chaitooooo main project doc1

7/27/2019 Chaitooooo Main Project Doc1

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CONTENTS

Executive Summary

Chapter 1 Introduction

Chapter 2 Industry ReviewChapter 3 Company Review

Chapter 4 export documentation

Chapter 5 shipping

Chapter 6 logistic cost parameters

Chapter 7 Efficient operating procedures

Chapter 8 Process analysis


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1.1: Objectives

This project helps us to understand the Efficient Operating Procedures for the export shipping in

esskay. This helps a new entry to understand how to operate in an organization. The detailed

objectives are:

Analysing and Reduction of major logistic cost parameters.

To develop a new Efficient Operating Procedures for the export shipping.

Duration Process analysis for export shipping.

1.2: Methodology

Primary Data:

As per the interaction and guidance given by CLEARING AND FORWARDING TEAM

of EXPORT-IMPORT DIVISION

As per the visits made to various department that are handled by CLERING AND

FORWARDING AGENTS

Secondary Data:

Detailed material of PROCESS ANALYSIS & Operating Procedures from OPEARTION

MANAGENENT TEXT BOOK

Existing documents provided by CLEARIND AND FORWARDING AND

STEWEDORING AGENTS.


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2 INDUSTRY

Shipping is a service industry that by general acknowledgement provides the lifeline of international

trade. Shipping is a highly competitive and challenging business, serving the needs of international trade

in the form of sea transport. It is truly international, both in the nature of its business and in the way it isorganized. Shipping Industry, devoted to moving goods livestock and passengers by water mostly by sea,

The industry connects people from different corners of the world commercially through ship we can

transport a Jumbo Jet to tiny electronic parts. Technological developments in ship design and

construction, and the ensuing economies of scale of larger ships, have also promoted trade particularly

which of developing nations- by making economical the transportation of goods over long distances. This

has expanded markets for raw materials and final products and has facilitated the industrialization of

many countries around the world.

Suffice it to say that, due to the morphology of our planet, 90% of international trade takes place by sea.

International trade has increase economic inter dependence of nations. Modern industries are depended on

variety of raw materials ail of which cannot be conveniently and economically produced in any one

countries.

No country has with in its own boundaries to get resources for economical production of all its

requirements through international its possi ble for a country to obtain goods produced as cheaply as

other countries through shipping. Often, the shipping industry is categorized in two major sectors

(markets): the bulk shipping sector (engaged mainly in the transportation of raw materials such as oil,

coal, iron ore and grains), and the liner shipping sector (engaged in the transportation of final and semi-

final products such as computers, textiles and a miscellany of manufacturing output).

2.1 Global Scenario:

Over 90% of world trade is carried by the international shipping industry. Without shipping the import

and export of goods on the scale necessary for the modern world would not be possible. Seaborne trade

continues to expand, bringing benefits for consumers across the world through low and decreasing freight

costs. Growing efficiency of shipping as a mode of transport and increased economic liberalization, the prospects for the industrys further growth continue to be strong. There are around 50,000 merchant ships

trading internationally, transporting every kind of cargo. The world fleet is registered in over 150 nations,

and manned by over a million seafarers of virtually every nationality

Foreign trade or exports, which are part of international trade, make a significant and necessary

contribution to the economy and the countries development. A developing country like India with a large


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and growing industrial infrastructure needs imports of capital equipment and article raw material. To

sustain development and also hasten the growth of industry with a view to increase the employments

potential exports become necessary.

The recent recovery of around 17% in the Baltic Dry Index from 31 December 2012 to 23 January 2013

was brought about by a temporary surge in freight demand by Chinese steel companies for re-stocking of

iron ore and coal ahead of the Chinese New Year in February. This trend is therefore unlikely to be

sustained and the Index level may decline from the current levels in subsequent months. Although China

has announced large-scale infrastructure projects which could lead to increased commodity imports in the

medium term, the high net capacity additions in 2013 and 2014 in the dry bulk segment would keep rates

under pressure in this period.

Although crude oil imports by China are steadily increasing, freight rates in the tanker market would

remain muted in 2013 given the likely lower US imports in the year. A steady reduction in crude oil

imports by the US (the largest importer of crude oil) kept freight rates muted in 2012 (besides

overcapacity).

Container rates would also remain low for 2013 as Chinese exports of manufactured goods are not likely

to revive significantly. The container segment witnessed low freight rates in 2012 due to a sharp fall in

exports from Asia to Europe despite shipping companies forming alliances to curtail capacity and prop up

freight rates.

2.2 Domestic scenario

The Indian shipping industry is classified into two categories, like coastal shipping and overseas shipping.

Indian shipping is a very long history and has its roots from the early centuries.

The share of Indian flagged vessels has been coming down over the years. Currently, only around 8% of

total EXIM trade of India is done by Indian flagged vessels. The country though moved to tonnage regime

the tonnage under Indian flag has not increased with major part of the Indian freight bill (over Rs 60000

crore) is paid out of the country as mercantile fleet under Indian flag is miniscule. Even Indian companies

prefer to register their fleet under the flags of other countries such as Singapore etc., as they continue to

see competitive disadvantage due to factors such as service tax on input services, stringent regime of

seafarer taxation etc. India Ratings has maintained a negative outlook for the Indian shipping industry for

2013. Capacity overhang brought about by the low levels of international trade and fleet additions are

likely to keep freight rates muted across the primary segments of dry bulk, tankers and container carriers

in 2013.


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While dry bulk rates will continue to be impacted in 2013 due to high capacity additions, container and

tanker rates may exhibit greater stability around the current low levels driven by relative stability in US

demand as well as in manufacturing activity in emerging nations including China.

The operating margins of shipping companies globally would continue to be under pressure in 2013 as

they would be faced with high fuel costs on one hand and muted revenue (due to low charter rates) on the

other. Bunker fuel prices (up to 40% of operating costs) would likely remain high in line with crude

prices.

Considering the global nature of the shipping industry, Indian companies would also continue to be

impacted by global trend in low freight rates. This is because cabotage regulations only provide them the

first right of refusal for freight routes along coastal waters or involving freight movements for

government companies.

Reduced profitability in 2013 is likely to hamper the debt repayment ability of Indian shipping

companies, particularly those that embarked on large debt-fuelled capex plan around 2007-2008 when

asset valuations had peaked. Considering that banks globally and in India continue to be wary of lending

to the shipping sector, debt refinancing would also be a challenge. Indian companies whose vessels are

deployed locally but who have availed foreign currency debt will also face difficulty in debt servicing,

considering that the rupee has depreciated sharply against other currencies in the past two years.

The Indian shipping industry consists of about 616 ships, with a total capacity of 6.62 million tons Gross

Registered Tonnage (GRT). Of these, about 258 ships are engaged in overseas trade and the rest plyinland routes. After a period of decline, both tonnage and fleet size have grown recently, with the addition

of ships tugs, survey vessels, towing vessels as well as pilot vessels belonging to ports and

maritime boards. These were added between April 2002 and March 2003. There are about 55 shipping

companies in the sector, of which 19 deal exclusively in coastal trade, and 29 are engaged in overseas

trade. The rest operate in both types of trade.

A few major players dominate the sector. Of these, the state-owned Shipping Corporation of India (SCI),

and the private sector Great Eastern Shipping have mixed fleets. Essar Shipping focuses on the energy

trade and mainly operates tankers. Chowgule Shipping and Varun Shipping are two other large companies

in the sector. Varun Shipping operates mainly in wet, dry bulk, gas and chemical transport sectors and

Chowgule moves bulk cargoes like iron ore, grain, coal, fertilizers etc.

Indian shipping companies that are largely into offshore exploration and drilling are likely to maintain

their credit profiles at the current levels. Charter rates in the offshore segment comprising oil rigs and


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support vessels remained high in 2012, supported by increased offshore exploration and drilling activity,

which in turn is driven by persistently high crude prices. Another category where the credit profiles would

remain unaffected by prevailing low rates comprises companies that operate on a cost-plus business

model with predictable cash flows.

A change in the outlook to stable is unlikely till 2015 considering the global overcapacity which the

agency believes will persist in the medium term. With large additions to the global fleet likely in 2013, a

meaningful revival in charter rates led by an uptick in global trade (if any) is unlikely during the year.

India Ratings expects capacity additions to taper down significantly in 2015 as companies align capacities

to demand levels which could then prompt an outlook change.


