Haider Role of Logistics

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A PROJECT REPORT ON

ROLE OF LOGISTICS ININTERNATIONAL BUSINESS

UNDER THE GUIDANCE OF

MR. M. ALTAF KHAN

SUBMITTED BY:

HAIDER ALIROLL NO. 07-MIB-14 MIB: SEM. III (2007-2009)

DEPARTMENT OF COMMERCE & BUSINESS STUDIES

JAMIA MILLIA ISLAMIA, NEW DELHI 110 025


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A CKNOWLEDGEMENT

First of my sincere thanks goes to all people helped me in making the practical

any way how, directly or indirectly. I would like to thank T.M ZEYAUL HAQUE,

Manager, Link Courier & Logistics, New Delhi, for giving us an opportunity

which gave us more knowledge about the lengthy and the complicated

procedures of import and export. With the help of this project we could

understand the role of clearing and forwarding agents in export and import

procedures.

I express my deep sense of gratitude to my project coordinator Professor M.

ALTAF KHAN whose experience and guidance helped me a lot in preparing the

project report entitled Role of Logistics in International Business

I express my special thanks to those who supported me during the analysis

phase also to those people of management who have helped me during the

queries about software requirements, hardware requirements and network

specification.

I would be failing in my duty if I dont offer special thanks to my parents and god

almighty for his showers of blessing and pray that he may continue to bless my

endeavors.

HAIDER ALI

ROLL NO. 07-MIB-14

MIB: SEM. III

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CONTENTS

TOPICS PAGE NO:

EXECUTIVE SUMMARY 4

INTRODUCTION 6

COMPANYS PROFILE 14

OBJECTIVE AND RESEARCH METHODOLOGY 19

SOME FACTS ABOUT SHIPPING 22

FINDINGS AND ANALYSIS 29

PROCEDURE AND DOCUMENTATION 35

ROLE OF EDI IN LOGISTICS 59

BIBLIOGRAPHY 69

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EXECUTIVE SUMMARY

The project title The Role of Logistics Industry in International Business isan attempt to briefly dwell upon the phenomenon growth of the Indian logistics

sector, particularly in recent years, and what the future looks like. The objective

of the report aims to quantify the change in the size, composition and direction of

Indian logistics sector and its role in the global trade.

With the changing economic scenario, factors such as globalization of markets

international economic integration, removal of trade barriers to business and

trade, increased mobility of the factors of production and increased competition

have enhanced the need of efficient logistical activities. This is one of the most

important infrastructure requirements, which is essential for the expansion of

opportunities and plays an important role in making or breaking the competitive

positioning.

Logistics is an important element of any business venture. If we closely examine

the cost of a product, the raw material cost forms a significant portion, nearly40% of the total cost. Logistics views transportation, production planning with

efficient demand management, distribution management design, location of

plants warehouses, inventory management, etc: as integral parts of its function to

achieve the overall objective of customer satisfaction.

Coming to the port sector the long coastline of India is dotted with 11 major ports,

which are managed by the Port Trust of India under Central Government

Jurisdiction, and 139 minor operable ports under the Jurisdiction of the

respective State governments. The ports are located at Kolkata/Haldia, Mumbai,

and Jawaharlal Nehru Port at Nhava Sheva, Chennai, Cochin, Vishakhapatnam,

Kandla, Mormugao, Parardip, New Mangalore and Tuticorin. The major ports

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handle 90 per cent of all-India port throughout, and thus bear the brunt of sea

borne trade.

The present problems and crises facing the transport sector, to a great extent are

the results of lack of integrated thinking of the government from the beginning.

India was one of the few countries, which attempted to evolve a cohesive

transport policy. On the commercial side, all of the major transportation modes

are facing serious problems. Motor carriers are getting slammed from several

different directions. Fuel cost and freight bill surcharges are straining

relationships between the carriers and the shippers customers. The railroad

industry is not faring much better. The Railroads, which are operating at or near

capacity, are clogged with freight. And that, in turn translates to a reduction in

service reliability. Yet the railroads have been reluctant to make the hugeinvestments requiring for rolling the stock and supporting infrastructure needed to

ease the problem. As a result, the existing congestion is only likely to worsen,

leading to more service and capacity problems for shippers.

While the governments should look at closely how best they can improve the

efficiency and effectiveness of the macro logistics, the industries and companies

should attempt to improve the micro logistics, and optimize their logisticsfunctions.

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INTRODUCTION

The report Role of Logistics Industry in International Business provides a

comprehensive picture of the Indian logistics industry and covers the major components of it. With the changing economic scenario, factors such as

globalization of markets international economic integration, removal of trade

barriers to business and trade, increased mobility of the factors of production and

increased competition have enhanced the need of efficient logistical activities.

This is one of the most important infrastructure requirements, which is essential

for the expansion of opportunities and plays an important role in making or

breaking the competitive positioning.

Logistics usage in India remains much less than those in the developed

countries. India has still to go a long way in strengthening and streamlining its

logistical network. Still the countries logistical network and facilities suffers from

several inadequacies and hurdles and, in particular it has little resilience to deal

with unforeseen and fluctuating demands.

Logistics, like all other industries is large influenced by information and

communication technologies with the focus being on knowledge of customer

needs and value added services.The foundation of any logistics program is reliable cost effective, time definite

transportation and it encompasses everything from basis point to-point moves

to complicated, end-to-end integrated logistics.

The infrastructure is supported by a network of consolidation / deconsolidation

gateways and integrated logistics centers covering all major transportation

distribution centers.

Each of these gateways is an integral part of the global network, the multi modal

information system, and these facilities have state if the art racking, sorting,

assembling and depending on the market, refrigeration and high tech product

handling and security services are provided.

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The strengths in core transportation services and fitted information systems are

an integral part of innovative logistics and distribution infrastructure. North

American and Pan-European distribution networks, Asia to store / door delivery

and innovative warehousing with just in-Time and Merge-in-Transit services

allow the clients to increase inventory visibility and velocity while reducing total

cost and cycle time.

Effective global logistics is built upon basic operational capabilities in air, ocean,

surface and multi modal transportation. When these capabilities are provided on

both an international and intra-continental basis connected by one information

system the promise of end to enc logistics becomes real.

GLOBAL TRANSPORTATION

1. AIR2. OCEAN

Air

The worldwide volume of million tones combined with the industry experiences,

global network, multi modal information system and superior customer servicesprovide the clients with increased global capability, inventory velocity and

shipment visibility.

Some companies like Geologistics operate as a non-asset based carrier, while

others like APL act as vessel owned, which gives customer variety of innovative,

cost effective, time definite programs-whether airport-to-airport, door-to-point

airfreight or integrated into end-to-end logistics programs. Organization know

what can and what cannot be accomplished and thus no false promises are

made, generally. The logistics companies maintain an alliance with a core group

of carriers allowing for competitive pricing, space allotments in peak season,

cargo security and integrity, time definite transits, date management through EDI

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links and complete export / import documentation. The result increased capability

with lower total costs for the clients.

Air Services

Direct and consolidated consignments.

Multi modal tracking, and trace. (JayemSkynet)

Charters and part charters.

Oversize and restricted cargo.

Complete documentation.

Security

Break bulk.

On forwarding

EDI links to carriers.

Direct to customer distribution.

Air Benefits

Reliable, time definite service

Ease of information access.

