1

EXECUTIVE SUMMARY
According to the master planning for seaport Vietnam system development until 2020
with the vision for 2030 approved by the Prime Minister, the sea-port development in
the Cai Mep - Thi Vai area plays an important role thanks to its navigational channel
and advantageous position in the regional maritime route. There are a lot of new
terminal projects in this area. Within the next two years, all the projects of the sea-port
development in Thi Vai Cai Mep area shall be completed. Upon the completion of these
projects, there shall be seven deep-sea container terminals operational in Cai Mep area.
Therefore competition among the deep-sea terminal operators shall be more and more
fierce especially in the situation of the limited volume of inbound and outbound
containers due to the global economic crisis.
Tan Cang – Cai Mep International Terminal Co. Ltd. (TCIT) started its operation since
January 15th 2011. It serves the direct services from Vietnam to USA and Europe. After
one year operational, TCIT has made some achievements but the volume was far to
reach its designed capacity.
This project aims to define an effective marketing strategy for Tan Cang Cai Mep
international container terminal (TCIT) during 2012-2015 to enhance its effectiveness,
increase the volume and turnover. The project has identified the theoretical basis of the
determinants of port competitiveness, the formulation of marketing strategy as well as
the marketing mix for the port. On these basis, the external and internal factors
affecting to the operation and business of TCIT have been thoroughly analyzed. A
survey was conducted on the customers’ satisfaction toward TCIT and their evaluation
on the importance of the port. All these results were the valuable data for the further
recommendations on the strategies and marketing mix which TCIT should apply
during 2012-2015 to enhance its competitiveness and attract more volume to the port.
The marketing mix strategy includes seven “P”: product, price, placement (location and
hinterland connectivity to port), promotion, people, physical evidence (infrastructure)
and process.
The project has made detailed recommendations for TCIT in each “P” to make the

achievements and increase the volume and turnover in the years from 2012 to 2015.


2

CHAPTER 1
INTRODUCTION
1.1

Background

After Vietnam’s successful entrance into WTO and deployment of its seaport strategies,
development of maritime business sector for the country has now drawn more attention
from the public. If foreign trade is deemed a foundation for successful global economic
integration, developing a complete terminal system shall crucially foster foreign trade
growth. It is now most vital to take full advantages of natural favors of the national
coastline and river network to develop standardized deep-sea terminals capable of
receiving large tonnage mother vessels. Cai Mep – Thi Vai area in Ba Ria – Vung Tau
Province is an ideal location for such deployment.
In Cai Mep – Thi Vai area, the development of the deep-sea terminal system to handle
110,000-DWT vessels make a great contribution to boost the economic growth for the
whole country in general and for Southern area in particular, especially in the context that
The South area currently accounts for about 66% of national throughput volume and in the
coming time, enhancement of export and foreign trade shall serve as a major solution for
national economic development for the time being till 2020.
According to the master planning for seaport Vietnam system development until 2020 with
the vision for 2030 approved by the Prime Minister, the sea-port development in the Cai
Mep - Thi Vai area plays an important role thanks to its navigational channel and
advantageous position in the regional maritime route. Before June 2009, there were not any
deep-sea container terminals in Vietnam and all the cargo transported between Vietnam

and the countries in America, Europe or Africa had to be transshipped in the transshipment
ports of Asia in Singapore, Malaysia, Hong Kong e.t.c. The first deep-sea terminal of
Vietnam has been operational in Thi Vai Cai Mep since June 3rd 2009. Within the two
years, five terminals with the berth length of 2,500 meters have been operational in this
area.
1.2

Problem statement


3

Tan Cang – Cai Mep International Terminal Co. Ltd. (TCIT) a deep sea terminal in Thi
Vai Cai Mep is a joint – venture company between Saigon Newport Corporation with three
shipping Lines including Mitsui O. S. K. Lines (Japan), Hanjin Shipping (Korea), and
Wanhai Shipping (Taiwan). The Investment Certificate was granted for TCIT by the
Vietnam Government in September 2009, with capital investment about USD 100 million,
equivalent to around VND 2,000 billion.
TCIT started its operation since January 15th 2011. Thanks to the great support of the
shipping lines who are also the shareholders of the terminals and Saigon Newport
Corporation, currently TCIT receives five voyages with the volume estimated of 7,000 to
7,500 Teus per week. The volume of TCIT in 2011 has reached 275,218 Teus while its
design capacity is 1.2 million Teus.
Within the next two years, all the projects of the sea-port development in Thi Vai Cai Mep
area shall be completed. Upon the completion of these projects, there shall be seven deepsea container terminals with the total berth length of 6,402 metres and the design capacity
of 11.2 million Teus in this area. Therefore competition among the deep-sea terminal
operators shall be more and more fierce especially in the situation of the limited volume of
inbound and outbound containers due to the global economic crisis.
The study intends to define effective marketing strategies for TCIT in such a severely
competitive situation. Based on the analysis of external environment, competitors’

weaknesses and strengths, TCIT’s SWOT analysis, it tries to outline the most important
indicators to formulate the objectives and strategies. There are questions that need to be
answered:
1. What are the opportunities and threats from the external environment that affect
the operation and business result of TCIT? What are the weaknesses and strengths of
TCIT in comparing to those of its competitors?
2. What are the most important factors affecting the choices of the shipping lines to
the port? What should TCIT do to enhance its competitiveness.
1.3

Objectives

The objective of this study is to develop marketing strategies for TCIT during 2012-2015
to enhance its competitiveness effectively as well as attract more volume to the terminal.


