A PROJECT REPORT ON ROLE OF LOGISTICS IN INTERNATIONAL BUSINESS

UNDER THE GUIDANCE OF

MR. M. ALTAF KHAN

SUBMITTED BY:

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

DEPARTMENT OF COMMERCE & BUSINESS STUDIES JAMIA MILLIA ISLAMIA, NEW DELHI 110 025

ACKNOWLEDGEMENT

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

CONTENTS

TOPICS EXECUTIVE SUMMARY INTRODUCTION COMPANYS PROFILE OBJECTIVE AND RESEARCH METHODOLOGY SOME FACTS ABOUT SHIPPING FINDINGS AND ANALYSIS PROCEDURE AND DOCUMENTATION ROLE OF EDI IN LOGISTICS BIBLIOGRAPHY

PAGE NO: 4 6 14 19 22 29 35 59 69

EXECUTIVE SUMMARY
The project title The Role of Logistics Industry in International Business is an 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, nearly 40% 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

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 huge investments 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 logistics functions.

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. 7

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. AIR 2. OCEAN Air The worldwide volume of million tones combined with the industry experiences, global network, multi modal information system and superior customer services provide 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

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.

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 nonconferences 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 12

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 Chennai Delhi - Central Gurgaon Jodhpur Lucknow Nagpur Bangalore Cochin Delhi - West Hyderabad Kanpur Ludhiana Udaipur Chandigarh Delhi - North Delhi - South Jaipur Kolkata Mumbai 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 17

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 and products 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 means of 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-and Improvement 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 in coastal 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. 2. 3. 4. 5. 6. 7. 8. Ownership and operations of vessels for cargo and passengers. Fair way development and maintenances. Construction and operation of river terminals or river ports. Provision and operation of mechanized cargo handling systems. Putting up and maintenance of navigational aids. Provision of pilot age services. Setting up and running of IWT training institutes. 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 1000billion 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

Transportation Mode ( sample size 25)

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No. of respondents

35 30 25 20 15 10 5 0 Air Export Ocean Export Air Import Ocean Import

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

25% 15%

East West

15 days Credit Policy

Advance Payment

40 days Credit Policy

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 70.00% 60.00% 50.00% 40.00% VALUE 30.00% 20.00% 10.00% 0.00% C.I.F. BASIS F.O.B.

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) basis and rest of the companies goes for F.O.B.

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80.00% 70.00% 60.00% 50.00% VALUE40.00% 30.00% 20.00% 10.00% 0.00%

EXPORT BASIS

C.I.F. BASIS

F.O.B.

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 36

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 importerexporter 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. 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. It is thus also known as bankers commercial or

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 without any 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 the bill 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 49

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. custom clearance. A Performa invoice contains:a. Exporters name b. Consignees name c. Notifys name d. Buyers name e. Countrys of origin f. Designation It helps in getting

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 53

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. 54

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, Country

of Origin, Vessels Name, Rotation No., and Bill of Lading No. &Date.

2. Particulars of the Goods: This includes description of goods as well as

marks & 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 the
Bill 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 that have 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 avoids delay 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 the customs 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 goods

as 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 the
Bill 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 includes

the 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 data related 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 and VISHAKHAPATNAM 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 it offers. 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 the shippers 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 entry errors 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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IMPORTER

Purchase Order/ Letter of Credit

EXPORTER Cargo Related Documents

FREIGHT FORWARDER

FREIGHT FORWDER

CUSTOMS

SHIPPING LINE/AIRLINE

CUSTOMS

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. 64

 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 registration counters 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 also transferred 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 amount keeps 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-procurement of 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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