A STUDY ON CHALLENGES FACED BY ACT SHIP AGENCY FOR INWARD

AND OUTWARD CLEARANCE OF SHIPS IN

COCHIN PORT

Summer Placement Project

Submitted by

DILSHYAM DK(Reg no:11P37S0005)

Under the guidance of Ms. S.KANIMOZHI (BCA, MBA)

in partial fulfillment of the requirements for the degree of

MASTER OF BUSINESS ADMINISTRATION

of Bharathiar University, Coimbatore.

2011-2013

HAPPY VALLEY INSTITUTE OF MANAGEMENT STUDIES

PARTNER INSTITUTION OF BHARATHIAR UNIVERSITYCOIMBATORE-64110

1

ABSTRACT

The Aim of the Study is to find out the procedures followed by the Ship Agency when a Ship is

Arriving and Departing from the port. Normally the Shipping Agency is the Sole responsible for

the ships which are entering into the concerned port and they will take care of all the activities

which are required for the clearance of the ships. Therefore this research will help to find out the

step by step process of Shipping Agency. Some of the major objectives of the thesis are To Find

out the overall activities followed by the ship agency for the Inward and Outward Clearance of

the Ships and to find out the Challenges faced by them during this Clearance process.

The research purpose applied in this research is Descriptive and the approach used is Qualitative.

The data will be collected by both primary and secondary data. The Primary Data will be

collected by Direct Observation from the Ship Agency. Secondary Data will be collected through

Internets, Books and Journals. This Research may help the people those who want to know about

the overall process happening in the Shipping Agency. And can keep this record for the future

study about this topic.

KEYWORDS : Inward and Outward Clearance, Agency, forwarding, challenges, Ship Agents,

Information Technology, Electronic Data Interchange.

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TABLE OF CONTENTS

CHAPTER TITLE PAGE

NO

I INTRODUCTION

1.1 Background 5

1.2 Company profile

1.2.1 About ACT 6

1.2.2 About Cochin Port 10

1.3 Problem of Statement 13

1.4 Objectives of the Study 14

1.5 Limitations 15

1.6 Research Questions 16

II THEORATICAL FRAMEWORK

2.1 Literature Review 17

2.1.1 About Shipping 17

2.1.2 The need for the Ship Agent 24

2.1.3 Qualification For The Good Ship Agent 25

2.1.4 Duties And Responsibilities Of Ship Agents 27

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2.1.5 Liabilities And Claims Of The Ship Agent 29

2.1.6 Problems Faced By The Ship Agents 32

2.1.7 Global Challenges Facing The Agent 36

2.2 Conceptual Framework 38

III RESEARCH METHODOLOGY

3.1 Research Purpose 39

3.2 Research Approach Used 39

3.3 Research Strategy 39

3.4 Data Collection Methods 40

IV EMPIRICAL FINDINGS

4.1. Arrival Of Vessel Into Port 42

4.2 Conditions For Acceptance Of Vessel Into Port 49

4.3. Departure Of Vessel From Port 50

4.4. Challenges Faced In Clearance 54

V RECOMMENDATIONS 55

VI CONCLUSION 56

VII REFERENCE 57

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1. INTRODUCTION

1.1. BACKGROUND: Shipping plays an important role in the transport sector of India's economy. According to EXIM

India’s survey. Approximately, 90 per cent of the country's trade by volume (70 per cent in terms

of value) is moved by sea. The shipping has developing year by year. Import and Export in India

is mainly depends on the shipping industry. If import and export falls, it will directly affect

shipping. India has the largest merchant shipping fleet among the developing countries and ranks

20th amongst the countries with the largest cargo carrying fleet with 8.83 million GT.

Development in the shipping industry and the Import and Export in India, will lead to increase in

the arrival and departure of Ships into India ports. The Inward and Outward of ships into port

needs many Pre-Preparations. All the activities relating to that will be carried out by the Shipping

Agency.

A Shipping agency or Shipping agent is the Designation for a person or Agency, responsible for

handling shipments and cargo at ports worldwide on behalf of shipping company. The Shipping

Agency will be the sole responsible for the ships which are entering and departing from the

concerned port and will take care of all the activities which are required for the clearance of the

ships. They need to prepare many documents for the clearance of Ships and have to get it cleared

from the customs as well as from the port authority. The agency is facing few challenging in this

clearance process and it will be mentioned here. The Shipping agencies in India are also

increasing rapidly. The role of a Ship Agent is also rising due to the increase in the arrival and

departure of ships into port.

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1.2. COMPANY PROFILE:

The Research is about the Ship agency activities in the Cochin port during the inward and

outward clearance of ships. Therefore the company profile will include both the Cochin port and

the Ship Agency.

1.2.1 ABOUT ACT INFRA PORT LTD:

A C T GROUP is a complete service provider sea trade and Logistics, headquartered at Port of

Kandla, Gujarat, India. They provide complete package of shipping services at all major ports for

different category of cargo. They are one of the leading Custom House Agents(CHA), licensed

stevedores, warehouse owners for both liquid and dry cargo, shipping agents, ship brokers and

affreightment agents operating at all Western and Eastern ports of India.

A C T has its own fleet of trailers, tankers, loaders, excavators, cranes, forklifts etc. Permanent

field staff of more than 500 personnel covering Western and Eastern Indian ports to provide

excellent services and ensures the cargo reaches its destination with complete care. The group

has competent, experienced and dedicated professionals at managerial and supervisory level to

stride into the future.

VISION:

“To develop a comprehensive growth oriented logistics business in all the sphere of sea

and/or inland trade.”

MISSION:

“To offer logical, price sensitive, comprehensive services to their clients facilitating

growth and minimizing risks.”

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MANAGEMENT GUIDELINES:

To seek talent from diverse culture & nurture them to strive for international competition. To

take challenge in uncharted waters for the growth of one and all.

HISTORY:

A C T GROUP formed in 1982 and since then operating successfully.

Their continued growth is attributable to strong company management and financial stability.

Their commitment to service excellence has established us as one of India’s leading shipping

service providers.

Their innovative leadership in the introduction of systematic approach will continue to

strengthen their growth and enhance their service excellence as the world moves forward in the

changing environment friendly atmosphere and rapid paperless electronic commerce.

They offers a total service covering door to door shipping, freight forwarding to all parts of the

world, customs clearance, transportation, storage and distribution, import/export documentation.

Therefore no matter from where the cargo originates and we are there to move the cargo to their

final destination by sea or rail or road or air. Their network ensures the cargo is delivered safely

on time every time.

They believe in the innate power and drive of professional management to shape their own

destiny and the destiny of the nation. Foremost in their mind was to improve upon the logistics

system to give their clients an unblemished and satisfactory support system. They provide and

supply systematic approach towards the services for their clients to make their business smooth

and productive. Their efforts are to bring positive changes in client’s balance sheet, that change

creates a ripple effect on generating more business and growth. Success lies in the hands of

competitive team.

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SERVICES OFFERED:

CUSTOM HOUSE AGENT :

They are operating as Licensed Custom House Agent since 1982, at all Western and Eastern

ports of India. They are also present at various ICD’s and CFS’s located at all the major

locations. They annually handle more than 5 million metric tons of cargo consisting liquid,

bulk/break bulk, project cargo and containerized cargo. They have custom approved trained

& experienced staff to deal with customs/port related matters and to provide excellent

services.

STEVEDORING :

They are one of the leading licensed stevedores operating at all Western and Eastern ports of

India. They handle all types of cargo i.e. Bulk(including Sugar, Coal, Fertilizers, Raw

materials for Fertilizers), Break bulk(Iron & Steel), Project cargo including Heavy lifts,

Containers etc. For efficient &expeditious handling of cargo, they possess all types of gears

and equipments like pay loader, excavators, cranes, forklifts etc. They are experienced in

handling project cargo and Iron & Steel materials.

CLEARING AND FORWARDING :

They manage and provide services related to receiving the goods from the factories or

premises of the principal or his agents, warehousing, redistribution of goods, maintaining

records of the receipt, dispatch of goods and daily update the stock available at the

warehouse to clients. Their experience of more than three decades in this field not only

allows them to take almost all the pitfalls of the industry but also guide them to provide tailor

made solutions for any type of need.

