logistic 24.05.17

By Ravikeerthi Rao & Subramaniam

Part 1

EXPORT LOGISTICS MANAGEMENT

SUPPLY CHAIN MANAGEMENT (SCM)

• Supply Chain Management (SCM) is a series of

interconnected activities related to the transformation

and movement of raw material to the finished goods till

it reaches to the end user.

• It is the outcome of the efforts of multiple organizations

that helped in making this chain of activities successful.


For example,

• One Entrepreneur decided to start the Retail business.

• She needs the Merchandise to sell.

• What are the activities involved in buying & selling these Merchandise?


• The activities may include :


Supply Chain Management


• Above all, the supply chain management involves the

coordination and collaboration with the parties like

suppliers, intermediaries, distributors and customers.

• Logistics Management is a small portion of Supply

Chain Management that deals with the management of

goods in an efficient way.

LOGISTICS

• Logistics is the process of :

• planning,

• implementing, and

• controlling procedures

for the efficient and effective transportation and

storage of goods, including

services and related information, from the point of

origin to the point of consumption.

TYPES OF TRANSPORTATION

• In the international trade, there are various forms oftransportation that one can use to get their products fromIndia to wherever the product needs to go.

• These transportation types used are the following:

• Sea freight

• Air freight

• Rail freight

• Road freight

• River freight


• Sea freight and air freight are perhaps the two most

common forms of transportation for getting products

from India to distant markets in Europe, and elsewhere.

• Road and Rail are also important forms of

transportation in order to get the goods from the

incoming port to the final destination (be it a warehouse

or a distribution centre).


• A Liner (freight or cargo or ocean) is a cargo ship

sailing on a regular schedule and offer cargo space for

shippers.

• A tramp ship which does not have a fixed schedule or

published ports of call.

• Tramp ships (also called tramp freighters) trade on an

ad hoc basis depending on whatever cargo is required

to be shipped wherever.

DIFFERENCE BETWEEN

FREIGHT AND CARGO

• “Cargo” and “freight” are the terms that are usuallyassociated with transporting goods.

• “Freight” means a cargo being transported via truck,train, plane, and ship.

• “Cargo,” on the other hand, is usually used when thegoods are transported via plane or ship.

DIFFERENCE BETWEEN

FREIGHT AND CARGO

• However, the “freight” is also the term used for the

payment when the certain goods are transported , while

“cargo” refers to the goods or the products and nothing

else.

• Cargo does not mean the money being charged for the

transport.

• Most cargo being transported can be referred to as

freight.

TYPES OF SHIPPING COMPANIES

• There are three types of shipping companies. They are:

• Liner operators - vessels that carry containers, thesesail on fixed dates and to predetermined ports.

• Charter operators - vessels that are utilised for a specificvoyage.

• Tanker and dry bulk operators - vessels that carry bulkcargo such as oil and grains

DIRECT SHIPMENT VS TRANSHIPMENT

Direct shipment

• A direct service from the load port of origin country to

the discharge port of destination.

• Direct shipping happens when a vessel ships the cargo

on one shipping service to its final destination,

DIRECT SHIPMENT VS TRANSHIPMENT

• Transshipment or transhipment means - Transfer of a shipment

from one carrier, or more commonly, from one vessel to another

whereas in transit.

• Transshipments are usually made :

• where there is no direct air, land, or sea link between the

consignor's and consignee's countries,

• where the intended port of entry is blocked.

Because transhipment exposes the shipment to a higher

probability of damage or loss, some purchase orders or letters

of credit specifically prohibit it.

TRANSHIPMENT

• Purposes of Transshipment :

• To achieve a lower transport cost;

• To hide the identity of the port or country of origin

and legally or illegally achieving new country-of-

origin status for the merchandise; or

• To circumventing the foreign trade policies of the

country-of-origin or the country of destination (for

purposely evading certain trade laws or regulations).

Draft (or draught)

• The depth of a ship while in the water.

• Measured as the vertical distance between the

waterline and the lowest edge of the keel.

• Indian ports have an average draft ranging from 8m to 12m.

• Bigger ships, that can carry larger quantities of cargo, cannot

call directly (visit the port) due to lack of adequate draft or

depth at the berths and channels.

• In comparison, the draft available at major ports ranges from

12m to 23m, which enables them to handle even new

generation big container vessels and tankers.

MOTHER VESSEL VS FEEDER VESSEL

• Literally speaking, a "mother vessel" (an "M.V.") is a

term in oceangoing transport -- basically a seagoing

ship that serves only major ports.

• The word M.V. is usually used in contrast to a "feeder

vessel".

MOTHER VESSEL VS FEEDER VESSEL

• Feeders or Feeder vessels are the vessels that pick up shipping

containers from the smaller ports that have less draft & have

vessel length restrictions.

• Feeder vessel is normally small in size compared to Mother

vessel, hence, they can easily navigate the smaller ports.

• Feeder vessels serves between smaller ports and major ports.

• In other words, feeder vessels feeds cargo to Mother vessel

from smaller ports for exports and from major main ports to

smaller ports for imports.