4

1.4

Scope and limitation

The customers of TCIT includes three main groups: shipping lines, forwarders, and
shippers/consignees. Due to limited time and resources, the case study focuses on
shipping lines only as this group generates the biggest revenue to the port, approximate
95% according to TCIT’s internal reports, and hence is much influential to the port’s
formulation of policy and strategy.
This project was developed for TCIT and mainly set for the operation of TCIT from 2012
to 2015.
1.5


Research Method

The study shall be based fundamentally on both qualitative and quantitative research
methods. This permits a flexible and iterative approach. Both primary and secondary data
shall be collected. In order to obtain primary data, surveys had been made through
questionnaires, phone contacts, depth –interviews. Secondary data have been collected
from the internets, articles from different journals and magazines, different kind of
business reports and statistics reports as well. Acquiring secondary data shall have to give
scientific proof for the findings of the project. After all data have been collected, the SPSS
was used to analyze these data.
The four year marketing strategy to enhance the competitiveness of TCIT then shall be
defined on the basis of the data analysis.
1.6

Structure of the study

The research consists of 5 main chapters as follows:
Chapter 1:

Introduction

Chapter 2:

Literature Background

Chapter 3:

External and internal analysis


Chapter 4:

TCIT’s Marketing strategies to enhance its competitiveness

Chapter 5:

Conclusions


5

CHAPTER 2
LITERATURE BACKGROUND
2.1 Determinants of Port Competitiveness
In order to study the effects of the determinants of port competitiveness, we should first
justify the indicators of port competitiveness. Since the environment

in which ports

operate has changed dramatically, ports are affected by various new forces driving global
competition, including the far reaching unitization of general cargo, the rise of megacarriers, the market entry of logistics integrators, the creation of network linkages among
port operators, the development of inland transport networks, and so on (Notteboom and
Winkelmans, 2001a,b). In this context, key determinants of port competitiveness include:
-

Accessibility and connectivity to Port

-

Port Productivity, operation & economic efficiency


-

Port cargo handling charges,

-

Reliability & qualities of services

-

Port selection preferences of carriers and shippers

Further characteristics and influence of each factor to the port operation have been
explained in more details in the Appendix 2.1.
2.2 Marketing strategy
According to Baker and Michael (2008), marketing strategy is a process that can allow an
organization to concentrate its limited resources on the greatest opportunities to increase
sales and achieve a sustainable competitive advantages
Marketing strategies are the basis for marketing plans to fill market needs and reach
marketing objectives. A marketing strategy basically includes the following steps:
-

Goal setting

-

SWOT analysis

-


Marketing Objectives

-

Marketing Mix for services business

The detailed content of each part in the marketing strategy as have been defined in the
Appendix 2.2


6

2.3 Marketing mix for a port to enhance its competitiveness
Based on the determinants of the port competitiveness and theory of 7 P’s marketing mix
for services. The marketing mix for a port to put into action to enhance the competitiveness
shall be concerned with the details as the following:
Product/services: Port Productivity, operation, reliability & qualities of services,
service network to create the economic efficiency and convenience, door to door services.
Price: Port cargo handling charges, transportation cost for hinterland connectivity.
Placement: location of port, accessibility to Port and hinterland connectivity.
Promotions: Promotions have become a critical factor in the service marketing
mix. In the severe competitive environment, the preferential policies and incentives to the
loyal and big customers are extremely essential for the port to maintain customers and
encourage shipping lines and customers to increase their volume through port.
People: An essential ingredient to any service providers is the use of appropriate
staff and people. Recruiting the right staff and training them appropriately in the delivery
of their service is essential if the port wants to gain competitive advantages. The faults of
staff during the handling process of cargoes at port may cause big losses to the customers.
Beside the skill and service knowledge, staff of port should also have the appropriate

interpersonal skills, aptitude and customer service with a focus towards customer
satisfaction.
Process: Service process is the way in which a service is delivered to the end
customer. Port should improve their process to ensure the optimum delivery/receipt
process without a loss in quality. The process of a Port in receiving/delivering the cargoes
is of utmost importance. It is also a critical component in the service blueprint of port.
Physical Evidence :Physical evidence is a very important element and considered
as a differentiator in service marketing. For a port, the depth of access channel to port,
length of berths, infrastructure of container yards, numbers and types of handling
equipments and vehicles, working office for shipping lines and customs to make the
transaction with customers are critical factors in attracting shipping lines, forwarding and
importers and exporters.


7

CHAPTER 3
EXTERNAL AND INTERNAL ANALYSIS
3.1 The external analysis
3.1.1 The economic situation of Vietnam in 2011
Vietnam aims at becoming a developed country by 2020 and in fact, Vietnam is
considered as one of the fastest growing economies in the world. Vietnam borders with
China to the North, Laos and Cambodia to the West and has a coastline stretching more
than 3,400 km along the South China Sea.
Vietnam can be roughly divided into three main economic regions: North, Central and
South. The Southern key economic region, centered on Ho Chi Minh City, is by far the
most developed region in Vietnam, considered as an engine for the country's growth. Most
of the country's logistics providers are based in this area.
The economy of Vietnam during the 4 year period (2008-2011) had slowed down with the
global recession. The GDP growth rates had decreased from 2007 to 2010 at respectively

8.46%, 6.18%, 5.32% and 6.78%. In 2011, the GDP growth of Vietnam was 5.89%.
According to the Ministry of Industry and Trade (MIT), the Vietnam’s export turnover in
2011 was USD 96 billion- a year on year increase of 33%. Import turnover in 2011 was
USD 106 billion, increasing by 33%.
Relating the commodities which were the major cargoes through the port, the results
achieved in 2011 was encouraging and it is forecast that the export of the major export
commodities of Vietnam will continue making big achievements in 2012 and coming
years. The details of the figures relating to the export of these commodities in 2011 are as
the followings:
As per the statistics of VinaTex (Vietnam National Textile and Garment Group),
despite an increase in costs for input material, textile and garment revenues of 2011
reached USD 13.5 billion, a year-on-year increase of 30%. The export to the major markets
has increased sharply: USA- increase by 14%, Europe: increase 41%, Japan: increase
52%. However, Vietnam still acts as a processing maker, most of the materials for
garments and textiles must be imported. In 2011, the value of the import material of the