Shipment and inventory visibility.

Cost effective.

Multiple service options.

Increased capability.

Ocean

With years if experience in transportation, and annual ocean expenditure of

million and nearly 5 lakh TEU moved per year, some organization like Jayem,

APL, Geologistics meets and exceeds the customers expectation. Utilizing the

network of services centers, global information system, superior customer

service and attention to detail their ocean programs are real and measurable.

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Operating as either a forwarder or NVOCC, Geologistics ocean services meet

the demands with cost effective flexible services LCI, FCL, contract

management, vendor consolidation, multi modal transportation, warehousing and

distribution with purchase order management makes a difference in designing an

increase in the capability of global market. Others also give the same with the

vessel under considerations. Using a combination of conference and non-

conferences steamship lines, they offer competitive pricing, weekly sailings, and

a verity of routings and transit times to meet the specific needs and budgets.

Ocean Services

Global NVOCC, on VOCC, FCL, LCL. Tracking services. (Geologictics Geoista )

FCL contract management.

Projects and charters.

Multi modal transportation.

Weekly sailings.

Timely and accurate documentation.

Warehousing.

Vendor and origin consolidation.

Ocean Benefits

Reliable and time definite.

Ease of information access.

Reduced cost

Increased capability

Increased service option flexibility.

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Everybody promises end-to-end logistics solution. With the package of services,

customers get it. The capabilities in air, ocean, surface and multi modal

transportation- connected by the global information system lets the customer

confidently extend their corporate reach around the world.

EXECUTIVE RELOCATIONS

An international move can be more complicated than a domestic relocation.

Packing and loading methods are different. Transportation options increase.

Customs must be cleared. And the complexity of documentation can increase

greatly. In short, an international move is something you should leave to an

expert.

Some company like Geologistics specializes in the door-to-door movement of

household goods and personal effects for thousands of relocating executives

each year. As one of the largest international household goods carriers in the

industry, the very best relocation services to some of the largest multinational

organizations in the world.

Utilizing the extensive network, Geologistics controls each step of every move,

allowing maximizing quality and minimizing cost, with over 1000 service centers,

the knowledge required to minimize transit time and customs delays is in store.

This includes customs regulations, documentation requirements, port

capabilities, holidays, and local infrastructure.

EXECUTIVE RELOCATION SERVICES

International tracking and shipment monitoring.

Origin / destination services.

Export packing, specialized crating.

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Wrapping, loading, and containerization.

Inland drainage.

International air and ocean transportation.

Warehousing. Customs brokerage.

Delivery to residence and unpacking.

Insurance coverage and claims processing.

EXECUTIVE RELOCATION BENEFITS

Reliable, time definite service worldwide.

Shipment visibility and control.

Reduction in overall relocation expenses.

Single source accountability.

Higher level of transferee satisfaction.

The entire international relocation services and process is controlled from start to

finish. Eliminating the complexities of international household goods logistics and

ensuring on time, cost effective delivery of their personal effects maximizes

expatriate satisfaction.

PROJECT CARGO

Project cargo management is the unique process of managing a dedicated

logistics channel, enabling a high volume of materials and equipment to be

sourced from multiple origins to a single job site on time and in the right

sequence.

Project cargo management is a highly specialized segment of the international

logistics industry. Few companies have the required expertise, trained personnel,

and network of service centers or experience in the unique aspects of project

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cargo management. The project experience covers all the regions of the

world, with particular focus on the developing economies of Russia and the

CIS, China and Latin America.

The project cargo movement is not a series of separate moves, but rather an

integrated logistics process linked with sophisticated information technology.

Companies assumes full responsibility for the movement of goods from multiple

suppliers facilities (regardless of location) through delivery on the job-site or final

destination. Customers will benefit from the economies of scale, carrier

relationships, on-time delivery, and industry expertise-resulting in cost-effective

programs, time definite services and successful project implementation.

Project Cargo Services

Multi modal tracing via the Internet.

Feasibility studies.

Management teams.

On site supervision.

Packing and crating. Specialized loading for oversized cargo.

Warehousing.

Air and ocean transportation and chartering.

Unconventional surface transportation.

Customs clearance.

Project Cargo Benefits

Single point of contact.

Global network of experts.

Shipment visibility.

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Emerging markets specialists.

Cost effective project management.

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COMPANY PROFILE

Link Courier & Logistic Pvt Limited

We are a Business Organization that is dedicated to the Enhancement of

Customer Care and Satisfaction through the means of a Proficient and Efficient

Courier Services.

The knowledge and Experience that has been acquired from our time with the

Company along with our allegiance to the professionalism and efficiency has

proven to be our most valuable tools.

With a wide Customer base of Blue chip Companies active in an extensive range

of industries, we have the experience to match.

We are committed to effective solutions to the distribution needs of our

Customers by offering exceptional service performance to time definite

standards.

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National Offices

Ambala Bangalore ChandigarhChennai Cochin Delhi - NorthDelhi - Central Delhi - West Delhi - South

Gurgaon Hyderabad Jaipur Jodhpur Kanpur KolkataLucknow Ludhiana MumbaiNagpur Udaipur Varanasi

DOMESTIC SERVICES

We prides ourselves in understanding the local as well as global needs of all our

Customers . Due to reason , we offer whole range of Courier and Parcel services to

meet your specific needs within Delhi Metro , within Country and to any part of the

World.

PRIORITY - Committed Time Bound Before Noon deliveries through special messenger.

This is a unique product exclusively designed for time sensitive consignments. This

Service is available for all Metro Locations only.

EXPRESS - Guarantees upliftment by the fastest and first available carrier to ensure

express delivery of consignments in the least possible time. This Service is available for

all nationwide locations.

ECONOMY - A cost effective and reasonably designed tariff to match requirement of

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your bulk shipments to be forwarded through Road /Rail Network . This Service is

available for all nationwide locations. Minimum chargeable weight is 5 kgs .

METRO - This product is widely used by Foreign & Pvt. Banks , MNCs , Mailing

Companies , Insurance Companies , Individuals etc. for distribution of their Mailers ,

Invoices , Banking Instruments , Greetings etc wherein we utilize our well knitted city

network supported by Professional Manpower and a large fleet of vehicles . This Service

is backed up by Online Tracking of consignments which helps us to provide the status

and any reports of all Consignments on daily basis . Presently this service is limited to all

Metro locations.

INTERNATIONAL SERVICE

EXPRESS - All the major gateways of the World are connected through our own

network and delivery partners. We value safe and prompt deliveries of your International

shipments through the fastest available Airlines, Routes and Networks all over the World.

SAVER - A Unique product designed to match requirement of your less time sensitive

shipments and giving you extra edge of economy pricings . This service is available for

Europe , Far East , USA & Canada only . Minimum chargeable weight is 11 kgs .

FREIGHT - We understand your Business requirements and also offer Port to Port Air

and Sea Freight for all your commercial shipments . Apart , we also offer Door to Door

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Air Freight consignments to most of the locations across the world . This product

undertakes Customs formalities at origin & destination to ease your job.

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Objectives of the study:

(1) To quantify the change in the size, composition and direction of Indian

logistics industry growth as a result of the liberalization, privatization

and globalization process.

(2) To study the trends in logistics industry including various modes of

transport.

(3) To identify the key areas of growth for the logistics sector.

(4) To analyze the future trends and growth patterns in the Indian logistic

industry.