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SHIPPING AGENCY :

A C T group as a Shipping Agent, provide multifaceted services to cater to the requirements

of the ship and its crew. They locally represent leading vessel owners & operators like M/S.

Mitsui O.S.K. Lines, Japan, M/S. Oldendorff carriers and M/S. oldendorff Express lines,

Germany, M/S. CPM corporation, China and M/S. Spur Shipping, Singapore. They are also

member of International Shipping Body (BIMCO).

OTHER SERVICES OFFERED:

CHARTERING AND SHIPBROKING

TANK TERMINAL OPERATION

TRANSPORTATION

FREIGHT FORWARDING

WAREHOUSING AND REDISTRIBUTION

SEZ FACILITY

They are the first licensed Government of India approved SEZ service providing unit. In the field

of material management and logistic support, they have created the SEZ facility at Kandla

Special Economic Zone, just 9kms from the major Indian port of Kandla. They have both bonded

and none bonded warehouses for Import/Export facilities.

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1.2.2 ABOUT COCHIN PORT :

Cochin Port is a major port on the Arabian Sea – Indian Ocean sea-route and is one of the

largest ports in India. The port lies on two islands in the Lake of Kochi: Willington

Island and Vallarpadam, towards the Fort Kochi river mouth opening onto the Arabian Sea.

The International Container Transshipment Terminal (ICTT), part of the Cochin Port, is the

largest container transshipment facility in India.

The port is governed by the Cochin Port Trust (CPT), a government of India establishment. The

modern port was established in 1926 and has completed 86 years of active service.

The Kochi Port is one of a line of maritime-related facilities based in the port-city of  Kochi. The

others are the Cochin Shipyard, the largest shipbuilding as well as maintenance facility in India;

the SPM (single point mooring) facility of the Kochi Refineries, an offshore crude carrier

mooring facility; and the Kochi Marina.

HISTORY:

The Cochin port was formed naturally due the great floods of Periyar in 1341 AD, which choked

the Muziris port (Kodungallur), one of the greatest ports in ancient world. Ever since, Cochin

became one of the major ports with extensive trading relations Romans, Greeks and Arabs, all

lured by the traditional spice wealth of the state. The port further attracted European colonialists

like Portuguese, Dutch and finally British who extended their supremacy over Kochi Kingdom

and the port city of Fort Kochi. The traditional port was near Mattancherry (which still continues

as Mattancherry Wharf).

The need of a modern port was first felt by Lord Willing don during his governorship of Madras

Province of British India. The opening of the Suez Canal made several ships pass near the west

coast and he felt the necessity of modern port in the southern part. He selected the newly joined

Sir Robert Bristow who was a leading British harbor engineer with extensive experience with

maintenance of the Suez Canal.

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Bristow took the charge of chief engineer of Kochi Kingdom's Port Department in 1920. Ever

since then, he and his team were actively involved in making a Greenfield port. After studying

the sea currents, observing tidal conditions and conducting experiments, he was convinced about

the feasibility of developing Cochin. He believed that Cochin could become the safest harbor if

the ships entered the inner channel.

The construction of the dredger 'Lord willing don' was completed in 1925. It arrived at Cochin in

May 1926. In 1932, the Maritime Board of British India declared Port of Cochin as a major port.

The port was opened to all vessels up to 30 feet draught. During the World War 2, the port was

taken over by the Royal Navy to accommodate military cruisers and war ships. It was returned to

civil authorities on May 19, 1945. After Independence, the port was taken over by the

government of India. In 1964, the administration of the port got vested in a Board of Trustees

under the Major Port Trusts Act. The port was listed as one of the 12 major ports of India.

ORGANISATIONAL STRUCTURE:

Cochin Port Trust is an autonomous body under the government of India and is managed by

Board of Trustees constituted by the government. The board is headed by the chairman who acts

as the chief executive officer. The chairman is assisted by the deputy chairman who in turn is

assisted by department heads and officials of the following port departments:

General Administration

Traffic

Accounts

Marine

Civil Engineering

Mechanical Engineering

Medical

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FACILITIES:

The port is administered by a statutory autonomous body known at the Cochin port trust. The

chairman, deputy chairman and 17 other trustees representing various interests interlinked with

the port such as Shipping agents, shippers, labor, customs, state government, etc Constitute the

board which looks after the administration of the port Facilities offered by the port are,

- Berths for handling cargo and passenger ships,

- Cargo handling equipments,

- Storage accommodation,

- Dry dock,

- Bunkering facilities,

- Fisheries harbor etc.

The entrance to port is through the Cochin gut between the peninsular head land and vypeen and

fort Cochin. The port limits extend up to the entire back waters and the connecting creeks and

channels. The approach channel up to the Cochin gut is about 10 km long with a designed width

of 200 meters and maintained dredged depth of 13.80 meters.

From the gut the channel divides into Mattancherry channel and Ernakulum channel, leading to

west and east of Wellington Island respectively.

- Well equipped container terminal with CFS.

- 16 berths including 3 oil jetties.

- Alongside draft of 9.14 meters to 12 meters.

- Vast estate covering 692.96 acres.

- 1 dry dock

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1.3 PROBLEM OF STATEMENT:

Of late the application of Information technology has been positively impacting in all the

Industries. Particularly, in the shipping also it is affecting a lot. Due to the growing changes in

the Information and Technology, Ship Agent is facing many issues/challenges in the recent days.

The Ship Agency is challenged for its existence due to their poor performance of its role which

will lead to dissatisfactions of their customers. The ship agency is facing some other challenges

such as Heavy work load to the employees, delay in getting the documents for clearance, lack of

training, etc.

Shipping is an international business meaning that it requires fast and efficient logistic chain

from the ship owner, cargo owner, port authority, agent, shipper and the final consumer.

Therefore the Ship Agents should be fast enough to respond to the growing technology.

Otherwise they have to suffer a lot to survive in this field.

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1.4 OBJECTIVES OF THE STUDY:

The purpose of this study is to find out the overall activities in the ship agency. The main aim of

this study is to prepare a clear report about the procedures followed by the ship agency during

the Inward and outward clearance of ships in port. And also to know the List of Documents

needed for the clearance of the Ships in and from Cochin port. And the ship agency is also facing

some issues in this clearance process of ships.

This research may help the people those who want to know about the overall process happening

in the Shipping Agency and also the procedures for clearing the ship. And this record may help

for future study about the same topic.

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1.5 LIMITATIONS:

Research is confined to Cochin ship agency only.

In Depth study was not possible due to the time constraints.

There is no comparison conducted between any of the companies.

It covers only the Inward and Outward procedures followed by the ship agency.

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1.6. RESEARCH QUESTIONS:

Choosing the research Question is major criteria in the research process. The Research question

should match its research objective. The research formulated for this study is as follows,

“To understand what are all the procedures followed by ACT ship agency when a ship is arriving and departing from the port?”

For clear understanding about the research, the researcher has formed some sub-questions. It

will help to find out the different aspects of the research. The questions are as follows:

1. What are all the documents to be submitted for Custom Clearance?

2. What are all the challenges faced by agency when clearing a ship?

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2. THEORETICAL FRAMEWORK

2.1. LITERATURE REVIEW:

2.1.1 SHIPPING:

International Trade means Exchange of goods or services across various borders. The trade can

be either Import or Export. If any country produces excess quantity of goods than their

consumption, they will prefer to export those goods to other countries to earn more profit. In the

same way, if any country is in need of particular product that is not available in their country,

will import those goods from other country which having those goods. The import and export

can be carried out by either by sea and air ways. Most of the goods are imported and exported by

means of ship. Shipping plays an important role in the transport sector of India's economy

(EXIM INDIA, 2011). Shipping is now becoming a unavoidable thing in Indian trade.