TYPES OF CARGO SHIPS

• The following the different types of cargo ships are

used in international trade:

• (https://www.slideshare.net/krunal111/unit-1-categories20of20-cargo)

Tankers

• These ships are

designed to carry liquid

cargos such as oil,

petroleum, certain types

of chemicals and other

types of viscous

cargoes (even wine).


Container ships

• Perhaps one of the

most common type of

merchant vessel you

will encounter is the

container ship which

has been specially

designed to carry

containers


Ro-Ro

• So called because they

are roll-on/roll-off ships

where cars and trucks

are driven directly into

the hold of this vessel

across a ramp usually

at the back or stern of

the ship.



General cargo ships

• These are ships that have holds for carrying general and break-

bulk (non-containerised) cargos and for this reason they may

also be referred to as break-bulk ships.

• These ships are often equipped with their own gantry cranes

and are capable of loading and offloading their cargos

themselves.

• They complement container ships by carrying cargo that won’t fit

a container, as well as cargos that are too small for a full

container load (referred to as less-than full container load or

LCL).

Bulk carriers

• As the names suggests,

these types of vessels

are designed to carry

bulky cargos, usually

grains (such as maize)

and ores (such as coal).


Reefer ships

• These are ships designed

to carry perishable cargos

that require refrigeration or

some form of temperature

control such as fruits, meat,

fish, vegetables, dairy

products and other

foodstuffs.


Chemical carriers

• Some chemicals need

to be transported in

specially vessels

specifically designed to

handle the chemical in

question (such as

natural gas).


Lift-on/lift-off or Lo-Lo

ships

• They have their own

gantry or crane on

board, these vessels

can load and discharge

their own cargoes.


TYPES OF CONTAINER

• Dry storage container. ...

• Flat rack container. ...

• Open top container. ...

• Tunnel container. ...

• Open side storage container. ...

• Double doors container. ...

• Refrigerated ISO containers. ...

• Insulated or thermal containers.

• The difference between them depends on the type of

goods that will be transported and their particular

characteristics to perform the loading and / or the

transportation.

The characteristics of the different containers:

• • Standard: It is a closed container y the most used for general

loads. Its opening is for front and real loading.

• • High cube: : It is a container similar to the standard, but a bit

longer in length.

• • Reefer: It is a refrigerated container.

• • Open top: It is a container with the top open through which

the goods are loaded.

• • Fixed flat rack: container with the sides opened.

• • Collapsible flat rack: It is a container like the fixed flat rack,

but collapsible.

• There are other containers, but for specific types of goods,

such as tanks, vented, for bulks, etc...

WAREHOUSE

• A warehouse is a commercial building for storage of

goods.

• Warehouses are used by manufacturers, importers,

exporters, wholesalers, transport businesses, customs, etc.

• They are usually large plain buildings in industrial areas of

cities, towns and villages.

TYPES OF WAREHOUSE

• Private Warehousing

• Public Warehousing

• Government Warehouses

• Bonded Warehouses

• Co-operative Warehouses

CFS

Container Freight Station (CFS)

• A dedicated port or container terminal area, usually

consisting of one or more sheds or warehouses and

uncovered storage areas where cargo is loaded

(“stuffed”) into or unloaded (“stripped”) from containers

and may be temporarily stored in the sheds or

warehouses.

ICD

• ICD means Inland Container Depot situated

at inland points away from sea ports. ICD is a term

used in India in the field of Imports and Export of sea

shipments. ICD is formed to help importers and

exporters to handle their shipments near their place of

location.

Bonded warehouse

• A warehouse authorized by customs authorities for

storage of goods on which payment of duties is

deferred until the goods are removed.

• The World Trade Organization (WTO) defines “Trade

Procedures” as “activities, practices and formalities

involved in collecting, presenting, communicating and

processing data required for the movement of goods in

international trade”.

• Several intermediaries are involved in international

transport operations, and in the next few slides we will

name them and explain their most important functions.

CARGO CLEARANCE SERVICES

• When small to large shipment is delivered from one

destination to another, be it national or international

ports, the handling of packages from its source location

to destination location is known as Cargo handling.

• The custom tasks and procedures involved throughout

the process are referred to as Cargo Clearance

Services.

SHIPPING LINES

• Regular shipping lines provide small and medium

shippers with regular service

• to different geographical destinations, stopovers

and fixed ports with preset prices and rates,

• that mainly engaged in international cargo

transportation or transportation of general cargos

and containers.

SHIPPING LINES

• The shipping line is responsible for the movement of

the cargo from port‐to‐port, organizes each vessel’s

rotation, and operates on strictly commercial terms.

• Some of the more commonly known shipping lines

include Maersk, Seaboard, Seafreight, and

Intermarine.

Carrier:

• The person or company responsible for the movement of

goods, by air, sea, road or rail, either by their own means

or outsourced.

• A carrier is a party who contracts with a shipper for the

transport of goods by sea.

NON‐VESSEL OPERATING COMMON CARRIERS

(NVOCC)

• A cargo consolidator in ocean trades who buys space from a

carrier and resells it to smaller shippers.

