Reference Material for

SCM Pro

Module 5
Global Supply Chain Management
 Reference Material for SCM Pro

Disclaimer

The Contents presented here are for the sole purpose of reference for SCM
Pro Certification program by the CII Institute of Logistics subject to the­
condition that it shall not by way of trade or otherwise circulated in any
form or used without the Cll's prior consent.

All Monetary values used here are for illustration purpose only. These
values will vary according to Governing laws and Regulations.

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Table of Contents

GLOBAL SUPPLY CHAIN MANAGEMENT

1. Global Supply Chain Management - Definition .... 6
Motivating factors

2. EXIM Procedures/Policy ............................................. 10

1. Introduction
2. Details of Trade Act
3. Details of Policy
4. Export Promotion Scheme
5. Documentation
6. Customs Procedure for Export
7. Customs Procedure for Import

3. lncoterms ............................................................... 34
1. Definition
2. Scope of Incoterms
3. Responsibilities & Liabilities
4. Changing circumstances
5. List of lncoterms
6. Interpretation of lncoterms
7. Latest changes
8. Conclusion

4. Letter of Credit ....................................................... 43

1. Introduction
2. Modes of payment
3. Definition
4. Mode of Operation
5. Types of L/C
6. Conditions of Presentation
7. Scrutiny of L/C
8. Preparation / Submission of documents
9. Insurance policy as Corollary
10. Conclusion

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5. Packaging / LabelIing ............................................... 54

1. Introduction
2. Packaging
3. Labellings
4. Marking
5. Conclusion

6. Risk Management .................................................. 60

1. Introduction
2. Risks in payment
3. Risks in Foreign Exchange
4. Risks in Transportation
5. Types of Risks
6. Marine Insurance
7. Features of Policy
8. Risks not Covered
9. Claim Procedure
10. Conclusion

7. Introduction of Containers .................................... 69

1. Introduction
2. Definition
3. Containers by Size
[Link]
5. Types of Containers
6. Advantages
7. Disadvantages
8. Cargo Ships- Types and Classification
9. Overcoming Disadvantages
10. Shipping Line Strategies
11. Conclusion

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8. Multimodal Transportation.................................... 86
1. Introduction
2. Mode of Operation
3. Basis of MultiModal Transport
4. Advantages
5. Conclusion

9. Air Consolidation ................................................... 89

1. Introduction
2. Definition
3. Rate Structure
4. Participants
5. Documentation
6. Mode of Operation
7. Advantages
8. Conclusion

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1. GLOBAL SUPPLY CHAINS DEFINITION:

As Thomas Friedman of the New York Times wrote in his book,
Yes, The World is flat.

Business today is happening in a global environment. This environment

forces companies, regardless of location or primary market base, to con­
sider the rest of the world in their competitive strategy analysis. Firms can­
not isolate themselves from or ignore external factors such as economic
trends, competitive situations or technology innovation in other countries, if
some of their competitors are competing or are located in those countries.
Companies are going truly global with Supply-chain Management.

A company can design a product in the United States, manufacture in

India and entire globe is the market. Companies have changed the ways
in which they manage their operations and logistics activities. Companies
engaging global Supply chain will incur heavy costs towards their Supply
chains due to its length. In spite of the increasing costs in globalization,
following factors motivate companies to go global.

Motivating Factors:
a) Global Market Forces
There is tremendous growth potential in the foreign developing markets
which has resulted in intensified foreign competition in local markets
which forces the small and medium-sized companies to upgrade their
operations and even consider expanding internationally. There has also
been growth in foreign demand which necessitates the development of a
global network of manufacturing bases and markets.

b) Technological Forces
The diffusion of technological knowledge and global low-cost
manufacturing locations have motivated companies to go global. In
response to this diffusion of technological capability, multinational firms
need to improve their ability to tap multiple sources of technology located
in various countries. There has been technology sharing and inter-firm
collaborations. The well-known joint ventures in the auto industry
between US and Japanese firms (GM-Toyota, Chrysler-Mitsubishi, Ford-

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Mazda) followed a similar pattern. US firms needed to obtain first-hand

knowledge of Japanese production methods and accelerated product
development cycles, while the Japanese producers were seeking ways to
overcome US trade barriers and gain access to the vast American auto
market. As competitive priorities in global products markets shift more
towards product customization and fast new product development, firms
are realizing the importance of co-location of manufacturing and product
design facilities abroad. Understanding technological know-how was the
main motivation for establishing design centers in foreign countries for
many companies. Other industries such as pharmaceuticals and
consumer electronics also have taken this approach.