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3 COMPANY

OVERVIEW

Esskay Shipping (P) Limited, made a humble beginning in India around October, 1994. It is a

service sector Organization providing comprehensive shipping services of Shipping Agency,

Stevedoring, Clearing and Forwarding, Contracts Handling, and Off-Shore support services at all

Indian Ports. Aviation support services to off shore activities at KG basin off coast Kakinada are also

provided from Rajahmundry.

The Company is led by a management with decades of experience in the related service fields,

known for its professionalism and dedication to the job. The Company attends to the Agency and

Stevedoring needs of about 540 Vessel per year. It represents a cross section of principals located globally

and handles more than 5.4 MT of Cargoes annually for both Public and Private Sector Principals. In thelast one and half decade. ESSKAY handled a cumulative total of more than 63 million MT of various

Cargoes. Esskay provides its customers with an unparalleled global resource delivered locally and tailored

to each customer's individual needs. Its diversified customer base includes clients across the Bulk,

Oil, cruise, Container and various general, Project Cargo sectors as well as serving naval, government

and inter-governmental clients. Additionally, Esskay provides landside commercial and humanitarian

logistics, transit, offshore support and other associated marine services. Agency Service Excellence, New

Cargo Handling Records, attracting new principals to our fold, constant quest for quality

enhancement in our work, and widening our performance scope has been a way of life for us at

Esskay Shipping (P) Limited.

Esskay is a one-stop solution to the entire gamut of shipping requirements and is a custodian of

customers trust. Esskay portfolio of integrated operations includes Steamer Agency, and all other

vessel related services, innovative management services, strict delivery schedules and the commitment

of trained and experienced personnel to uphold the quality and safety of services rendered. At Esskay,

the guiding principle is total customer satisfaction. Sharing an excellent relationship with the Port,

Customs and all other Government Authorities. With the changing needs and demands of Principals,

have acquired the competitive technology and professional edge in all spheres of shipping to deliver

goods cost effectively. Esskays track record and its reputation as one of the five leading shipping agency

compan ies at Indias premier major port of Visakhapatnam lend credence to this. As Agents to Principals

in Asia and Europe, Esskay handles nearly 500 vessels in a year at Visakhapatnam, Paradip, Haldia,

Kakinada, Krishnapattanam, Chennai, Ennore, Karaikal Nagapattinam and Tuticorin, with two


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million tonnes of diverse cargo like containers, food grains including bagged rice, bulk fertilizers, coal,

steel, timber, general, project and ODC traffic handled at Visakhapatnam alone.

At Visakhapatnam, Ess kay has won the trust of several of Indias leading public and private sector

undertakings including Steel Authority of India Ltd., Visakhapatnam Steel Plant (RINL), etc., Libra

Shipping Services FZE, Dubai, Jayaswal Neco Industries Ltd., Agarwal Coal Corporation, Essar Steel

Limited, West Asia Maritime Ltd, and Bhatia International Limited Indore, to name a few Principals, who

nominate us as their agents to the ship owners.

3.1 Milestones:

1998: Best shipping agency - winner of jackleens press international rajiv gandhi memorial shipping

performance award in the year

1999: First shipping company in India to receive ISO 9002:1994 quality systems certification for

comprehensive services of shipping agency, stevedoring, C&F and contracts handling services at the ports

of Visakhapatnam, Kakinada and Chennai

2000: Handled highest varieties of cargoes at the port of the visakhapatnam as the stevedores

2001: Handled first ever container cargo from kakinada deep water port as handling agents to m/s

American president lines India ltd

2001: Commenced operations as handling agents to the first Indian pvt. Sector fortune 500 company m/s

reliance industries ltd (oil and gas) division, rendering the services as vessel agents, custom Clearing and

forwarding agents, stevedores, materials handling at the ports of Kakinada, Visakhapatnam and aviation

support services at Rajahmundry, A.P.

2002: First again in receiving the ISO-9001:2000 quality Management Systems certification for

comprehensive shipping services by the DNV

2003: The President of the Company has been appointed as Member of the Visakhapatnam Dock Labour

Board, as a representative of the Indian National Ship Owners Association, to represent the Employers of

dock workers and shipping companies in the Board of Visakhapatnam Dock Labour Board.

2004: The Company has emerged as the handlers of highest quantity of diversified cargoes at the port of

Visakhapatnam during the fiscal 2003-04


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2005: The company had a repeated his performance for the second time as an handlers of highest quantity

of diversified cargoes, Aggregating to 4.86 MT at the port of Visakhapatnam during the fiscal 2004-05

2006: For the third consecutive year, Esskay has been the leading stevedore in the port of Visakhapatnam

by handling 5.24 MT of diversified cargoes for the year 2005-06

3.3 Objectives

To provide prompt response, and timely execution of services to all our customers.

To interact with customers & obtain feed backs to understand the stated and implied needs of all our

customers in order to improve the service scope accordingly.

To periodically review the process efficiency in order to revise, amend, alter the same to meet the

business goals of the Organisation and existing trends.

To improve the competency of our personnel on the strength of internal communications, training and

refresher programmes.

To shape up as a futuristic company, sharpening the competitive edge, reaching out to the customers

worldwide with the reputation of being a quality conscious company caring for the total customer

satisfaction.

3.4 MISSION:

Esskay Shipping mission is to provide prompt response and timely execution of services to all our

customers in the most efficient manner ensuring shipping solutions in the industry trend. To interact with

customers & obtain feed backs to understand the stated and implied needs of all our customers to improve

the service scope accordingly. To review the process efficiency periodically in order to revise, amend and

alter the same to meet the business goals of the Organisation and existing trends.

3.5 VISION:

Esskay Shipping envisions itself as a truly world-class shipping Agency and forwarding ServicesCompany known for quality and it endeavours to become a bench mark in its core areas of expertise

worldwide.


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3 Export documentation

The main function of documentation is to communicate information in a format (either hard copy or

electronically) that allows a process to flow in an effective manner.

Export documents (issued with the objective of passing details about the physical and financial nature of a

shipment) communicates information to a number of different parties, starting with the Customs

Authorities and other Government departments in the country of Export, the Buyer, Banks, Freight

Forwarders, Transport Carriers, Insurance companies, Customs Authorities and other Government

departments in the country of Import.

Therefore, it can be seen that export documents are always transcending boundaries which can offer

cultural, linguistic and legal challenges. If these factors are not taken into consideration, then theeffectiveness of the documentation can be compromised and problems can arise with the shipment.

The function of physically shipping the goods and transferring funds to pay for those goods are self-

explanatory. However, there are often question marks about why international shipments sometimes need

so many types of documents? What, exactly, is the function of export documentation? One answer is that

documentation is required to allow Governments to do their house-keeping (Balance of Trade figures) and

to collect income through the application of Duty tax (the tax levied on goods at the time of importation).

However, a much more important concern, for many Governments, is the prevention of hard currenciesfrom leaving their coffers, since virtually all international trade is negotiated in hard currencies.

Consequently, a lot of Governments keep a very tight control on their hard currency reserves by using

Exchange Control Mechanisms. This is often why a lot of countries require a Pro-Forma invoice to be

issued by the seller. This document is often used by the buyer to access hard currency funding from their

governments, as well as being the document used by banks to set up Documentary Letters of Credit.

Export documents fall into a number of categories: Financial (e.g. Invoices), Physical (e.g. Packing lists),

Origin (e.g. Certificate of Origin), Movement (e.g. EUR and ATR), Shipment (e.g. Bills of Lading,

Airway Bills), Compliance (e.g. Export Licences), and Regulatory (e.g. Fumigation Certificates). The list

is quite long and varies depending on the type of goods and the countries of export and import.