There are many parties involved in the shipping business. Each and every person are playing a

crucial role in the shipment of goods. Some of the parties involved in that are Shipper, Freight

Forwarder, Liner, Ship Management, Ship Agency, Charterer, Consignee etc. Each one’s role

will differ according to their nature of work. These major parties in these can be grouped into

three sections. The sections are as follows,

1. Ship interests

2. Cargo interests

3. Ancillary services

1. SHIP INTERESTS:

Ship interests, who mean those who are all concentrating mainly on Ships. They will not

concentrate mostly on the cargos that the ship is carrying. They want their ships to be maintained

well in order to get more cargos than they actually carry. Normally he Ship Agents will be

appointed by any of the parties under the ship interests. The parties are,

a) Ship owner

b) Ship management

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a) SHIP OWNER:

Ship owner means the one who owns a ship or who have share in the particular ship. Ship owner

is the person who normally appoints the Ship agent. That agent will act on behalf of the owner in

all the ports wherever the ship travels.

b) SHIP MANAGEMENT :

Ship management, as the name suggests, deals with the process of managing a ship. Ship

management is done by independent companies which use ships of some other companies or

independent owners. The ship management can also have the right to appoint the ship agent. The

ship management can never control the ship in the place where the ships travelling. Therefore

they will appoint a ship agent in almost every port where the ship is visiting. The ship

management company manages ships for the owner and pays him the yearly amount which is

settled between the owner and the ship management company. The owner of the ship signs a

contract and leases the ship to the ship management company for a defined duration of time.  The

owner can lease the ship completely or he can render some of the services provided by the ship

management companies. (Monica, December 10, 2010)

The ship management company should do the supervision of the maintenance

of machinery on board the ship. The process should also include different

surveys and repair work of the ship.

The ship management company should provide adequate crew for manning

the ship.

The company should negotiate the contracts for bunker   and lube oil.

The ship management company pays the expenses on behalf of the owner.

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2. CARGO INTEREST:

Cargo Interests are the persons who merely concentrate on the cargos that the ship is carrying

and not the ship. The cargo interests can be the person who buys the goods or sells the goods or

who are all involved in the shipment of the goods. They are

a) Shipper b) Chartererc) Freight forwarder

a) SHIPPER:

A person or company who enters into a contract with a liner conference, shipping line or ship

owner for the carriage of goods. The shipper could be the seller of the cargo, the buyer of the

cargo or some third party that solely arranges the transportation of the cargo. A shipper is a

person who is entrusted with the responsibility of transportation of goods and commodities. In

the shipping industry, a shipper’s role is very vital and something that can never be overlooked.

(Sharda, January 12, 2011)

b) CHARTERER:

A person or organization that contracts to acquire a vessel, for a voyage or a period of time, to

carry his cargo. Chartering is an activity within the shipping industry. In some cases a charterer

may own cargo and employ a shipbroker to find a ship to deliver the cargo for a certain price,

called freight rate.

A charterer may also be a party without a cargo who takes a vessel on charter for a specified

period from the owner and then trades the ship to carry cargoes at a profit above the hire rate, or

even makes a profit in a rising market by re-letting the ship out to other charterers. Depending on

the type of ship and the type of charter, normally a standard contract form called a charter party

is used to record the exact rate, duration and terms agreed between the ship owner and the

charterer. (N.Lopez in 2007)

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TYPES OF CHARTERERS:

BAREBOAT CHARTERER:

By this type of charter, the ship owner leases his entire vessel and the charterer has the

responsibility of operating it as though it were his own vessel. The ship owner has, for the

period covered by the charter party, lost control of his vessel. The charterer pays all

expenses: fuel, stores, provisions, harbour dues, pilotage, etc. And employs and pays the

crew. The charterer is responsible for the upkeep, preservation and safety of the vessel.

Before delivery to the charterer the vessel is surveyed by representatives of both parties and

the same is done on redelivery also.( Aleem Charter Parties)

VOYAGE CHARTERER:

This is a charter party for the carriage of a full cargo, not for a period of time, but at a

stipulated rate per ton, for one voyage only, between named ports to be named on arrival in a

given area. It is a frequently used charter party of which there are many varieties, and most

commodities and trades have a particular type to suit their purposes. (Aleem Charter Parties,

Pg. No. 63)

TIME CHARTERER:

Where vessels are hired for a specific period, the responsibilities of the parties differ

substantially from those involved in voyage chartering. Under a time charter, the charterer

employs and directs the vessel in accordance with the terms of the Charter party and for the

specified period, he bears the risk of speedy performance of the vessel and any delays during

the voyages or the cargo handling. It is the most effective way to gain more money because

the owner will get money consistently till the time period gets over. (Aleem Charter

Parties, Pg. No. 63)

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c) FREIGHT FORWARDER:

A freight forwarder, forwarder, or forwarding agent, is a person or company that organizes

shipments for individuals or corporations to get large orders from the manufacturer or producer

to market or final point of distribution. An increasing importance is being placed upon the freight

forwarder, as he takes over many of the functions of the traditional ship owner/carrier yet retains

interested in the cargo.

Many of the larger exporting companies maintain an in house shipping and distribution

department which negotiates contracts of freightment or carriage of goods for the company with

the shipping line that trades to the area of the world where the company’s goods are destined.

Traditionally, the freight forwarder filled the need for expertise, with their knowledge of

export/import documentation and procedure, plus their wide experience in dealing with shipping

companies with regard to contracts and documents. The freight forwarder can offer services that

come under four distinct headings

Purely as a shipper’s agent procuring transport and shipping services on

behalf of the exporter and under his direction

As a forwarder offering a total expertise package to the exporter with regard

to routeing and choice of mode together with ancillary documentation and

perhaps packing service. With regard to transport he remains an agent for the

exporter and bills of lading are made out in the shipper’s name and to the

shipper’s account.

As a principal, usually multi-modal transport operator, taking responsibility

for the goods irrespective of who actually carries them. In many cases he may

be the actual carrier for at least part of the transit. He issues the transport

documents, combined bill of lading.

As a specialist provider of ancillary self standing services, such as, custom

clearance, warehousing, packing and port agency. (ISSA BALUCH in 2000)

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3. ANCILLARY SERVICES:

a) Ship Brokersb) Ship agents

a) SHIP BROKERS:

Shipbrokers are the people who act as intermediaries between the ship owners and the charterers

who charter these ships for the transport of their cargo or intermediaries of a permanent

transaction like buying and selling of ships. They are specialists in their trade and abide by the

letter of the law in all their transactions.

The dynamic nature of the business means that Ship Brokers must be in touch with the market,

so that they are well positioned to close a contract between two parties when the opportunity

arises. Working hours can be demanding with Ship Brokers expected to be alert to the different

trading zones of Asia, Europe and the Americas. They may also have to commit to on-call

periods out of office hours to ensure the 24/7 coverage needed in this fast-moving and

competitive industry.

There are also innumerable brokerage firms that have been established all across the world and

have separate departments that specialize to deal in sale and purchase, heavy containers, dry

cargo chartering, tanker chartering and also often in demolition sales and research. The major

areas of interest are numbered like the container broking, dry cargo broking, tanker broking and

sales and purchase broking. Sales and purchase is an activity wherein the shipbrokers handle and

manage the buying and selling of the existing ships as well as the new ones. For this process the

broker will get money as brokerage from both the parties. They will be specialized in the

activities such as the buying and selling of the ships. (Krishna Prasad in the year 2006)

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ROLE OF SHIP BROKERS:

- Finding ships for cargoes and cargo for ships

- Source of Information

- Market trends and an adviser to owners and charterers

- A dispute resolver.

b) SHIP AGENTS:

Sell defines ship agent in a legal perspectives, “as a legal relationship that exist

between two parties that enter into agreement, whereby one of the parties, called the Agent

agrees to represent or act for the other called the principal, subject to the principal’s right to

control the agent’s conduct concerning the matters entrusted to him.”

According to ALAN BRANCH in 2007, “A ship agent is a person who acts for, or on behalf of

another in such a manner that the principal is logically responsible for all acts carried out under

such agency”.

Basically the ship’s agent represents the ship owner or master at a particular seaport, either on a

permanent or temporary basis. This includes notification of arrival and departure of the vessel,

acceptance of vessel for loading, discharge, repairs, storing, arranging berths, tugs, harbor pilots,

launches, ordering stevedores, cranes, equipments, etc

Port requirements such as requirements of the master, covering bunkers, stores, provisions, crew

mail & wages, cash, laundry, engine and deck repair and completion of customs, immigration

and port health formalities, cargo surveys, collection of freights, collection and issue of Bill of

Lading. The agents also have a marketing and sales role in accord with the guidelines laid down

by the principal.

