2013 and the result was the
same figure in 2012. In short, the Vietnamese macroeconomics had a slight
recovery and tầced many significant diííìculties in 2013 (Vietfracht, 2013).
V ietnam’s fleets in its maritime industry have small scale. In other vvorlds, the
country’s sea port netvvork is small scale with inefficient distribution. Most o f
big ports are located at far rivers like Saigon port and Haiphong port with
restricted depth at the entrance while some ports o f the country are located in
big cities. This causes difficulties to transíer cargos from one port to other
port. Moreover, Vietnam lags badly behind other countries in Asian area
because o f its high operation cost and its average operation períòrmance in
the region.

Moreover, maritime supporting services such as maritime

transport agents, ship line agents, ship maintenance and repair at port, etc are
developing. Hovvever, Vietnam’s the development o f supporling services in
maritime transport is weak in comparison vvith other countries in the Asian
are because its weak proíessional and managerial ability o f shipping
companies in Vietnam, especially low quality o f maritime supporting services
and untầir competition between the shipping companies. From now to 2020,
the country íocuses on investment for its fleet, cargo distribution centers and
logistic Service centers with total investment costs o f 270-290 trillion.
Vietnam has less crew members and its crew members who are well trained in
the basic theory but they have the restricted practical experience. Theretbre,
the country does not meet needs for quality and quality, especially in crew
members who have the ability to work on overseas vessels. In order to
overcome the lack o f human resources in the maritime industry, Vietnam has

an orientation o f developing human resources from now to 2020. The country


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vvill train about new 24,000 crevv members and officers and retrain to increase
skill level o f 15,000 existing crew members and officers. Moreover, the
country enhances to train human resources in shipbuilding, logistics and
marine seaport exploitation aspects (ASEM Connect Vietnam, 2014).
The year 2013 vvas the golden jubilee o f the corporation’s íbundation.
Although the global economy has a slight recovery, the year 2013 was still a
diỉììcult business year o f all shipping companies. In 2013, most shipping
corporations in Vietnam suffered signiíìcant losses but Vietfracht’s business
results are proíìtable. Although the corporation’s business proíits were very
small in 2013, this proved a success in its business activities and expressed
increasing efforts o f its leaders and its human resources. In the quite difficult
context o f buying and selling seagoing vessel in Vietnam, the corporate sold a
sea going vessel - Vietíracht 02 and contributed to reduction o f losses o f the
íleet. Moreover, in order to reduce diffĩculties o f cash flows and financial
costs, the Corporation had success negotiations with banks in Vietnam to have
extension o f paying bank loans and reduce interest rate o f the bank loans
(Vietíracht, 2013).
2.1.2 The main market activities
Services o f Viettracht include shipping o f goods hy sea, chartering ships, ship
chartering brokerage-related

services, ships for rent, shipping agency,

logistics and forwarding agents for air, sea and land, services o f warehouses
and Container,

direct import and export o f goods íòr transport industry,

transport o f goods by land, consolidation o f goods; intemational express
Service (including heavy cargo and goods, technical and scientific material,

commercial documents, Products, sample o f goods, commodity), booking
agent for domestic and intemational airlines, ship-chandler, entertainment
Service for passengers and seamen, pick-up, imm igration and change o f

seaman Service, íorvvarding Service o f ship’s spare parts, tallying o f goods,
maritime brokerage, real estate business, offìce for lease, shoveling, carrying,


15

leveling ground suríầce for mineral exploitation and construction, temporary
import for re-export; triangle trading, forwarding Service o f export and import
goods, customs clearance Service (Vietửacht, 2014a).
In terms o f sea transport, Vietíracht sea transport lleet consisted o f 04 vessels
including Vietíracht 01, VF Glory, Thang Long and Blue Lotus and they are
presented in table 3. Vietíracht manages and operates 04 fleets vvith the high
capability and it is going to invest in its fleet to ensure that it can provide its
customers with the best services and improve the business períbrmance
(Vietíracht, 2013).
Table 3: The sea transport fleet o f Vietíracht
Tonnage
No

Vessels name

Year/Place o f
Vessels type

(DWT)

being built

1

Vietíracht 01

8,100

General Cargo

1990/Japan

3

VF Glory

8,500

General Cargo

2008/China

4

Thang Long

9,000

General Cargo

1998/Japan

5

Blue Lotus

14,500

Bulk Carrier

1999/Japan

Source: Vietíracht (2013)
As shipping agency, Vietfracht is General Agent for many conventional
Container lines around the vvorld vvith various types o f vessels including dry

carriers, reefers, bulkers, tankers, passenger ships, Ro-Ro vessels, and crude
oil carriers. Moreover, the Corporation provides agency services for vessels
that call at all ports in Vietnam and its range o f services covers all aspects
including inward and outvvard clearance, stevedoring, crewing, and cargo
handling (Vietíracht, 2014c).
In terms o f charting and ship-broking services, two services are traditional
Business o f the Corporation. With many years o f experience and strong
relationship with charterers and ship-owners, Vietíracht is successíully fixed

suitable ships for many shipments in Vietnam. Customers can contact the
Corporation for any import or export cargo because it has extended its services


16

to link its customers and suppliers Corning into transactions in some
shipments such as salt, coal, tapioca chip, silica sand, fertilizer, coal, grain,
sugar, rice, anthracite, and ore cargo (Vietíracht, 2014 d ).
With respect to forwarding and logistics services, Vietfracht’s employees with
experience and knovvledge alvvays understand how to satisíy requirements o f
customers and protect their own beneíìts. With its overseas representatives
and agencies always take good care o f customers’ interests and cooperate
with the Corporation for sm ooth m ovem ent o f cargo to all destinations.