8

VinaTex was total USD 8 billion. In 2012, Vinatex targets at reaching the export of USD
15 billion.
According to Vietnam Association of seafood exporters and producers (Vasep), in
2011, Vietnam's fisheries exports has officially reached over 6 billion. The seafood exports
increased by 20% compared to that of 2010. It is expected that in 2012, the total
production will be 5.35 million tons of aquatic products (fishing products: 2.2 million tons;
aquaculture products: 3.15 million tons) and total seafood export turnover reached 6.5
billion USD.
The statistics of Vietnam Food Association (Vietfood) states that in 2010, Vietnam
exported 6,75 million of tons of rice and the revenue of rice export was USD 2.912 billion.
Rice export in 2011 reached 7 million of tons and value of USD 3.7 billion- year on year

increase of 3.7% in volume and 22% in value. It is expected that in 2012, Vietnam will
rank first in rice export in the world. The difficulties which Thailand is facing due to the
flood and rice cost increase will be the opportunity for Vietnam to develop the market of
high value rice in 2012 and the coming years.
This year, coffee exports of Vietnam was 1.1 million tons - were estimated at 1.2
million tons accounting for a revenue of $ 2.54 billion, 5.3 percent higher in volume and
59.5 percent greater in earnings than those of 2010. The coffee volume of Vietnam now
accounts for 14-15% of the total coffee globally.
In 2011, export rubber reached 800,000 tons making a revenues of USD 3.2 billion.
In 2010, the figures were 783,000 tons and USD 2.38 billion. The fact that the revenue of
coffee export increased sharply while the increase of export volume went up slightly
reflects the encouraging signal of the raise of Vietnam Coffee price in the global market.
The Economist Intelligence Unit of England (EIU) has also made their estimation of
Vietnam Economy in the coming year as in the following table.
Table 3.1: Estimation of Vietnam’s Economy in the coming years according to
Economist Intelligence unit -EIU (Economist Group) of England
GDP (%)
CPI (end of year-%)
Interest of loan (%)

2011
6
19
18,3

2012
6,6
8,7
17,5


2013
7,1
7,8
12

2014
7
7,5
11,5

2015
6,5
6,2
11,5


9

Export (USD Bn)
Import (USD Bn)

96,3
103,2

102,9
112,4

115
126,6


131,2
145,5

152
167,1

Exchange rate (end of year)

21.019

21.685

22.144

22.600

23.076

(Source: EIU)
Besides the import and export growth that has fueled the country’s economic development,
the retail-distribution sector is also growing, resulting in the whole supply chain becoming
the top priority for Vietnam’s economic strategy. However, the lack of infrastructure
facilities in the country has contributed to the increase in transportation costs as well as left
a negative impact on manufacturers. Inadequate logistic infrastructure and lack of
information and cooperation between enterprises have increased expenditure and
weakened Vietnam’s competitiveness compared to their peers in the region. This has led
the Vietnamese government to start taking serious steps to improve facilities for transport
and logistics. However, in the past ten years the government's record in infrastructure
investment can best be described as mixed. Road and rail networks are still relatively
inefficient and port facilities are still far from world class.

3.1.2 Port industry in Vietnam
3.1.2.1 General Information
Currently, Vietnam’s Port Association (VPA) has 58 port members. In 2010, the total
volume of the port members of VPA was 154 million tons – a decrease of 4% in
comparing to those of 2009 (10% increase in 2009). However, container volume growth
rate continued to be high, at 18% (15% in 2009) and reached nearly 6.5 million. The ports
in HCMC area occupied more than 66% of container throughput country wide.
The ports in the Northern area had maintained growth of container of 10% in 2010, the
central area ports made an increase of 12%. In the Southern focal economic area and
mainly in HCMC area, total cargo throughput reached almost 74 million tons, increased by
2% in which containerized cargo was 4.3 million TEU, increased 24%.
The details of the throughput of the member ports of VPA in 2007-2010 have been
summarized in Appendix 3.1
3.1.2.2 Estimation of the port throughput in the coming years
According to the seaport development master plan up to 2020 with the vision for


10

2030 which was approved by the Prime Minister under Decision No. 202/1999/QD-TTg,
the estimation of the volume of the general cargo and containerized cargo through the
ports in Vietnam in 2015, 2020 and 2030 as described in the following table:
Table 3.2: The estimation of the volume of the general cargo and containerized
cargo through the ports in Vietnam in 2015, 2020 and 2030
Total cargo
throughput

General &
Container


2015

2020

Low
Scenario

High
Scenario

254

13.5

Low

2030

Scenario

High
Scenario

Low
Scenario

High
Scenario

280


410

488

880

1180

15.2

24.5

29

57.5

79

(Mil tons)
Container only
(Mil Teu)

(Source: The seaport development master plan up to 2020 with the vision for 2030)
According to this estimation, the container throughput in 2015 will be increased by nearly
107.7 % in comparing of those in 2010 in the low scenario and by 133.8% in the high
scenario. It is an impressive growth.
Vietnam can be said to have the top potentials in shipping, with its advantageous
geographic location, the seaport system of Vietnam, if being properly and quickly
developed up to the international standards, could affect the container shipping pattern of

the region in the next decade
However, the inherent weakness of the world financial system is affecting world trade and
together with other potential and hidden risks in the region, the port operators should have
more measures to mitigate risks, ensure higher sustainability for their businesses.
3.1.2.3 Problems of the deep sea ports:
One of the main issues of Vietnam is the landside transport infrastructure and the hot spots
are the container terminals as predicted. Many port projects have been implemented
speedily while the hinterland connections as well as other utilities and supporting services
(electricity, water supply, types of services, Customs formalities, port dues and charges…)
are not adequate and ready, thus increasing the costs and risks to the port operators.