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3.1 LIST OF BILLS

3.1.1 Post shipment documents

S.NO Post Shipment Documents :- CHECKLIST

1 Bank Invoice

2 Commercial Invoice

3 Commercial packing List

4 Bank Certificate Horizontal format (Form No. 1)

5 Bank Certificate Vertical Format (Form No. 1)

6 Letter to bank for Collection/Negotiation

7 Bills of Exchange

8 Cost Sheet

3.1.2 REPORTS

S.NO Reports :- CHECKLIST

1 Export Register

2 Consignee wise Exports

3 Country wise Exports

4 Item wise Exports

5 Pending Order details

6 LC Register

3.1.3 PRESHIPMENT DOCUMENTS

S.NO Pre Shipment Documents CHECK

LIST

1 Cost Sheet

2 Order Acceptance

3 Proforma Invoice

4 Invoice

5 Packing lists


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3.1.4 EXCISE DOCUMENTS

S.NO Excise Documents CHECKLIST

1 AREI

2 Form C

3 Form CTI

4 Proof of exports

3.1.5.EDI SHIPPING BILLS

6 Special customs Invoice

7 Drafts bill of Lading

8 Form SDF

9 Certificate of Origin

10 GSP Certificate

11 Marine Insurance

12 Declaration

13 Shipping Instructions

14 Shipment Advice

15 Intimation for Inspection

16 Certificate for Inspection

17 Certificate of Health

18 Certificate of Analysis

S.NO EDI Shipping Bills :- CHECKLIST

1 Annexure A

2 Annexure B

3 Annexure C

4 Annexure D DEPB Declaration

5 DEPB/ DEEC / DBK documents

Appendix10A - DBK application

Appendix 10 B - Advance license application

Appendix10C DEPB application

Appendix 10D - DFRC application


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4 SHIPPING

Shipping is a mode of transport through sea for cargo as well as passenger transport around 90% of the

international cargo transport is being done through sea. Shipping industry and Export and Import are

interdependent. A country where Export and Import are flourishing, there the shipping business also isvery active. Compared to air traffic, Sea traffic is safe and economical.

Apart from Cargo Transport many of the countries use passenger vessels, for human transport as it is

economical compared to the Air Transport and it develops the Tourism in such countries.

4.1 Shipping Functions

There are different functions in shipping business which are executive by the personal, who are

specialized in it. The Major functions of shipping business are as follows.

4.1.1 Operations:

Engaging suitable workmen and equipment, and supervising, loading and unloading of bulk cargo and

containers at port. To interact with the Port labour and the private labour to optimize the rate of loading or

unloading of the cargo. Transporting the cargo to and from Port in time. And also responsible for the

expenses incurred from time to time. Hence the personnel who are in charge of operation should be able

to handle Men, Machine, Material and Money and also be able to work round the clock.

The qualities that are expected from the Operations personnel are good inter personnel relationship withthe Port Labours, Ships Crew and private labour, Timely decisions in case of any brake down to the

equipment or any mishap. And good planning to do the assigned job promptly and safely.

4.1.2 Documentations:

Preparation and collection of documents in regard to Export or Import cargo which are to submitted or

presented to the Port and Customs authorities.

4.1.3 Customs and Port Formalities:

Customs and Port formalities are to be adhered by the agents and Clearing and Forwarding Departments

to clear the import cargo from the Port through customs forwarding the same to the importers destination

as well as vessels entry and Outward Clearance. The customs and Port formalities are to produce the

different documents. The main important documents are as follows.


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1. Port trust cargo handling labour pool shore data sheet

2. Import / export tally sheet

3. Filling of EGM (Export General Manager)

4. General printout sheet

5. Hatch cleanliness certificate

6. Draft survey report

7. Ships stores declaration

8. Bonded store declaration

9. Ship movement certificate

10. Customs report

11. Crew affects declaration form

12. Foreign currency declaration form

13. Ships particulars form

14. Sailing clearance certificate

15. Mail list

16. Dispatch advice

17. Check list

18. General declaration form

19. Maritime declaration of health

20. Imo general declaration

21. International oil pollution prevention certificate

22. International tonnage certificate


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23. International load line certificate

24. Cargo ship safety radio certificate

25. Cargo ship safety construction certificate

26. Cargo ship safety equipment certificate

27. Custom house port clearance certificate

28. Sailing report draft survey report

29. Request for vessel code allotment advance port cl

4.2 Types of shipments

Basically, shipments are classified into two broad categories, bulk shipment and small shipment. Bulk

shipment is further divided into two, liquid bulk, e.g. POL, chemicals, edible oil etc. and dry bulk e.g. ore,

food grain, fertilizer etc. Small shipment is further divided into two, Containerised shipment and non-

Containerised shipment (break-bulk or general cargo).

To cater to the movement of these shipments, shipping companies provide two types of services, tramp

shipping and liner shipping. Tramp shipping provides services on demand and carries bulk shipment

(liquid and dry bulk), between nominated ports. Transportation charges, i.e. freights are based on supply

and demand situation for the ship in the market.

In contrast, liner shipping provides schedule service to advertised ports, on different selected trade routes

in the world. Liner shipping carries containerized shipment and non- Containerised shipment (break bulk

or general cargo). Liner shipping carries small shipment, received from N-number of exporter in various

ports and deliver to N-number of importer located in various ports. Liner shipping receives the shipment,

irrespective of characteristics, volume, weight and quantity of cargo. Containerised shipment is further

divided into less than container load (LCL) and full container load (FCL).

4.2.1 Movement of containerized shipment

Generally, an exporter based in hinterland, irrespective of distance from the servicing gateway port,

prefers to move cargo by road to CFS. Some preferred to move cargo in container under factory stuffed

facility by road. In both LCL/FCL and factory stuffed, cargo moves through the CFS (Container Freight

Station), a transit facility, before entering in port premises for loading on board the ship.


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From an economic and industry structure point of view, the two sectors are as different as they could be:

bulk shipping uses very large carriers, such as tankers and bulk-carriers, to transport goods in bulk on a

contract basis. The service requires minimal infrastructure and in this respect it resembles a taxi service

whereby the contractual relation between passenger and driver (cargo owner and ship-owner) expires

upon the completion of the trip. The industry is highly competitive with prices (freight rates) fluctuating

wildly even in the course of a single week.

4.3 Cargo Handling Methods

The cargo to be handle in different ways. It may be as follows.

4.3.1 Dry Bulk Shipping (Bulk Carriers)

The principal dry bulk cargoes carried in merchant ships are: iron ore, coal, phosphates, bauxite, and

grain. These are all low value commodities and must therefore be transported as cheaply as possible.

Transportation costs for dry bulk commodities are often less Bulk carriers are usually large vessels

designed both to carry full cargoes and, when necessary, to make return voyages to loading ports without

any cargo.

Bulk Carriers are designed to carry bulk solids. Some bulk carriers are multi-purpose, while others are

specially adapted to carry dense cargoes like iron ore, or lighter cargoes like wood chips. They also have

substantial water ballast capacity so that they can proceed to sea safely after discharging their cargo.

Combination carriers, ore/oil and ore/bulk/oil carriers can carry either bulk solids or bulk liquids. The

bulk carriers included as salt, wheat, rice, and coal.

4.3.2 Bulk Oil and Gas Shipping (Tankers)

Tankers carried mainly refined oils from producing areas. Crude oil is now transported in huge quantities

from the worlds major producing areas Most of it is carried in VLCCs or ULCCs, ultra large crude

carriers, which are the largest tankers but products like diesel oil, petrol, and paraffin are now usually

transported from refineries in industrialized countries to coastal storage and distribution centres.

International trade in liquefied gases has grown substantially since the 1960s. Many LNG (methane) and

LPG (butane and propane) tankers are now in service.

Tankers are designed to carry bulk liquids. Most are engaged in the carriage of oil, but some are specially

adapted to carry liquefied gases, chemicals, or even wine. VLCCs (very large crude carriers), are

designed to carry crude oil. Very large crude carriers (VLCCs) became common space required; these


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ships are generally around 2, 50,000 tones carrying capacity, much of which is accounted for by the

cargo. Loading and discharging rates may be as high as 10,000 tonnes per hour. Products and chemical

tankers are usually smaller and more complex than VLCCs.

Tankers can be mostly used with the liquid items. The liquid solids include phosphoric acid, ammonia

used by spic India ltd, caustic soda lye, vinyl chloride ,used by DCW India ltd and furnace oil used by

Indian oil corporation.

4.3.3 Linear Shipping (Containers)

Liner shipping is characterized by scheduled sailings on an advertised route. Cargoes may consist of

many different kinds of goods, in consignments that are each much less than a shipload. Today many liner

services are containerized. Liner cargoes include manufactured and high-value goods that can bear higher

transport costs than bulk cargoes.

Container ships are designed to carry standard ISO (20 ft. and 40 ft. and 40H and 45 and reefer)

containers, either in designated cells within a hold, or on deck. Large cellular container ships are capable

of carrying several thousand containers. Many subsidiary ports do not have container cranes; so small

feeder container ships often have their own handling equipment.