c) Global Cost Forces

New competitive priorities in manufacturing industries, that is product
and process conformance quality, delivery reliability and speed,
customization and responsiveness to customers, have forced companies
to reprioritize the cost factors that drive their global operations strategies.
The Total Quality Management (TQM) revolution brought with it a focus
on total quality costs, rather than just direct labour costs. Companies
realized that early activities such as product design and worker training
substantially impact production costs. They began to emphasize
prevention rather than inspection. In addition, they quantified the costs of
poor design, low input quality and poor workmanship by calculating
internal and external failure costs. All these realizations placed access to
skilled workers and quality suppliers high on the priority list for firms
competing on quality. Similarly, Just-in-time (JIT) manufacturing
methods, which companies widely adopted for the management of mass
production systems, emphasized the importance of frequent deliveries
by nearby suppliers. A number of high-technology industries have
experienced dramatic growth in the capital intensity of production
facilities. Such high costs drive firms to adopt an economies-of-scale
strategy that concentrates production in a single location, typically in a
country that has the required labour and supplier infrastructures. They
then achieve high-capacity utilization of the capital­ intensive facility by
aggressively pursuing the global market. Besides this the host
government subsidies also become an important consideration.

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d) Political and Macroeconomic Forces

Getting hit with unexpected or unreasonable currency devaluations in
the foreign countries in which they operate is a nightmare for global
operations managers. Managing exposure to changes in nominal and
real ex­ change rates is a task which the global operations manager
must master. If the economics are favorable, the firm may even go so far
as to establish a supplier in a foreign country where one does not yet
exist. For example, if the local currency is chronically undervalued, it is
to the firm's advantage to shift most of its sourcing to local vendors. In
any case, the firm may still want to source a limited amount of its inputs
from less favorable suppliers in other countries if it feels that
maintaining an ongoing relationship may help in the future when
strategies need to be reversed. The emer­gence of trading blocks in
Europe (Europe 1992), North America (NAFTA), and the Pacific Rim
has serious implications for the way firms structure or rationalize their
global manufacturing/sourcing networks. The trade protection
mechanisms which exist in the form of tariff and non-tariff barriers effect
the global operation strategy; but these are readily losing importance
in the new borderless trade regime. Yet, as global logistics
professionals know only too well, it is still a long way from one domestic
location to overseas location, especially when the product being
moved will have to go through numerous steps from manufacturing to
delivery, involving multiple governments, trade compliances and third
party service providers. On this context, economics of Global Supply
Chains are considered by total Landed Cost Evaluation. By and large,
following factors influence Total Landed Costs:

• Product Purchase Price

• Transportation Cost
• Warehousing Costs
• Expedited Transportation Costs
• Increased Safety Stock
• Shrinkage of Inventory in Transit & Warehouse
• Insurance on the Inventory
• Customs Costs

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• Customs Processing
• Carrying Costs on the Inventory
• Carrying Costs on Increased Accounts Receivables
• Import/Export Compliance
• Taxes - Income & Property
• Supplier Payment Processing
• Variability and market analysis

Many intermediaries are involved in an Export/ Import process as:

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2. EXIM PROCEDURES/ POLICY

1. INTRODUCTION:
Every country has its own Export/ Import Policy which is framed by the
Government of that country. The Policy is based on the country's needs,
requirements, its resources and strengths/weaknesses.

India's Exim Policy is announced every five years and runs concurrent to
the Five Year Plan. The aims and objectives of the Policy are implemented
during the Plan period. The Policy is announced every year by the Office of
the Director General of Foreign Trade, which functions under the Ministry of
Commerce.

2. DETAILS OF TRADE ACTS:

The very first Exim Policy of Independent India was framed under the Im­
port-Export (Control) Act [Link] this Act, the emphasis was on Trade
Control, exercised by the Government through several bureaucratic meth­
ods, as below:

a. Licensing Systems- many commodities of import and export were

brought under Licensing System, making it mandatory to obtain
Export/Import Licence prior to trading.
b. Regulatory Bodies- the Government exercised control over
export/import formalities, procedures and documents through
Government bodies with vast regulatory and restrictive powers,
such as
i. Chief Controller of Imports and Exports- for issuing licences
and certificates.
ii. The Reserve Bank of India- with stringent laws on
movement of foreign exchange through the Act known
as FERA.
iii. Central Excise- which had provision to impose heavy Excise
duty on locally manufactured goods and imports.
iv. Customs- which was empowered to levy heavy duties
and penalties on imports.