Scope of the study:

The Indian logistics industry has undergone so many changes in the past

few years and is changing constantly, because the importance and character of

the industry is changing with the changing environment. As a result of the fact,

which was true yesterday, may not be true today. Many of the sources of data

are secondary. As a result discrepancy may occur in spite of all the precaution

one can take. Time though ample but to remain strictly on the topics which

otherwise could have been very important.

Limitations of study:

1. Most of the executives were a bit conservative as well as tired in revealing

few details.

2. Scope and objective is limited to certain standard, as it cannot be covered

in a single project.

3. Some views are based on personal opinion.

4. Some information is not up to date till present date.

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Methodology Adopted:

The Indian logistics industry is emerging from a neglected field to an

internationally recognized industry. Consequently, the statistics and analysis is

derived from a number of primary and secondary data sources. In order to arrive

at the most feasible model, the following approach has been adopted.

RESEARCH DESIGN:

As logistics management is known to be a major role player in any of the

organization, it includes entire logistics process required by an organization.

1. Exploratory

2. Descriptive and Diagnostic

Exploratory Research is done to get the details of the present scenario.

Finally the latter is carried out to get a view of logistics management andproducts in the industry as well as in deciding how the movement occurs.

Data Collection:

Primary Data- has been collected through verbal interviews, telephonic

interviews with executives of various organizations. Secondary Data - bulk of data belongs to this category, from magazines,

journals, shipping times, various websites and books.

Tools

Bar Diagram

Pie-Chart

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SOME FACTS ABOUT SHIPPING INDUSTRY

Shipping Industry Historical Perspective

The physical movement of cargo can be achieved by employing various meansof transportation. The shipping industry has grown from manual sea ships that

would take a long time to traverse short distances to large cargo carriers who

cover large distance sonly in matter of days. The European initially developed the

ship building industry and invented navigational systems.

Right from the beginning till today developed countries controlled the shipping

industry. Their technological edge had contributed largely to their superiority.

Liners and Tramp Operations

Cargo ships can be categorized as liner ships and tramp ships. Liner ships

represent the organized sector of the shipping industry due to their fixed

schedules of arrival and departure, predetermined voyages and trade routes and

pubic ocean freight rates. Liner ships are governed by shipping conference and

offer the following advantages to shippers.

Regular sailings to schedule port of call

Uniform rates for all shippers

Coverage of wide range of ports Rebates of freight rates based on loyalty agreements

Tramp Ships on the other hand have the following characteristics---

They are free to move anywhere on the high seas at their will

Their voyage routes and schedules are flexible

They arrive or depart without a fixed route

The freight rates of tramp ships depend upon the demand and supply

conditions in the shipping industry

Tramps normally carry homogeneous cargo like grains, ores, coal, timber,

fertilizers etc.

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Type of ships and international trade:

About five thousand million tones of cargo are transported by sea every year

from one part of globe to another. Those cargos manufactured, semi

manufactured and bulk cargo. There are various types of ships, which carry

these cargoes. Some of them are as follows

General cargo ships

Bulk carriers

Tankers

Specialized ships- With a view to saving time and cost, may new types of ships

have come into being? These are

Container ships

Roll- on- roll- off (RO-RO) ships

Barge Systems

Multi purpose vessels

Multi purpose vessels tend to be more expensive then conventional general

cargo but cheaper than container ships, RO_RO vessels or Barge carriers.

These are

General cargo/liner type vessels

Combination of bulk carriers and container vessels

Combination of container and RO_RO vessels

BO_RO vessels

Water transport:

Overview

Water transport can be broadly divided into two groups - Inland water transport

and Shipping. Shipping, in turn, can again be divided into two categories Coastal

shipping and overseas shipping.

Inland Water Transportation

Inland water transport includes natural modes as navigable rivers and artificial

modes such as canals. The inland waterways have played an important role in

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the Indian transport system since ancient times. However, in recent times the

importance of this mode of transportation has declined considerably with the

expansion of road and rail transport. In addition, diversion of river water for

irrigation has also reduced the importance of inland water transport. The decline

is also due to deforestation of hill enrages leading to erosion, accumulation of silt

in rivers and failure to modernize the fleet to suit local conditions. The

transportation of goods in an organized form is confined to West Bengal, Assam,

parts of North Eastern region and Goa.

Development of inland water transport commenced from the Second Five Year

Plan and up to the end of Fifth Plan the total expenditure on this sector was Rs.

34 crores. It was only in the Sixth Plan that this sector was given priority and

specific schemes of inter-State and national importance for development of inland water transport were taken up. The Seventh Plan was an important

landmark in the development of inland water transport. The expenditure on this

sector in the Plan (at Rs. 131.85 crores) was more than the expenditure incurred

right up to the end of the Sixth Plan. Three objectives were laid down in the

Seventh Plan for the development of inland water transport. Development of

inland water transport in the regions where it enjoys natural advantage.

Modernizations of vessels and country crafts to suit local conditions-andImprovement in the productivity of assets. The Inland Waterway Authority has

been set up which is a big step forward and should help in the accelerated

development of inland water transport.

Coastal Shipping

India has a long coastline of 7,516.6 kms, a number of ports (11 major and

139 minor working ports) and a vast hinterland. Therefore coastal shipping

holds a great promise more so because it is the most energy efficient and

cheapest mode of transport for carriage of bulky goods like iron and steel,

iron ore, coal, timber, etc. over long distances. However, despite this fact

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(and despite the fact that coastal shipping was reserved exclusively for

Indian ships after Independence), there has been a sharp decline in

coastal shipping operations. For instance, the number of ships fell from 97

in 1961 to only 56 in 1980 while Gross Registered Tonnage (GRT) fell

from 3.1 lakhs to 2.5 lakhs over the same period. However, at the end of

1994 the fleet strength was 438 vessels of 6.3 million GRT. The main

factors affecting the growth of coastal shipping adversely have been High

transportation costs especially for movement other than those between a

pair of water front locations, port delays, poor turnaround time of coastal

ships on account of averaged vessels, lack of mechanical handling,

facilities etc. The coastal fleet is ageing fast; about 52 per cent of the

tonnage is already overdue for replacement. Also, there is imbalance incoastal traffic movement as traffic is not equally available in both

directions. This makes it necessary for coastal ships to sail in ballast, at

times, on return journey. Moreover, slow handling of the cargo at port and

undue port delays inflict heavy losses on shipping, companies. It is

estimated that at present 70% of the ship time is spent at ports and only

30% of voyage.

Overseas Shipping

Because of the importance of overseas shipping in international trade,

considerable attention has been paid to increase the shipping tonnage in

the planning period. As a result, the share of Indian shipping in the

transportation of India's overseas trade has slowly and consistently

increased in the planning period. From around 5 per cent in the first Plan,

it increased to around 34.0 per cent at the end of 1993-94. As compared

to 1.92 lakh GRT (Gross Registered Tonnage) at the time of

Independence, shipping tonnage increased to 6.30lakhs Modernization of

fleet on the basis improved ship design and fuel efficiency in engine.

Replacement of over aged fleet on a selective basis. Drivers fixation of

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fleet by acquisition of cellular container ships and specialized product

carriers.

