Executive summary

Shorter overland distance to Ho Chi Minh City (230 km), making road transport faster and
potentially less expensive. However, shipping to Hanoi (1,490 km) would be more expensive and
time-consuming compared to ocean + rail from China.
Introduction
Task 1:
Initial transportation plan comparison between GZ supplier and BK supplier regarding
standard shipping and EXW shipping point
The polymer resin is transported to VBC's factories through intermodal freight. The supplier in
Bangkok, Thailand, benefits from its proximity to Vietnam, utilizing a combination of rail and
over-the-road trucking. In contrast, the transportation plan for the Guangzhou supplier, located
farther from Vietnam, involves sea, rail, and road modes (thêm lí thuyết intermodal cho lấy
mertirial quốc tế).

Figure 1. Guangzhou supplier’s initial transportation plan

 Figure 2. Bangkok supplier’s initial transportation plan

Guangzhou, China – VCB’s Bangkok, Thailand – VCB’s factories

factories
Sea Road Rail Rail Road Road
(GZP – (HPP – (HN – (BK-Poipet (PP- (PP-Trapeang
HPP) HN) HCMC) Border Gate- Mocbai Kriel Border
PP) Border Gate (Laos)-
Gate- Laobao Border
HCMC) Gate-HN)
Lead Time 4 days 2 hours 65 hours 31.5 hours 10 hours 2.3 days
Total: 6.8 days (163 hours) Total:3.8 days (91,5 hours)
Reliability Medium to High Low to Medium
Accessibili These are all popular shipping routes, offered by many couriers, so accessability
ty is relatively equal
Capability All of modes have adequate capacity to carry the VCB’s order (wieght 5.5 tons
or 34.125 CBM) in a shipment
Sercurity Medium Medium High Medium Low Low
Cost 25,000,0 4,600,00 10,500,0 9,000,000+tari 21,700,0 51,800,000+tari
00 0 00 ffs 00 ffs
40,400,000 VND More than 85,000,000 VND
Figure . Supplier Comparison (Appendix 1)
Lead Time & Cost
Bangkok supplier indicates a significant reduction in lead time for a VCB’s shipment to half that
of the Guangzhou supplier while having a double cost because the nature of sea mode used by
GZ suppliers is cheap but too slow (). In contrast, having a favorable location, BK supplier's
cargo is transported by rail and trucks across the land borders to Vietnam with one-stop
intermodel transfer in Phnom Penh, enabling time savings (). However, heavy transport costs are
attributed to four custom clearance times and high unit costs due to truck hauling ().
Reliability
Although BK supplier’s lead time is low, it is unreliable because the two main routes from
Phnom Penh to Vietnam are ASEAN highways (AH1 and NR7). These roads are of uneven
quality and mostly have only two lanes so that trailers can reach low speeds of 40-60 km/h
(https://irap.org/2023/09/improving-road-safety-in-cambodia-project-kicks-off/). In addition, the
above border gates have customs clearance procedures that depend mainly on manual methods,
so four clearance times can cause unpredictable delays during peak seasons (). In contrast, the
schedule and speed of vessels and trains strictly comply with the port authority and VNR
(Vietnam Railway Corporation), and the standardized handling process in HPP makes cargo lead
time from GZ suppliers reliable (). The only road route in this plan is also strengthened by the
HN-HP highway, enabling heavy trucks to reach 120 km/h speed (VETC 2022).
Security
With fixed routes and limited access to terminals, especially GSP tracking systems in HPP’s
container yard, sea mode minimizes loss and damage for GZ suppliers’ cargo (). In contrast, the
lack of plastic packaging exacerbates the potential damage to BK supplier’s cargo when
transported by rail and road ().

Risks and Opportunities Evaluation

Local Level National Level Global Level

Risk In HPP: “Knot” in Vietnam South- - Heightened China-
- Limited inland North transportation: East Tension causing
shipping options, - The cost of transporting a frequency military
with 80% of goods container by road from activities territorial
transported by road North to South is too high disputes in the region
(Yoon and Doan ($2000) (ETV 2022). (Bowling 2024).
2019) - Rail or sea transport can
- Lacking of railway reduce shipping costs by 50-
connection (VNMT 70%, but transit time
2023). increases to 3-5 days (PRN
2019, Minh 2023)
Opportunities - ICD Mocbai in Moc - Synchronize customs
 Bai border gate is set procedures
to operate this year commitment has
(MT 2024). reached at the
upcoming 13th
Cambodia-Laos-
Vietnam (CLV)
Ministerial Meeting
(KPL 2024)
Figure 4. External Factors

