2016

CH.RAHUL SUBUDHI

BALMER LAWRIE & CO. LTD.

COST CONTROL ON CUSTOM HOUSE AGENT’s

ACTIVITIES AND DEMURAGE & DETENTION OF

LOGISTICS SERVICES OF BALMER LAWRIE & CO. LTD.

Gold and silver, like other commodities, have

an intrinsic value, which is not arbitrary, but is

dependent on their scarcity, the quantity of

labour bestowed in procuring them, and the

value of the capital employed in the mines

which produce them.

Date: 15.07.2016

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SUMMER INTERNSHIP REPORT

On

COST CONTROL ON CUSTOM HOUSE AGENT’s

ACTIVITIES AND DEMURRAGE & DETENTION OF

LOGISTICS SERVICES OF BALMER LAWRIE & CO. LTD.

Submitted to

M/s. BALMER LAWRIE COMPANY LTD.

SBU: LOGISTICS SERVICES

Submitted in Partial Fulfilment of the requirement of

Post Graduate Diploma in Management

Submitted by Submitted to

Name: CH.Rahul Subudhi Name: Basu Deb Basu

PG No. : PGDM20170050 Designation: Sr. Manager (A&F)

Batch

2015-17

IILM Graduate School of Management

Greater Noida

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DECLARATION FORM

hereby declare that the project work entitled COST CONTROL ON CUSTOM

HOUSE AGENT’s (CHA’S) ACTIVITIES and DEMURRAGE & DETENTION OF

BALMER LAWRIE & CO. LTD. Submitted by me for the Summer Internship during

the Post Graduate Diploma in Management to IILM Graduate School of Management is my

original work and has not been submitted earlier either to IILM or to any other Institute for

the fulfilment for the requirement for any course of study. I also declare that no chapter of

this manuscript in whole or in part is lifted and incorporated in this report from any earlier

other work done by me or others.

I

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ACKNOWLEDGEMENT

The internship opportunity I had with Balmer Lawrie Co. Ltd. was a great chance for

learning and professional development. Therefore, I consider myself as a very lucky individual

as I was provided with an opportunity to be a part of it. I am also grateful for having a chance

to meet so many wonderful people and professionals who led me though this internship

period.

Bearing in mind previous I am using this opportunity to express my deepest gratitude

and special thanks to my mentor, Mr. Basu Dev Basu, Sr. Manager (Accounts and Finance)

who in spite of being extraordinarily busy with his duties, took time out to hear, guide and

keep me on the correct path and allowing me to carry out my project at their esteemed

organization and extending during the training. It is his timely advice, intervention, and

symbol of discipline that I shall forever try to emulate along with it his methodical way of work

and his professionalism that I will always try to follow in professional life.

I express my deepest thanks to Mr. Udayan Ghosh, Vice President (Finance), for taking

part in useful decision & giving me opportunity to work for this glorious organisation, despite

not knowing me prior to the project.

I express my deepest thanks to Mr. M.Pavithran (Chief Branch Head) for allowing me

to sit with each and every activity head for gathering all the required information.

It is my radiant sentiment to place on record my best regards, deepest sense of

gratitude to Mr. Subimal Dasgupta, Mr. Mohit, Mr. Bappa Mishra and Ms. Soumi Pal for their

careful and precious guidance which were extremely valuable for my study both theoretically

and practically.

I express my gratitude to the faculty members of IILM Graduate School of

Management, Greater Noida, for their support and advice regarding the mode and approach

of data collection.

I perceive as this opportunity as a big milestone in my career development. I will strive

to use gained skills and knowledge in the best possible way, and I will continue to work on

their improvement, in order to attain desired career objectives. Hope to continue cooperation

with all of you in the future.

Sincerely,

Name: CH.RAHUL SUBUDHI

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Table of Contents

EXECUTIVE SUMMARY ..................................................................................................................................... 5

LOGISTICS AS A SECTOR ................................................................................................................................... 6

BALMER LAWRIE COMPANY PROFILE ..................................................................................................... 7

BALMER LAWRIE & CO. LTD. ORGANISATIONAL STRUCTURE: ............................................... 9

BALMER LAWRIE & CO. LTD. LOGISTIC SERVICE ORGANISATIONAL STRUCTURE: ..... 9

INCOTERMS ........................................................................................................................................................... 10

LOGISTICS SERVICES OF BALMER LAWRIE: ........................................................................................... 12

INTRODUCTION TO LOGISTICS SERVICES: ........................................................................................... 13

COST CONTROL: ................................................................................................................................................. 18

Cost control on cha’s activity for sea import and export: ................................................................................. 18

cost control on cha’s activity for air import and export: .................................................................................. 19

cost control on cha’s activity for land export: .................................................................................................. 20

DEMURRAGE AND DETENTION OF LOGISTIC SERVICES: ............................................................ 21

Difference between Demurrage and Detention Charges: ................................................................................. 23

Causes of Demurrage at Balmer Lawrie & Co. Ltd. ........................................................................................ 24

Sea imports and exports:...................................................................................................... 24

Air imports and exports: ...................................................................................................... 25

How to avoid or minimize demurrage: ............................................................................................................. 26

How to avoid or minimize detention: ............................................................................................................... 27

Discussion: ....................................................................................................................................................... 27

Price comparison: Demurrage and Detention ................................................................................................... 28

Responsibilities of each unit in reduction of demurrage and detention ............................................................ 28

RECOMMENDATION: ........................................................................................................................................ 31

BIBLIOGRAPHY .................................................................................................................................................... 34

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EXECUTIVE SUMMARY

The scope of the project is to find out the various cost controls on CHA’s activity and

Demurrage & Detention applicable in the Logistics services Department and narrow it down

to the most suitable and feasible cost controls for the Company. The Project focuses on the

following aspects:

Going through different activities under logistics services and their process both at

the main branch and airport office.

Reviewing various files of export and import through air, land and sea working as

Custom House Agent (CHA) to control the cost on each activity.

Studied the financial statements of the company for analysing company’s financial

position.

Interviewed each Activity Head to understand the process flow of each activity.

Studied available information from Company’s Manual etc. to gather knowledge

of the Company policies, etc.

Studied the financial statements of the company for analysing company’s financial

position.

Studied demurrage and detention of the company for reducing the cost on it.

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LOGISTICS AS a SECTOR

Logistics is about moving materials, information and funds from one business to

another business or from a business to the consumer. Logistics is an important part of the

business economic system and is a major global economic activity. It encompasses activities

like freight transportation, warehousing, material handling, protective packaging, inventory

control, order processing, and marketing, forecasting and customer service. Fierce

competition in today’s global market, the introduction of products with short life cycles, the

heighten expectations of customer and the cost cutting measures have forced business

enterprise to focus attention on logistics industry. Historically, the logistics sector was clearly

separated and restricted mainly to transportation and warehousing.