Inland Waterways: Renewed Thrust

Indias extensive water network consists of 14500 km of navigaval

waterways. Out of this, around 5700 km of rivers and canals are navigable

by motorized craft. Inland water transport has the potential to be a very

cost efficient mode of transport. Apart of involving substantially cheaper

maintaince and capital costs, it is also an environmentally friendly mode of

transport. According to conservative estimates, a shift of one billion-tone

km of cargo by inland water transport will reduce fuel cost by about Rs

250 million.Despite these advantages, inland water transport has failed to take off in

India. Cargo Transportation is an organized manner takes place mostly on

the three national waterways and in the states of Assam, Goa, Kerela and

West Bengal. Inland water transport contributes a minuscule 0.15% of the

1000 billion tone km inland cargo market.

A considerable hurdle lies in the lack of supporting infrastructure like

adequate and properly equipped terminals and warehouses. Another constraint is the lack of availability of vessels. Navigational hazards further

complicate the situation. Most waterways suffer from the mange of shallow

waters, narrow width of channels during the dry season, salutation, bank

erosion, and inadequate navigational aids to permit 24-hour operations.

The inland waterways authority of India is responsible for the development

and regulation of the sector. It was set up in 1996. Given its potential to

contribute to and estimated 50-billion tone km to the total cargo

movement, steps are being taken to invigorate inland water transport. At

present three waterways have been identified as national waterways.

Recognizing the roles of state governments in developing water ways,

various projects were to be assisted on a 50-50 basis under a centrally

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responsible scheme. The grant assistance to other states is limited to

90%.

On the policy front, the inland water transport policy was introduced in

2001. The main thrust of the policy to facilitate the private sector

participation. Its sought to encourage the entry of private players in ----

1. Ownership and operations of vessels for cargo and passengers.

2. Fair way development and maintenances.

3. Construction and operation of river terminals or river ports.

4. Provision and operation of mechanized cargo handling systems.

5. Putting up and maintenance of navigational aids.

6. Provision of pilot age services.7. Setting up and running of IWT training institutes.

8. The policy offered various concessions to attract private players. It also

enhanced the fund raising capacity of the IWAI by authorizing it to raise bonds

ion the market. The IWAI could also enter into commercial or joint venture.

9. The Asian Development bank has given in principle approval for a three

hundred million loan to the IWAI for the development of the sector. The loan will

be given in two phases. The ADB is presently working on a feasibility project for the use of inland waterways in transporting goods, a task entrusted to it by the

WAI.

10. IWT also forms an important constituent of the ambitious rupees 1000-

billion sagar mala project. If all these majors are properly implemented, inland

water transport could see a dramatic improvement.

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FINDING AND ANALYSIS

0

5

10

15

20

25

30

35

40

N o . o

f r e s p o n

d e n

t s

Air Export Ocean Export Air Import Ocean Import

Transportation Mode ( sample size 25)

There are various modes of transport through air, ocean, rail, road etc. The

people interviewed were mainly dealing in Air export (9), Air import (6), Ocean

export (8) and Ocean import (17) which, shows that companies in export tend to

prefer ocean rather than air because of economic reasons. In case of import air

transportation is more preferred which may be due to the reason of faster

delivery of raw materials.

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Terms of Payment

25%15%

60%

0%10%20%30%40%50%60%70%

15 daysCreditPolicy

AdvancePayment

40 daysCreditPolicy

EastWest

The people of the various companies who were interviewed most of them opted

for 40 days credit policy-21 (60%) which gave them the time to collect the

amount smoothly. 6 (25%) companies opted for 15 days credit policy and 3

(15%) companies opted for advance payment. 10 companies did not come out

with their policies.

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IMPORT BASIS

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

C.I.F. F.O.B.

B A S I S

VALUE

The graph of Import basis shows that around 66.67% of the sample companies

have their import routed through the C.I.F. (Cost, Insurance and Freight) basisand rest of the companies goes for F.O.B.

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EXPORT BASIS

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

C.I.F. F.O.B.

B A S I S

VALUE

The graph of Export basis shows that 30.35% of the sample companies have

their Export routed through the C.I.F. (Cost, Insurance and Freight) basis. The

rest is done, i.e. 69.65%, through the F.O.B. (Free On Board) basis.

Key reasons for inefficient logistics: -

Poor Infrastructure.

Underused potential to cut cost.

Numerous regulatory bottlenecks.

Transport Industry is an unorganized sector.

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No professional approach.

Low transportation efficiency, 250 kms/day (Global average is 1000

kms/day)

Unsuitable vehicles, 45% containerized (global 90%).

Unfocused spending global outsourcing trends.

Outsource logistics is growing 25-30% per annum in US market.

70% of fortune 500 companies are outsourcing their logistics

requirements.

In India companies like Telco, GE, Godrej, Toyota, Kirloskar, P&G and

Lafarge are outsourcing their logistics.

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PROCEDURE AND DOCUMENTATION

Export Documents

Pre-shipment documents:

Commercial documents

The commercial documents are those, which, by customs of trade, are required

for effecting physical transfer of goods and their title from the exporter to the

importer and the realization of export sale proceeds.

14 out of 16 commercial documents have been standardized and aligned to one

another. Shipping order and bill of exchange could not be brought within the fold

of the aligned documentation system because of their very different data

elements and having a very little in common with other commercial documents.

The commercial documents may be classified into Principal Documents and

Auxiliary Documents.

Principal documents

Out of the 16 commercial documents mentioned above, the exporter is required

to send the following eight documents to the importer. These are known as the

principal export documents.

1. Commercial invoice

2. Packing list

3. Bill of lading

4. Combined transport documents

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5. Certificate of inspection/quality control

6. Insurance certificate/policy

7. Certificate of origin

8. Bills of exchange and shipment advice

Auxiliary documents

The remaining eight commercial documents are known as auxiliary documents.

1. Performa invoice

2. Intimation for inspection

3. Shipping instructions

4. Insurance declaration

5. Shipping order

6. Mate receipt

7. Application for certificate of origin

8. Letter to the bank for collection/negotiation of documents

Regulatory documents

Regulatory pre-shipment export documents are those which have been

prescribed by different government departments/bodies in compliance of the

requirements of various rules and regulations under relevant laws governing

export trade such as export inspection, foreign exchange regulations, export

trade control, customs etc.

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There are 9 regulatory documents associated with the pre-shipment stage of an

export transaction and are as follows:

1. Gate pass-I/Gate pass-II (prescribed by central excise authorities)

2. AR4/AR4A form (prescribed by central excise authorities )

3. Shipping bill/bill of export (prescribed by central excise authorities )

For export of goods

For export of duty free goods

For export of dutiable goods

For export of goods under claim for duty drawback

4.export application (prescribed by port trust)

5.receipt for payment of port charges

6.vehicle ticket

7.exchange control declaration prescribed by RBI GR/PP forms

8.freight payment certificate

9.insurance premium payment certificate

The different commercial regulatory documents may be classified into documents

related to shipments, documents related to payment; documents related to

inspection, documents related to excisable goods and documents related to

foreign exchange regulations.

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Documents related to goods:

(i) Invoice

CUSTOMS INVOICE

The customs invoice is used in lieu of the commercial invoice in a few importing

countries for customs purposes, but the importer often needs a commercial

invoice too. The customs invoice can be in a form called the certificate of value.

The invoices vary in format but they contain essentially the same data as in the

commercial invoice and packing list. The invoice is self-certified by the exporter.