• The NVOCC issues bills of lading, publishes tariffs, and

otherwise conducts itself as an ocean common carrier, except

that it does not provide the actual ocean or intermodal service.

• They performs a similar service as a shipping line, such as

performing consolidation and containerization, etc.

• The major difference is that they do not own vessels.

Shipping agent :

• The representative of the ship-owner of the vessel at

port, and who makes all necessary arrangements with

local authorities thereby helping both the ship and the

crew and facilitates supplies as may be required.

• (Here Supplies includes : Fresh water including Drinking water, food stuffs,

fresh fruits & vegetables, groceries and other sundries, fuel, etc.)

FREIGHT FORWARDER

• A freight forwarder is an agent for the exporter in

moving cargo to an overseas destination.

• Traditionally freight forwarders dealing with cargo

bookings and contract with a Carrier to move the

goods.

FREIGHT FORWARDER

• They have the expertise in ocean freight and air freight

as well as all of the paperwork involved.

• These agents are familiar with the import rules and

regulations of foreign countries, the methods of

shipping, and the documents related to foreign trade.

• Export freight forwarders are licensed by the

International Air Transport Association to handle air

freight and the Federal Maritime Commission to handle

ocean freight.

FREIGHT FORWARDER

• Freight forwarders can help exporters prepare price quotes by

advising on :

• freight costs,

• port charges,

• consular fees,

• costs of special documentation,

• insurance costs, and

• their handling fees.

• In short - The forwarder advises his client, on the most effective

and economical way to make the shipments entrusted to him.

FREIGHT FORWARDER

• Other services that forwarders may provide in relation

to international transportation of goods are those

logistic services such as storage, handling, packaging,

etc.

• The freight forwarders can reserve the necessary

space on a vessel, aircraft, train, or truck.

• They can even help arrange for warehouse space and

storage of products at destination.

FREIGHT FORWARDERS

• Once the cargo arrives at the port, freight forwarders

may make the necessary arrangements with customs

brokers to ensure that the goods comply with customs

export documentation regulations.

• In addition, they may have the goods delivered to the

carrier in time for loading.

• They may also prepare the bill of lading and any

special required documentation.

• After shipment, they forward all documents directly to

the Exporter /customer.

FREIGHT FORWARDERS

• Freight forwarders can also make arrangements with

customs brokers overseas to ensure that the goods

comply with customs export documentation regulations.

Longshoreman:

• Is the company or person in charge of loading and

unloading the ship as well as of any handling needed.

• Longshoreman is also referred as docker, port worker,

or dock worker.

Stevedore

• Individual or firm that employs longshoremen to load

and unload vessels.

Stevedoring charges

• Fees for loading and stowing or unloading a ship.

Consignee of goods:

• Person or legal entity designated by the sender to take

charge of the goods and deliver them to the recipient.

• The consignee may be the buyer of the goods, or a

party acting as import agent for the buyer.

The receiver

• is the party who takes receipt of the goods from the sea carrier

at the port or place of delivery.

• Some consignees will take direct delivery of goods from

carriers,

• but many consignees in the liner trades employ an agent such

as a freight forwarder to act as a “clearing agent” in the

customs and other formalities of importing the goods, and for

transportation of goods to their ultimate destination.

• When loss or damage to goods is discovered on discharge, it

is often the receiver who notifies the carrier.

The notify party

• (a term found in most bills of lading and sea waybills) is

the party who must be informed by the carrier of the

ship’s arrival, so that collection of the goods can be

arranged.

• The notify party may be the consignee or a receiver.

CUSTOMS CLEARANCE

• Customs business is limited to those activities involvingtransactions related :

• to the entry and admissibility of merchandise;

• its classification and valuation;

• the payment of duties, taxes, or other charges assessed or collected;

• or the refund, rebate, or drawback thereof.

CUSTOMS CLEARANCE

• The Customs clearance work involves :

• preparation and submission of documentations

required to facilitate export (or imports into the

country),

• representing client during customs examination,

assessment,

• payment of duty and co taking delivery of cargo from

customs after clearance along with documents.

Customs Agent / customs brokers :

• Normally this is the person authorized by the

Directorate General of Customs to process the

necessary paperwork, and settle the taxes on import

and export operations, before the governmental

authorities.

• A customs house agent (CHA)’s work can also be

handled by Forwarder.

CUSTOMS HOUSE AGENT

Customs House Agent

• Cargo Clearance is a very technical and highly

regulated activity (for obvious reasons).

• CHA act as agents of importers/exporters with the

objective of using their expertise in smooth clearance of

cargo at the customs - export and import.

CUSTOMS HOUSE AGENT

• Like the Forwarder, the CHA will recommend efficient

means for clearing goods through the red tape of

customs entry rules and regulations

CUSTOMS HOUSE AGENT

• Customs Agents prepare the document of ShippingBills.

• Preparing shipping bill involves Classification of cargounder specific classification that is a critical activity inthe entire process.

• CHA is also known as Customhouse Broker in US.

• (This PPT has been prepared for internal training purpose)

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