The logistics management in today’s world however, covers all the aspects of value

chain including an efficient integration of transportation, distribution, warehousing, reverse

logistics, value added services such as payment collection, packaging, documentation,

customer brokerage facilities, kitting, repair management, reconfiguration etc. The

developments of state-of-the art IT in recent years have further had remarkable implications

for the logistics industry. Various surveys have been conducted to estimate the logistics

activities as a percentage of whole production value, and it is found that between 12 and 20%

of the final retail price of current consumer goods is associated with logistics cost. (The three

major cost components of logistics operations are inventory carrying, transportation and

administration.) Logistics industry represents a significant part of the economy, as they

generally constitute between 10 and 15% of the GDP of a country.

Different mediums of Logistics services

There are three mediums of logistics services in India. These can be categorized in the

following ways:

Air freight : A modern and the safest mode to ensure a fast delivery of goods. A chosen

one by many because of the swiftness of the system there are many companies that are now

even providing super-fast deliveries.

Land transport : A means of logistics support that has withstood the test of time through the

extensive network of roads in India. It has been the popularly used method and used

especially in the shipments of heavy articles like machinery and vehicles. This is also a chosen

method in case of household packers and movers.

Railways : An age old method of shipments and transport.

Ocean transport: Essential part of this industry this is also one of the oldest methods.

Shipments and transportation of goods is done on an international basis through this way. It

is apt in case of shipments of oil, highly sensitive or volatile articles like Uranium.

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BALMER LAWRIE COMPANY PROFILE

Balmer Lawrie & Co. Ltd. is an India based Mini Ratna –I public Sector Enterprise, under

the Ministry of Petroleum and Natural Gas of India, with a Total Turnover of Rs. 2816 cr. and

a profit before tax of Rs. 210 cr. In the financial year 2014-15.

It is a conglomerate with a presence in both manufacturing and service sector with

seven Strategic Business Units (SBUs) namely: Industrial Packaging; Greese Lubricants;

Performance Chemicals; Logistics Infrastructure; Logistics Services; Tours and Travels and

refinery and oil field services. The company has six Joint Ventures and 2 Subsidiaries, five

located in India and three in abroad.

It is a conglomerate with a presence in both manufacturing and service sectors with

seven Strategic Business Units (SBUs) namely,

Industrial Packaging segment consists of plain steel drums, lacquer-lined drums, etc.

Greases and Lubricants is divided into processing business and direct sales .Refinery & oilfield

services provides high technology oil and gas related areas. Tours and Travel is affiliated to

the International Air transport Association. In February 2014, the Company has taken by way

of sale/transfer of business undertaking the holiday brand Vacation Exotica Destinations (P)

Ltd. Tours and Travels has been awarded by Air Canada Turkish Airlines for outstanding

performance and sales support. Company has its main branches in Delhi, Mumbai,

Hyderabad, Kolkata and Bengaluru with Satellite units scattered all over India and also have

branches abroad in the UK, Indonesia and UAE.

Balmer Lawrie Co. Ltd.

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The Company believes that good financial results are not an end in itself to assess the

success of any business, rather it is a mean to achieving higher socio economic goals. In

pursuance of this belief, the Company has been pursuing many CSR initiatives since the last

decade or so. There is however two flagship programs under this namely – Blamer Lawrie

Initiative for Self Sustenance (BLISS) and Semaj Mein Balmer Lawrie (SAMBAL). While the first

program is directed at providing & improving the long term economic sustenance of

underprivileged, the second program aims at improving the living standards and quality of life

of population in and around the Company’s work canter’s.

Branch Profile:

The freight services activities of Kolkata Branch comprises of the following:

AIR CARGO: Air Import/Export, Air Clearance

SEA CARGO: Sea Import/Export, Sea Clearance

LAND CHA

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BALMER LAWRIE & CO. LTD. ORGANISATIONAL

STRUCTURE:

BALMER LAWRIE & CO. LTD. LOGISTIC SERVICE

ORGANISATIONAL STRUCTURE:

Chairman and Managing Director

Director M.B.

(Manufacturing Business)

Greases & Lubricants (COO-G&L)

Industrial Packging

(COO- I.P.)

Leather Chemical

(COO- L.C.)

Refinery Oil Field service

(ROFS) -(V.P.)

Director S.B.

(Service Business)

Travel & Vacation

(COO- T&V)

Logistics (COO-

Logistics)

Logistic Infrastruct-

ure

Logistic Services

Temperature Control

Wearhouse (TCW)

Director Finance

Accounts

Corporate Accounts

Branch Accounts

Corporate Tax

I.T.

Corporate I.T.

Branch I.T.

SVP (Finance)

Director H.R.

Corporate H.R.

Corporate Affairs

SVP (H.R)

COO

Logistic

VP Freight & Forwarding

(FF)

Branch Heads

VP Logistic Infrastructure

Branch Heads

A.V.P. (Marketing)

Central Pricing Desk (CPD)

Branch Marketing

KEY Accounts Incharge (VP)

VP Finance

Branch Accountants

I.T.

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INCOTERMS

First created in 1936 by the International Chamber of Commerce, INCOTERMS are

uniform, internationally recognized foreign trade terms that refer to the type of agreement

for the purchase and shipping of goods internationally. There are 11 different terms, each of

which helps users deal with different situations involving the movement of goods. In the end,

however, the terms wind up boiling down to a few basic specifics:

1. Costs: who is responsible for the expenses involved in a shipment at a given point in

the shipment's journey?

2. Control: who owns the goods at a given point in the journey?

3. Liability: who is responsible for paying damage to goods at a given point in a

shipment's transit?

What are Incoterms?

The term, Incoterms, is an abbreviation for International Commercial Terms. They are

a set of rules which define the responsibilities of sellers and buyers for the delivery of goods

under sales contracts for domestic and international trade. They are published by the

International Chamber of Commerce (ICC) and are widely used in international commercial

transactions. The first Incoterms were issued in 1936. The most recent version of Incoterms,

Incoterms 2010, was launched in September 2010 and became effective January 1, 2011.

What are Incoterms used for?

Incoterms provide a common set of rules to clarify responsibilities of sellers and

buyers for the delivery of goods under sales contracts. They apportion transportation costs

and responsibilities associated with the delivery of goods between buyers (importers) and

sellers (exporters) and reflect modern-day transportation practices. Incoterms significantly

reduce misunderstandings among traders and thereby minimize trade disputes and litigation.

What are the Incoterms 2010?