GZ supplier
Due to the lack of a railway connection to HPP, the GZ supplier’s cargo must be hauled to points
and shipped to HCMC by rail (figure 1). This weakens the lead time reliability of the GZ
supplier’s plan because of more handling time. Besides, cargo is more likely to be lost or
damaged (). Moreover, Heightened China-East Tension would increase transit times and
insurance premiums for ocean freight from GZP to HPP because military activities could disrupt
shipping routes ( Bowling 2024 Bogatic et.al. 2024).
BK supplier
The appearance of ICD Moc Bai as a centralized clearance point at the Mocbai border gate
reduces existing congestion and vehicle waiting times at the border gate (MT 2024). Moreover,
the commitment to simplify customs was reached at the upcoming 13th Cambodia-Laos-Vietnam
(CLV) Ministerial Meeting between Vietnam and Cambodia. As a result, the transit time of road
transport from Phnom Penh to HCM could be significantly decreased (Dung 2024).
Supplier selection
Both shipping routes from GZS and BKS have strengths and weaknesses. However, these
external factors can potentially increase the cost and initial lead time (6.8 days) of shipping from
GZP, causing the risk of not meeting the standard shipping lead time of 7 days. In contrast,
external factors can reduce the BK supplier's shipping lead time without increasing cost.
Consequently, BK suppliers are more optimal in light of disadvantages such as high cost and less
reliability could be improved in the recommendations (refer to Task 2).

Recommended Transportation Plan for BK supplier

Route Selection
BK supplier’s shipments reach Ho Chi Minh City in less than two days, showcasing the
significant time savings of cross-border rail and road transportation at reasonable costs. Although
the need for two customs clearances at the Poipet and Bavet border gates may impact the
reliability of this route, external factors identified can help mitigate this weakness by eliminating
customs clearance delays at the Bavet border gate (MT 2024). Furthermore, various cross-border
trucking companies in Thailand offer shipping options, including primary packaging (cartons),
providing ample protection for the resin to minimize the risk of damage during transportation
from BK to PP and reduce handling time in Phnom Penh, thereby eliminating the need for plastic
totes packaging at the packaging center in Phnom Penh (SIAMA n.d)
Remaining the route BK-rail-> PP and PP-road->HCMC

Initital Option Option 1 (remaining full Option 2 (remaining full

(disconsolidate order in order) order)
PP)
Route
Rail: BK-PP
Road: PP-HCMC

Road: PP-HN Road: HCMC-HN Rail: HCMC-HN

Lead time -7 hours +55 hours +44 hours +65 hours

(38.5 hours)
Cost +51,800,000 VND +50,000,000 VND +10,500,000
(33,2000,000
VND)
Figure 5. HCMC - HN Route Selection (Appendix 2)
Option 2 offers superior cost optimization at only about 1/5 of the cost of the other two options.
Although the lead time is 5 hours longer than the initial option, the reliability of the domestic rail
surpasses the road mode due to its fixed schedule according to VNR and the absence of the need
for customs clearance twice at the Trapeang Kriel and Lao Bao border gates, which would
otherwise increase lead time and add tariff costs (Zhang et.al. 2019, MFA 2017). Besides,
although the lead time is higher than the option of 17 hours, this weakness of option two could
be compensated by the high reliability and security of the rail mode compared to the road mode
(option 1), which is more likely to encounter accidents and traffic jams could cause damage and
unexpected delays in transit time (Zhang et.al. 2019, Thanh 2024).
Finding the optimal balance between transportation cost and time is crucial for an efficient route
strategy (Chen et.al. 2019). I believe the following transportation route (figure 6) is the most
optimal for VCB’s shipment from the BK supplier because the faster BK-HCMC route can
compensate for the longer lead time of the HCMC-HN route, while the lower cost of the HCMC-
HN route can make up for the slightly higher cost of the BK-HCMC route.
 Figure 6. Recommended Route
Carrier Selection
Cross-border Trucking Carrier (BK->PP->HCMC)
Differences from mode selection, cost, service quality, reliability, flexibility, and responsiveness
are reliable and popularly used to select carriers (Meixell and Norbis 2008).

Alphas Tran Siam Shipping Rhenus Logistics

Cost $ $$ $$
Reliability medium
Flexibility (door-to- No Yes No
door shipping)
Sercurity medium medium high
Value-adding service No Yes No
Figure 7. Carrier Comparison ( Alpha Trans n.d, SIAM Shipping n.d, Rhenus n.d)
In anticipation of the upcoming completion of the international railway from Bangkok to Phnom
Penh, both carriers provide intermodal transportation (rail-road) from Bangkok to Vietnam.
Rhenus Logistics offers competitive pricing but does not provide door-to-door shipping or
packaging. However, its focus on high security may not be suitable for VCB’s cargos, which are
neither high-value nor fragile. In contrast, Alpha Tran offers the most affordable prices and a
frequent schedule (1-2 shipments/day). Nevertheless, its services do not include carton packing
and door-to-door delivery, requiring VCB to allocate additional resources for 3PL services to
pack cargo in Phnom Penh and ship it to VCB’s factories in HCMC. Despite the higher pricing,
SIAM Shipping is recommended to VCB due to increasing VCB’s seamless logistics operations.
Railway Carrier (HCMC->HN)
Ratraco is currently the most appropriate and sole carrier in Vietnam for VCB's domestic railway
transportation from HCMC to HN. Ratraco also provides LCL transport and door-to-door
service, allowing the cargo to be transported to VCB's factory following railway transportation.