The blank customs invoice is available from the customs broker or forwarder and

specialized printer. Certain importing countries may require their importers, not

the exporters in the exporting country, to provide the completed customs invoice

for customs clearance.

CONSULAR INVOICE

As the name implies, the consular invoice is a specific invoice issued by the

Consul of the importing country. Many importing countries, mainly less developed

countries, have already phased out this invoice. It is used for customs clearance

and other purposes, as such any errors or omissions on the invoice may cause

problems and fines at the customs in the importing country. The consular invoice

is a form of non-tariff barrier. The format of the consular invoice form varies

greatly, but it contains essentially the same data as in the commercial invoice

and packing list. The invoice form is either in the language of the importing

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country (e.g. Spanish usually) or bilingual, that is, a combination of English and

Spanish usually. The exporter's declaration normally is included in a consular

invoice. The consular legalization and payment of a consular fee is required. The

consular fee can be a percentage of the FOB invoice value.

(ii) Packing list:

The packing list is the detailed list of contents of the shipment, including

quantities, items, model numbers, dimensions and net and gross weights. A

packing list should specify per carton or crate the number and type of units of

material inside. The shipper gets the packing list ready at the time the goods are

being is prepared for shipping. There is no standard format for packing lists.

Although it is not a required customs document, the packing list is often used by

the customs broker to obtain additional information about the shipment.

(ii) Certificate of origin:

The Certificate of Origin is only required by some countries. In many cases, a

statement of origin printed on company letterhead will suffice. Special certificates

are needed for countries with which the United States has special trade

agreements, such as Mexico, Canada and Israel. More information about filling

out these special certificates is available from the

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Certificates related to shipment:

(i) Mate receipt: mate receipt is a receipt issued by the commanding office of

the ship when the cargo is loaded on the ship, and contains information

about the name of the vessel, berth, date of shipment, description of

packages, marks and numbers, condition of the cargo at the time of receipt

on board the ship etc.

(ii) Shipping Bill: - Shipping bill is the main document for obtaining custom

permission for shipping goods. This document is of four types: -

Free shipping bills

Drawback shipping bills

Ex-bond shipping bills

Dutiable shipping bills is filled up where the consignment is subject to

export duty and where duty drawback is to be claimed. Whereas free shipping

bills is filled up when the consignment is subject to export duty and no duty

drawback is to be claimed. Ex-bond shipping bills is needed in case of shipment

from the customer bounded warehouse.

(iii) Airway bills: - Airfreight shipments are handled by air waybills, which can

never be made in negotiable form.

(iv) Bill of lading: - is a contract between the owner of the goods and the carrier

(as with domestic shipments). For vessels, there are two types: a straight bill of

lading which is non-negotiable and a negotiable or shipper's order bill of lading.

The latter can be bought, sold, or traded while the goods are in transit. The

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customer usually needs an original as proof of ownership to take possession of

the goods

DOCUMENTATION : -

Generally documentation is perceived to be the most complex, difficult and

critical activity of export marketing particularly in India. Successful

consummation of an export order needs innovative skills and meticulous planning

including proper compliance and subsequent documentary provision.

One may categorize export documents into three dimensions on the basis of their

role in smooth flow of trade.

REGULATORY CONTROL IN INDIA

After becoming an exporter company it is required to obtain a (RCMC) from the

relevant export promotion council, commodity board or any other designated

body. This certificate is needed for getting some more export incentives given by

the govt.of India. Next step in becoming an exporting unit is to obtain importer-

exporter code number from Director General of Foreign Trade.

a) GR FORM / PP FORM : -

GR FORM / PP FORM in duplicate is required for every consignment for

obtaining customs clearance. This form is needed as a legal requirement under

the Foreign Exchange Regulation Act of India. GR FORM is needed for all

consignments other than ones being shipped by post, while PP FORM is needed

for goods going by post.

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b)

DOCUMENTATION: -

Various documents originated during export marketing activities of Moserbaer

are defined below: -

SALE ORDER / CONTRACT: -

It is a premiere document that has to be generated in any transaction. It is an

agreement between buyer and seller, in which seller has agreed to buy them, at

an agreed price with specified delivery terms. Delivery terms may be F.A.S,

F.O.B, and C&F etc.

F.A.S (Free Along Side)

In this seller has the obligation to deliver the goods alongside the vessel on the

quay. The buyer has to bear all the cost and risk of loss or damage to the goods.

Dutiable shipping bills

F.O.B (Free On Board): -

When the delivery condition is F.O.B, the seller has the liability to load the

goods / materials on the vessel specified by the buyer. The transportation,

insurance and other agreements are to be made by the buyer.

C & F (Cost and Freight): -

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The seller must pay the costs and freight necessary to bring goods to the named

port of designation but the risk of loss and damage to the goods is transferred

from the seller to the buyer.

In case of International Trade the buyer and seller separated by distant

boundaries. Hence it becomes less viable for the parties to come together to

form a contract. Thus it so happens the buyer or seller initiates the formation of

contract by sending purchase order or sale order respectively. Sometimes the

buyer intimates the seller by sending the purchase order, or if seller finds the

initiative lucrative, he sends his sale order to the buyer. Thus in this way the

parties enter into a contract with each other. Such type of contract is known as

Constructed Contract.

Various contents of sale order are listed below:-

a. Price of the product

b. Quantity and quality of the product

c. Period of delivery

d. Port of delivery

e. Standard terms and condition

f. Types of financial arrangements

g. Payment terms

Documents related to payment

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(i) LETTER OF CREDIT: -

L /C is the most popular method of payment / receipt in foreign trade transaction

as well as it the mother document which give rise to all other documents. Under

L/C the buyer promise to pay the seller on due date. In this type of credit, the

buyers liable to pay. It is thus also known as bankers commercial or

documentary credit.

It is commonly referred as commercial L/C as it a means to opening a credit in

favour of someone, under which payment will be made provided that certain

conditions are fulfilled within given time.

PARTIES INVOLVED IN L/C: -

1.Buyer or importer

2. I) Issuing or opening Bank

II) Reimbursing Bank

3. Seller or exporter or beneficiary

4. I) Advising / confirming Bank

II) Paying Bank

III) Negotiating Bank

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Based on security, L/C can be classified into 3 types: -

1.Revocable or irrevocable : -

A revocable L/C can be cancelled or modified, by the buyer at any time withoutany notice to the seller. But an irrevocable L/C cannot be cancelled without prior

notice to the seller of exporter.

2.Confirmed or Unconfirmed: -

When the bank authorized by opening bank confirms an irrevocable L/C, it

becomes confirmed. Otherwise the L/C is unconfirmed.

3.Recourse or without recourse: -

If the advising bank pays the seller but does not get reimbursing from the

opening bank, then this bank can recover the whole money with interest from the

seller.

But in case of without recourse, the liability of the exporter ends after he has

deposited the required documents and received payments.

(ii) BILLS OF EXCHANGE : -

It is a document for the goods exported. It is the means of collecting money

through banking channels and also a method of payment by credit. A bill of

exchange is also referred as Draft. It is a legal document. In India, Section 5

of Negotiable Act, 1881, defines bill of exchange as:-

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An instrument in writing containing an unconditional order, signed by the maker,

directing the person to pay certain amount .

It has the following characteristics:-

a. It is an instrument in writing

b. It is an unconditional order signed by Maker (Drawer)

c. It is a direction given to a specific person (Drawee)

d. It is a direction to make payment of specific or fixed amount.