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2.1.2 THE NEED FOR THE SHIP AGENT:

The need for a ship agent is explained by JOHN.K.MOCHI in the year 2000.

The need and significance of the ship agent can be easily understood when someone looks at the

functions and the liabilities entrusted to him by the ship owner. The ship owner need a

representative who will take care of his ship in the foreign port with good knowledge of the local

situation, such as marketing and port conditions and capable of handling all the necessary work

for the ship owner. According to Alan Branch, ship agent is a person who acts for, or on behalf

of another in such a manner that the principal is logically responsible for all acts carried out

under such agency”.

However with the introduction of the container transport and computerization in 1960´s has

greatly affected the coefficient degree of the need and the size of the ship agent in our modern

times. Mergers and acquisition of the shipping lines like Maesrk acquiring Sealand, P & O

merges with Neddloyds etc all these has a great impact on the ship agent in terms of sizes and

revenue.

In those long past days, the business of shipping agency was extremely profitable resulting from

the high level of freight. Implying that both the principal and agent made good amount of money.

However, since the ship agent most important resources are training, experience, marketing

knowledge, etc. That still applies today in a world of increasing globalization and modern means

of communication. The ability to call up data on a screen does not completely eliminate or totally

replace the commercial initiative and creativity that the ship agent offers to the ship owner.

Basing on this, the author is convinced that the ship agent will continue to be an indispensable

link in the maritime chain.

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2.1.3 QUALIFICATION FOR THE GOOD SHIP AGENT:

According to JOHN.K.MOCHI in 2000, many countries in the world do not impose

professional qualification for ship agents. Generally speaking there are no mandatory

qualification requirements; indeed many agents do not even know the existence of some code of

conduct for the ship agent. It has been confirmed that many ship agents operate without having

to be member of any association or having to comply with any sort of standards.

Like in Tanzania, there is no specific requirement one has to posses for becoming a ship agent

but what is important he has to be registered with the Customs Authority together with the

Ministry of Trade and Transport. The purpose for this registration is mainly for tax collection

and distance monitoring. However, apart from lack of uniformity in qualifications, there are

some implied requirements to be attained by ship agent.

These requirements include;

_ Sounding financial base.

_ Sounding professional shipping matters,

_ Technical knowledge

_ Reliable office

_ Marketing knowledge and

_ Knowledge of the Local procedures.

Having examined the existing standards, which lacks uniformity? UNCTAD (United Nations

Conference on Trade and Development) decided to prepare a set of draft minimum standards as

a non- mandatory model to be applied to the ship agency business. The UNCTAD minimum

standards have been prepared in close consultation with organization involved in ship agency

matters. The minimum standards stipulate that, in order to be professionally qualified, the

shipping agent must:

Have obtained the necessary experience in the profession by working for

at least three years in a responsible capacity with a qualified shipping

agent;

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Be of good standing and be able to demonstrates his good reputation and

competence, by positive screening and signified approval of at least two

agents of good repute who are in his business and his geographical area of

activity: and

Have passed such professional examination(s) as required by relevant

national authorities / professional associations.

The scope and details of such examinations shall be determined by the

said authorities/ professional associations.

The financial qualifications required by the minimum standards are aiming at preventing the

operation of financially unstable individuals or entities, by requesting shipping agencies to have

adequate financial resources and to be adequately insured against professional liabilities.

The minimum standards promote a high level of business ethics and professional conducts. The

agents required to:

Discharge his duties to his principals with honesty and integrity

Apply a standard of competence in order to perform in conscientious,

diligent and efficient manner.

Observe all national laws and other regulations relevant to the duties he

undertakes.

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2.1.4 DUTIES AND RESPONSIBILITIES OF SHIP AGENTS:

According to Ralph Amissah in his study (1988) The duties of the shipping agent to his

principals are covered under the contract called the Agency Agreement. The contact can be in a

formal document or can be implied as a matter of common law or by customs, or by statute.

However, in general the agent undertakes the following duties.

The agent is required to exercise skill and knowledge to the best of his ability for the benefit of

the principal; he is supposed to perform duties to the satisfaction of the principal. Again he the

agent should avoid errors, omissions negligence and other risks or some mistakes that may

consequently cause loss to the principal. The agent should avoid any act that may low down the

reputation of his principal, he should always try to defend and protect his principal’s interest

The Agent has a duty to keep his principal informed of any development e.g. when securing

cargo, any market possibilities, changes in the port both infrastructure and superstructure,

changes in port restrictions, any changes with regards to port tariffs, change in the Bunkering, so

when the agent fails to inform his principal of such development then the duty to keep the

principal informed has been breached. In some occasion breach of this duty may warranty the

principal to terminate agency contract and may lead for him to appoint someone else who is

more capable.

In tanker market, competition is very violent hence principals are heavily relying on the agent.

While at the agent port the vessel may be fixed for the next employment to load and the lay day’s

date are based on the latest information received from the agent. If the agent fails to keep the

ship owner closed advised of possible delays, the ship owner may lose the next cargo and

revenues. The same can occur if cargo discharge or loading order is issued locally to the agent

and the agent fails to advise the principals of changes in quantity and or quality of cargo. The

agents also have to take intense care while followings the above mentioned activities,

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A. The duty for contracting signature

B. Accounting for the fund

C. Cargo canvassing

A) THE DUTY FOR CONTRACTING SIGNATURE:

Care should be taken when the agent is signing contract or any other document on behalf of the

principal. The very commonly document signed by the agent is the Bills of Lading, the Agent is

keenly required to understand the meaning and implication of what he is signing, cost, risk and

impact to be involved thereafter.

It is on this ground that the ship agent is required to have knowledge in commercial law or

maritime law which covers some backgrounds of INCOTERMS e.g. FAS i.e. Free Along Side

Ship, (named port of shipment) FOB, (Free On Board, named port of shipment) CIF- (Cost

Insurance and Freight, named port of destination) When issuing Bill of lading he should be able

to differentiate the meaning of stamped phrases like, Received for shipment Bill of Lading or

Cargo loaded on Board Bill of Lading. When signing the relevant document, the Agent should

sign as agent for a named principal, in this manner the agent ensuring that he is contracting on

behalf of the principal.

B) ACCOUNTING FOR THE FUND:

The Agent has the duty to account for the fund advanced by the principal. When vessel calls at

the agent’s port, normally he request estimated port charges to be advanced to him prior to the

arrival of the ship. Thus, the use of the principal’s fund should be reported immediately after the

vessel has sailed. If the agent fails in this regard, he may be considered as trustworthy, creating

the impression of lasting ship agent.

C) CARGO CANVASSING:

The agent also has the duty of marketing and sells principal’s service, monitoring of cargo

entering or leaving the territory weather direct or transshipment.

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2.1.5 LIABILITIES AND CLAIMS OF THE SHIP AGENT:

According to the study “STANDARD PORT AGENCY CONDITIONS” .The liabilities and

claim of the shipping agents are mainly resulting from his main duties. The author shall only

discuss fewer liabilities and claims basing from his book research and experience. Most of the

liabilities discussed hereunder are those caused by agent own fault (negligence). They are

a) Claim from negligence

b) Liabilities resulting from booking cargoes, quoting rates

c) Liaising with other parties

d) Liabilities resulting from releasing of import cargo

e) Liabilities resulting from improper care in issuing documents

f) Liability claims resulting from fake crew .

a) CLAIM FROM NEGLIGENCE :

If the agent fails to arrange for the ship to berth, or for the stevedore to attend loading or

discharge the ship, he has failed to perform his duties and would become liable for any losses

suffered by his principal or by his customers.

Consider a case when an agent receives fax or telex message from a charterer asking if a

particular ship was suitable for that port. Having received this message the agent just checked

port draft restrictions and replied that the ship was suitable and the ship was fixed for that port.