4.3.4 Coastal And Short Sea Shipping (Passenger Cruise ships)

Coastal and short-sea shipping are concerned with the movement of cargo and passengers between ports

in the same country, or between ports belonging to adjacent countries on the same continent Cruising is

an increasingly important shipping sector. In recent years many new cruise ships have been built. Many

older vessels have also been converted for cruising. Cruise ships are like floating resort hotels. The latest

are very large, with extensive recreational facilities and amenities for 2,000 or more passengers.


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5 EXPORT DIVISION

The activities related to the export of goods by the shipper to the consignee, is carried out by this

department. The CHA may be the freight forwarding agent. The process runs through as initially with the

preparation of the shipping bill, with the registration done for the service number. Then the lead goes

through with next stage of customs verification and formalities. The documents required by the shipper

for further proceedings are sent, when the shipment is over physically from the port. After the shipment is

finished, the commencement of Post Shipment is initiated. This includes the processing of ARE forms,

Mate receipt, drawback application (if any), etc., along with the bill of lading.

Finally, after completion of formalities and attaining the original BL, the respective copies are sent to the

shipper, bank and the customs. This would fulfil the practical functions. But the responsibility still rests

on the agent until the consignment reaches the destination safely. Any interruptions should be dealt

accordingly to clear the way for the customer.

5.1 Clearing and Forwarding Agents:

The One who take charge of its his importers and exporters cargo either from the Port to the clients

destination or from clients premises to the Port is known as Clearing and Forwarding Agent (i.e.), the

one who clear the import cargo and forward the export cargo.

For import cargo, the Clearing and Forwarding (C&F) agent on behalf of the importer present the Bill of

Lading (B/L), Invoice, Packing List, Certificate of Origin, Plant Quarantine (in case of food grains and

seeds) and other relevant documents to Customs for their endorsement and inspection of the cargo and

pay the necessary Duty, prior to clearing of goods. And then transport the cargo to the Importers desired

destination by Road.

And for export cargo, the C&F Agent take delivery of the exportable cargo from its clients premises or at

C&F Agents premises or Container Freight Station (CFS) and arrange to book the cargo in the immediate

next vessel after customs examination and stuffing the cargo into the container.

5.2 RESPONSIBILITIES

The C&F Agent shall be a licensed agent of Customs House and submit a valid license copy along with

technical bid/offer for verification and record. The offers of those C&F agents who do not furnish valid

license copy will be rejected.


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2. The C&F Agent must be capable of deploying sufficient personnel to liaison with Customs house

notified container freight station & Shipyard in arranging immediate clearance of the consignments on

arrival of the same to the respective station without any delay.

3. The C & F Agents shall arrange transportation of the consignments from the respective CFS Go-down

to Shipyard, Visakhapatnam in the safest mode of transport and as per customs procedure.

4. Where the consignments are found to be damaged and contents exposed, packages/material short

received, the C&F Agent shall apply for open delivery of the cargo within time and obtain shortage /

damage certificate from the respective Port/Station, Steamer Agents along with Steamer Agents survey

report.

5. Arranging of surveyors, if necessary, for notifying the damages/shortages to the consignments at the

respective Station in time and attending survey is to be done on time under intimation.

6. Arrange vehicle for transportation of the consignments at your own expenses on time to take delivery

of the cargos/consignments from the respective Station, if any delay at your end, the detention charges,

demurrages, ground rent etc., if any attracted to the consignments after collection of all the relevant

original shipping documents, payments & Bonds etc., from HSL, shall be to your account only for the

delayed portion from your end.

7. For arranging loading of the consignments on to the vehicle at the respective Sea port/CFS godowns

will be to exporter account only.

8. The C & F Agent is fully responsible for the safe transportation of the goods from the respective

Stations to HSL site , Visakhapatnam and the damages, shortages if any, while the goods are in their

custody/transit shall be to CHA Account.

9. The C&F Agents are fully responsible for the proper control of their staff and vehicles during the

course of the business. While transporting the consignments, the drivers of the vehicles shall take all

precautions for the consignments such as proper lashing and coverage of tarpaulins of cargo, tying the

cargos with proper ropes etc., and take utmost care during driving, in order to avoid falling, rolling,

slipping of the consignments and any sorts of damage/accidents to the consignments and the C&F agents

are fully responsible on this account.

10. The vehicles of the C & F Agent operating in the yard should not cause damage to HSL property and

personnel and if any damage caused in this regard, proper compensation shall be paid by the C & F Agent

immediately to HSL.


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11. Arrange unloading of the consignments at Shipyard stores by their own men and gear. However,

where the consignments are heavy and cannot be manually handled, Shipyard will provide the required

equipment such as fork lift or crane or any available capacity cranes free of cost at the unloading points in

Shipyard. Shipyard shall not be responsible to provide such facility at the point of loading at Sea Port &

CFS Godown and the C&F Agent shall have to make their own arrangements at their cost and risk.

12. The C&F Agent shall be responsible for clearing the consignments from the respective Stations within

the free time allowed by Sea Port authorities/Steamer Agents of the vessel from the date of arrival of

consignment at the specified Sea Port. However, if the clearance of the consignment is delayed on

account of delay in releasing of funds by Shipyard and (or) for want of documents required for

assessment by Customs or delay in receipt of documents from Bank and if such delays could be

substantiated by documentary evidence, the demurrages involved for such cases will be borne by

Shipyard. If any delay in releasing the consignments even though all the information/documents are

received by the C&F Agent from HSL on time , for such cases/events the demurrages and other charges if

any shall be to C&F agent account.

5.3 Export Clearing and Forwarding

Role of Co-ordinator:

1. Documents required filing the shipping bill.

2. Check the types of schemes involved.

3. Allotting service number for further proceedings.

4. Receiving the shipping bill and check with invoice.

5. Booking the container with liner depending upon the rate.

6. To prepared a stuffing programme and sending through it.

7. Checking B/L with invoice.

8. Dispatch of documents to shipper.

Receiving the documents from Shipper:

The Co-ordinator receiving the following full set of documents from the shipper such as follows

1. Invoice


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2. Packing List

3. Letter of Credit / Contract

4. GRI form / Self Declaration Form (SDF)

5. ARE forms C.E

5.4 Shipping Bill Preparation

1. The Co-ordinator to check the above documents required filing shipping bill and also checking types of

schemes involved. The respective Co-ordinator gives a service number. The service number is used for all

further proceedings. Then registration is done. It includes the parameters of shipper name and address,

Consignee name & address, Port of loading, destination, vessel, voyage, schemes, terms of shipment,

description of items, gross weight, Net weight etc.

2. Then the item wise details are to be entered and to calculate the FOB value based on the freight polices.

Fob value would include as invoice value, Freight, Insurance, and commission etc. Insurance charges are

generally 1.125% of the fob, In case of PMV (105% of fob). In some times two schemes are used it. In

case of agricultural and marine products cess columns are also filled.

3. After the shipping bill is prepared, the respective executive to make an arrangement of the bill and

before taking printout. The calculated fob value is printed on the invoice.

4. Then the bill set is send to the respective Co-ordinators, and for final checking. The Co-ordinator also

attaches the schemes certificates and other documents etc.,

Custom Processing (Assessment):

The full set of shipping bill carried to customs house for filing to pay charges at the following rates as the

CMC.

1. Shipping Bill having up to 5 items - Rs 60

2. for every additional block of 5 items - Rs 10

3. Amendment fees for a block of 5 fields - Rs 10

1. The CMC staffs carefully enter the data entered in the declaration, Annex A or and hand over the

resultant checklist to the exporters / our staffs for confirming the correctness of entries. If any sign the

checklist and return it to the CMC. The CMC shall make corrections in the corresponding data and submit


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the revised checklist to the exporter for re- confirmation. This process would be repeated till it get sign a

clean checklist in taken of correctness of the entered data.

2. The checklist would contain all the Annex details. The generated checklist would be checked by

invoice and not with the Annex. The bill is submitted for further Assessment. {The validity of S/B in the

system would be 15 days, after which it would stand automatically deleted}

3. On submission of S/B the system would generate of S/B number. Then the set of bill goes to

assessment. The assessment procedure would vary according to different schemes

Amendments:

1. Corrections / amendments in the checklist can be made at provided the system has not generated the

S/B number. Where corrections are required to be made after the generation of the S/B no.