A bill of exchange performs the following functions: -

i. Means for collecting payment

ii. Means for demanding payments

iii. Means for extending credit

iv. It is a promise of payment

v. It is a receipt of payment

Various documents are required for custom clearance. Exporter or his agent

submits the following documents to the custom department so as to get custom

clearance for export.

(iii) BANK CERTIFICATE OF PAYMENT

It is a certificate issued by the negotiating bank of the exporter, certifying that thebill covering particular consignments has been negotiated and that the proceeds

received in accordance with exchange control regulation in the approved

manner.

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DISPATCH INSTRUCTION: -

Dispatch instruction is almost like sale order. It is an instruction or order given by

the companys marketing department to the plant to dispatch specified goods to

the port of any other designations.

Contents of dispatch instruction are given below:-

a. Specification and quantity of materials to be transported

b. Port of dispatch

c. Shipment schedule

d. Place and port of schedule

e. Name of the buyer

A.R.4 FORM: -

In India exportable goods are exempted from duty. Hence if the company

exports goods to foreign countries, to gain foreign exchange, it applies to central

excise department to get exemption, from excise duty, by giving application in a

It is an application, by the company to the central excise department of custom,

for excise relief. prescribed format under rules 158, 185, 1730. This application

is known as the A.R.4 FORM.

The contents of A.R.4 FORM are listed below:-

a) Name and address of range officer

b) Name of the company

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c) Port of loading

d) Country of loading

e) Central excise regd. No.

f) Number and description of goods

g) Gross weight / net weight

h) Value of goods

i) Weight and quantity of goods

j) Duty rate and amount

k) Amount of rebate claimed

l) Remarks

m) Declaration of the company

DELIVERY INVOICE: -

The plant prepares it at the time of removal of goods from the plant. It is meant

for excise purpose. It contains the following: -

a. Quantity of goods dispatched

b. Price of goods

c. Mode of dispatch

d. Port of dispatch

e. Buyers details

f. A.R.4 reference

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PERFORMA INVOICE: -

It is basically a form of quotation by the seller to the buyer. It is a sort of

invitation to the buyer from the seller to place a firm order to him. It is deposited

with the custom clearance for estimation of excise duty. It helps in getting

custom clearance.

A Performa invoice contains:-

a. Exporters name

b. Consignees name

c. Notifys name

d. Buyers name

e. Countrys of origin

f. Designation

TEST CERTIFICATE: -

It is a verification certificate that shows that the goods shipped have the required

cast no. And percentage composition.

INSPECTION CERTIFICATE: -

It is a document which certifies that the goods have been inspected (prior to

shipment). This certificate is generally desired by the importer so that he can be

sure that right types of goods ordered are being send by the exporter. In India

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certain goods are subjected to quality control. For this purpose an agency called

(EIC) was created.

G.R FORM: -

It is one of the most important documents in international business. This form is

obtained from R.B.I. This form is filled by the exporter and is endorsed by the

customs. This form is one kind of guarantee given by exporter to R.B.I. The

exporter gives guarantee that within six months of transaction the foreign

currency involved will be realized.

G.R FORM contains: -

a. Exporters name and address

b. Invoice no. And date

c. Consignees name and address

d) Port of loading and discharge

e) Country of designation

f) Exchange rate

g) Currency of invoice

h) Net & gross weight, particulars, description

SHIPPING BILL: -

It is the main document on which custom permission for export is given. It is

custom document. It is a document, which is necessary for loading the cargo on

ship.

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It contains the following: -

a. Exporters name and address

b. Invoice no. and date

c. Port of loading

d. Port of designation

e. Details of packages and goods

f. Analysis of export value; currency; amount

MATE RECEIPT: -

When the cargo is loaded on the ship, the commanding officer /

captain of the ship will issue the receipt called the mate receipt for goods

loaded.

It contains the following information:-

a. Name of the vessel

b. Berth

c. Date of shipment

d. Description of packages etc

BILL OF LADING: -

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It is a document which is issued by the shipping company acknowledging the

receipt of goods mentioned there / in and undertaking that the goods are in

condition and will be delivered to the consignee, provided that the freight

specified therein is duly paid.

It serves the following 3 purposes: -

It is a document of title of goods shipped,

It is a receipt for goods, received by the steamship company,

It contains the terms of the contract between the shipper and shipping

company

MARINE INSURANCE: -

When the goods are transported from one place to another there is always risk

involved. Hence to avoid such transit losses, marine insurance is taken up. In

India there are various insurance companies, such as General Insurance

Company. Insurance Policy is normally done through agents.

Marine insurance contains the following:-

a. Name and address of the subsidiary of insurance company

b. Claim payable

c. Name of the insured

d. Vessel no.

e. Place of dispatch

f. Port of loading and dispatch

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g. Destination

h. Insured value

i. Terms of insurance

j. Particulars and description of goods

IMPORT DOCUMENTS

1. INVOICE

2. PACKING LIST

3. PURCHASE ORDER

4. BILL OF LADING

5. DOUBLE DUTY BOND (If Required)

6. ENDUSE BOND (If Required)

7. DECLARATION: If the supplier of the goods is different from the

manufacturer, the importer or his agent has to file the declarations

required under GATT Valuation act.

8. WORK SHEET

9. INCOME TAX CERTIFICATE

10.TR6 CHALLAN

11.IGM (Import General Manifest): The declaration to be filed under section

30 of the Customs Act 1962, known as Import Report in case of import by

land and Import General Manifest, in case of import by sea or air. It is filed

by the Capt. Of the Vessel within 24 hours of the arrival of the vessel in

the customs station. In case of import by vessel, IGM may be delivered

even before the arrival of the vessel. This is not permitted in the case of import by air or by land.

BILL OF ENTRY

After receiving the documents required for the import procedure Bill of Entry

is prepared.

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They are basically of 3 types.

1. B/E for Warehousing.

2. B/E for Home Consumption.

3. B/E for Ex-Bond.

B/E for Warehousing is made when the importer does not

require all the goods at the same time. So the importer only takes a part of goods

required by him and keeps other goods in the warehouse.

B/E for home consumption is made when the goods imported are fully

taken up by the importer or in other words fully consumed by the importer.

B/E for Ex-Bond is made in order to take the goods from the warehouse.Every time the goods are taken from the warehouse or Ex-Bonded, this type of

B/E is prepared.

SALIENT FEATURES OF BILL OF ENTRY

1. Origin and vessels Particulars: This includes Port of Shipment, Countryof Origin, Vessels Name, Rotation No., and Bill of Lading No. &Date.

2. Particulars of the Goods: This includes description of goods as well asmarks & no. of packages, weight / volume /quantity, description of goods

as per classification and gross weight & total no. of packages.

3. Value: Assessable value is to be indicated with following breakup of Invoice Value, Freight, Insurance, and Exchange rate, Loading & Local

agency commission, Misc. charges & landing charges.

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4. Duties Levi able: The Customs duty rate and amount indicating Tariff Heading & Exemption notification wherever applicable should be indicated

for both Basic as well as Auxiliary duty. Also the Central Excise Tariff

should be indicated.

5. Codes: Code numbers are to be indicated by the importer while filing theBill of Entry which includes Port code, Customs House Agents Code,

Country of Origin, Consignment Code, Unit Code, Currency Code etc.