29

Unfortunately he had overlooked the fact that the ship was too long, and that the vessel could not

berth accordingly. So when the ship was streaming to the said port then the error was realized. In

this particular situation the cargo had to be diverted to the nearest port, unloaded and then

shipped in a shorter ship to the previous port. So the agent in this particular case is fully liable for

the extra cost involved due to his negligence, he would have to reimburse the substantial costs

incurred by his principal.

b) LIABILITIES RESULTING FROM BOOKING CARGOES, QUOTING RATES :

One of the most important tasks of the agent is to find and book cargo for his principal’s ship.

The agent in this respect he must be careful to book the cargo and quote the rate under the terms

and conditions of the principal concert.

Some forwarding companies do attempt to their own terms on the ocean carriers, sometimes

under the guise of the quality assurance requirement. In this respect the agent should take care

not to accept booking on terms that his principal has not been specifically agreed upon. If the

agent is not careful then he might find himself liable and paying substantial amount of money so

as to cover the loss incurred.

c) LIAISING WITH OTHER PARTIES :

The agent should liaising between the cargo interests, the ship service provider etc. a failure by

the agent to pass on an instruction correctly may lead to a consequential losses. For example,

when dealing with refrigerated or cargo which need fumigation care should be taken accordingly.

To be on safe side the agent need to put necessary instructions in writing to the relevant

authorities.

d) LIABILITIES RESULTING FROM RELEASING OF IMPORT CARGO:

One of the greatest moment of which the agent exposes himself to a higher liability claim, is

when he releases cargo to a consignee or receiver, when a container has to be delivered directly

over the ship’s rail into consignee’s possession, the agent needs to be careful. The agent has to

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ensure that original bill of lading or the approved original bank indemnity, which has been

approved by his principal, is in the hands of the agents before the cargo is being released to the

consignee. When agent releases cargo without original bill of lading or approved instructions

from the principal in this regard the agent is said to commit professional negligence, and that the

agent will be liable for wrongful delivery or any other losses resulted thereof.

e) LIABILITIES RESULTING FROM UNPROPER CARE IN ISSUING DOCUMENTS:

Transposition of container numbers may subsequently lead to a wrong destination of those

container(s), and thus the agent will be liable for paying reposition cost of those container(s)

indeed if cargo lost or damaged (or even confiscated by customs) the agent may be fully liable

for the value of goods in question. Issuing of incorrect address may cost the agent dearly,

consider cargo bound for San Diego has been sent to Santiago, iron ore for Coaching went to

Kaohsiung, refrigerated cargo for Birmingham Alabama has been mistakenly shipped for

Birmingham England.

Extra care needs to be maintained when preparing cargo manifest, bills of lading and other

related documents. Negligence and other minor errors like those mentioned above may cost the

agent huge sum of money.

f) LIABILITY CLAIMS RESULTING FROM “ FAKE CREW “ :

It has been learnt that some organization pretends to be principals or ship owners with malicious

motives. BIMCO (1999), that illegal immigrants posing as ship’s crew have increasingly using

unwitting ship agents to gain entry into a number of countries. The agent is rendered liable for all

costs incurred by the crew, and for any fines or any sanctions that may be levied by local

immigration authorities for failure to exercise due diligence.

The business of agency is especially susceptible because it relies to an extent on trust. The only

way to check the validity of a company is to investigate it fully before to agreeing to represent it,

something which is not always possible given the level of competition on agency business.

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2.1.6 PROBLEMS FACED BY THE SHIP AGENTS: According to JOHN.K.MOCHI (2000). State owned shipping agency basically could have faced

with only two major problems, first problems related to Liner business which can be said as

more work load for lower reward; lower levels of cash flow; less control over his or her own

future and greater investment in technology. At the same time the Liner Principal expect the

Agent to work in partnership bringing the sense of change of corporate culture and greater

degree of mutual understanding.

For non-liner, the agent faces the problem of identifying where control really lies i.e. the cargo

owner or the ship owner; the information required focuses on the cargo, as well as the vessel. In

such business there are conflicts between the owner, who pays the fees and the chatterer who

nominates him, demands from owner for discounts and chatterer for rebates and for need for

wider marketing and intelligence work. The political and the institutional factors will influence

the challenges faced by the ship agents.

Thus these are general problems which might face the Liner Agent and non-liner agent in his day

to day operations. However the situation is more detailed for a state owned ship agent. The

problems of the shipping agency can be divided into four major group that includes

a) Political problems.

b) Institutional Problem.

a) POLITICAL PROBLEMS:

The major problems caused by the ship agency are caused by the political factors. The political

forces influence a lot in the process of ship agency. These are the problems, which affected the

company due to political influences, and others are due to Company formulation, some of them

are as follows;

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FORMULATION OF THE COMPANY :

The formulation of a company is mainly depends upon the political decisions. If we take the case

of NASACO (National Shipping Agencies Company Limited) which was a Tanzania ship

agency. By the virtue of law, NASACO was empowered to monopolize all shipping agencies

business. Monopolists have unique feature of raising the prices of goods or services for the

purpose of enrichment. So, NASACO as a single provider of the agency services had a problem

of higher commission rates and higher agency fees while service provided where critically low

and of poor standard.

Another problem with such political formulated organization includes the possibility of existing

mismanagement of finances leading to self enrichment, since officials exercise substantial

amount of power so under such environment it is easy to bend rules in favor of certain groups or

individuals.

MIXING POLITICS AND SHIPPING BUSINESS :

Shipping industry is competitive businesses it mostly requires freedom of decision and

sometimes ad hoc solution and responsibilities. Thus combining management team with

politicians and workers may distort decisions. This is because history has proved that politics

affects economic business. But to some academicians, there is nothing wrong for management

team that comprise of managers, politicians and workers in fact this can be assumed as a

participate management concept in large spectrum.

Chief Executive Officer of the Company is a political appointee of the ruling party in which case

he has to dance whatever the party is singing. It is prudent to agree that for any business to

prosper needs to be free in her decision without political yoke or intervention and unnecessary

bureaucratic constraints it must have the authority and implement them and take full

responsibility for success or failure as the case may be.

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b) INSTITUTIONAL PROBLEM : These are problems relating to management as a whole, some of these could be sighted as

follows;

LACK OF ACCOUNTABILITY :

The concept gives the idea of reporting and feedback system. Those who acts on behalf of the

other persons or group should report back to the group or person this is one of the basic principle

of quality management in an organization. NASACO as a public enterprise lacked this important

component. At the other end of the business i.e. in a Private Sector accountability is very

obvious, for directing and supervising production.

Finally, the owners are accountable to the customers, and collect profit the excess of revenue

over cost in exchange for organizing and monitoring the whole process. From the customer point

of view a classic profit seeking agency relationship prevails, but with layers of more complex

contracts within it. The Chief Executive officer and other managers are accountable to the Board;

the Board is accountable to the Shareholders. Thus there is a clear line of accountability from

management to the Board and finally to the Shareholders. So NASACO as a Public Enterprise

had little to do with this concept of accountability.

POOR MARKETING EFFORTS :

One of the important duties of the shipping agent is to conduct cargo canvassing or cargo

promotion. Due to the fact that NASACO was the sole Shipping Agency by that time, little

attention was being paid in this due regard. It was obvious that the Agent was not fulfilling one

of his obligations of which he was duty bound. To the ship-owners it was disappointing since the

agent was paid reasonable remuneration and other fees. Some of the vessels used to sail with

ballast water simply because the Agent could not secure cargo for the vessels.

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WRONG PERCEPTION :

The Company had no clear mission statement, it had wrong perception that ”Customers will

always buy the company service whether they are satisfied or not”. This was absolutely wrong in

its totality especially in the competitive market.

CONFLICTS OF INTEREST AMONG SHIPPING LINES :

Putting all shipping lines together under one roof was not proper since there is a strong conflict

of interests among shipping lines such combinations were P&O Nedlloyd, Msc, PIL, MOL,

Hyundai, GSL etc such environment apart from creating conflicts it also invites corruption

among the shipping lines for cargo lobbying against each other.