11

The demand of using large vessels (more than 350 meter long, more than 100,000 DWT)
to reduce the shipping costs within the allowable channel conditions of the Thi Vai river
shows that the theoretical restrictions of the master plans has been and continues to be the
obstacles for the port and maritime development in the Southern focal economic area.
Most of the world first-class port operators have been attracted for investment in container
port and marine services in Ho Chi Minh City and Baria Vung Tau. We can see the
presence of Ports of several well-known port developers in Cai Mep-Thi Vai of Ba RiaVung Tau province such as SITV of Hutchison Ports (Hongkong), SP-PSA of PSA
(Singapore); CMIT of APM Terminal (Maersk A/S - Denmark), SSIT of SSA Marine
(USA) and Dubai Port world developed their Port namely SPCT in the south of HCM city.
From 2008 to 2011, the capacity of container ports in the South of Vietnam has increased
300% (from the capacity of 4 million Teus/year in 2008 to 11.2 million Teus/year in 2011)
while the actual increase of the throughput was at the rate of 15-18%/year. There is a
severe competition in price which has been causing financial difficulties for the port
operators, especially for those of the deep sea terminal in Cai Mep Thi Vai. They can not
increase the handling price while the inflation in Vietnam is high and price of oil, petrol,
electricity has increased 18% in 2011.

2009 and 2011 were considered the toughest years for all the shipping lines. The sea
freight market has experienced steep declines on account of the gloomy economic situation
in 2009 and 2011. A sharp dip in trade volumes, especially in the European and North
American trade routes, and increased idle fleet have adversely affected profitability.
Reduced demand and rising fuel prices have resulted in losses of 25-50% for many
shipping lines. Maersk Line, the biggest container carriers, suffered a loss of USD 2
billion in 2009. In 2011, Maersk Line lost USD 351 million from January to September
and USD 293 million in the third Quarter. In such a hard situation, cutting cost is the
ultimate goal of each shipping line.
From the above analysis, we can see that the operators of the deep sea ports in Vietnam
are still facing big challenging in 2012 and the coming years and TCIT should find it
appropriate way to increase the volume and make the profit.
3.1.3 Competitors’ Analysis


12

3.1.3.1 Deep Sea Terminals in Cai Mep Thi Vai Area
To meet the increasing demand of the shipping lines for the deployment of direct services
from Vietnam to The US and European countries, Vietnam has developed the deep sea
terminal in the port group No. 5 in Baria Vung Tau. The feasible study for the project
started in 2004 and afterward, the construction of the first deep sea port started in 2006.
The first deep sea terminal iin Cai Mep Thi Vai area into operation in June 2009 and up
to the present time, there are five terminals with the berth length of 2830m and designed
capacity of 5.3 million Teus have been operational. Most of the terminal now can reach
only 5-20% of their capacity and this actual situation has caused the competition between
the deep sea Terminals in Cai Mep Thi Vai more and more fierce. The locations of the
deep sea terminals in Cai Mep Thi Vai have been shown in the Appendix 3.2
3.1.3.2 SP-PSA
SP-PSA is a joint venture between Saigon Port, Vinalines and PSA Vietnam Pte Ltd, the latter

is a wholly-owned subsidiary of PSA International Pte Ltd (PSAI) of Singapore.). It is the
first deep-sea container terminal operational and started operations in May 2009. The
facility and equipment of SP-PSA are described in the Appendix 3.3 (Table 3.3.1)
SP-PSA started its operation by welcoming the APL mother vessel in May 2009. After
one year operational, in 2010, SP-PSA received five voyages per week including the
vessels of APL (service to the US West Coast), the Grand Alliance (service to the US
West Coast), CMA-CGM (two services- one to the Mediterranean Sea and one to North of
Europe), Maersk (service to the US West Coast). 2010 was quite a successful year for SPPSA because that time there were only three terminals operational in Cai Mep Thi Vai and
the shipping market had recovered after the crisis of 2009. SP-PSA reached the volume of
293,913 Teus in 2010. However, in 2011, more players come into the market and some
shipping lines had to stop their service to Vietnam due to the sharp decrease of freight. The
services of CMA-CGM and Maersk Line moved to CMIT, service of the Grand Alliance
moved to TCCT and APL stopped their service on Dec 7th 2011. There is not any service
in SP-PSA in the current time. The volume of SP-PSA was 118,352 Teus in 2011,
accounting for 16.3% of the total throughput of the deep sea port in Cai Mep Thi Vai and
the volume decreased by 59.73%. 2012 and the coming years shall be the hardest time for
this terminal.


13

Strength of SP-PSA
SP-PSA has advanced facility and handling equipment. SP-PSA is a subsidiary of PSA
International Pte Ltd. PSA international ranks first among

the leading

global port

operators (based on equity Teu throughput) in 2010. PSA has its flagship operations in

PSA Singapore terminal and PSA Antwep. PSA operates 29 terminals in 16 countries
across Asia, Europeand the America. In 2010, the total volume of the terminals of PSA
was 51.3 million Teus making up 9.4% of the world throughput. SP-PSA's terminal
operating system will streamline their internal processes to facilitate data interchange and
enhance communication with their business partners around the world. In 2010, terminals
belonging to PSA handled 65.12 million Teus of containers in which PSA (Singapore)
handled 27.68 mil Teus and Terminals outside Singapore handled 37.44 mil Teus. SP-PSA
have good relationship with the shipping lines globally and thanks to their system
terminals globally, SP-PSA can have a good price policy globally to attract shipping lines
to use their services.
Weaknesses of SP-PSA
SP-PSA is located in a disadvantageous place in comparing to other terminals like CMIT,
TCCT and TCIT. It is too far from the pilot station and causes more petroleum to the
shipping lines coming to this terminal. SP-PSA is under the high pressure of the facility
and equipment depreciation and thus its price is the highest in comparing to others in the
region. There is no shipping lines joining in the operation of SP-PSA and they do not have
the hinterland logistic facilities in Ho Chi Minh city.
3.1.3.3 SITV
SITV (Saigon International Terminals Vietnam) is the Joint Venture of the Hutchison Port
Holdings (HPH)- Hong Kong and Saigon Invevestment Commercial Company. SITV is a
member of Hutchison Port Holdings (HPH) of Hong Kong- the world's leading port
investor, developer and operator. SITV has been operatio
nal since August 2010.
The facility and equipment of SITV are described in the Appendix 3.3 (Table 3.3.2)