6. Declaration of Importers / Clearing Agents: This declaration includes

the declaration about the correctness of the contests of the goods thathave been purchased on outright purchase / Consignment basis and

whether the importer has any connection with supplier / manufacturer.

ACTIVITIES IN IMPORT OPERATIONS

. Notification of arrival: -

Process of informing the importer of the date and location of goods arrival & the

requisite documents required for custom clearance.

. Customs Clearance: -

Presentation and clearance of cargo through the customs.

. Payment of duty and Freight Charges: -

Payment on behalf of his principal at the time of importation. This avoidsdelay in the dispatch of goods to the importer.

. Delivery to the importer: -

Process of delivering goods to the importers premises following customs

clearance.

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. Breaking Bulk & Distribution: -

The agent may be an umbrella agent whereby he will have commodities

not only of his clients but also those of other agents with whom he has a

contractual arrangement.

Procedures of Custom Clearance for Imports

At first all the documents along with Bill Of Entry and the GATT & the

small declaration are presented to the Appraisal Officer. The Appraisal Officer

checks for all the documents and if found it correct sends it to the Deputy

Commissioner of Customs for cross checking. This process is called noting and

assessment of B/E. If the Appraisal officer does not get satisfied he can send the

person for checking. After the examination of the container is done, then thecustoms gives a security seal no. which has to be put in the container. This

container is then sent to the factory for destuffing. Before this the containers

should be taken out of charge. If the Appraisal Officer requires checking of the

cargo he can remove the cargo on the ground itself before sending it to the

factory.

Categories of Importers

Actual User: Actual user (Industrial) persons who utilize the imported

goods for manufacturing their own industrial units or manufacturing for their

own use in another unit including a Jobbing unit.

Actual User (Non-Industrial): Person who utilizes the imported goods for

their own use in -

Any commodity establishment carrying on any business, trade

or profession or any laboratory, scientific or research and development

institution, university or other educational institute or hospital Or any

service industry.

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Non-Actual User include: Importers for stock and sale.

Personal imports.

Import for gifts.

1. Particulars of the Goods: This includes numbers of description of goodsas well as marks & no. of packages, weight / volume /quantity, description

of goods as per classification and gross weight & total no. of packages.

2. Value: Assessable value is to be indicated with following breakup of Invoice Value, Freight, Insurance, and Exchange rate, Loading & Local

agency commission, Misc. charges & landing charges.

3. Duties Leviable: The Customs duty rate and amount indicating Tariff Heading & Exemption notification wherever applicable should be indicated

for both Basic as well as Auxiliary duty. Also the Central Excise Tariff

should be indicated.

4. Codes: Code numbers are to be indicated by the importer while filing theBill of Entry which includes Port code, Customs House Agents Code,

Country of Origin, Consignment Code, Unit Code, Currency Code etc.

5. Declaration of Importers / Clearing Agents: This declaration includesthe declaration about the correctness of the contests of the goods that

have been purchased on outright purchase / Consignment basis and

whether the importer has any connection with supplier / manufacturer.

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ROLE OF EDI IN LOGISTICS

Computerization has changed the way business is conducted the world over.

No aspect of business has remained untouched by computer revolution. This

also includes international business where a large number of people located

in different parts of the world conduct transactions with each other. These

activities include manufacturing, inland transportation, customs and exercise

matter, port operations, shipping, clearing, and forwarding etc.

EDI is defined as the computer-to-computer transfer of commercial or

administrative transactions using a pre-defined standard to structure the datarelated to the transaction. In such case transactions means carrying out

functions like consignment instructions, payment of customs duty, processing

of duty draw back applications, DEPB applications etc. The need for such

electronic link between various agencies involved in the logistics operation

was felt world wide, because of increasing number of transactions. EDI can

be best described as an inter organizational computer-to-computer exchange

of business documentation in a standard machine process able format. EDI

takes place through proprietary, value added networks.

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DEVELOPMENT OF EDI IN INDIA

In India, where a major part of work is done manually, EDI is making its

presence felt slowly but surely. The progress is slow because of stiff

resistance from labor unions at docks, airports and other government

establishment. The progress of EDI depends upon the computerization of

these departments.

PORTS:

Different ports in India are linked to each other through EDI system. Some of

these ports are J.N.P.T., COCHIN Port, KOLKATA Port, CHENNAI Port andVISHAKHAPATNAM Port. Earlier this system was used for the disbursement

of duty drawback. Under the duty drawback scheme, the exporters are

reimbursed the duty paid on the raw material and other commodities imported

for use in the manufacturing of export items. In this case, EDI help in the

disembarrassment of duty drawback more efficiently and effectively. Cochin

AND Chennai ports are the two ports in India that has been linked with

different shipping lines. Once all the ports will be linked with the shipping lines

there will be drastic change in the turnover time of ships on the Indian ports.

As the lines will be in position to inform the port authorities about the arrival of

ship in advance documents can be processed accordingly and hence less

time will be consumed.

AIRPOPRTS:

Operations at all the airports in India have been computerized. The increased

use of air cargo in international business is basically due to the speed itoffers. It enables just in time manufacturing practices, sourcing the raw

materials and components from anywhere in the world and opens new

markets. Profile of air cargo industry is changing rapidly to cope up with the

new demands from markets. Companies like FEDEX AND UNITED PARCEL

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SERVICES act as integrators forwarders who have their own aircrafts. Thus

the turnover time has decreased and this system (EDI) is helping a lot.

SHIPPING LINES:

Around 30shipping lines operating presently in India are linked electronically

with their headquarters in other countries. Their local offices/agents receive

information about the schedules and departures of various ships at different

ports. They also receive import manifests, cargo details etc. EDI facilitates

linkage between different shipping lines, ports and customs, thereby

substantially reducing duplication of work, improving the efficiency and cutting

down the transaction costs and delays.

INLAND CONTAINER DEPOTS:

Electronic linkage of ICDs with different ports will make the various links in the

logistics chain stronger. CONCOR, which manages various ICDs, is already

planning to link the ICDs through computers and it has done so in the recent

years i.e. connected many of them. This linkage enables them to receive the

information about the arrival of different cargos from various ports in India.

EDI will help various other agencies operating at ICDs such as customs,

shipping line representatives, freight forwarders, exporters and importers to

bring more efficiency to their work.

RAILWAYS:

Indian railways have also computerized its network, so that different parties

like freight forwarders, exporters, importers, shipping lines, CHA can check

the status of container at their will all over the world. This linkage helps theshippers to keep track of their cargo and monitor its status at the various

stage of transit.

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BENEFITS OF EDI:

EDI saves the repetitive data entry work at various points.

EDI enables error free and quick transmission of data from one point to

other point. Many of the problems thus arising out of the data entryerrors can be minimized.

EDI helps the exporters and importers to practice just-in-time

inventory concept, thereby reducing inventory-carrying costs.

EDI improves the cash flow position of the exporters by quick

processing of invoices and drawback applications.

EDI speed up the customs clearance by reducing the transit time of the

cargo.EDI reduces the turn around time of the ships at the ports.

EDI improves the efficiency of port authorities and helps them to earn

more revenues.

EDI reduces the paperwork and thus saves time and money.