The two main categories of Incoterms 2010 are now organized by modes of transport.

Used in international as well as in domestic contracts for the first time, the new groups aim

to simplify the drafting of contracts and help avoid misunderstandings by clearly stipulating

the obligations of buyers and sellers.

There are eleven Incoterms and they are divided into four groups:

GROUP: E (Departure)

1. EXW (Ex Works)

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GROUP: F (Main Carriage Not Paid By Seller)

2. FCA (Free Carrier)

3. FAS (Free Alongside Ship)

4. FOB (Free on Board)

GROUP: C (Main Carriage Paid By Seller)

5. CPT (Carriage Paid To)

6. CIP (Carriage and Insurance Paid)

7. CFR (Cost and Freight)

8. CIF (Cost, Insurance, and Freight)

GROUP: D (Arrival)

9. DAT (Delivered at Terminal)

10. DAP (Delivered at Place)

11. DDP (Delivered Duty Paid)

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LOGISTICS SERVICES OF BALMER LAWRIE:

Balmer Lawrie ventured in Logistics Services as early as the 19th Century. It has

continuously grown since then offering a wide range of seamless logistics solutions to clients

and hence has gained strong national as well as global network which is managed by a

competent team of experts supplemented by latest communication facilities. Balmer Lawrie

Logistics Services offers complete logistics solutions for all types of cargo and is a reputed

IATA accredited facility along with ISO Certification. The services include handling both

inbound and outbound cargo including normal over dimensional perishable, temperature

sensitive and dangerous consignments.

It has all factors necessary for being an efficient provider of world class logistics

services. With over 40 well reputed associates around the world, we provide round the clock

information regarding position and transit of goods ensuring cost effectiveness and on time

delivery.

Logistics Services provides the following services:

International freight forwarding by ocean, air and multi-modal transportation

Air Chartering and Vessel Chartering

Warehousing and distribution

Custom House Agency at all major ports/airports

Project Logistics Management

Door to Door delivery

3PL Business

Cold Chain Business

Some major USPs of Logistics Services includes:

Regular consolidation services from all major international airports to India

Specialization in handling aerospace, refinery & oilfield equipment for over 20 years

Chartering of all types of aircrafts with transit/over flying permit

Association with experienced IATA agents in more than 40 Countries

Provision of door to door services including Customs clearance activity at all

airports/seaports with dedicated & trained person

Specialization in handling high value and time sensitive cargo

Handling of sensitive defence equipment, satellites for the defence forces etc.

Risk and Concern:

The Logistics services industry has become acutely competitive in nature more so

because there are no entry barriers .the industry has both national and multinational players

competing against each other. The multinational forwarders with their superior purchasing

power pose tough competition to other forwarders by offering competitive rates and single

window service.

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INTRODUCTION TO LOGISTICS SERVICES:

Import Consolidation- Sea & Air: Grouping and consolidation of small cargo to form a bigger volume for

palletisation/containerisation on behalf of various suppliers in the country of the origin done

by foreign associate/agent. The consolidation of the cargo in the country of origin is from

various shippers who are supplying goods to different importers in India. The break bulking

of the consolidated cargo is done at the gateway port and deliveries are effected to the

individual importer/consignee at different location in India by Balmer Lawrie & Co. Ltd. (BL).

The consolidation and break bulking of cargo can be through air or sea mode.

Export (Direct and Routing) - Sea & Air:

The Export (Direct) is the freight forwarding of export cargo from India to other

countries directly to the consignee by air or ocean.

The Export (Routing) is the freight forwarding of export cargo from India to the

foreign associate/agent where the sales are normally generated by the foreign

associate/agent in the said country.

The Export (Direct and Routing) can be through air or sea mode.

SEA LOGISTICS:

Sea Import Operation:

The declaration to be filed under Section 30 of the Customs Act 1962. is known as

Import Report in case of import by land, and Import General Manifest in case of import by

sea .This is a declaration is a statutory declaration and every ship, which enters Indian, waters

with the intention of discharging cargo is bound to deliver this document. The process flow

of sea import operation:

Document Received

Check List Prepared

Bill Of Entry Filed To Customs

Bill Of Entry Assessed

Duty Requisition Sent

Duty Paid

Delivery Order Obtained

Post Formalities Completed

Physical Appraisement Completed

Materials Delivered

Bill Prepared

Bill Submitted To Importer

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Sea Export Operation:

The exporter should have an IEC (Import Export Code) number issued by DGFT

(Director General of Foreign Trade). He has to file a Shipping Bill which has to be assessed by

Customs. The goods are also subject to examination by Customs before LEO (Let Export Order)

is given. The exporters are also required to register authorised foreign exchange dealer code

(through which export proceeds are expected to be realised) and open a current account in

the designated bank for credit of any drawback incentive. The following documents are

commonly used in exporting; which of them are actually used in each case depends on the

requirements of both our government and the government of the importing country. The

process flow of sea export operation:

Document Received

Check List Prepared

Shipping Bill Processed

Port Formalities & Appraisement Completed

Shipment Made

Bill Of Lading Prepared

Bill Prepared

Bill Submitted

AIR LOGISTICS:

Air Import Operation:

In case of imports, the availability of right documents, the correctness of the

information available in the documents as well as the timeliness in submitting the documents

and filing the necessary applications for the Customs Clearance determines the efficiency of

the Customs Clearance process. Any delay in filing or non-availability of documents can delay

the process and thereby importer stands not only to incur demurrage on the imported cargo

but also stand to lose business opportunities. The process flow of sea import operation:

Document Order

Document Received

Check List Prepared

Bill Of Entry Filed To Customs

Bill Of Entry Assessed

Duty Requisition Sent

Duty Paid

Airport Formalities Completed

Physical Appraisement Completed

Materials Delivered

Bill Prepared

Bill Submitted To Importer

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Air Export Operation:

The exporters have to obtain PAN based Business Identification Number(BIN) from the

Directorate General of Foreign Trade prior to filing of shipping bill for clearance of export

goods. Under the EDI System, PAN based BIN is received by the Customs System from the

DGFT online. The exporters are also required to register authorised foreign exchange dealer

code (through which export proceeds are expected to be realised) and open a current account

in the designated bank for credit of any drawback incentive. Exporter is also required to

register authorised foreign exchange dealer code (through which export proceeds are

expected to be realised) and open a current account in the designated bank for credit of any

drawback incentive. The process flow of air export operation:

Document Received

Check List Prepared

Shipping Bill Processed

Airport Formalities & Appraisement Completed

Shipment Made

Consignment Note Prepared

Bill Prepared

Bill Submitted

LAND LOGISTICS:

The Company has no import operations.