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On the whole,the Government felt that the best way to regulate trade is to
impose controls and restrictions.

It was in the early 1990s that the Government realized that this mode of
controlled trade was not conducive for the growth of the country's econ­
omy. Hence in 1992, a more liberalised Act was passed known as Foreign
Trade (Development and Regulation) Act 1992.

Under this Act the emphasis was shifted from Control to Growth .The Policy
was so framed as to allow growth of the economy through globalization
and liberalisation .The following were the aims of the Act:

• To produce quality products at competitive prices - to make

Indian products acceptable in the global market which is full of
competition.
• To create a vibrant, growing economy with global orientation -
the Indian economy was so far insular, protected by Government
policies on import/export. The new Act opened the economy to
the outside world and exposed Indian products to foreign
competition so that the quality and prices of Indian products
would become competitive.
• To enhance technological strength and efficiency in agriculture,
industry and services - it was realized that only with advanced
technology and efficient, well-trained manpower, India could
produce goods and services that the rest of the world wanted.

Important Acts, Rules & Regulations

• Customs Act 1962
• Customs Tariff Act, 1975
• Central Excise Rules, 1944
• Customs (Attachment of property of Defaulters for recovery of
Government dues) Rules, 1995
• Customs (Import of Goods at Concessional Rate of Duty for Man
ufacture of Excisable Goods) Rules, 1996
• Customs and Central Excise duties Drawback Rules, 1995

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• Customs House Agents Licensing Regulations, 1984

• Customs valuation (Determination of Prices of Imported Goods)
rules, 1988
• Export and Import Policy Foreign Exchange Management (Export
of goods and services) Regulations 2000
• Foreign Exchange Management Act, 1999
• Foreign Exchange Regulation Act, 1973
• Project Import Regulations, 1986
• Foreign Trade (Development and Regulation Act), 1992
• The Multimodal Transportation of Goods Act, 1993
• The Foreign Trade Policy 2015-2020

3. DETAILS OF POLICY:
The Foreign trade Policy 2015-2020 is published by the Ministry of
Commerce (DGFT) in four Chapters :

a. Chapter 1. The Foreign Trade Policy 2015-2020. This is a

current broad frame-work and rules relating to exports and
imports.
b. Chapter 2:The Handbook of Procedures -Vol 1. This gives in
detail the procedures to be followed for exports and imports. For
example, if one is applying for Import/Export Code Number, the
handbook gives details of how to apply, formats of application
etc.
c. Chapter 3 : Exports from India Schemes. This gives details of
each export schemes, Merchandise exports from India Scheme
(MEIS), Service exports from India Scheme(SEIS) and
common provisions for Exports from India Schemes.
d. Chapter 4 :The Hand book of procedures about Duty
Exemption / Remission Schemes

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4. EXPORT PROMOTION SCHEMES:

a. Export Promotion Policies in India
The government of India has liberalized the schemes for the export
oriented units and export processing zones, agriculture, horticulture,
poultry, fisheries and dairying have been included in the export
oriented units. Export promotion capital goods schemes (EPCGS)
has been started to permit the exporters to import capital goods on
concessional import duties. Under the EPCGS scheme, such
importers of capital goods have to export goods of 4 times values of
import within next five years. Establishment of the EXIM bank and
SEZs promoted the export from country.
Government of India has liberalized the schemes for export oriented
units and export processing Zones. Agriculture, Horticulture, poultry,
fisheries and dairies have been included in the export oriented units.
Export processing zones have been allowed to export through
trading and star trading houses and can have equipment on lease.
These units have been allowed cent percent participation in foreign
equities.
Export Promotion Schemes
Foreign Trade Policy 2015-20 and other schemes provide
promotional measures to boost India’s exports with the objective to
offset infrastructural inefficiencies and associated costs involved to
provide exporters a level playing field. Brief of these measures are
as under:
A. Exports from India Scheme
. Merchandise Exports from India Scheme (MEIS)
Under this scheme, exports of notified goods/ products to notified
markets as listed in Appendix 3B of Handbook of Procedures, are
granted freely transferable duty credit scrips on realized FOB value
of exports in free foreign exchange at specified rate (2-5%). Such
duty credit scrips can be used for payment of custom duties for
import of inputs or goods, payment of excise duty on domestic
procurement, payment of service tax and payment of custom duties