Vietíracht assists its customers in four fíelds including airữeight and sea
íreight forwarding services, multi-modal transportation, consolidation and
distribution services, and customs clearance, documentation and insurance
(Viettracht, 2014e).
In terms o f trucking and vvarehousing services, Vietfracht provides modern
vvarehouses and management system in different locations in Vietnam such as
Danang City, Binhduong province, Haiphong City, Hochiminh City, etc.
Moreover, it trucks provide timely services with safety o f goods and it
supports to stuff cargo into containers at vvarehouses o f customers. The
professional services satisfy its customers due to careful and timely services
and suitable prices (Vietíracht, 20140.
Places or locations o f Vietíracht are in 8 key provinces and cities in Vietnam
that Vietíracht has a strong presence including Hanoi City (its headquarters),
Hochiminh City, Vungtau City, Quangninh province, Haiphong City, Danang
City, Ọuangngai province and Ọuynhon City. Vietfracht’s key customers are

in the 08 markets. With its locations in big cities, Vietíracht can meet most
demands o f customers around Vietnam. In addition to the 8 key markets, it
starts enter new markets such as Hungyen province, and Dongnai province
(Vietíracht, 2013).
Prices o f Vietfracht are reasonable and this helps it create and maintain
competitive advantages in the ĩiercely competitive maritime industry in


17

Vietnam. Hovvever, in the very difficult economy situation, most shipping
companies around Vietnam have reduced íreight rates to attract customers and
maintain their business operation. Like the shipping companies, Vietíracht
also reduce Service prices to survive in the severe com petitive industry. In sea

transport o f Vietíracht, the 4 fleets o f the Corporation provided strongly
decreasing prices o f renting its vesseỉs in 2013 such as the Thang Long íleet
reduced 45.5 percent, and the Blue Lotus reduced 32.4 percent compared to
2012. Therefore, difficult markets are main reasons for reducing prices,
revenues and business períormance o f the 4 fleets o f Vietữacht. Moreover,
Service prices related to renting offices also strongly reduced because o f
customers’ demands for renting offices in 2013 (Vietfracht, 2013).
Promotion or m arketing activities o f Vietửacht do still not achieve

efficiency in fmding out nevv customers and introducing services o f the
Corporation to customers. Most m arketing activities o f the Corporation only

use traditional marketing methods such as advertising in the press and
seminars o f introducing services (Vietfracht, 2013). Therefore, new marketing
methods such as social media (Pacebook, and YouTube, etc), vvebsites, and

other Online marketing methods can be a new marketing orientation for the
Corporation in the future to attract n ew cu sto m ers.

2.1.3 The present organization
Present objectives o f the Corporation is to conduct restructuring o f the tleet
and assets, maintain and enhance business períbrm ance in all Service fields

that Vietíracht is providing, maximize reduction o f business costs, keep the
corpo ratiorfs Capital whole, restructure business activities according to the
priority plan o f developing human resource and inữastructure for Service tìeld

related to Logistics, maintain security o f employment for its employees and
benefits for its shareholders. The Corporation is divided into 3 blocks that 2
blocks are responsible for direct business related to Sea Transport and
Logistics block, and Management and Services block. There apẹ 4 divtstoos
1

Đ Ạ I H Ọ C Q U Ộ C G IA H A NỘT

ĨRUNG t â m t h ô n g T Ị N Ĩ H Ư ^


18

that are responsible for directly managing and operating the sea transport fleet
for business. Firstly, Sea Transportation Department is responsible for
operating business. Secondly, Ship Management Department is responsible
for owner business, engineering, repairs and supplies.

Thirdly, Personnel

Department is responsible for crevv business. Lastly, Safety Management
Board is responsible for safety management business under the ISM Code.
Moreover, in Vietíracht branches and subsidiary companies, there are also
departments or divisions for chartering, and marine brokerage supporting the
company fleet by seeking cargos and conducting the shipping agent tasks for
the fleet when arriving Vietnam ports (Vietữacht, 2013).
According to leaders o f Vietfracht, Vietfracht has lots o f capability and
competences to create competitive advantages to maintain and develop its
growth o f business operation in the severely difficult economic period.
Vietíracht is a Corporation with long history o f business in the Vietnamese
maritime industry and thus its brand name is íầmous in both domestic and
intemational market in marine and logistics tìelds. When customers in
Vietnam have demands o f shipping goods, they often choose shipping
services o f Vietữacht hecause the Corporation has high position in customers’
minds. The Corporation has built a good brand image in thoughts o f customers
through provide quick and exact shipping services and other services,
tbcusing on providing services that meet all demands o f customers, pay much
attention to customer values, and handling customers’ problems related to
shipping issues o f their cargos quickly. The Corporation has built a large

netvvork o f activities including branches, subsidiary companies, and joint
venture companies with its partners around Vietnam and has provided a
variety o f services reiated to shipping and logistics. Moreover, the Corporation
has invested in m odern transportation facilities and has built a netvvork o f
Container warehouses in some key ports o f Vietnam. Vietíracht has had strong

cooperative relationships with many international and domestic shipping