14

From the start of operation to September 2011, SITV receives one vessel/week (service of
Kline and MOL to the US East


coast) with the

monthly volume of

4,000-4,800

Teus/months. In September 2011, MOL and K’ line moved their service to TCIT and now
there is not any container services in SITV. They sometimes handle the bulk vessel. The
volume of SITV in the 8 moths of 2011 was 49,699 Teus accounting for 6.8% share of the
area and SITV is experiencing the most challenging time for them in Vietnam market.
Strength of SITV
SITV is a subsidiary of Hutchison Port Holding (HPH) who

is the second biggest

container terminal operator in 2010 (on equity Teu throughput). HPH has 52 ports,
spanning 26 countries throughout Asia,the Middle East, Africa, Europe, the Americas and
Australasia. In 2010, the HPH port network handled a combined throughput of 36 million
TEU worldwide, accounting for 6.6% of world throughput. Like SP-PSA, SITV's terminal
operating system will streamline their internal processes to facilitate data interchange and
enhance communication with their business partners around the world. Hutchison can also
utilise their good relationship with shipping lines using their ports globally to develop their
market in Vietnam. It is also noticing that SITV had made lower investment into the
handling equipment because they moved their second hand Quayside cranes and RTGs
from foreign facilities to Cai Mep. That is the reason SITV applies a low handling rate to
shipping lines using their services. Their handling price is 15-20% lower than handling
price of CMIT, TCCT or TCIT and 30% lower than price of SP-PSA.
Weaknesses of SITV
SP-PSA is located in the most disadvantageous place in comparing to other terminals like

CMIT, TCCT and TCIT. It takes the vessel an hour and a half to come from TCIT to
SITV. There is no shipping lines joining in the operation of SITV and they do not have the
hinterland logistic facilities in Ho Chi Minh city The turning basin and depth at berth is
also a disadvantage for SITV in attracting the big ship.
3.1.3.4 CMIT
Cai Mep International Terminal Co., Ltd. (CMIT) was established on January 26, 2007 as a
joint venture between the Vietnam-based Saigon Port, Vietnam National Shipping Lines
and APM Terminals BV. APM Terminals offers an integrated Global Port, Terminal and


15

Inland Services Network of 50 ports and terminals, and 122 inland facilities with 22,000
employees in 64 countries on five continents. CMIT started its operation in March 2011. In
September 2011, CMIT received 5 voyages/week including two services of CMA-CGM
(the services to Europe moved from SP-PSA to CMIT), one of Maersk Line to USA, one
of the Grand Alliance to Europe and one domestic feeder. However, currently, CMIT
receives only 2 vessels/week.
The facility and equipment of CMIT are described in the Appendix 3.3 (Table 3.3.3 in
2011, the volume of CMIT from March to December is 89.668 teus making up of 12.3%
of the total volume in this area.
Strength of CMIT
CMIT is the strongest terminal operator among the deep sea terminals in Thi Vai Cai Mep
area. Their strength comes from APMT who ranks third among the Top world leading
terminal operators with market share of 5.8% and volume of 31.6 million Teus in 2010.
CMIT has also the advantages over SP-PSA or SITV thanks to the suport of Maersk Line
who is the sister of APMT in the AP Moller- Maersk group (Denmark). Maersk is the
leading container shipping company in the world with a fleet numbering more than 500
container vessels. The capacity of Maersk Lines accounts for 16% of the total container
shipping capacity

CMIT is in the most advantageous location and is the nearest container terminal from the
pilot station. They also have advantages in term of the access channel and turning basin.
Weaknesses of CMIT
Most of the cargo to the deep sea ports in Thi Vai Cai Mep come by barge from Ho Chi
Minh city to Cai Mep and thus the customers have to drop their containers in the ICDs or
Terminals of Ho Chi Minh city. However, CMIT, like SP-PSA and SITV, do not have their
own facilty in Ho Chi Minh city and they all have to rely on the ICD in Ho Chi Minh city
area for this dropping. The facilities of ICDs are quite limited. The details of the falilities and
equipment of the ICDs in Ho Chi Minh City was shown in Appendix 3.4 and thus it is a risk
for big shipping lines if they rely only on the ICDs and this is a big obstacle for CMIT to
attract the shipping line to their terminal.


16

The competition between the deep sea terminals in Cai Mep Thi Vai will also be more
fierce in 2012 and the coming years with the operation of SSIT (SP-SSA International
Container Terminal) – a joint venture between Saigon Port and SSA Marine (USA). SSIT
locates next to CMIT. SSIT has 60 hectares of CY, one 300 meter berth (first phase) and
two berths (600 meters) when they complete the project. SSA is the leading terminal
operator in the USA. Marketing strategy for TCIT from 2012 to 2015 thus has to take into
account all the above- mentioned competitive factors and find out the best solutions to
enhance its strengths and opportunities.
3.2 Internal analysis
3.2.1 TCIT business profile
Tan Cang – Cai Mep International Terminal Co. Ltd. (TCIT) is a joint – venture company
of Saigon Newport Corporation with three shipping lines including Mitsui O. S. K. Lines
(Japan), Hanjin Shipping (Korea), and Wanhai Shipping (Taiwan). The Investment
Certificate was granted for TCIT by the Vietnam Government in September 2009, with
capital investment about USD 100 million, equivalent to around VND 2,000 billion. TCIT

is located in Tan Phuoc Commune, Tan Thanh District, Ba Ria – Vung Tau Province.
TCIT is 18 nautical miles from the pilot station (Bouy zero) and 80 km from Ho Chi
Minh city.
The organization chart of TCIT is as shown in Appendix 3.5.
The facility and equipment of TCIT are described in the following table:
Table 3.3: Facilities and equipment of TCIT
FACTORS
Terminal area (ha)
Number of berth
Quay length (m)
Berth depth
Quay crane
RTGs
Turning basin (m)
Capacity
Tractors and chasis