2. If the goods not yet been allowed "Let Export", AC may allow the amendment.

3. Where the "Let Export" order has been given, the additional/Deputy Commissioner Exports would

allow the amendments

Stuffing Programme:

1. The respective coordinator to prepare a stuffing programme and send it to CFS / Wharf office

specifying the Vessel, Voyage, shipper name, container type and Liner etc., The Liner is chosen based on

Freight rate, Nomination and destination of service etc.

2. The wharf office staffs collects the Carting order from the respective Liner and TSA, Container Seal,

and the moved in to CFS / House stuffing place. The Wharf office staffs then arranges to pay the

container Wharf age at PSA along with the carting order of the Liner and gets the EIR (Equipment

Interchange Report). Then the wharf office staffs arranges for the transportation of container to CFS /

House Stuffing depending upon the case sending the Line TSA, Seal and EIR copy with the Trailer.

5.4.1 Differences between Agents / Stevedoring / Chartering and Clearing and Forwarding are as

follows.

In Agency, Stevedoring and Chartering activities vessel wise / Voyage wise accounting is being

maintained. And the payments will be recei ved prior to the vessels arrival or before executing the work.

In Clearing and Forwarding activity, Customer wise accounting is being maintained and the payment will

be effected by the customers after executing the work assigned by them.


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The usual record keeping likes Creditors and Debtor's Accounts, General Ledger, Bank Book, Cash

Book, Trial Balance, Profit and Loss Account are being maintained. Bills/Invoices are raised for the

services rendered on the agreed rates, Regular payment follow up, with the Debtors. Making payments to

the creditors are the activities.

The best Marketing technique in shipping industry is by rendering a prompt and cost effective service to

the clients. An effective customer care to the existing clients will generate new customers to fold. And

prompt feedback to the clients about their cargo movements.

To develop Agency, Stevedoring, and Chartering business, the marketing personnel should have close

contact with the Vessel Owners, Vessel Managers, Large Scale Exporters and Importers and C&F Agents.

In case of Clearing and Forwarding business, marketing should be concentrated on all the exporters and

importers and Liner Agents.


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6 CFS AND ICD

Essentially, movement of goods from a port, airport or LCS to an ICD shall be in the nature of movement

from one custom station to another custom station and will be covered by Goods Imported (Condition of

Transhipment) Regulations, 1995. In contrast, movement of goods from a customs station at port/airport/LCS/ICD to a CFS would be akin to local movement from a custom area of a customs station to another

custom area of the same station and such movement is covered by local procedure evolved by the

Commissioner of Customs and covered by bonds, bank guarantee, etc.

6.1 CFS Stuffing

1. In case of CFS stuffing, the exporter will send the goods or cargo to the CFS Park.The goods to be

unloaded and stored in CFS. The goods would be under the supervision of the CFS, where the stuffing

programmed is arranged for respective coordinators, and the empty containers is brought to the CFS for stuffing.

2. The shipping bill assessed at customs is received and printout of the final documents for stuffing.

Exporter copy, Exchange control copy, Customs copy, and Examination report. If all the documents

signed by the superintendent and Inspector at CFS.

3. The examination report contains the name of the Inspector to examine the cargo and package numbers

to be examined at random. The Inspector check the shipping bill No, Packages etc. and finally inspector

gives "Let Export".

4. Then the container to move to the stuffing place and gate officer is informed for stuffing, and our

supervisors to prepare a Tally sheet. The gate officer to check it and to seal by customs seal and Liner

seal.

5. The gate officer (or) Inspector to mark the Container Numbers and Seal No, and signed it. Then the

container is moved to the Port.

For most exporters, importers, Customs house and shipping line agents, and even Customs officers, there

is no difference between Container Freight Stations (CFS) and Inland Container Depots (ICD). In both

the places, the imported goods or export goods are ordinarily kept before clearance by the Customs and

where filing of Customs manifests, bills of entry, shipping bills and other declarations, assessment and all

the activities related to clearance of goods for home consumption, warehousing, temporary admissions,

re-export, temporary storage for onward transit and outright export, transhipment, etc, take place. So, CFS


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Lift on/Lift off chargesLoaded Container Rate / TEUEmpty Container Rate / TEU

Transportation of container from ICD/CFS to PortLoaded Container Rate / TEUEmpty Container Rate / TEU

Charges payable to CHA for the service rendered by C&F agent Type of charges RatesAgency Expenses There is no fixed yardstick for charging agency

expenses. Some charge 0.75% of invoice amount,if invoice amount is more than RS. 10 Lakh. And

some charges 1% of invoice amount, if invoiceamount is less than RS. 10 Lakh. Some charge fixedrate per TEU for FCL shipment and some fixedminimum charges for LCL shipment.

Documentation Charges. Rate / Shipping Bill N Form charges Rate / Invoice Measurement charges Rate / Package or CartonExamination Charges Rate/ Shipping billGSP Charges & expenses Rate / CertificatePostage, courier charges Rate / DOC set

Bill of Lading charges Rate / Bill of LadingConsolidation charges Fixed Amount

Terminal handling charges:

Once the cargo is stuffed in container to its fullest capacity and after completion of all due documentationformality, sealed containers are moved from CFS/ICD to gateway servicing port for further loading oncontainership.

Port authority provides facility to receive container, stacking of container in yard, transportation of container from yard to quayside and loading on board the ship. For providing these facility, port authorityrecover some charges from shipping line or agent of vessel or cargo agent, commonly known as TerminalHandling Charges (THCs).

Normally, THCs are quoted per TEU separately for loaded and empty container. Rate varies per TEU for the type of container used like reefer container, flatbed container, hazardous cargo carrying container.


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Terminal handling chargesFrom truck to Container Yard Rate / TEUFrom rail flat wagon to Container Yard Rate / TEUFrom CFS to Container Yard Rate / TEUFrom Container Yard to Ship Rate / TEU

Normal practice is that shipping line or vessel agent or cargo agent pays THC to port authority and,subsequently, recover from the concerned party i.e., exporter or importer.

7 LOGISTIC COST PARAMETERS

Increased competition worldwide, the emergence of new technology, ubiquitous connectivity, changing

demographics, climate change etc. are bound to affect the big Picture of business across the world. New

capabilities are to be developed by industries in order to be competitive in the global market place. The

development of new capabilities also depends upon enabling policy environment in the logistics space. In

other words, in order to create an environment which facilitates a seamless flow of material within the

country and also for EXIM purposes, it is important for Government to devise a logistics policy

framework. This shall be done with a long term perspective ensuring consistence measures.

The logistic cost measures should be aimed at:

Intelligent regulation in tune with the time reliabilities

Achieving cost efficiency

Integration of transport flows

Level playing field in all aspects

Encouraging private participation by chalking out clear roles

Focusing on network and infra development

While the logistics should try to address all the issues of the logistics components in an export

transaction, most of the shippers have indicated that measures should be more focused on ports. While the

constraints faced by the Shippers in the other logistics chain have also to be dealt with, these however (as

per the shippers) seem secondary as compared to issues / constrains faced at the ports which delays the

handing over of the consignment to the shipping line and has a ripple effect on the shipment costs in

terms of truck detention charges, inability to catch the planned vessel, loss in terms of the re-order value

from Clients etc.


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Since Ports handle more than 90% of the export volume, specific policy measures aimed at fixing these

shortcomings would help in achieving desired efficiency in operations, which in turn, would translate into

benefit in form of cost saving / loss minimization to individual importer/exporter, thus improving his

export competitiveness.

Here the following tables shows that the movement of an 20 TEU and 40 TEU container through road and

rail as per the road and rail freight charges from allapuzha to cochin port, from Chennai to Chennai port,

from cochin to cochin port, from Coimbatore to cochin and Chennai port and to tuticorin port and from

Hyderabad to Chennai port and visakha port.