Expedited shipping comparison between GZ supplier and BK supplier in terms of EXW

shipping point
Regardless of whether the GZ or BK supplier is chosen, only the air mode of transport can ship
materials from foreign suppliers to VCB’s factories within 1-2 days.
Supplier Selection

Figure 8. Illustration of direct flights from GZ and BK to HCMC and HN

Due to its favorable location, shipping by air freight from Thailand to Vietnam is much more
affordable than from Guangzhou (figure below), with the same tax of 8%.

Figure 9. Comparison shipping cost (5 totes) between GZ and BK to HN by air freight (DHL
2024)
 Selecting supplier Thailand
Route Selection

Option 1 Option 2
Route BK->HCMC BK->HCMC->HN
BK-> HN
Transit time 1-2 days 2-3 days
Cost (VND) 673,089,043*2 + taxes*2 673,089,043 + 734,850,370
( 11,000,000)
Figure 10. Route Comparison (DHL 2024)
The second option extends the transit time to 3 days, exceeding VCB’s standard expedited
shipping lead time and raising the shipping cost, so the first option is chosen.

Carrier Selection
DHL vs FedEx

DHL FedEx
Transit time 2 days
Cost Equal
Reliability high medium
Flexibility (schedule
high low
frequency)
Sercurity medium high
Responsiveness high high
Value-adding service
(door-to-door high high
service)
Figure 11. Carrier Comparison (DHL n.d, FedEx n.d)
DHL has been selected for its exceptional lead time reliability. They offer a money-back
guarantee if the order does not arrive on time, except for factors beyond DHL’s control.
Additionally, they provide a denser air freight schedule than FedEx for freight from Bangkok
airport.
Recommendation
1. Choosing a more suitable Incoterms
The FCA (Free Carrier) shipping point Incoterm is a more suitable choice for VCB. Currently,
under the EXW arrangement, VCB has to manage complex and inefficient transportation from
the supplier's factory in Bangkok (Hajdukiewicz and Pera 2021). By switching to FCA, the local
supplier can utilize their expertise and transportation networks, ensuring timely delivery to the
common carrier. Additionally, under FCA, the supplier bears the risks and logistics fees until the
goods are delivered to the agreed carrier, reducing VCB’s risk burden and variable cost
management while maintaining control (Abdulkhay et.al. 2023). Overall, transitioning to FCA
better aligns with VBC’s operational capabilities, simplifies logistics, and allows the company to
focus on manufacturing premium cola products rather than navigating the complexities of local
transportation in Thailand.
2. Ultimately Recommended VCB’s Transporation Plan
In essence, VCB should consider collaborating with a new supplier in Bangkok. This could be
the most efficient transportation arrangement in partnership with Ratraco Ltd and SIAM shipping
carriers for VCB's standard shipping needs.

Figure 12. Transport Plan Regarding Standard Shipping

In sudden spikes in demand, VCB should explore utilizing DHL's express delivery services to
swiftly transport materials directly from Thailand's supplier to VCB's HCMC and Hanoi
factories. However, VCB should use expedited shipping for small quantities as the associated
costs are high.
 Figure 13. Transport Plan Regarding Expedited Shipping

Expendix 1

Guangzhou-VCB
Sea Mode: Transit time + clearance time + handling time = 4 days, cost is
about 1000$ (Do 2022)

Road mode: HPP->HN through express way long 105 km -> Transit time is
about 1h20’ + handling time = 2h (VETC 2022) + Cost for transporting a
container from HP to HN is 4,600,00 (Luong 2024)

Rail Mode

Picture 1. Rail freight price for conatiner (Ratraco 2024)

Bangkok-VCB

Rail mode: in light of the uncompleted railway from BK-PP, I assume that this mode has the
same speed and price as the Vietnam railway. -> Transit time is about 8.5h + 23h for clearance
time in Poi Pet border gate (Nhem 2013)
Road mode: PP-HCMC is 226 km however, in good condition of the road, the truck can move at
speed of 40-50km/h (Uttamapurna 2019) -> 5h for transit time + 5 hours for clearance in Bavet
(Moc Bai) border gate (Nhem 2013).
Cost

Picture 2. Container freight price from HCMC to Phnom Penh (Alpha Trans n.d)

Road mode: PP-HN takes two days for transit time (FNM n.d) + clearance time in Lao Bao
border gate from 2h to 8h (Vietnam Trade Portal 2016) + Cost (Dinh 2024)
 Picture 3. LCL freight rates to Laos
Appendix 2.
Road: HCMC-HN
The distance between HCMC and HN by road is 1700km. However, heavy trucks can move at a
speed of 50 because of uneven quality roads from South-North Vietnam (suppression way has
not been completed yet in some central provinces) (Trang 2024, MT 2024). Besides, too long
distances force drivers to take time to sleep and take breaks, which costs about $2,000 (ETV
2022).
Rail: HCMC-HN

Picture 4.Rail freight price for container (Ratraco 2024)

https://vetc.com.vn/gia-ve-cao-toc-ha-noi-–-hai-phong-chi-tiet-2022-n70.html