STAFF RECRUITMENT :

The personnel recruitment’s policy did not comply on required personnel attitudes and qualities

desired for competitive global shipping business. Such recruitment policy was based on the fact

that employment was for life. Boarding officers who had direct contact with the master and the

crew onboard needed to have academic and professional qualities as a tool of giving good

company’s external image. Selecting a unqualified person may cause many problem to the firm.

LACK OF COMMUNICATION FACILITIES :

We all agree that shipping is International business of which the players need to contact each

other by various facilities due to vast distance exist among those participants. Ship owner may be

far away say in Western Europe but his ship may be sailing in the waters of East Africa. In this

regard, the owner would be anxious to know the prevailing situation of his ship, crew on board,

and the carried cargo. So he will spend most of his time making phone calls, telex and other

sophisticated means of communication just to inquire for the actual position of his ship.

It is important then for the agent to have reliable communication facilities since he can

communicate with the owner and give him all the required information, So, communication

facilities are very important for any ship agent who aspires to be successful.

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2.1.7 GLOBAL CHALLENGES FACING BY AGENT:

According to Ralph Amissah in his study (1988), below are some of those challenges of which

the ship agents and other intermediaries like shipbrokers are facing, these challenges creates a

sort of limitation to these agents.

a) E-COMMERCE:

Information Technology is changing our business environment in a way few could ever have

thought possible and even fewer were prepared for the changes. In the modern world today due

to technological changes especially on the IT and internet in particular, ship agent seems to be

limited in his daily operational functions.

Consider a case prior to internet, the functions of the ship agent as before the arrival of the ship,

the agent had a numerous obligations including that of informing the port authority for the

arrangement of pilotage, tugs, security, cargo owners, customs, ship clearance, co- ordinate port

operations, signing the bills of lading, cargo canvassing and pays all the expenses of the ship in

the port etc.

In this particular case the agent uses paper, telex, telephone, or fax to communicate and

discharge his due obligations in a due and diligence manner to the relevant parties. So ship

owners and or cargo owners had to appoint ship agent in various port so as to carry out those

mentioned tasks. But with the introduction of Internet and e- commerce, (i.e. making business

electronically) maritime and shipping industry seems to take a different image.

One shall have to agree that with internet which is high level of technology at the moment

making the shipping activities to become faster and relatively transparent than before leading to

reasonable economies of scale, quality and safety measures has also been tremendously

improved.

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b) DECLINE IN FREIGHT RATE :

For some reasons including that of improvement in ship technology leading for the ships to be

faster. Decline of the freight rate has impacts to the ship agent, this is due to the fact that, one of

the source of his income is derived from the cargo booking computed on the basis of freight

commission. Thus if the freight rate is higher than the agent will have higher commission and

viz. versa., So, given the fact that there is a decline of the freight it is automatically that the

revenue received to the ship agent will be also low thus fluctuation on freight rate has impact to

the ship agent too.

c) MERGERS, ACQUISITION, ALLIANCES AND TAKE OVER :

There has been a great pace of shipping lines to merge or to form alliances and take over, some

of the purpose for this is being an attempt to achieve better slot utilization and lower operating

cost. With alliance it is possible to serve more ports more often 55 and be more responsive to

customers with dramatically less investment than it would have taken for single shipping line

indeed tracking and tracing of containers in the multiple port, from the port of loading to the

retailing centers becomes more easier.

So, when they merged together means that they will consolidate their services and provide as one

entity, hence keeping two ship agents in each port will be economically not accepted

d) ELECTRONIC DATA INTERCHANGE(EDI) :

In the olden days, a hard copy of the manifest used to be handed over to the captain of the ship

and also a hard copy of the same used to be couriered or posted to the relevant discharge ports.

Then as technology improved, there was the process by which the manifest was sent to the

relevant discharge ports by email. The manifests thus received by the discharge port agents were

manually captured into their respective computer systems. With the advent of EDI, the above can

now be avoided and precious time can be saved. When sent as an EDI message, the data can be

37

instantly downloaded into the recipient’s system thereby avoiding manual capture which in turn

will avoid any typographical errors and also saves a lot of time.

2.2 CONCEPTUAL FRAMEWORK

38

INWARD AND OUTWARD CLEARANCE OF SHIPS

Prepare Documen

ts

Submit Documen

ts

Approval of

Documents

Entry of ShipsCUSTOMS DOCUMENTS

1. Deck Cargo

2. Arrival Report

3. Authorization Letter

4. Nil List

5. General Declaration

6. Stores List

7. Crew List

8. Crew’s Effect List

PORT DOCUMENTS

1. Deputy Conservator

letter

2. FA and CAO

3. Deputy conservator

letter

4. Arrival Report

5. Captain’s under taking

6. Marine Form 1

7. Marine Form 2

3. RESEARCH METHODOLOGY

3.1 RESEARCH PURPOSE:

Descriptive research attempts to describe systematically a situation, problem, phenomenon,

service or program, or provides information about the living condition of a community, or

describes attitudes towards an issue. Descriptive research is also known as statistical research.

Although the data description is factual, accurate and systematic, the research cannot describe

what caused a situation

The main purpose of the study is to describe the procedures followed in ship agency when a ship

is arriving and departing from the port and the overall process in the shipping agency. Therefore

the method followed is Descriptive research.

3.2 RESEARCH APPROACH USED:

With a qualitative research approach, a researcher focuses on gaining a better understanding of

the research problem through detailed information about the subject matter. One essential aim of

this research approach is to have a complete and detailed description of the subject through the

application of reasoning. Qualitative research often involves interviews and observations without

formal measurement.

Since the purpose of the study is to understand the overall operations in the shipping agency and

to find out the challenges faced by them in inward and outward clearance of ships into port,

Qualitative Approach is applied in this research. Hence this approach allows flexibility in all

aspects of the research process and flexible in explaining the nature of a problem.

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3.3 RESEARCH STRATEGY :

This research based on descriptive method, therefore the research is focused on the strategies

such as,

a) Interview and

b) Direct Observation

3.4 DATA COLLECTION METHODS:

It is very important to choose the appropriate data collection method for a particular study in

order to complete the research successfully. The purpose of data collection is to obtain

information to keep on record, to make decisions about important issues, or to pass information

on to others. There are two types of data available. They are

1. Primary Data.2. Secondary Data.

PRIMARY DATA: Primary data is information collected by the researcher directly through instruments such as

surveys, interviews, focus groups or observation. Tailored to his specific needs, primary research

provides the researcher with the most accurate and up-to-date data. Normally Primary data has

been collected from first-hand-experience.

In this research the primary data will be collected by Interview and Observation from the

Shipping Agency. The ways in which interviews can be conducted in an open interview, pre

coded, direct interview and semi structured interview. In my dissertation, the researcher takes in

direct interviews. It is combination of open and pre coded interview, the main motive is to take

the direct interview the importance issues that need to be covered by the respondent.

40

The respondent can answer the questions in a practical manner and to encourage the respondent

to getting the more valuable data in a sensible way. It also very much helpful for discriminate

and deepen understanding of the particular issues.

SECONDARY DATA:

Secondary data refers to the data that are collected by another researcher for another purpose or

study; so it is collected from external sources such as magazines, articles etc. Secondary data is

easier to acquire than primary data. Even though primary data is difficult to acquire, they are a

lot more trustworthy compared to secondary data.

In this research, the secondary data will be collected through books, journals, internet and

articles.

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4. EMPIRICAL FINDINGS

4.1. ARRIVAL OF VESSEL INTO PORT:

Ship arrival and departure procedures vary from port to port, but some of the necessary formalities

will follow on the same or similar lines everywhere. A ship agent will be appointed by the owner or

charterer in every port, to take care of each and every requirements of the ship. Like the same ACT

is also a representative of ship owner in Cochin port. Mainly they will take care of the Bunkering

activities and inward/outward clearance of ships in port. They need to prepare the documents that

are needed for the clearance of ship. Customs and port authorities require many documents for

allowing the ships into the port.

The master of every vessel, on arriving within signal distance of any signal- station established

within the limits of any part of a river or channel leading to a port shall, on the requisition of the

pilot in charge of the vessel, signify the name of the vessel by hoisting the number by which she is

known, or by adopting such other means to this end as may be practicable and usual, and shall keep

the signal flying until it is answered from the signal- station.