Road freight chargesFrom origin to Cochin port Chennai port Visaka port Tuticorin port

container type 20" 40" 20" 40" 20" 40" 20" 40"Allapuzha 3000 4600BangaloreChennai 2000 4000Cochin 1000 2000Coimbatore 12000 18000 16500 28000 14000 21000Hyderabad 20000 38000 22000 42000

Rail freightFrom origin to Cochin port Chennai port Visaka port Tuticorin port

container type 20" 40" 20" 40" 20" 40" 20" 40"Bangalore 8500 16300 6300 12200 8000 15000Hyderabad 10500 19200 10700 20700 11500 19500

On observing the exclusive transportation costs I made my analysis on the major logistic cost parameters

which includes inland transportation, Transit facility (ICD / CFS /warehousing), Custom House Agent

/Clearance, Terminal Handling Charges, Documentation Charges, other logistic costs. The reason why i

took these are the major logistics costs as these are to be in the scope of the clearance and forwarding

agents perspective. These are in the movement of a 20 container (TEU) from Hyderabad to various ports

by road on the cost and time factors


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Movement of a 20 container (TEU) from Hyderabad to various ports by road Hyderabad to various ports Visaka port trust Chennai port Trustlogistics cost parameters Cost cost % time cost cost% Time

inland transportation 22000 60.27% 1 22000 64.16% 1

Transit facility (ICD / CFS / 5000 6.85% 2 2800 8.16% 1

Custom House Agent /Clearance 2500 13.70% 2500 7.29%

Terminal Handling Charges 6000 16.44% 6000 17.49%

Documentation Charges 800 2.19% 500 1.46%

other logistic costs 200 0.55% 1 500 1.46% 1

total logistic costs 36500 100% 34300 100%

On observing the exclusive transportation costs I made my analysis on the major logistic cost parameters

which includes inland transportation (in this order I sum up the transportation costs by road and rail as to

get on to the rail wagon the cargo should follow by road and to train shipment) , Transit facility (ICD /

CFS /warehousing), Custom House Agent /Clearance, Terminal Handling Charges, Documentation

Charges, other logistic costs. The reason why i took these parameters, as these are to be in the scope of

the clearance and forwarding agents perspective. These are in the movement of a 20 container (TEU)

from Hyderabad to various ports by rail on the cost and time factors.

MAJOR LOGISTIC COST PARAMETERS

Hyderabad to various ports Visaka port trust Chennai port Trustlogistics cost parameters Cost cost % time cost cost% Time

inland transportation Road 2000 7.35% 1 2500 1.97% 1

inland transportation Rail 10700 39.34% 1 10700 8.44% 1

Transit facility (ICD / CFS / 5000 18.38% 2 2800 2.21% 1

Custom House Agent /Clearance 2500 9.19% 2500 1.97%

Terminal Handling Charges 6000 22.06% 6000 4.73%

Documentation Charges 800 2.94% 500 0.39%

other logistic costs 200 0.74% 1 500 0.39% 1

total logistic costs 27200 100% 25500 100%


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On observing the graphs of the logistic cost parameters we can predict that the maximum area of the

logistic cost parameter is that the inland transportation and the next to is an terminal handling charges

summing up the costs the total logistic cost is that amounts to nearly 35000 which it is movement of the

20 feet TEU container from Hyderabad to Visaka port.

On observing the graphs of the logistic cost parameters we can predict that the maximum area of the

logistic cost parameter is that the inland transportation and the next to is an terminal handling charges

summing up the costs the total logistic cost is that amounts to nearly 28000 which it is movement of the

20 feet TEU container from Hyderabad to Visaka port through rail including road up to the track.

05000

10000150002000025000300003500040000

05000

1000015000200002500030000


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7.1 LOGISTICS SPEND AREAS CHART import/export

The domestic logistics costs are an important factor affecting the logistics performance. The domestic

logistics cost in India on the higher side when compared to the other developed countries. This is mainly

due to the relatively higher transit time taken by rail and road transport in India.Costs were segregated

across major logistics both spend areas domestic outbound and domestic inbound from/to import-export

like inland freights agency charges ocean freights insurances port charges, demurrage, penalties and

further each parameter get segregated by distance volume documentation, shipping line ,clearance and

further they are divided by the means of stuffing /DE stuffing, warehousing, tonnage, container

handling, surveyor charges, truck capacity, turnaround time, statutory and other miscellaneous and the

measure of the charges are provided in the previous topics.

TURNAROUNDTIME

DIESEL COST

TRUCKCAPACITY

DISTANCE

RETURNFRIEGHT

TONNAGE

MISCELLANIUOS

SURVEYORCHARGES

CONATINERHANDLING

WAREHOUSING

CLEARANCE

DOCUMENTATION

STFFING/DESTUFFING

CUSTOMCLEARANCE

DOCUMENTATION

SCHEDULING

SHIPPINGLINE

DISTANCEVOLUME

PENALITIES

DEMURAGE

PORTCHARGES

INSURANCES

OCEANFRIEGHTS

AGENCYCHARGES

INLANDFRIEGHTS

IMPORT/EXPORT

STATUTORY


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7.2 Cost optimizing chart

Reduction in losses

Location of depots andfeeding pattern

Inland freight cost

Agency charges

Depot policy and costs

Transporter contracts

Consolidation of transporter base

Import-export costoptimization

Reduction in transitchar es

Insurance, demurragesand enalties

Ocean freight costs

Cost optimization

Reduction in depotchar es

Improvement inplanning efficiency

Turnaround time

Domestic


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7.3 SUGGESTIONS:

7.3.1 EXTERNALLY

1. Procedural delays Manual processing, multiple physical interfaces and redundancy characterize the

EXIM processes at Indian ports. Bottlenecks and limited use of information technology in the processeshamper the seamless transfer of cargo in the supply logistics chain. Switching to a policy that propagates

efficient online procedures & paperless regime will help achieve time bound clearances

2. Poor infrastructure Most Indian ports lack the necessary draft, the draught available in these ports

ensures that neither the size of vessels nor the nature of cargo is a constraint. Unlike most Indian ports,

international ports are characterized by sufficient port infrastructure in terms of modern resources, port

superstructure and services. Efficient handling of container traffic may require creation of deep water

facilities. While this holds good for hub ports, feeder ports would require up to 12 m draft. Bigger, deeper

ports allow for larger ships, in turn, allowing for larger parcel sizes (number of containers handled at a

time) bringing in operational and, in turn price efficiencies.

3. Inadequate connectivity - Inadequacies in the infrastructure for ports-hinterland connectivity has

resulted in delays in evacuation of goods from ports, thereby hampering efficiency. A minimum four-

lane road connectivity and double line rail connectivity are a must for major ports.

4. Lack of state-level initiative in development of non-major ports States like Karnataka are still

without a maritime board, which is an important state-level nodal body instrumental in facilitating port

development. Of late, although a lot of interest has been evinced by industrialists for setting up captive

port facilities at various locations, there is an urgent need for state- level intervention for regulation &

coordination of such development initiatives. Although initiatives seem to be lined up in this regard, the

need of the hour is to accelerate their pace and achieve tangible outcome.

5. Uncompetitive pricing While privatisation has led to increase in productivity, there is little benefit

for the cargo owner as concessions are hard to obtain. Even if concessions are awarded, the government

nets 30-50 per cent of the revenue, leaving the price of cargo on the higher side. Generally, the port

authority tends to retain marine services such as pilotage, vessel handling, etc. charges for which are someof the highest in the world. The ship-to-shore fee of over RS 5,000 per TEU, a yard handling fee, a gate

fee and several such fees. Standardization / setting a permissible range to the extent possible for various

port charges can be envisaged to provide a level-playing field to port developers & make Indian port

sector globally competitive.


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6. Unskilled labour / Low mechanization To improve the efficiency levels, there is need for high

degree of mechanization and skill intensive, technology driven workforce, both of which are relatively

lacking in the Indian context. The human resources aspect of port policy should stipulate mobilization of

adequate multi-skilled & disciplined labour force, and employment based on issue of licenses by the Port

/ local Government to such labour force.

Understanding trends, learning from best practices and developing insights will be critical to evaluating

the competitiveness of Indian logistics sector and evolving a path forward. As trade in manufactured

cargo increases, there would be rising demand for multimodal services. At present, the cost of switching

from one mode to another is high as different modal nodes are located far away from each other. The

government should plan logistics infrastructure development by linking it with ports in a manner that such

exchanges are adjusted and economic transfer is facilitated.

7.3.2 INTERNALLY

Custom house agent charges:

The custom house agent charges are INR 2,000 per TEU and INR 3,000 per FEU. These charges are

exclusive of Service Tax and they have to organize in the frequent wise as the number of times the

transactions made exporters has to charge up on his frequency as if the exporter proves his humbleness in

the exports. It has been observed that there would be 15- 20 CHAs gather around one Customs official

table, each coaxing the Customs official to clear his papers. This leads to confusion and also delays

customs clearance.

Shipping cost

The companies in the southern region prefer VPT and Cochin Port Trust as they handle direct vessels.

Tuticorin and Chennai are less preferred as the ports are mainly into transhipments and hence are costlier

when compared to other ports. Depending on the urgency and the high value consignments the exporters

prefer air or sea options.