Land Export Operation:

Identify and negotiate with importer

Confirm the export deal

Receive an export order or contract

Examine thoroughly and ask for amendment, if any

Receive letter of credit

Scrutinize thoroughly, compare with terms of contract

Ask for amendments from exporters, if required

Receive amended letter of credit

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Custom House Agent’s (CHA’s): The Custom House Agent’s Licence (CHA’s Licence) is obtained from the Customs

Authorities for providing services towards customs and port clearances as per the existing

Custom Act, 1962. This is to facilitate processing of documents, ascertaining customs duty,

examination and clearance of import or export cargo, etc. For this purpose there should be

CHA License with authorised and qualified personnel to handle the jobs with customs

authorities under the Regulation 9 of the Customs House Agents Licensing Regulation, 1984

and Custom House Agents’ Licensing (Amendment) Regulation, 1997.

A Custom’s House Agent, or CHA, is hired by a company to act on the company’s behalf

in importing and/or exporting goods. This releases the company from having to tangle with

the often stringent and complicated laws of importing and exporting. A CHA would perform

all the actions required to get your goods through customs.

CHA Import Operation:

Obtaining import license and quota

Obtaining foreign exchange

Placing an order

Dispatching letter of credit

Appointing C & F Agents

Receipt of Shipment advice

Receipt of documents

Bill Of Entry

Delivery order

Clearing of goods

Payment to C & F agents and exporters

Follow up

CHA Export Operation:

Clearing and Forwarding (C&F) Agent received documents from exporter

C&F Agent takes delivery of cargo

C&F agent stores cargo in his warehouse till shipment

C&F agent prepares shipping bill and submits along with other documents to

customs house

Documentary check by customs appraiser/examiner who also instructs 'Dock

Appraiser' about extent of physical examination of cargo

Cargo brought to the port shed for loading

Physical examination by Dock Appraiser who endorses 'Let Exports' on duplicate

copy of shipping bill

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Cargo loading 'On Board' the vessel

Master of Vessel issues 'Mate's Receipt' to Shed Superintendent of Port

C&F agents collects mate's receipt after paying port dues

Shipping company issues bill of lading after receiving necessary charges

C&F agent dispatches bill of lading along with other documents to the exporter.

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COST CONTROL:

“Cost control by management means a search for better and more

economical ways of completing each operation. Cost control is simply the

prevention of waste within the existing environment. This environment is

made up of agreed operating methods for which standard have been

developed.” By Smriti Chand

COST CONTROL ON CHA’s ACTIVITY FOR SEA IMPORT AND

EXPORT:

1. Focus on eliminating the variability out of transit time. As I studied some import and

export file there is more time gap between one processes to another process and also

there is more variable in the transit time like receiving party is using more premium

fright, building buffer of inventory. This dynamics can lead to paying higher fright cost

to ensure higher variability, that actually save money in total cost.

2. Balmer Lawrie & Co. Ltd. Have many suppliers in the country and also outside the

country, consolidation goods into one shipment. If a company have LCL (Less than

Container Load) shipment out of one country, try to find another LCL importer goods

from that country. Company may be able to partner and consolidate to a more

effective FCL shipment, and that will definitely save huge money.

3. While an occasional fine may not seem much of a problem, that time some cost can

keep adding on to the processes which may lead to substantial increase in fine

payment which indirectly raise the total cost. To avoid this cost, documents should be

up-to-date and all the required documents should be carried by loading and unloading

to substantially cut fine payments at the customs.

4. Periodically review and analyse the Supply Chain Networks to pin point issue which

may lead to bottlenecks, hence reduce in productivity. Strategies to reduce or

eliminate bottlenecks which include proper documentation and regulatory

compliance for imports and exports and a periodic review of the same. At the same

time company needs to be realistic about their service level and should not over pay

in the process to deliver the goods before time; say a customer expects delivery in 3

days so it doesn’t need to overpay to get shipments them to one day.

5. In a normal import clearance practice the custom authority permits minimum free

days to complete the import custom formalities, where demurrage occurs. At Kolkata

Airport Custom House allows 72 hours and Kolkata Seaport Custom House allows 7

days to complete the custom formalities and clear the cargo from specified

warehouse. Due to delay in processing necessary import clearance procedures which

could be for various reasons, the cargo might be delayed to move from custom

location to importers place. If the cargo is not cleared with in the stipulated time the

19

detention on demurrage charges to exorbitant and the importer may not be able to

take delivery of cargo if comparing the value of goods imported with the demurrage

he/she need to pay. In such cases where in the imported cargo is uncleared for a long

time, the CFS (Container Freight Station) authorities and shipping line may waive off,

a certain % of demurrage/detention with full discretionary power of the concerned

authority. To overcome this situation the following steps needs to be taken:

i. Pre alert from domestic/foreign associates this is done through ACAN (Air Cargo

Arrival Notice).

ii. Documentation arranged before the assignment reaches.

iii. Imports should be contacted and informed that the goods are received and ask

them to pay and take the delivery.

iv. Invoice should be generated immediately and a copy of it sent over to the

importers and a receipt of same is kept for record.

6. This is a general perception that airfreight charges are higher than the freight charges

by sea. However in the actual practice this is not the case and depends upon the

weight, volume and value of the consignment to be carried. Say a consignment of less

than 500k.g. sent through sea, since it is assume that the freight charges by sea is

relatively less as compared to air freight charges. But in the actual practice the freight

charges by air for this weight is more economical than sea freight charges. To

overcome the above situation as per my point of view the company should obtain the

details of approximate weight and volume of the consignment whenever quotations

are invited so that the right and advantageous mode of the consignment is

determined.

COST CONTROL ON CHA’s ACTIVITY FOR AIR IMPORT AND

EXPORT:

1. Earlier company used to incur considerable amount of cost while preparing

documents for air CHA (Custom House Agent) import. Company used to make 3 set of

documents each for customs, AAI, importers. Each set consist of: Invoice (2-3 page),

Packing List, Way Bill, Bill of Entry, Custom Clearance, House Air Way Bill (HAWB),

Master Air Way Bill (MAWB), etc. So approximately a total of nine (9) set of papers is

required for one (1) set of document. Hence total cost approximately comes up to

9*3*0.80= ₹22-25 plus photo copy cost is required for a set of documents. Hence total

cost on preparation of a single cargo is approximately ₹30.

This cost has been considerably reduce by the use of EDI (Electronic Data

Interchange) system used by customs, Balmer Lawrie, and some of its important

clients. As the media system documents can be uploaded in custom system and can

be checked by not only the customs but also Balmer Lawrie as well, since there is a

central data base.