CURRENT PHASE
40
2
590
-14.5
6
20
600
1,200,000
30

FINAL PHASE
40

2
590
-14,5
6
20
600
1,200,000
50


17

3.2.2 Operation of TCIT in 2011
TCIT officially started operation in January 2011 by welcoming the vessel of Mitsui O. S.
K Lines. Currently, TCIT receives five voyages/week. Mitsui O.S.K Lines- one partner of
TCIT is deploying two services at TCIT- one to the US West Coast and one to Europe and
joining with K’ Line in the service to the US East coast. Hanjin- another partner of the
joint venture has a service to US West coast and Cosco- a members of CKYH (Cosco,
Hanjin,K’line , Yangming) is also deploying a service at TCIT.
In 2011, TCIT reached the volume of 275.218 Teus, making up 37.9% of the total throuput
of the area. TCIT has the biggest market share in the area in 2011. Mitsui OSK Lines was
the shipping line with the biggest volume in TCIT in 2011 and Hanjin ranked second. The
volume of each shipping Line in TCIT in 2011 was described in details in the Appendix
3.6.
The volume of the deep sea container terminals in Thi Vai Cai Mep is shown in the
following table:
Table 3.4: Volume of terminals in Cai Mep Thi Vai in 2011
Total volume (inbound and outbound) (teu)

Tyû leä %


SP-PSA

118,352

16.3%

TCCT

193,452

26.6%

TCIT

275,218

37.9%

SITV

49,699

6.8%

CMIT

89,668

12.3%


Total (teu)

726,389

Most of the containers loaded on the vessel at TCIT must be dropped at Tan Cang, Cat Lai
Terminals (facilities of Saigon Newport Corporation) or ICDs in Ho Chi Minh city area
and then barged to TCIT. The barging cost is much competitive to the trucking cost and
due to the fact that the depots locate in Ho Chi Minh city area, even the shippers who have
factories 20km away from TCIT chooose the facilities in Ho Chi Minh city to drop off
their containers.


18

3.2.3 Analysis of the strengths and weaknesses of TCIT
3.2.3.1 Strength of TCIT
TCIT has a good hinterland logistics connectivity network thanks to the good system
of Saigon Newport Corporation (SNP) - the biggest partner in the joint venture of TCIT.
SNP currently operates two terminals in Ho Chi Minh City namely Tan Cang and Cat Lai
Terminals, and one in Ba Ria-Vung Tau Province, Tan Cang-Cai Mep Terminal (TCCT)
which locates next to TCIT. TCCT has been put into operation since June 3rd 2009- one
and a half year before operation of TCIT. The current services of Mitsui O.S.K Lines and
Hanjin Shipping at TCIT started deploying at TCCT in 2009 and then moved to TCCT
when it started operation in the early of 2011. Moreover, SNP has terminals operational in
the center of Vietnam (Quy Nhon city) and one terminal in the North of Vietnam (Hai
Phong) operational in the second quarters of 2012. SNP also operates a good systems of
ICDs in the South Focal Economic Area of Vietnam- Tan Cang Long Binh ICD in Dong
Nai province (40km from TCIT), Tan Cang Song Than ICD in Binh Duong province (80
km from TCIT). Binh Duong and Dong Nai are the provinces with large amount of the

industrial parks. Both ICDs of SNP have good system of the warehouses and Container
yards as well as the handling equipment and tractors. Currently, SNP expands their system
to Mekong Delta with some terminals in Dong Thap and An Giang provinces. SNP also has
their own barging fleet to carry containers between Cat Lai, Cai Mep, Mekong Delta and
they establish a joint venture with Sun Cypress of Hong Kong to barge containers between
Vietnam and Cambodia. SNP is now taking the lead in the port operation in VN, with 81%
of market share of import-export containerized cargoes in Hochiminh city area and almost
50% nationwide in 2011. In 2011, the volume of Cat Lai terminal of SNP was 2.6 mil TEU.
SNP aims to create a port chain throughout the country to accommodate the potential
demand of the shipping market in the long run. The partnership of SNP with its strong
hinterland facilities allows TCIT to have a competitive price for the barging cost (handling
cost for barge at end of Ho Chi Minh city) and a strong back up for TCIT.
TCIT has a good support from the shipping lines- partners of TCIT. Mitsui O.S. K
Lines (MOL) – one of the shareholder of TCIT, is the leading container terminal in Japan
and they are a member of the New Worl Alliance-TNWA (including MOL, APL and
Huyndai). According to AXS –Alphaliner, up to January 2011, the total fleet of TNWA


19

includes 142 ships having the total capacity of 1,344,188 Teus making up 8.4% of the total
container shipping capacity globally. Hanjin Shipping- another shareholder of TCIT, is the
leading Carrier of Korea. Hanjin Shipping is a member of CKYH (Cosco- K’LineYangming-Hanjin) and as per the statistics of AXS Alphaliner, CKYH has a fleet of 483
vessels with the total capacity of 1,797,674 Teus, accounting for 11,3% of the total carriage
capacity. The third shipping shareholder of TCIT is Wanhai- the leading internal carrier
with the fleet of 76 ships and capacity of 170,205 Teus. The total capacity of the share
holders of TCIT and their alliances is 3,312,067 Teus occupying for 20.8% of the world
total container shipping capacity. In comparing to Maersk Line- the leading container
carrier in the world and sister of CMIT, the capacity of TCIT’s share holders and their
partners of Alliance is 30% higher than that of Maersk Lines.