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in case of EO default.
Exports of notified goods of FOB value upto Rs 25, 000 per
consignment, through courier or foreign post office using e-
commerce shall be entitled for MEIS benefit.
ii. Service Exports from India Scheme (SEIS)
Service providers of notified services as per Appendix 3E are
eligible for freely transferable duty credit scrip @ 5% of net
foreign exchange earned.
B. Export Houses, trading houses and star trading houses:
To increase the marketable efficiency of exporters, the
government introduced the concept of export houses, trading
house and star trading houses. Those registered exporters who
have shown good performance over the past few years have
been given the status of export houses and trading houses.
Since 1994n a new category of golden super star trading house
was added by the government which has the highest average
annual foreign exchange earnings.
C. Duty Exemption & Remission Schemes
These schemes enable duty free import of inputs for export
production with export obligation. This scheme consists of:-
i. Advance Authorization Scheme
Under this scheme, duty free import of inputs are allowed, that
are physically incorporated in the export product (after making
normal allowance for wastage) with minimum 15% value
addition. Advance Authorization (AA) is issued for inputs in
relation to resultant products as per SION or on the basis of self
declaration, as per procedures of FTP. AA normally have a
validity period of 12 months for the purpose of making
imports and a period of 18 months for fulfillment of Export
Obligation (EO) from the date of issue. AA is issued either to a
manufacturer exporter or merchant exporter tied to a supporting
manufacturer(s).
ii. Advance Authorization for annual requirement
Exporters having past export performance (in at least preceding
two financial years) shall be entitled for Advance Authorization

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for Annual requirement. This shall only be issued for items
having SION.
iii. Duty Free Import Authorization (DFIA) Scheme
DFIA is issued to allow duty free import of inputs, with a
minimum value addition requirement of 20%. DFIA shall be
exempted only from the payment of basic customs duty. DFIA
shall be issued on post export basis for products for which SION
has been notified. Separate schemes exist for gems and
jewellery sector for which FTP may be referred.
iv. Duty Drawback of Customs/Central Excise
Duties/Service Tax
The scheme is administered by Department of Revenue. Under
this scheme products made out of duty paid inputs are first
exported and thereafter refund of duty is claimed in two ways:

i) All Industry Rates : As per Schedule

ii) Brand Rate : As per application on the basis of
data/documents
v. Rebate of Service tax through all industry rates
Refund of service tax paid on specified output services used for
export of goods is available at specified all industry rates.
D. Export promotion Capital Goods (EPCG) Scheme
I . Zero duty EPCG scheme
Under this scheme import of capital goods at zero custom duty
is allowed for producing quality goods and services to enhance
India’s export competitiveness. Import under EPCG shall be
subject to export obligation equivalent to six times of duty saved
in six years. Scheme also allows indigenous sourcing of capital
goods with 25% less export obligation.

i. Post Export EPCG Duty Credit Scrip Scheme

A Post Export EPCG Duty Credit Scrip Scheme shall be
available for exporters who intend to import capital goods on full
payment of applicable duty in cash.

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E. EOU/EHTP/STP & BTP Schemes
Units undertaking to export their entire production of goods and
services may be set up under this scheme for import/
procurement domestically without payment of duties. For details
of the scheme and benefits available therein FTP may be
required.
F. Other Schemes
i. Towns of Export Excellence (TEE)
Selected towns producing goods of Rs. 750 crores or more are
notified as TEE on potential for growth in exports and provide
financial assistance under MAI Scheme to recognized
Associations.
ii. Rebate of duty on “export goods” and “material” used in
manufacture of such goods
Rebate of duty paid on excisable goods exported or duty paid
on the material used in manufacture of such export goods may
be claimed under Rule of 18 of Central Excise Rules, 2002.
[Link] of goods under Bond i.e. without payment of
excise duty
Rule 19 of Central Excise Rules 2002 provides clearance of
excisable goods for exports without payment of central excise
duty from the approved factory, warehouse and other premises.

iv. Market Access Initiative (MAI) Scheme

Under the Scheme, financial assistance is provided for export
promotion activities on focus country, focus product basis to
EPCs, Industry & Trade Associations, etc. The activities are
like market studies/surveys, setting up showroom/warehouse,
participation in international trade fairs, publicity campaigns,
brand promotion, reimbursement of registration charges for
pharmaceuticals, testing charges for engineering products
abroad, etc. Details of the Scheme is available
at [Link]