If the ships agent got information about the ships arrival to the port, they have to immediately

retrieve the documents that are necessary for the clearance of that particular ship. And they also

have to get some documents and signature from the master of the ship. Once every document is

prepared and got signed from the ship master, they (ship agent) will submit those documents

separately to the custom agent and port authority for the process of clearance. Once every

document is verified and satisfied by the customs and the port authority, they will issue the

clearance for the vessel. The port authorities will board the vessel at the pilot station upon arrival.

When reporting at the custom house, inward light dues are paid and general declaration on arrival

(or inward entry) is completed by the agent.

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And they also have to pay certain amount to the Port Authority for Port clearance and for the

allotment of birth to the ship. The ship agent need not to pay those dues from their own, they can

claim that from the owner or charterer of the vessels. The owner will handle his separate bank

account for handling these kinds of expenses. Once the documents were cleared in customs as well

as port and dues are paid out, the ship agent can take care of the discharge of goods. The Ship’s

Agent will be always present in the inward and outward clearance and will require all the

permissions that the ship may require, in advance.

Below are the operations where vessel in port needs a previous authorization:-

Washing of ship’s side

Painting and Maintenance

Lowering Lifeboats

Use of ship’s whistle or horn

Bunkering Operations

Welding Operations.

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DOCUMENTS REQUIRED FOR INWARD CLEARANCE:

CUSTOMS BOARDING DOCUMENTS:

1. Deck Cargo

2. Arrival Report

3. Authorization Letter

4. Nil List

5. General Declaration

6. Stores List

7. Crew List

8. Crew’s Effect List

PORT DOCUMENTS:

1. Deputy Conservator letter

2. FA and CAO

3. Deputy conservator letter

4. Arrival Report

5. Captain’s under taking

6. Marine Form 1

7. Marine Form 2

8. Marine Form 3

9. Crew list

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DETAILS ABOUT THE DOCUMENTS:

CUSTOMS BOARDING DOCUMENTS:

The documentation department in ACT have format of each and every Custom Boarding

Documents. Once they get intimation about the ships arrival to a port, immediately they will

enter the details about the ship and cargo into those documents. And a representative from that

agency will bring those documents to the Customs Authority for clearance purpose. Details about

each documents is explained below,

1. DECK CARGO :

Deck Cargo declaration is provided along with the “APPLICATION FOR ENTRY

INWARD” by the Ship Agents to the Customs Boarding Officer. Hereafter, the Deck Cargo

Declaration shall give details of the number of container, sizes, inner volumetric capacity of

the containers and computed Tonnage for the purpose of assessment of light-dues. The same

applied to the Ships leaving the port. The Ships shall also provide cubic capacity as well as

Tonnage of the General Cargo or any other cargo carried as Deck Cargo under the ‘Deck

Cargo Declaration’. The Master of the Ship shall also provide information of any additional

spaces other than NRT that is utilized for carrying cargo.

2. ARRIVAL REPORT :

This is a Pre-arrival document which is submitted to customs. This document will contain the

full details about the arriving ship such as vessel name, registered tonnage, nationality of

ship, name of the port at which the vessel touched during the voyage, description about the

cargo that it is carrying, number of deck passengers, light dues, name of the ship’s agent,

goods that are imported at arriving port, and goods that are to be exported from the arriving

port, details about the vessel’s stay in the port and also the endorsement on last port

clearance.

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3. AUTHORIZATION LETTER :

This authorization letter will be submitted to the commissioner of customs. This letter

ensures that the concern ship agent is appointed by the owner of the vessel for handling

overall activities of the vessel in the port. This letter is a witness for the agency that they are

officially appointed by the owner of thee vessel.

4. NIL LIST :

This list makes sure that there is no Hazardous or dangerous goods on board and there is no

passenger on board. If there are any Hazardous goods on the vessel, then customs will not

clear the vessel’s entry.

5. GENERAL DECLARATION :

General Declaration form contains the details about the ship and about the cargo that it is

carrying. Some of the details in the form are, Name-type-call sign of ship, port of

arrival/departure, Date and time of arrival/departure, port arrived from, certificate of registry,

gross tonnage, net tonnage, brief description of the cargo etc.

6. STORES LIST :

This form contains the full details about the stores that the cargos are occupied. Few contents

in this FORM IV are Name of shipping line agent, port from arriving, date of arriving,

Nationality of the ship, no. of persons on board, period of stay, place of storage and the

quantity.

7. CREW LIST :

This list comprises the full details about the full crew who are all onboard. The details about

every member onboard such as Name, age and nationality will be present in the crew list.

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8. CREW EFFECT LIST :

This list contains the details about the whole crew and the list of goods or things which they

are carrying with them. The list of goods includes all the belongingness of the crew

members. This list also contains the details such as name of the agent, IMO number, period

of stay etc.

PORT DOCUMENTS:

1. DEPUTY CONSERVATOR LETTER :

This letter will be prepared by the vessel agent and for the purpose of submitting it to the

Deputy Commissioner of customs. This is prepared for the intension to get permission for

clearance. This letter contains details such as Name of the ship, nationality of the ship, name

of the master, nationality of master, Gross registered tonnage, Net registered tonnage, no. of

crew, arriving from, arrived for, sailed with, sailing to, etc.

2. FA AND CAO LETTER :

This letter will be prepared by the vessel agent, to the FA (Financial Advisor) and CAO

(Chief Accounts Officer). This is prepared for the debit purpose. This document will mention

about the charges that need to be credited to the agents account. The ship owner will transfer

amount to the agents account for the purpose of paying dues which need to be paid to the port

for the vessel clearance. The agents need not to pay the dues by their own.

3. DEPUTY CONSERVATOR LETTER :

This letter ensures that the ship agent has complied with all the regulations of the port and

paid all the dues that are required to pay for the clearance of the ship. This letter will be duly

signed by the agent of the ship and the master of the ship. This letter was to be written to the

deputy conservator.

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4. ARRIVAL REPORT :

Name of the vessel, name of the master, name of the agent, name of the line, nationality of

the ship, gross registered tonnage, net registered tonnage, length overall, original port of

departure, type of carrier ,time of arrival etc will be present in the arrival report. Agent has to

attach 2 copy of arrival report to the port authority. This document is necessary for the port to

allot the berth for ship at the right time and place.

5. CAPTAIN’S UNDERTAKING :

The agents have to mention in the document, if there is any change in the master in the

previous port due to unavoidable circumstances. If there is any change in master of the ship,

then the agent has to mention the name of the new master, details about him and the reason

for the undertaken.

6. MARINE FORM 1 :

This form will contain all the details about the ship such as Name, nationality, port of

registry, agent name, Charterer(if any), Length Overall, Beam, Gross registered tonnage, net

registered tonnage, passenger capacity and the ship type, berth required, etc. It is a general

declaration form.

7. MARINE FORM 2 :

It is a cargo declaration form which contains the full details about the cargo that are on the

vessel. It contains the details such as type of cargo in transit, cargo to be discharged, cargo to

be loaded, tons to be discharged and loaded etc.

8. MARINE FORM 3 :

Marine form 3 is a ship stores declaration form. This form contains complete detail about

stores in the vessel. It will have the details such as the space available and space allocated in

the stores.

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9. CREW LIST :

This list comprises the full details about the full crew who are all onboard. The details about

every member onboard such as Name, age and nationality will be present in the crew list.

4.2 CONDITIONS FOR ACCEPTANCE OF VESSEL INTO PORT:

The Vessel shall be accepted for berthing subject to fulfillment of the following

conditions amongst others:

a) All the documents/certificates mentioned above should be valid and shall remain

valid during the stay of the Vessel within Port Limits. In the event any information is

incomplete or missing, the berthing of the particular Vessel will not be planned.

b) Vessel possesses valid Port Clearance Certificate from the last port of call.

c) Vessel is not loaded above the Vessel’s certified load lines.

d) Vessel is not carrying any hazardous cargo.

e) All Vessel Related Charges such as Port Dues, Pilotage and Towage and Berth

Hire has been paid as per Port Tariff by the vessel Agent.

f) Indian Light House Dues as per rates notified by Government of India has been

paid to the Government Authorities.