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2. Balmer Lawrie uses a lease vehicles (TATA ACE with carrying capacity of 600kg, height

4feet, weight 700kg) for delivery of goods to importers. In case cargo of larger size is

required to be transported then Balmer Lawrie has to opt for trucks and vehicles in

which case the owners of these vehicle charge more as compared to the lease vehicles.

To overcome this the company can take following steps:

i. Company should own vehicle to carry any size of cargo.

ii. Company should look for parking space near to airport for ease to make vehicle

available at airport on demand.

iii. Company should have a ware house near to airport to store cargo. This will

help them to sue damage which is not admissible by most of the consignee.

iv. Company should form lease with difference vehicles which can carry cargo of

varied sizes.

3. Considerable amount of cost can be saved by transportation of cargo from shipper

place to airport, by collaborating with other Freight & Forwarding (F&F).

Say there is a XYZ F&F company which consignee is at esplanade and Balmer

Lawrie has consignee at B.B.D. Bagh and esplanade are located near to each other. So

a single vehicle can be used to carry cargo from both the spaces. This will reduce

carrying cost charges for both the companies.

4. Handing Agent is the responsible for unloading of cargo which can charge ₹50 per kg.

Box. If unloading is not done in time, then there can be delay in export. This charge

can be reduce by the intervention of management (interaction of management with

the handing agent).

5. At the airport cargo has to go through open examination or X-ray. While at Kolkata

airport it is mandatory for cargo to go through open examination. But it is also seen

that the Airport Authority of India (AAI) makes the cargo to go through X-ray as well.

Since open examination is mandatory so the cost of X-ray is redundant and additional,

as open examination alone can solve the purpose of checking.

COST CONTROL ON CHA’s ACTIVITY FOR LAND EXPORT:

1. While the goods are expected, documentation should be maintained as such so that

cargo (if any) can be imported as well when the vehicle return after unloading the

shipment at the importer place. This will helps in minting the opportunity cost of the

vehicles which otherwise would have returned empty; which will lead to a major cost

reduction.

2. By approaching a large number of transporter through tendering and negotiate rates

with the agent within and outside the border will reduce the cost of export and will

gives a better margin in each consignment. Along with it increasing the volume of

export helps to negotiate better with the agent and will decrease the cost on

transportation and agency charges.

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DEMURRAGE AND DETENTION OF LOGISTIC

SERVICES:

Importers and Exporters can get confused by the often interchangeably used terms

demurrage, detention, per diem and storage. These terms does not all necessary mean

storage; such as per diem, as mentioned below. Storage charges accumulated at ports, inland

rail ramps and rail yards, airline terminals, and bonded warehouses when import or export

cargo or containers remains at the site beyond the allowed free time provided by the shipping

line, airline or warehouse.

The fee is intended to be compensated, the facility for the use of their space and their

equipment. All carriers and warehouses grant different amounts of free days and storage

charges per day will vary from one facility to another. Depending on the carrier or warehouse

and importers/exporters volume with them, importers/exporters can get more beneficial free

time for these various charges. If the service is through importers/exporters freight

forwarder, then it depends on what volume they have with the carrier or warehouse. Many

times, especially during times of congestion where pulling out import containers becomes

difficult, importers have to pay demurrage charges even though it is out of their hands. This

is an unfortunate and frustrating part of international trade.

Demurrage is a charge for the use of space; detention is a charge for the use of

equipment. Free time is the grace period for which neither of these charges will be incurred.

Both are meant to compensate for the use of space and equipment, and to encourage the

efficient movement of cargo by importers and exporters.

Demurrage

Demurrage is charged by ocean lines and airport authority for the use of their shipping

containers. In the case of sea import/export a limited number of 7 free days is provided, which

varies depending on the carrier and location is granted, after which demurrage charges will

be incurred for each additional day. But in case of sea shipment whereas for air import/export

consignee have got only 72hr.’s (in case of import) and 24 hr.’s in case of export by air as rent

free shipment. This fee is intended to discourage the use of the carrier’s equipment for

storage purposes and to compensate the carrier for the use of their equipment. Demurrage

charges generally increases per day after a certain number of days. As an example, after 5

free days, you may get charged ₹150/day, from 5-10 days you get billed ₹225/day and from

10+ days you get billed at ₹300/day. The actual charges vary considerably from carrier to

carrier and from port to port. Demurrage charges must be paid in full before you can pick up

importers/exporters container.

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Detention

Detention has two meaning, that is:

1. In domestic trucking, detention is a charge invoiced by a trucker for excess use of their

time for loading or unloading cargo. It is billed hourly by the trucker or sometimes pro-

rated, which depends on the trucker. Normal detention free time for loading or

unloading of container depends on the contracts (depending on if it is a domestic,

import or export shipment). Truckers also charge detention while waiting to pick up

an import container at a port or when delivering an export container back to the port,

this is usually enforced during times of extreme port congestion.

2. When importer/exporter store the container at the terminal beyond the set number

of free time, carriers can call this charge “detention” charge, but it is more often

known as per diem which is described below.

Per Diem

It is a charged by the ocean lines and airlines for use of their equipment, whether it is

ocean containers or Air Unit Load Devices (ULD’s). Carriers grant a certain amount of free days

with their equipment before charging per diem. Per Diem applies to cargo that leaves the

arriving terminal (on an import) or leaves the departing terminal (on an export) for loading

and is charged until the equipment is returned to the terminal (whether it is a port, rail yard

or airline). Many people use Per Diem interchangeable with detention and demurrage which

can confuse the billed party.

Do not confuse Demurrage with Detention fee:

Demurrage relates to cargo (while cargo is in the container) and is paid to the port. It

is charged for the storage of containers with cargo that exceeds free time at the

terminal.

Detention (per dime) relates to equipment and is paid to a freight carrier company. It

is charged when the shipper keeps the container beyond free time or when trucker

waits extra time during loading/unloading containers.

Even if the shipper does its best to plan loading/unloading and has all necessary

paperwork, there are other external factors that could affect deadlines and cause demurrage.

Late freight release or custom release of containers, damaged containers, or overweight

containers are some reasons a shipper could be charged a demurrage fee.

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Difference between Demurrage and Detention Charges:

Importers and exporters often wonder what the difference is between Demurrage and

Detention for shipping containers. The easiest way to look at the difference between the two

terms is to break it down between import and export containers.

Import Containers Export Containers

Demurrage

Demurrage fees are charged when import

containers are still full and under the control of the

shipping line. In this situation, the container has not

yet been picked up by the consignee, and the free time

for pick up set by the ocean line has expired for the

container. The free period starts when the container

has been discharged from the vessel to the terminal.

Demurrage charges are applied for storage of

containers while in the steamship lines terminal, rail

terminal, inland depot, or container yard. Demurrage

is applied after the free time has expired, and ends the

day when the container has been picked up and out

gated from the terminal.