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v. Marketing Development Assistance (MDA) Scheme

Financial assistance is available for exporters having an annual
export turnover upto Rs. 30 crores for trade fairs, buyer seller
meets organized by EPC’s/ Trade promotion organizations.
MDA guidelines available at [Link]
[Link] Holder Scheme
Upon achieving prescribed export performance, status
recognition as one star Export House, two Star Export House,
three star export house, four star export house and five star
export house is accorded to the eligible applicants as per their
export performance. Such Status Holders are eligible for
various non-fiscal privileges as prescribed in the Foreign Trade
Policy.
In addition to the above schemes, facilities like 24X7 customs
clearance, single window in customs, self assessment of
customs duty, prior filing facility of shipping bills etc are
available to facilitate exports.

DOCUMENTATION :
For the logistics manager whose experience is limited to domestic move­
ments, both the documentation and the insurance requirements of in­
ternational movements will be an additional challenge. In global Supply
chains, documentation flows are as much a part of the main logistical flow
as flows of product.

Documents are important for the following reasons:

b. as an evidence of shipment and title of goods;

c. for obtaining payment;
d. to provide a specific and complete description of the goods;
e. for assessment of correct Duty for clearance purpose;
f. for obtaining Export Licences;

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g. for obtaining export finance;

h. for completing Pre-shipment Inspection;
i. for claiming export benefits like Duty Drawback, etc.
Documents involved in Global Supply chains can be Com
mercial or Regulatory Documents.

• Commercial set of documents are mainly used for Commerce.

In other words these are documents normally exchanged
between buyer and seller.
• Regulatory documents are required in dealing with various
regulatory authorities such as customs, RBI, Excise, Licensing
authorities Inspection and other Export Promotion bodies for
availing incentives etc.

Again, Commercial documents could be either principal documents or

Auxiliary documents as listed below.

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Commercial Documents
I
Principal Auxiliary
1. Commercial Invoice 1. Proforma Invoice
2. Inspection Certificate 2. Intimation for Inspection
3. Insurance Certificate 3. Declaration for Insurance
4. Certificate of Origin 4. Application for Certificate of
Origin
5. Bill of Lading 5. Mate receipt
6. Shipment Advice 6. Shipment Order
7. Packing List 7. Shipping Instructions
8. Bill of Exchange 8. Letter to Bank for negotiation
of documents

A Commercial Invoice is the basic statement of the seller to the buyer

for payment of the goods shipped. It must conform to any Letter of Credit
requirements, foreign government requirements, and export control re­
quirements regarding destination statements.

It is used as one of the primary documents in the collection process, and

is the main document used by foreign Customs for control , valuation,
and duty determination. The Commercial Invoice should contain a full
descrip­ tion of the goods, pricing, terms of sale, payment and delivery,
bills of lad­ ing numbers, method of shipment, and ship date, letter of
Credit num­ bers, import license numbers, shipper and consignee names,
and shipping marks and numbers. Commercial invoices are usually
signed by the ex­ porter.

CONSULAR INVOICE - Prepared from the information on the commercial

Invoice by the buyer's consulate or embassy in the shipper's country, these
documents are usually stamped with an official seal.

Consular Invoices are required for control of certain commodities and to

ensure valuation control in specific countries.

PRO FORMA INVOICE - The Pro Forma is used primarily to document to

the buyer, in advance, the cost and terms of sale of a proposed export. It is

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used by the foreign buyer as a quotation from the exporter, and also to as­
sist in applying for a Letter of Credit from his bank. The Pro Forma Invoice
serves as the basis for the subsequent Commercial Invoice.

CUSTOMS INVOICE - Certain countries require special invoices containing

specific information for the Customs clearance and valuation of imported
shipments. These documents contain most of the elements of the Com­
mercial Invoice, and are usually in the language of the importing country.
The Canadian Customs Invoice is the most popular of this type.

INSPECTION CERTIFICATE - To protect themselves, many foreign firms re­

quest a Certificate of Inspection. This may be an affidavit by the shipper, or
by an independent inspection firm hired by the buyer, certifying the qual­
ity, quantity, and conformity of the goods to the Purchase Order.