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4.3. DEPARTURE OF VESSEL FROM PORT:

The ship cannot leave the port until it get Port clearance certificate from the port authority. For

getting the port clearance certificate, the agent have to submit certain documents similar to

inward clearance and also have to outward due to the port. There is not much procedure for

outward clearance when compared to inward. If the port is satisfied with the documents

submitted by the agent, then they will issue the Port Clearance certificate.

The agent must go to the Custom House and first pay the outward light dues unless these dues

have already been fully paid for the current financial year. If the ship is a foreign going ship and

has deck cargo, the agent must complete a form to declare the space occupied by the deck cargo.

The form must be shown to the Custom Officer. If the ship is foreign going ship, then they have

to pay ILH Dues to the custom for the tonnage it is carrying.

DOCUMENTS REQUIRED FOR OUTWARD CLEARANCE:

PORT DOCUMENTS:

1. Deck cargo cover letter

2. Departure Report

3. Captain’s Undertaking

4. Marine form 2

5. F.A and C.A.O Letter

6. Crew list

7. NIL list

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CUSTOMS DOCUMENTS:

1. Entry Outward Declaration

2. Capt appointment Form

3. NIL list

4. Crew List

5. Declaration of Pollution.

DETAILS ABOUT THE DOCUMENTS:

PORT DOCUMENTS:

1. DECK CARGO :

Deck Cargo declaration is provided along with the “APPLICATION FOR ENTRY

OUTWARD” by the Ship Agents to the Customs Boarding Officer. Hereafter, the Deck

Cargo Declaration shall give details of the number of container, sizes, inner volumetric

capacity of the containers and computed Tonnage for the purpose of assessment of light-

dues. The Ships shall also provide cubic capacity as well as Tonnage of the General Cargo or

any other cargo carried as Deck Cargo under the ‘Deck Cargo Declaration’. The Master of

the Ship shall also provide information of any additional spaces other than NRT that is

utilized for carrying cargo.

2. DEPARTURE REPORT :

This letter is a mandatory one for the clearance of the vessel. This letter will have the

contents like Name of the vessel, name of the master, name of the agent, name of the line,

nationality, gross registered tonnage, net registered tonnage, length overall, next port of call,

type of carrier, DWT, no. of crew on departure, etc. They have to submit 2 copy of departure

report to the port.

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3. CAPTAIN’S UNDERTAKING :

The agents have to mention in the document, if there is any change in the master in the ship

from the port due to unavoidable circumstances. If there is any change in master of the ship,

then the agent has to mention the name of the new master, details about him and the reason

for the undertaken.

4. MARINE FORM 2 :

It is a cargo declaration form which contains the full details about the cargo that are on the

vessel during the time of sailing out. It contains the details such as type of cargo in transit,

cargo that are loaded, tons that are loaded etc.

5. FA AND CAO LETTER :

This letter will be prepared by the vessel agent, to the FA (Financial Advisor) and CAO

(Chief Accounts Officer). This is prepared for the debit purpose. This document will mention

about the charges that need to be credited to the agents account. The ship owner will transfer

amount to the agents account for the purpose of paying dues which need to be paid to the port

for the vessel clearance. The agents need not to pay the dues by their own.

6. CREW LIST :

This list comprises the full details about the full crew who are all onboard. The details about

every member onboard such as Name, age and nationality will be present in the crew list.

7. NIL LIST :

This list makes sure that there is no Hazardous or dangerous goods on board and there is no

passenger on board. If there is any Hazardous goods on the vessel, then customs will not

clear the vessel.

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CUSTOMS DOCUMENTS:

1. ENTRY OUTWARD DECLARATION :

The entry outwards declaration form should contain: name of ship, name of master, port of

registry, net tonnage, number of crew, where the ship is lying, the name of any previous loading

port, destination, whether with or without passengers, particulars of any inward cargo,

particulars of previous voyage, and the name and address of the agent. Either master of agent

can sign it.

2. CAPTAIN’S APPOINTMENT FORM :

The agents have to mention in the document that who is present master of the vessel and the

details about the master. If there is any change in master of the ship, then the agent has to

mention the name of the new master, details about him and the reason for the undertaken.

3. NIL LIST :

This list makes sure that there is no Hazardous or dangerous goods on board and there is no

passenger on board. If there is any Hazardous goods on the vessel, then customs will not

clear the vessel.

4. CREW LIST :

This list comprises the full details about the full crew who are all onboard. The details about

every member onboard such as Name, age and nationality will be present in the crew list.

5. DECLARATION OF POLLUTION :

This will ensure that the ship agent will pay the charges, if the ship cause any oil pollution or

polluting the sea by throwing garbage’s within the port limit. This will be submitted to deputy

commissioner of customs.

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4.3. CHALLENGES FACED IN INWARD & OUTWARD CLEARANCE:

Long Waiting in Customs to get the documents cleared

Not using E-Commerce for the clearance.

Delay in getting documents that need to be cleared.

Unawareness of proceedings by the staffs.

Poor Connectivity with the Vessel.

Time Congestion in the port.

Heavy work load.

Errors in Documentation.

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5. RECOMMENDATIONS

The agency is facing many issues/Challenges in the documentation alone. Therefore the main

solution for overcome these challenges is to apply the EDI system. Electronic data

interchange (EDI) is the structured transmission of data between organizations by electronic

means, which is used to transfer electronic documents or business data from one computer

system to another computer system, i.e. from one trading partner to another trading partner

without human intervention It is more than mere e-mail; for instance, organizations might

replace bills of lading and even cheque with appropriate EDI messages. It also refers specifically

to a family of standards. EDI helps to reduce time in preparing documentation, waiting time in

the queue for clearance, reduce work load and such us.

Another major problem faced by the ship agency is heavy work load. The whole inward and

outward clearance of ships is handled by a single person therefore it adds more load to that

person. Here they can appoint few more persons to that process and can divide their work, by

that they can reduce their work load.

They can also give training to the members to reduce the errors in documentation, delay in

preparing it such as. Training will help the staffs to know more about the field which will reduce

errors and also helps to improve the communication skills and many more. Thus the ship agency

can improve a lot in many aspects.

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6. CONCLUSION

Shipping agents have some significant role in the logistic chain hence they have to provide

higher services with higher quality services, reliability and above all the focus should be on

customer requirement. The major roles of the Ship agents are explained in the above headings.

Hence this project helps to know that how the agents are appointed, what are the qualifications to

act as a Agents, what are the liabilities of the Agents and also some of the challenges faced by

the Agents.

There were only few researches has been done on the Inward and outward clearance of the ships

into port. Therefore this research may help the people to gain knowledge about the particular

field and also can take effective measures for the challenges by implementing the suggestions

given.

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7. REFERENCE

Alvatzidis, P. Painful Progress. The Ship’s Agents & Brokers, 25, 53. (1999,Autumn).

Alan branch, Elements of shipping, (2007)

Aleem ,Charter Parties, Unit 12. (2001)

Barker. D.. The cycle of challenges continues in liner and port agency, BIMCO Review

1998. London: Stroudgate PLC.

Beardshaw, J. Economics: A student guide. London: Pitman (1988).

Bonfield, P. Knowledge management strategy: Managing Information.25, 26-30. (1999, July-

August).

C.R Kothari, Research Methodology Techniques, (2004)

Donner, P. Bolero. Unpublished lecture handout, World Maritime University, Malmö,

Sweden. (2000).

E- Commerce – Revolution or hype? Maritime Asia, 9- 18 (2000, May).

Francou, B. Freight Forwarders. Unpublished lecture handout, World Maritime University,

Malmö, Sweden.69 (2000).

Issa Baluch “The Changing Role of Freight Forwarder” (2002)

John.k.mochi Problems and prospects of the state shipping agency in Tanzania.

(2000)

Krishna Prasad “CHANGING ROLE OF SHIP BROKERS” (2002)

Moussa, D. The future of Niger Shipping Council in the new maritime

framework. Unpublished master’s thesis, World Maritime. (1999).

Ralph Amissah “United nations (UNCTAD) Minimum standards for shipping Agents”

(1988)

Sharda, http//:www.marineinsight.com (2011)

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