INTERNATIONAL TRADE AND EDI:

There is a very close relationship between EDI and the international trade. EDI

was first used immediately after the Second World War in 1948. Huge bulk of

cargo arrived in BERLIN and all the carriers coming with the goods contained the

description of goods in different language and it caused a problem. Hence, a

common format was developed and thus came the standard format.

Since then EDI has developed a lot and facilitates the data interchange around

the world. It handles large amount of information, which controls and regulates

the movement of cargo, containers, ships and aircrafts. Such information is

useful only if they arrive before the cargo.

Following figure illustrates the flow of cargo and related documents in a typical

international transaction.

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CUSTOMS AND EDI:

Every consignment entering or leaving a country must clear the customs barrier.

The customs official of most of the countries have to operate under tremendous

pressure of physical examination of cargo, completing paper work, collecting the

customs dues, keeping the cargo in bounded warehouses etc. On the one hand

they have to comply with the governments rule and regulations, and on the other

hand they have to expediter the clearance of cargo, which is legally entering the

country with proper documents.

Following are the reasons for which many countries are adopting EDI and

advising the shippers to transact with customs department electronically instead

of submitting paper: -Liberalization of the economies across the world has given a boost to the

world trade. This has resulted in increased volume of cargo to be

examined by the customs department at ports, airports and land borders.

Technology has enabled to increase the speeds and sizes of ships and

aircrafts, which bring in large amount of cargo in one go.

IMPORTER EXPORTER

FREIGHTFORWDER

CUSTOMSSHIPPING

LINE/AIRLINECUSTOMS

FREIGHTFORWARDER

Purchase Order/Letter of Credit

Cargo RelatedDocuments

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The scope of customs department has widened and now covers areas

such as intellectual property rights, toxic wastes and endangered species.

Governments, international agencies and NGOs demand data related to

the international trade more frequently.

EDI helps customs department to cope up with increasing demands on

their time. It is emerging as a useful tool of transaction for customs

departments in many developed and developing countries.

EXPORT PROCESS UNDER EDI:

EDI enables the customs department on the ports and airports to process the

shipping bill very fast. Instead of paper documents going from table to table as

happen in most of the government departments, EDI makes it possible to

process and send the documents on-line from one department on the port to

another. Various steps involved in the processing of shipping bills under EDI are

as follows:

Step 1: - Submission of shipping documents

Shipping documents such as invoice, packing list, quality certificate of

export inspection agency etc. are first handed over to registrationcounters at customs house along with the processing charges.

Step 2: - Preparation of Check List

The customs clerk checks all the documents and a checklist is

prepared which contains the description of goods and other details.

This checklist is crosschecked by the exporter/CHA.

Step 3: - Endorsement of Shipping Bill Number

The shipping bill is generated online and second copy of checklist is

given to exporter/CHA with shipping bill number endorsed on it.

Step 4: - Transfer to Customs Appraiser

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At this stage, the original documents along with checklist are forwarded

to customs appraiser to pass the shipping bill. Since shipping bill is not

prepared physically, it is transferred on-line to appraiser. He passes

the shipping bill online after checking all the documents. He also gives

the examination order by giving details of the extent to which cargo has

to be examined.

Step 5: - Transfer to Assistant Commissioner

Shipping bill is then transferred to Assistant Commissioner for counter

signature. In this way shipping bill is passed under EDI system. The

examination order issued in such cases issued by the appraiser is alsotransferred on-line on the docks to the examiner. The export promotion

copy is issued to the exporter for his future use is issued at the docks.

IMPORT PROCESS UNDDER EDI:

Step 1: - Collectio0n of Documents

All the documents necessary for clearing of import consignment such

as invoice, packing list, bill of lading or any other document as per

contract are submitted by importer.

Step 2: - Annexure Preparation

Annexure-1 is prepared and submitted along with other shipping

documents for noting with customs departments.

Step 3: - Endorsement of Bill of Entry Number

Import general manifest (IGM) filed by shipping company carries

details of goods carried on board, vessel number, name of importer

and exporter etc. on the basis of the information in the IGM customs

department checks the details of documents and issues a checklist.

The bill of entry number is endorsed on this checklist.

Step 4: - Action of Appraiser

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Customs appraiser checks the documents on the basis of checklist

available top him on-line takes the following action:

1. Issuing of examination order indicating the extent of

examination.

2. Making entry in DEPB/DEEC.

3. Calculate the amount of import duty payable by importer.

Step 5: - Documents Audit

The auditor cross checks the following information in the documents:

1. Import duty amount calculated by customs appraiser.

2. Correctness of entry in DEPB/DEEC book.

Step 6: - Online clearance of Documents

Next, the checklist is sent on line to deputy commissioner of customs

along with physical documents. The documents are passed on line and

TR6 challan is issued for payments of duty. One copy of bill of entry is

generated on line for record purpose by customs department.

Step 7: - Payment of Duty

TR6 challan is issued in 3 copies for payment of import duty. Customs

department keeps first copy, the bank while depositing duty amountkeeps second copy and third copy is given to the importer. After the

duty is paid 2 copies of bill of entry are printed. One is the exchange

control copy, which importer sends to R.B.I. and he retains the second

copy.

Step 8: - Issue of Delivery Order (D/O)

Once the duty is paid the D/O is issued to the importer. The importer

also hand over the bill of lading received from the exporter abroad and

importer must pay administrative charges and stamp duty charges on

the import duty amount to the shipping line D/O is necessary for

accessing the goods and carrying out the examination of import cargo.

Step 9: - Examination of Goods

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On the basis of forwarding order stamped on the reverse of D/O by

dock authority the customs appraiser examines the cargo. After

completing the examination, he puts his remarks on the examination

order and enters the same in the computer also. At this stage, final

release order is issued.

Step 10:-Issuance of Gate-Pass

After the payment of port charges, the customs appraiser issues final

gate pass, which allows the carriage of the goods out of dock

premises.

LOGISTICS AND E-COMMERCE:

There is tremendous scope of IT in logistics. In fact, the modern supply chain is

held together by the strength of IT, either through its ability to transit huge

amount of data speedily or make global data available to expedite the decision

making process.

Due to such advantages offered by IT, many logistics providers are planning to

handle majority of their commercial transactions electronically. Also many

exporters are already using IT for various activities ranging from e-procurementof goods to availing transportation services on the net.

In spite of the strides made by the IT, the phone and fax will still remain the

preferred mode of communication between shippers and shipping lines. This is

because the information highway is still not fully integrated fully with logistics

system.

Shipping lines are keen to encourage their customs to use the Internet, and have

developed a number of attractive tools. The biggest benefit of these tools is that

both shippers as well as shipping lines gain by using them. Following are some

of the important tools:

1. Electronic receipt of vessel schedule information

2. Tracking and tracing of cargo

3. Remote bill of lading (B/L) printing

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4. Simple data entry reporting

5. Exception reporting

6. Online tendering etc.

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BIBLIOGRAPHY

LOGISTICAL MANAGEMENT BOWERSOX / CLOSS

MARKETING RESEARCH MR. AKARANDE

Internet sites - www.shipping.nic.in

- www.jayem.co.in

- www.reverselogistics.com

ASSOCHAM Winning Strategies of Supply Chains.

FICCI.

EXIM Newspaper.

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http://www.shipping.nic.in/http://www.jayem.co.in/http://www.reverselogistics.com/http://www.shipping.nic.in/http://www.jayem.co.in/http://www.reverselogistics.com/


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Haider Role of Logistics

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