Demurrage

Demurrage charges occur after the loaded

export container has been returned to the

possession of the steamship line but cannot be

shipped out due to non-carrier related errors

once the allotted free time has expired. For

example, if the exporter fails to provide required

export information or documentation in a

timely manner, the steamship will be unable to

load the container onto the originally scheduled

vessel and will roll the container to a new vessel.

Demurrage charges would apply for the

additional storage period until the container is

shipped on board the next vessel.

Detention

Detention occurs when the consignee holds onto

the carrier’s container outside of the port, terminal, or

depot beyond the free time that is allotted. Detention

is charged when import containers have been picked

up, but the container (regardless if it’s full or empty) is

still in the possession of the consignee and has not

been returned within the allotted time. For example,

let’s assume a period of 5 free days is provided to

return an empty import container to the steamship

line after pick up. If the consignee takes 7 days to

return this container, the steamship likely will charge

for 2 days of Detention.

Detention

Detention is charged for export containers in

which the empty container has been picked up

for loading, and the loaded container is returned

to the steamship line after the allotted free

time. Steamship lines typically provide 5 free

days for the shipper to pick up the empty

container, load it, and return it full to the port.

If the container is not returned during this free

time, the line will charge detention for the

additional days the container is in the

possession of the consignee.

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Causes of Demurrage at Balmer Lawrie & Co. Ltd.

Although, the most common reasons of demurrage & detention are trigged by a

shipper’s actions, but few other points which could lead to demurrage & detention:

Sea imports and exports: 1. Delay in payment- If the shipper paid for only part of a shipment, the vessel can refuse

to release the freight until paid in full. Any delay in payment will lead to cargo

detention at the port, which in turn causes demurrage charges.

2. Paperwork errors- Shippers may not succeed in preparing all initial documents for

clearing customs process; after all, the procedures can be confusing. To clear

shipments through customs, shippers need four documents: a Commercial Invoice, a

Bill of Lading or Airway Bill, a Packing List, and an Arrival Notice. Although, some

specific goods require additional documents. Without these documents, demurrage

charges will occur.

Original bill of leading may get lost during the currier despatched, which may

lead to delay in clearing of goods by importers unless the original Bill of Lading (BL) or

a telex being released to the exporter.

3. Lack of financing- With the payment terms, the vast majority of the purchase price is

paid at the very end of the transaction. Many aggressive importers attempt to stretch

their financing as far as possible, so they may find themselves over-extended and

unable to make the payment for the final 80% due when the goods are loaded onto

the ship. In this case, the seller will refuse to release the goods into the importers

possession, causing them to be stranded at port, where Kolkata Customs will be quick

to impose demurrage charges. Those charges can add up very fast, so it usually makes

sense for importers to try raising the money to get them out, even if it means

accepting over interest rates on short-term bridge financing.

4. Poor understanding of the paperwork required by customs- The process of clearing

customs can be confusing, and without an experienced broker to hold hand it may

lead importers/exporters to be overwhelmed and unprepared to submit all the correct

documents at the last minute. In order of importance, the four documents required

to clear most shipments through Kolkata Customs are:

Commercial Invoice- Importers/exporters supplier’s invoice for the

shipment is an itemized list with the price paid and the Harmonized

Schedule code for each product on the shipment.

Bill of Lading or Airway Bill- A receipt for the transportation of the goods

from importers/exporters overseas point of origin to the destination port

in the Kolkata. In the national trade industry, the original BL also serves as

legal title to the goods, so by submitting the original BL to Kolkata Customs,

importers/exporters are in effect demonstrating that they are the legal

owner of the products in question. The BL provides data on the number of

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products on the shipment, weight, volume, product description, and

contact information for both parties, name of the carrier, plus details on

the ports the goods will pass through the route of Kolkata.

Packing List- A document from importers/exporters supplier or their

shipping company that lists all the packages within the shipment and their

contents. This is different from the commercial invoice in that it deals with

the actual boxes on the shipment, showing what is in each box, instead of

just grouping everything together by product type.

Arrival Notice- When the ship carrying importers/exporters goods reaches

the port, their carrier or freight forwarder will send the company an Arrival

Notice. It’s just a document certifying the date on which your goods will

arrive. Custom and Board Protection (CBP) requires this so they can be

certain that their shipment is in fact at the port before they waste time on

it.

With these four documents in hand, any customs broker will be able to help

importers/exporters clear the vast majority of shipments, although some specific

goods will require additional documents. For example, shipments containing

unfinished wood products are required to show a fumigation certificate certifying that

they have been treated with pesticides.

5. Incompetent Customs Brokers- This is the least common cause of demurrage, but

surely there are incidents where customs brokers themselves lose paperwork or fail

to file it on time. In fact, most customs clearances can be processed in under 15

minutes, and the reply as to whether the goods have cleared is instant. So if

importers/exporters broker tells them they are waiting to hear back from customs

about whether importers/exporters goods have cleared, chances are they haven’t

even filed them yet. Get on broker case before importers/exporters rack up

demurrage charges. And then think about getting a new customs broker or working

with a software application that can help importers/exporters do it them self.

6. Extreme natural disaster may lead to the blockage of international courier dispatch

services. Hence, preventing importers to locate original shipment documents

including original Bill of Lading (BL).

Air imports and exports: 1. Late receipt of clearance documents by consignee- All Educational Institutes or

Research Institutes get Basic Customs Duty (BCD) exemption. They are charged on 5%

based on the Department of Science & Industrial Research (DSIR) tariffs provided.

Institutes based out of Kolkata delay in providing such documents which is one of the

major reason for incurring demurrage.

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2. Late filling of inward date by airlines- After loading, inward date is filed only after the

deposition of total cargo is done with AAI. for e.g. if the flight is to land on Saturday

morning, the delivery order date will be filed only on Monday and delivery order on

Monday, considering more than 24hr. Such is the case with other airlines too.

3. Short / excess landing- Sometimes cargo lands without proper labelling which needs

to be relabelled. Relabeling needs DC & AC permission which causes delay in

clearance.

4. Late payment of custom duty by consignee.

5. Way Bill delay- As most of the time sales tax webpage is down where part-II of form

50A is generated. Without this form, as per sales tax rules, moving cargo out of Kolkata

airport may be questioned by airport authorities and extra charges can be levied.

Delay in providing proper way bill will cause delay in the delivery of cargo, which leads

to detention.

6. Non availability of proper vehicles- Sometime the dimension of cargo mentioned in

the documents varies with the actual dimension of cargo and cannot be

accommodated in the vehicle provided. In such situation either company have to call

different vehicle or delay delivery for next day either of which will cause surge in cost.