Transit facility (ICD/ CFS/ Warehousing etc.)

It has been seen that most of the bigger companies in the hinterland prefers to directly stuff the containers

in the port premises and smaller companies prefer sending the LCL/FCL to the ICDs/ CFSs where they

get stuffed and is then taken to the various ports depending on the export destinations. For Andhra

Pradesh: Visakhapatnam Hyderabad (CWC, CONCOR), Guntur.


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Documentation charges

The shipper has to incur a cost of around INR 600 to INR 1,000 per Bill of Lading in the southern ports.

Apart from the referred documents, the shipper would also be required to bear the nominal L/ C charges

which vary depending on the bank. The other charges incurred by the shipper include courier & fax

charges, certificate of origin charges etc. Accordingly the total charges associated with documentation

would be around INR 1,000 2,000/-.Documentation hassles during inland transportation. The consignor

indicated that the Government should consider a uniform single set of documentation valid for the

interstate movement across all the states.

Consolidation centres

There is a requirement for Primary Collection Centres, for the cause of a potential reduction in the

mileage associated with transporting less-than truckload consignments to exporters.

Other logistics cost

Unauthorized check posts, the exporters in the southern region have to pay hefty bribes in the check-

posts spread across the country. According to the exporters, in some cases they end up paying around INR

1000 to INR 2000.

Total logistics cost Most of the cargo in the southern hinterland moves by road. This is mainly because of

lesser distance from the factories to the gateway ports. It could be seen that exporters prefer rail

movement if the distance between the factory to the gateway ports is more than 600 kilometres. The

logistics cost for the following routes have been analysed in detail for Andhra Pradesh, Hyderabad to

VPT/ Hyderabad to JNPT/Hyderabad to Chennai Port Trust

Overtime charges:

According to exporters, Customs charge overtime charges after 7 pm. Respondent feels that Customs

should not charge the overtime charges and should be on the regular scale. There should not be any

overtime charges for any transactions.

Difficulties in obtaining export benefits:

The shipper has to pay the import duty to get his raw material cleared and he obtains the benefits only

after he has exported the required quantity under the advanced license scheme.


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The shippers are supposed to obtain their Export Promotion (E.P) certificate after the 3 rd to 4th week of

the shipment. But the actual time period may take around 3 months. To avail the benefits, the shipper has

to approach the DGFT, based on the E.P certificate issued by the customs. DGFT does not check the

physical copy of the E.P certificate.

The EP certificate issued by the customs is uploaded on the main server, from where the DGFT accesses

and views the certificate. Similarly the Advanced license issued by the DGFT is again uploaded on the

server for the Customs to view and take the necessary steps with the shipper concerned.

However the uploading of the E.P certificate and / or the advanced license never happens in a timely

manner, thus delaying the shipper in obtaining his incentives dues. In addition, the shipper also has to

invest in time and other resources to follow up with the customs / DGFT on the uploading of the

necessary documents.

Faster clearances

There is a need for faster clearances of documents /consignments to improve the logistics activity. This

shall be achieved by the introduction of a Single Common Document System acceptable by shippers,

DGFT, Customs & Excise, and Income Tax Dept. etc. Introduction of Electronic Data Interchange

connecting all sea ports, airports, check posts, Customs, Income Tax and other similar offices Planning

Commission, Various Ministries / Government Depts. like Finance, Commerce, Industry, Shipping,

Aviation etc.

Cargo tracking

Government to make it mandatory to have GPS based systems / Telematics installed in the Commercial

Vehicles used in cargo transportation in a phased manner spread over a period of 3-5 years. Government

shall incentivize the adoption of cargo tracking by logistic players.

7.4 Incoterms:

Incoterms or International commercial terms are a series of international sales terms widely

used throughout the world. INCOTERMS are designed to create a bridge between different

members of the industry by acting as a uniform language they can use. The main objective of

Incoterms2000 defines the responsibilities and the obligations of a seller (Exporter) and a buyer

(Importer) within the framework of international contracts of trade concerning loading, transport,

type of transport, insurances and delivery. Its first function is about a distribution of transport


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charges. The second role of the Incoterms2000 is to define the place of transfer and the transport

risks involved in order to justify the ownership for support and damage of goods by shipments

sent by the seller (exporter) or the buyer (importer) in an event of execution of transport.

Most frequently listed by category. Below are the 11 international Incoterms adopted by the InternationalChamber of Commerce.

Group E (Departure):

1) EXW - Ex Works (...named place): Ex works means that the seller (exporter) delivers when he places

the goods at the disposal of the buyer (importer) at the seller's premises or another named place (i.e.

works, factory, warehouse, etc.) not cleared for export and not loaded on any collecting vehicle.

This term thus represents the minimum obligation for the seller (exporter), and the buyer (importer) has to

bear all costs and risks involved in taking the goods from the seller's premises. However, if the parties

wish the seller (exporter) to be responsible for the loading of the goods on departure and to bear the risks

and all the costs of such loading, this should be made clear by adding explicit wording to this effect in the

contract of sale.

Group F (Main carriage unpaid):

2) FCA - Free Carrier (...named place): Free Carrier means that the seller (exporter) delivers the goods,

cleared for export, to the carrier nominated by the buyer (importer) at the named place. It should be noted

that the chosen place of delivery has an impact on the obligations of loading and unloading the goods at

that place. If delivery occurs at the seller's premises, the seller (exporter) is responsible for loading. If

delivery occurs at any other place, the seller (exporter) is not responsible for unloading.

This term may be used irrespective of the mode of transport, including multimodal transport.A Carrier

means any person who, in a contract of carriage, undertakes to perform or to procure the performance of

transport by rail, road, air, sea, inland waterway or by a combination of such modes.

If the buyer (importer) nominates a person other than a carrier to receive the goods, the seller (exporter) is

deemed to have fulfilled his obligation to deliver the goods when they are delivered to that person.

3) FAS - Free alongside Ship (...named port of shipment): Free Alongside Ship means that the seller

(exporter) delivers when the goods are placed alongside the vessel at the named port of shipment. This

means that the buyer (importer) has to bear all costs and risks of loss of or damage to the goods from that

moment. The FAS term requires the seller (exporter) to clear the goods for export. However, if the parties


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wish the buyer (importer) to clear the goods for export, this should be made clear by adding explicit

wording to this effect in the contract of sale. This term can be used only for sea or inland waterway

transport.

4) FOB - Free On Board (...named port of shipment): Free on Board means that the seller (exporter)

delivers when the goods pass the ship's rail at the named port of shipment. This means that the buyer

(importer) has to bear all costs and risks of loss of or damage to the goods from that point. The FOB term

requires the seller (exporter) to clear the goods for export. If the parties do not intend to deliver the goods

across the ship's rail, the FCA term should be used. This term can be used only for sea or inland waterway

transport.

Group C (Main carriage paid)

5) CFR - Cost & Freight (...named port of destination): Cost and Freight means that the seller (exporter)

delivers when the goods pass the ship's rail in the port of shipment. The seller (exporter) must pay the

costs and freight necessary to bring the goods to the named port of destination but the risk of loss of or

damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are

transferred from the seller (exporter) to the buyer (importer).The CFR term requires the seller (exporter)

to clear the goods for export. If the parties do not intend to deliver the goods across the ship's rail, the

CPT term should be used. This term can be used only for sea and inland waterway transport.

6) CIF - Cost, Insurance & Freight (...named port of destination): Cost, Insurance and Freight means that

the seller (exporter) delivers when the goods pass the ship's rail in the port of shipment. The seller (exporter) must pay the costs and freight necessary to bring the goods to the named port of destination but

the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the

time of delivery, are transferred from the seller (exporter) to the buyer (importer).However, in CIF the

seller (exporter) also has to procure marine insurance against the buyer's risk of loss of or damage to the

goods during the carriage. Consequently, the seller (exporter) contracts for insurance and pays the

insurance premium. The buyer (importer) should note that under the CIF term the seller (exporter) is

required to obtain insurance only on minimum cover. Should the buyer (importer) wish to have the

protection of greater cover, he would either need to agree as much expressly with the seller (exporter) or to make his own extra insurance arrangements.

The CIF term requires the seller (exporter) to clear the goods for export. If the parties do not intend to

deliver the goods across the ship's rail, the CIP term should be used. This term can be used only for sea

and inland waterway transport.