TCIT and the neighbor TCCT (a subsidiary of SNP) have the longest berth in Cai
Mep Thi Vai. These both terminals have 3 berth with 890 meters in length which have
been equipped with 9 Quayside gantry Cranes. TCCT has three dedicated barge quays to
serve the handle of the containers barged to TCCT and TCIT. This is a big advantage for
TCIT because nearly 85% of domestic containers come to TCIT by barges.
3.2.3.2 Weakness of TCIT
TCIT does not have a good connection globally like other terminal operators like
CMIT, SP-PSA or SITV. Therefore TCIT interchange data can not be as strong as those
of other competitors. Other competitors can also use their global price policy to attract the
shipping lines in Vietnam market in the initial stage. Vietnam market is much more smaller
than those in China, Europe and USA which is the main market for the shipping lines.
The location of TCIT is more advantageous than SP-PSA and SITV but less competitive in
comparing to SSIT and CMIT.
3.2.4 Results gained from survey and data analysis
3.2.4.1 Methodology of survey and coding of analysis
The research aims to explore the evaluation of important factors and satisfaction of the
customers to TCIT’s services and its facility. In doing so, the research can define what
TCIT should do to enhance its competitiveness.


20

To address the research questions, the research consists of a quantitative survey. The
questionnaires of the survey were based on the determinants of the port competitiveness
and asked the participants the questions relating to their evaluation on the satisfaction and
importance of the location in term of geographical characteristics, infrastructure, people,
service cost and policies. The survey questionnaires consist 2 parts of Importance and
Satisfaction rating. The details of questionnaires are as shown in Appendix 3.7.
The survey was conducted in the first week of December 2011 with a target customer
group of 10 shipping lines using TCIT’s services. Outcomes of the survey are assumed

to

reflect customers’ perception and attitude as regards customer satisfaction and

evaluation on the important factors towards the ports. Therefore, the survey questionnaires
were sent to 10 representatives of each shipping lines/agents to complete during the week
from 2nd December to 5th December 2011. Within two weeks (8th Dec to 24th Dec), 85
responses from shipping lines/agents were sent back, making up a response rate of 85%.
All the responses were valid for analysis. Results of the survey were analyzed using
descriptive tools of SPSS software – version 11.5. The 25 items of the survey were
e n c oded into 5 main dimensions as in the following table:
Table 3.5: Encoded Dimensions of quantitative survey:
No.

CODE

ITEM

I. GEOGRAPHIC FEATURES
1

GEO01

Geographic location of TCIT

2

GEO02

Access Channel


3

GEO03

Traffic connectivity

4

GEO04

Logistics network of associated ICDs and depots

II. INFRASTRUCTURE
5

INF 05

Yards and warehouses

6

INF 06

Berth

7
8

INF 07

INF 08

9

INF 09

Facilities and equipment for container handling & transport
Public facilities: shuttle bus, canteen, waiting area
ICDs & depots under SNP's management


21

No.

CODE
10

INF 10

ITEM
IT system: TOPX, EDI, online payment

III. SERVICE RELIABILITY
11

REL11

Handling productivity


12

REL12

Cargo delivery time in TCIT

13

REL13

Cargo delivery time in HCM City

14

REL14

Safety in operation

15

REL15

Safety in transportation to HCM city

16

REL16

Security


17

REL17

Operational processes

IV. PEOPLE
18

PEO 18

Top management's vision and competency

19

PEO 19

Top management's flexibility in solving problems

20

PEO 20

Staff competency: work performance, English skills

21

PEO 21

Staff's communication skills toward customers


V. SERVICE COSTS & POLICIES
22

COS 22

Service rates

23

COS23

Favorable policies: VIP customers, storage, transport

24

COS24

Discount

25

COS25

Commissions, promotions

3.2.4.2 Analysis on the satisfaction of customers toward TCIT
To define the strength or weakness of TCIT, the survey on the customers using TCIT’s has
a significant role.
According to Hill et all (2003), on a 10-point scale, average satisfaction scores above

9.00 demonstrate that customers are extremely satisfied with the attributes. Those
scoring above 8.00 refer to “satisfied” customers, 7.00 means “quite satisfied”, and 6.00
equates to

“barely satisfied”.

Average satisfaction scores of 5.00 or lower indicate

dissatisfied customers. With this measurement scale, any item having an average


22

satisfaction score below 7.00 should receive serious attention from the service provider.
The details of the survey result have shown in Table 3.6 below.
Table 3.6: Results of the survey on the satisfaction of the customers towards TCIT
N

Max

Min

Mean

STD Deviation

Inf 6

85


9

7

8.36

0.67

Inf 5

85

9

7

8.27

0.65

Inf 7

85

9

7

8.27


0.79

Peo 18

85

9

7

8.27

0.79

Peo 19

85

9

7

8.09

0.70

Rel 11

85


9

7

8.00

0.77

Pe 20

85

9

6

8.00

0.89

Rel 14

85

9

7

7.55


0.69

Geo 4

85

9

6

7.55

1.04

Rel 12

85

9

6

7.45

0.93

Inf 10

85


9

6

7.45

1.04

Inf 8

85

9

5

7.45

1.37

Peo 21

85

9

5

7.27


1.42

Cos 22

85

8

6

7.18

0.75

Cos 23

85

9

5

7.09

1.45

Geo 1

85


8

5

6.91

0.94

Cos 24

85

8

6

6.82

0.98

Rel 15

85

8

6

6.73


0.79

Geo 2

85

8

5

6.64

0.92

Rel 13

85

7

5

6.45

0.93

Rel 17

85


8

5

6.45

1.13

Inf 9

85

8

5

6.36

1.21

Rel 16

85

8

5

6.36


1.36

Geo 3

85

8

5

5.82

0.98

Cos 25

85

7

5

5.73

0.65

Satisfaction scores given by customers do not reach 9.00 and thus vary in a range from
8.36 to 5.73. Survey results reveal that none of the