7. Importer could not get the original Bill of Lading and other shipping documents from

his bank if letter of credit has been selected as a payment method under the current

international trade transaction. According to Letter of Credit rules depending on the

kind of bank number of days for checking the documents may vary from 4 to 7 days.

How to avoid or minimize demurrage:

1. Pre-clear the cargo and issue delivery instructions to the inland carrier in

advance. Balmer Lawrie, being a pro-active broker will help in pre-clearing cargo,

whenever possible so that coordination with the truckers can begin well before free

time expires.

2. Have a trucker “back-up” plan. In dealing with a particularly congested port, having

an alternate option for a trucker could be a life saver when time schedules become

tight.

3. Request extended free time. This only works for large shippers like Balmer Lawrie,

since company is based on the volume of containers (for sea) have arriving on a vessel

at any given time. The status of large shipper varies from carrier to carrier but there

might be a need to be moving at least 800 containers a year to be even considered for

this perk.

4. Know in advance how many free days the freight forwarder has been granted.

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How to avoid or minimize detention:

1. Dispatch cargo as far in advance as possible. This gives the trucking company time to

schedule the pick-up and/or delivery. Make sure that the loading party (for exports)

or the unloading party (for imports) is ready to take action when the container arrives. 2. Negotiate more time for live loads/unloads. If the company or importer/exporter is

aware of a container taking longer than the allotted free waiting time to load or unload

a deal should be made in advance for a bit of extended time. Otherwise, allotted free

time should be known before, the clock for billing starts. This can help in being

cognizant of the coming fees while loading/unloading the container. 3. Make sure your facility is prepared to load/unload cargo. This allows the trucker to

arrive and depart in a timely manner and puts the service provider in a good light so

they provide the service in the future.

4. Setup the delivery schedule well in advance with the trucker or freight forwarder. To

avoid scrambling last minute to setup the trucker and not have the facility ready to

load or unload the cargo.

5. The company should review the agreement they have with that line with regard to

detention-free days (in particular, the time at which that detention-free period starts

and ends) and calculate when the empty container must be returned to the nominated

empty container park.

6. As part of forward planning, the operator should also consider all possible factors that

may influence their ability to unload a container (such as seasonal demands or holiday

shut-down periods) and, where possible, make their request for extension prior to the

container being shipped from the load port.

7. The operator should utilise software (calendar systems, freight management

software, etc.) to provide alerts, with sufficient notice, of the expiry of the detention-

free period.

Discussion:

Marine Terminal Operators (MTOs) provide dock, warehouse, or other marine

terminal facilities to ocean common carriers moving cargo in the ocean-borne. MTOs include:

1) Public port authorities that own and maintain the docks and other facilities, and sometimes

directly operate the marine terminal that ocean common carriers use 2) Private terminal

operators are companies that lease terminals from a public port authority (which acts as a

landlord) and operate the leased terminals as a private business.

Vessel-Operating Common Carriers (VOCCs) 1) Holds itself out to the general public

to provide transportation by water of cargo between India and a foreign country for

compensation 2) Assumes responsibility for the transportation from the port or point of

receipt to the port or point of destination 3) Uses for all or part of that transportation, a vessel

operating between a port in the India and a port in a foreign country.

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The MTO congestion the Commission had noted in 2014 at certain ports has recently

become even more acute. Operationally, it appears that congestion begets further

congestion, which in turn may result in higher costs for everyone in the supply chain. When

MTOs are forced to stack equipment higher and tighter to address terminal space issues,

containers may be buried in hard-to-access stacks when a truck driver is attempting to pick

up a specific container. Landside productivity consequently declines when a crane operator

has to move multiple containers in order to remove the desired one. Further, truckers

complain that certain areas at terminals have been restricted or placed off limits; this makes

some containers unavailable for pick up. VOCCs and MTOs have limited the days and shifts

during which they will accept the returns of empty containers. Last-minute notice from VOCCs

and MTOs to truckers, importers and exporters about vessel loading delays, cancelled vessel

calls, terminal opening hours, shifts and closed areas, have left cargo interests scrambling to

pick up their cargo, load their exports and return their empties.

Price comparison: Demurrage and Detention

Reduce service hours at the ports for the return of containers and free time leaves the

Importers with very less time to return empty containers to the terminal as instructed by the

carrier. Detention is usually calculated on a calendar day (or fraction) basis; free time is

generally extended for the time equivalent to a terminal shutdown only while containers are

still in free time.

A comparison of the combined import/export average prices for demurrage with

those for detention, however, reveals that the average daily costs for demurrage is higher.

Shippers on the complain that the one-for-one extension of free time days after a terminal is

closed for weather, for example, is inadequate because it may take longer to return the

terminal to normal productivity after a closure than the closure itself. It appears that, because

of the generally higher daily charge, a decrease in demurrage fees, or increase in demurrage

free time, would have greater overall impact than changes in detention prices and practices.

Responsibilities of each unit in reduction of demurrage and

detention

1. Consignee Responsibility for Demurrage and Detention: a. If the pre-alert is sent on time, consignee is supposed to send the clearance

document on time. As the free period only 72 hours and if the consignee delays in

sending the clearance documents on time then the responsibility of the detention

lies with consignee.

b. If as per the contract consignee is supposed to pay the Custom Duty (CD) and due

to procedures consignee delays the CD payment then consignee is responsible for

detention.

29

c. If the consignee delays in providing valid sales tax Way Bill / road payment on time

then consignee is responsible for the applicable demurrage/detention.

2. Freight Forwarder Responsibility for Detention: a. If there is some lock out or the AAI’s system is down or in case of any other miss-

functioning of AAI system, then it’s the freight forwarder responsibility to inform

consignee through email and request them to accept the detention.

3. CHA’s Responsibility for Demurrage and Detention: a. Despite having all the documents in hand if there is clearance delay then the

responsibility is of CHA’s.

4. VOCCs Responsibility for Demurrage and Detention:

Carriers may reduce or compromise fees relating to congestion if they have the

flexibility to do so under their tariff or service contract. Some carriers’ tariffs provide for

extensions of free time for delays in cargo availability due to carrier’s error or carrier’s inability

to tender the cargo.

It seems carriers vary widely by customer and by situation as to whether they will

waive or reduce demurrage and detention charges where they are able to tender the cargo,

but have experienced delays due to terminal unproductivity. It may be that VOCCs once

willing to interpret these free time extensions liberally are no longer willing to do so. Wide

variation in carriers’ willingness to waive, or even consider reducing, these fees has been

observed. VOCCs have indicated that proper documentation is needed for a waiver to be

considered.