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7) CPT - Carriage Paid To (...named place of destination): "Carriage paid to..." means that the seller

(exporter) delivers the goods to the carrier nominated by him but the seller (exporter) must in addition pay

the cost of carriage necessary to bring the goods to the named destination. This means that the buyer

(importer) bears all risks and any other costs occurring after the goods have been so delivered.

Carrier means any person who, in a contract of carriage, undertakes to perform or to procure the

performance of transport, by rail, road, air, sea, inland waterway or by a combination of such modes. If

subsequent carriers are used for the carriage to the agreed destination, the risk passes when the goods

have been delivered to the first carrier. The CPT term requires the seller (exporter) to clear the goods for

export. This term may be used irrespective of the mode of transport including multimodal transport

8) CIP - Carriage and Insurance Paid To (...named place of destination):

"Carriage and Insurance paid to..." means that the seller (exporter) delivers the goods to the carrier

nominated by him but the seller (exporter) must in addition pay the cost of carriage necessary to bring the

goods to the named destination. This means that the buyer (importer) bears all risks and any additional

costs occurring after the goods have been so delivered. However, in CIP the seller (exporter) also has to

procure insurance against the buyer's risk of loss of or damage to the goods during the carriage.

Consequently, the seller (exporter) contracts for insurance and pays the insurance premium. The buyer

(importer) should note that under the CIP term the seller (exporter) is required to obtain insurance only on

minimum cover. Should the buyer (importer) wish to have the protection of greater cover, he would either

need to agree as much expressly with the seller (exporter) or to make his own extra insurance

arrangements. Carrier means any person who, in a contract of carriage, undertakes to perform or to

procure the performance of transport, by rail, road, air, sea, inland waterway or by a combination of such

modes. If subsequent carriers are used for the carriage to the agreed destination, the risk passes when the

goods have been delivered to the first carrier. The CIP term requires the seller (exporter) to clear the

goods for export. This term may be used irrespective of the mode of transport including multimodal

transport.

Group D (Arrival):

9) DAP - Delivered at Place (...named place): Delivered at Frontier means that the seller (exporter)

delivers when the goods are placed at the disposal of the buyer (importer) on the arriving means of

transport not unloaded, cleared for export, but not cleared for import at the named point and place at the

frontier, but before the customs border of the adjoining country. The term "frontier" may be used for any

frontier including that of the country of export. Therefore, it is of vital importance that the frontier in


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question be defined precisely by always naming the point and place in the term. However, if the parties

wish the seller (exporter) to be responsible for the unloading of the goods from the arriving means of

transport and to bear the risks and costs of unloading, this should be made clear by adding explicit

wording to this effect in the contract of sale.

This term may be used irrespective of the mode of transport when goods are to be delivered at a land

frontier. When delivery is to take place in the port of destination, on board a vessel or on the quay

(wharf), the DES or DEQ terms should be used.

10) DDP - Delivered Duty Paid (...named port of destination): Delivered duty paid means that the seller

(exporter) delivers the goods to the buyer (importer), cleared for import, and not unloaded from any

arriving means of transport at the named place of destination. The seller (exporter) has to bear all the

costs and risks involved in bringing the goods thereto including, where applicable (Refer to Introduction

paragraph 14), any "duty" (which term includes the responsibility for and the risk of the carrying out of

customs formalities and the payment of formalities, customs duties, taxes and other charges) for import in

the country of destination.

Whilst the EXW term represents the minimum obligation for the seller (exporter), DDP represents the

maximum obligation. This term should not be used if the seller (exporter) is unable directly or indirectly

to obtain the import license. However, if the parties wish to exclude from the seller's obligations some of

the costs payable upon import of the goods (such as VAT), this should be made clear by adding explicit

wording to this effect in the contract of sale. If the parties wish the buyer (importer) to bear all risks and

costs of the import, the DDU term should be used. This term may be used irrespective of the mode of

transport but when delivery is to take place in the port of destination on board the vessel or on the quay

(wharf), the DES or DEQ terms should be used.

DAT - delivered at terminal (... named terminal at port or place of destination)

The Seller delivers when the goods, once unloaded from the arriving means of transport, are

placed at the Buyer's disposal at a named terminal at the named port or place of destination.

"Terminal" includes any place, whether covered or not, such as a quay, warehouse, container yard or road, rail or air cargo terminal. The Seller bears all risks involved in bringing the goods

to and unloading them at the terminal at the named port or place of destination


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New incoterm chart

Any transport mode Sea/inland waterway transport Any transport mode

Charges EXW FCA FAS FOB CFR CIF CPT CIP DAT DAP DDP

Packing Buyer/seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller

Loading Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller

Delivery to

port

Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller

Export

duty/tax

Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller

Origin

terminal

Buyer Buyer Seller Seller Seller Seller Seller Seller Seller Seller Seller

Loading on

carriage

Buyer Buyer Buyer Seller Seller Seller Seller Seller Seller Seller Seller

Carriage Buyer Buyer Buyer Buyer Seller Seller Seller Seller Seller Seller Seller

Insurance ----- ----- ----- ----- ----- Seller ----- Seller ----- ----- -----

Destination

terminal

Buyer Buyer Buyer Buyer Buyer Buyer Seller Seller Seller Seller Seller

Delivery to

destination

Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Seller Seller

Import

duty/tax

Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Seller

Table view of incoterms


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8 PROCESS ANALYSES

Processes represent the stream of systematic approach. Problems that occur inside processes produce

consequences that affect the health of entire shipping. For that reason processes have to be managed, or

even better, an enterprise should be managed through process management. Process approach involvesidentification, measurement and analysis of their performance, as well as continuous improvement and

monitoring of the implementation of the improvement. Process identification can be described as

determination of the start and the end point of the process, sequence and content of the activities it

includes, as well as points of connection with the other processes. Measurement provides data on

processes performances, which is, during the analysis, transformed into information important.For

discovering the link between inputs and processes, on the one side, and the results of processes, on the

other. This information is important for proposing the possible solutions, and for choosing the best of

them for process improvement.

Time management represents some kind of a connector between quality management and cost

management (quality of processing affects process lead time, and this, consequently, affects process

costs). Generally, there are two ways for providing information for better time management, and they are:

process duration analysis and process capacity analysis.

8.1 Process duration Analysis Terms

Process: Is any part of an organization that takes inputs and transforms them into outputs.

Cycle Time: Is the average successive time between completions of successive units.

Utilization: Is the ratio of the time that a resource is actually activated relative to the time that it is

available for use.

Process Flowcharting: Process flowcharting is the use of a diagram to present the major elements of a

process. The basic elements can include tasks or operations, flows of materials or customers, decision

points, and storage areas or queues. It is an ideal methodology by which to begin analysing a process.

After building the process flow diagram, the next step towards understanding and improving a business

process is to perform a process analysis. The objective of the process analysis is to:

Find the process step that is limiting the rate at which the process generates output. This limiting step is

called the bottleneck. Find the maximum rate at which the process can generate output (capacity). If there

is sufficient demand, the capacity of the process will correspond to the flow rate defined above. Compute


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the time it takes for a flow unit to go through the process, the flow time, including processing time and

waiting time.

8.2 Efficient operating procedures (EOP) in the movement of shipment by road andstuffing of shipment in container is done at CFS, port by the service operation provided bythe C&F and stevedoring agents

Transfer of cargo intotruck

Storage of cargo intruck

Road (truck) journey

Unpacking forcustoms examination

Repacking forcustoms examination

Transfer of cargofrom truck to storagepoint/shed/yard in

Breaking out of cargofrom truck

Transportation of loaded container tocontainer yard in port

Consolidation of cargo according to

Stuffing of cargo in thecontainer

Loading of containeron truck

Locking and sealingof container

Unloading of container incontainer yard in port

Stacking of containertin container yard inort

Loading of container on

truck to move containeralongside ship

Sea voyage Loading of containerfrom truck to cellularhold of ship

Truck journey fromcontainer yard toalongside ship, i.e., Quay


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8.3) Efficient Operating Procedures (EOP) in the movement of factory stuffed FCL shipmentcontainer:

Factory stuffing serves certain advantages over CFS stuffing. It reduces multiple handlings of packages/cases, etc., thus reducing labor cost and material handling equipment hiring cost. Further, italso reduces risk related to loss or damage due to theft, mishandling.

Road journey

Unloading of container from truckand storage/stackingof container in buffer yard in CFS.

Loading of container

on truck

Central excise sealing

Stacking of container inContain