attributes


brings

extreme


23

satisfaction to customers. Customers are most satisfied with the infrastructure of TCIT
(INF 06-Berth, INF 05-Yard and INF0 7-equipment). This is understandable because
currently, TCIT is a new modern Terminal with the longest berth length in this area.
Customers are also highly evaluate the Top management's vision and competency and
Flexibility in solving problems (Peo 18, Peo 19), staff competency (Peo 20) and handling
productivity of TCIT (Rel 11) with the means of 8.27, 8.09, 8.00 respectively. The
other attributes which quite satisfied customers of TCIT are Logistic network of
associated ICD and depot (GEO 04), and IT systems (INF 10).
TCIT should pay more attention to improve the delivery time of containers moved from
HCM city to Terminals and ICD in HCM city area because the satisfaction level for this
item is low (mean= 6.45). Security (Rel 16) is also an issue which does not satisfy the
customers. Commission and promotion is also an alarming issue for TCIT when it ranks
last in the satisfaction table (mean = 5.73). TCIT also should focus on improving its
documentation process because this is one of those having the least satisfaction score (REL
17).
Most of the scores have standard deviation score around 1. However, there is quite a big
deviation on the favorable policies. This has shown that some shipping lines are satisfied
with the favorable policies while other are not. This has also reflected the different point of
view between shipping lines who are the share holder of TCIT (MOL, Hanjin, Wanhai) and
other normal shipping lines on the issue.
Customers are quite not satisfied with the traffic connectivity and access channel.
However, as explained in the port problem, these attributes are beyond TCIT’s control and

it much depends on the speeding up of the projects of the government.
3.2.4.3 Analysis on the important attributes as evaluated by the customers
According to Hill et al (2003), average importance scores on a 10-point scale above 9.00
show an extremely high level of importance to customers. Scores of 8.00 mean
“important” to customers, 7.00 mean “quite important”. Also on this type of measurement
scale, a standard deviation of around 1.00 or below indicates a strong consensus of
opinions. Meanwhile, a standard deviation of 2.00 or above illustrates a wide disparity of
views.


24

The details of survey results are as in the Table 3.7 below. It has shown that almost all
of the attributes having significant importance to customers, with 10 attributes being
extremely important, 12 important and 3 quite important.
Table 3.7: Survey on the important attributes as per evaluated of TCIT’s customers:
N

Max

Min

Mean

STD Deviation

Rel 15

85


10

8

9.73

0.65

Rel 14

85

10

8

9.64

0.81

Rel 16

85

10

8

9.45


0.82

Inf 7

85

10

8

9.18

0.75

Rel 13

85

10

8

9.18

0.75

Peo 19

85


10

8

9.18

0.98

Inf 10

85

10

8

9.09

0.54

Peo 18

85

10

8

9.09


0.83

Peo 20

85

10

8

9.00

0.89

Cos 22

85

10

7

9.00

0.89

Inf 5

85


10

8

8.91

0.54

Peo 21

85

10

8

8.82

0.87

REL 11

85

10

7

8.73


1.01

Rel 17

85

10

7

8.64

0.92

Geo 2

85

10

7

8.64

1.21

Inf 6

85


9

7

8.55

0.82

Geo 4

85

10

7

8.55

0.93

Rel 12

85

10

7

8.55


1.04

Cos 24

85

9

7

8.27

0.79

geo 3

85

10

7

8.27

1.10

Cos 23

85


9

7

8.00

0.77

Geo 1

85

10

7

8.00

0.77

Cos 25

85

9

7

7.73


0.65

Inf 8

85

8

7

7.64

0.50

Inf 9

85

9

5

7.45

1.29

Among the ten extremely important attributes having importance score over 9.00, we can


25


see representatives of Service reliability (REL14, REL15, REL 16), People (PEO18,
PEO19, PEO 20), Infrastructure (INF07, INF10) and Service costs & policies (COS
18). Safety in transportation to HCM city (REL 15) is strongly chosen as the most
important attribute with the highest mean of 9.73 and small deviation of 0.65. Also,
customers are very concerned about the safety in operation (mean = 9.64) and security.
Because TCIT is in Cai Mep- 80 km from Ho Chi Minh city and most of the containers are
transported to HCM city to deliver to customers, delivery time in HCM city is one of the
extremely important factor for shipping lines. All the attributes relating to people play
significant role as perceived by the customers.
Considered as having the least importance is supporting facilities and public facility (INF
08 & INF 09). Public facilities (INF 09) with the score of 7.45 is also the one with
highest standard deviation score of 1.29. This illustrates a quite wide discrepancy of
customers’ viewpoints on the issue. Commission and promotion is the third

least

importance to customers with the score of 7.73.
The results of survey shall be the basis for TCIT to give priorities in improving the safety
in operation and transportation, strengthening the security. Top Management must be
reasonable in deciding the service rate (COS 22) because this is significant important to
customers (mean =9.0). However, in such a severely competitive environment, in the
customers’ point of view, service rates are not the most important factor but it ranks after
the service reliabilities and people. The big gaps between the evaluation on the satisfaction
and importance have also reflected the fact that TCIT will have to try their best efforts in
term of the service qualities, skills and qualifications of their staffs to meet the demand of
customers.
The analysis of the survey on the satisfaction and important factors has given us more
profound understanding of strength, weaknesses and well as improvement priorities and
this will serve for the right solutions in the strategies to enhance TCIT’s competitiveness.