With respect to the charges to which cargo interests are accountable, and the subject

of this report, VOCCs are unlikely to take action to reduce their collections of these fees

unilaterally. Carriers undoubtedly have costs relating to the delays in their vessel operations.

The additional detention costs on these containers are unlikely to be reduced by the carrier.

It has been observed, although not by the VOCCs themselves, that better preplanning,

blockage, as well as vessel scheduling and regular vessel traffic information and forecasts may

improve the MTOs ability to expedite the import shipments as they are unloaded. This type

of operational improvement may be achieved as alliances integrate their shared vessel

strings.

5. MTOs Responsibility for Demurrage and Detention:

Those MTOs who are members of an FMC (Forward Market Commission)-filed-and-

effective agreement can make increasing use of their ability to address congestion collectively

and thus reduce costs. In addition, they can individually improve technology for gate

operations, through systems such as NAVIS (Navy Automated Video Information System), for

30

example, as well as improve communications with importers. All this, of course, may require

additional capital contributions as well as the agreement with labour. MTOs could extend

their own free time for demurrage; this may drive VOCCs to reflect the additional free time in

their tariffs, but it may not necessarily be the case.

6. Port Authorities Responsibility for Demurrage and

Detention:

Port authorities, both landlord and operating ports, continue to publish terminal

schedules. It appears they may consider, either individually or collectively through

agreements filed with the India Association of Port Authorities, adding requirements for

terminal productivity, incentives or measurements of terminal productivity that include

container velocity from dock to gate. Some public port authorities may determine they lack

adequate current authority to unilaterally extend demurrage free time. Doing so would have

reduced the demurrage charges collected by MTOs on behalf of VOCCs; it would not have

appeared to have any impact on detention fees.

Some port authorities are taking steps to do what they can to relieve congestion:

offering lots for the storage of empties; purchasing chassis and creating pools; adding

required infrastructure improvements; and exploring how information technology can help

stakeholders share shipment and location information to improve velocity in terminals. They

also fund and advocate for infrastructure improvements that can improve terminal

operations and the flow of cargo on and off the terminal. Port authorities have been reaching

out to their stakeholders for input.

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RECOMMENDATION:

Balmer Lawrie being a big brand it always give excellent service to its valuable clients

for which they have to incur various cost for operational activity. All activity in different

activity cannot be reduced because most of the expenses are determined my authorities like

airport custom dock and seaport CFS (Container Freight Station) and so there company has

no scope to reduce cost. But in my point of view there are place where company can reduce

its operational cost and can earn a better margin. The areas where company can reduce its

cost are:

Share cargo and shipment delivery instructions with all parties (carrier, vendor, third

party provider) in advance, to plan smooth loading/unloading process and avoid

delays.

Provide a back-up plan for the carrier’s driver in case of port congestion have

alternative routes for a tight situation and be able to adjust.

Consider the automation of demurrage management by monitoring the

containers/cargo as they move through facilities.

Advanced planning and streamlining trading processes are the keys for minimizing the

risk of demurrage charges.

It can reduce its detention or demurrage cost by means of smooth transportation

facility for clearing of goods.

Demurrage cost incurred by the company for the reason of mistakes of its own need

to be reduce following better tendering process for transportation in line with the

work order requirement of the client and better communication with the transporter

for placement of the transport before the scheduled time at the mention place.

Demurrage incurred for the mistake of the client may be reduce in making the client

knowledgeable on the process of the clearance. However the expenses incurred on

demurrage for the flaws of the client should be well documented to attach those

document with invoice raised on the clients for such demurrage charges, so that the

company can recover such charges from the client without any difficulty.

Approaching a large number of transporter for transportation and clearing goods

through tendering will procure the service with least cost.

Large shippers could ask for extended free time (large shipper status starts at a volume

of 800 containers a year).

In case of Air (CHA) import consolidation the buying freight can be made cheaper if

the company can consolidate more cargo in on shipment with the help of its foreign

associates. The rates available can further be negotiated after getting rate from

different airlines.

In CHA air import activity with the increase in volume of goods the exporting rate

decreases. So the company should try to as many clients as possible to get the business

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for the company so that it get a better airlines rate and earn good margin of profit

from each client.

In case of Air (CHA) export, again the buying rate is inversely variable with the

consignment which again can be negotiated based on the rate quoted by different

airlines.

In case of Ocean (CHA), the company should take rate from maximum possible

shipping line and compare the rate among them so that it gets the best possible rate

from the market. This way it will decrease its container cost and earn a better margin

of profit from the client.

In case of CHA land export procuring more business from the market will decrease

cost, for that company needs to take a strong initiative to approach a good number of

client. If company can generate more business for its agents then it can be an

advantageous position to negotiate rate with the agent which ultimately decrease

their cost.

Land export (CHA) this activity is mainly dependent on transportation on road and CHA

formalities at border point in India side and in other country side. As such the scope

of reduction of cost arises on transportation cost and in CHA agency charges at border

point. The reduction in this two cost can be optimised with better tendering

procedures in transportation part and CHA agents at cross border point.

A major reduction in cost is possible in the area of transportation where the company

has the role of delivery of the cargo at client destination spot. This transportation may

be different volume and different destination like intercity and inter province may

within eastern region or in the other part of the country. The volume of the cargo and

the destination to be covered by the transport are the two factors that determines

the type of transportation to be availed to minimization of the transportation cost.

The transportation of small consignment even can be arranged using a messenger or

a courier whereas the bigger the consignment are the bigger transport requires for

transferring the consignment. The company having its regular transportation of

consignment to different clients is required to follow a systematic tender procedure

to get the least rate with the best of services for different type of transport Tata ACE,

truck trailer, etc.

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BIBLIOGRAPHY

Article under How to Export. (n.d.). Retrieved from HOW TO IMPORT EXPORT.COM:

http://howtoexportimport.com/How-to-export/default.aspx

Article under How to Import. (n.d.). Retrieved from HOW TO IMPORT EXPORT.COM:

http://howtoexportimport.com/How-to-Import/default.aspx

The Incoterms rules. (n.d.). Retrieved from INTERNATIONAL CHAMBER OF COMMERCE:

http://www.iccwbo.org/products-and-services/trade-facilitation/incoterms-2010/the-

incoterms-rules/

Unclaimed Cargo - Demurrage and Storage - Who is responsible. (n.d.). Retrieved from Letter

of Credit Forum: http://letterofcreditforum.com/content/unclaimed-cargo-demurrage-and-

storage-who-responsible

www.balmerlawrie.com. (n.d.). Retrieved from http://www.balmerlawrie.com/

Various official documents and job file of different activity

Interactions with various officials within and outside the department

Thank You.