Marketing strategies to enhance the competitiveness of Tan Cang Cai MEP container international teminal (TCIT)

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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.

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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

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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 deep￾sea 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.

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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

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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 mega￾carriers, 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