INSURANCE CERTIFICATE - An insurance certificate gives evidence of risk

coverage for goods shipped. It is sent to the bank with other collection
documents, and normally is used only when required by Letter of Credit
or Documentary Collection procedures. There are many types of insurance
policies available. Coverage requested is usually 110% of the value of the
cargo shipped.

CERTIFICATE OF ORIGIN (COO) : It is a certificate indicating the fact that

the goods which have been exported have originated or manufactured in
a particular country. So it is a sort of declaration testifying the origin of
export.

It is normally required by an importer to clear goods from the customs.

For political and social reasons, it is insisted by Customs Authority of im­

porting country before goods are allowed to enter in the country.

It helps the importer to take an advantage in duty concession, if any. For

e.g. goods imported under Free Trade Agreement.

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BILL OF LADING : is the transport document associated with Sea freight. It

is issued by the Shipping Company or its agent or master of a ship ac­
knowledging that specified goods have been received on board as cargo for
conveyance to a named place for delivery to the consignee. It is a docu­ ment
of title to the goods and, as such, is freely transferable by endorse­ ment
and delivery. Bill of Lading serves three purposes as:

• Receipt given by Shipping Company as goods described on

document has been received by carrier.
• Evidence of the contract of carriage by sea between the shipping
company and the shipper (exporter or importer).
• Document of title to the goods and can be used to obtain payment
or a written promise before the merchandise is released to the
importer.
Bill of Lading, is generally made out in the sets of two or three originals
duly signed by the master of the ship or the agent of the steamship
company. All the originals are equally valid for taking the delivery of the
goods. Once one original is utilized the other originals become null and
void.

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SHIPMENT ADVICE: Depending upon the terms of sale and immediately

after shipping the goods, the exporter has to inform the foreign buyer of
the fact of shipment .This is usually done in the form of a 'shipment advice'
giving invoice number; description of goods, quantity, number of pack­
ages, marks and numbers, name of the carrier, bill of lading/airway bill
number and date, expected time of arrival of the carrier at the port of des­
tination, etc. This enables the foreign buyer to arrange insurance coverage
in respect of goods in transit and also for making advance arrangements
for the clearance of the goods at the port of destination.

PACKING LIST describes all items in the box, crate, pallet, or container,
plus the type, dimensions, and weight of the container. It is used to de­
termine total shipping weight and volume (cubes) by Customs officials to
check cargo, and by the buyer to inventory merchandise received. Prices
and item values are usually omitted from the packing list. Shipping marks,
reference numbers, and carton numbers are also important additions to
the packing list.

Bill Of Exchange: [BE] is a document drawn and is an order by the export­

er to the buyer to pay the money in specified exchange. It is also known
as a draft. A bill of exchange is accompanied by commercial documents
which are presented by a bank and released to the buyer either against
payment (at sight) or against a signature for payment on a specified future
date. It is an unconditional written order.

When a BE is drawn on foreign firm it is termed as a foreign draft or bill of

exchange.

It is prepared either in an international currency or Indian rupees depend­

ing on the terms of the contract. Accordingly, the bill is known by the name
of currency in which it is drawn.

e.g. a bill drawn in US dollars is known as a “Dollar Bill" and when

drawn in Rupees, it is termed as “Rupees Bill”.

The most common versions of a bill of exchange are:

A) Sight Draft - When the drawer (exporter) expects the drawee (im-

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porter) to make payment immediately upon the draft being pre­

sented to him.

Unless and until the Draft is received, the Negotiating/ Collecting

Bank does not hand over the Shipping documents and the buyer
cannot take delivery of goods.

B) Usance Draft-When draft is drawn for payment at a date later than

the date of presentation. It may be a fixed future (specific) date or
determinable date according to the period of credit viz. 30 days, 60
days or 90 days etc. It is presented to the drawee (importer) who
will retire the documents by accepting the draft by putting his sig­
nature and date. When the payment is received in advance no Bill
of Exchange is required to be drawn.

Parties to a bill of exchange are :

Drawer - who makes the order for making payment.

Drawee - whom the order to pay is made.

Payee - whom the payment is to be made.

Features of a Bill of Exchange:

a. A bill must be in writing, duly signed by its drawer, accepted by its
drawee and properly stamped.
b. It must contain an order to pay. Words like 'please pay US $ 5,000
on demand and oblige' are not used.
c. The order must be unconditional.
d. The sum payable mentioned must be certain or capable of being
made certain.
e. The parties to a bill must be certain.
SHIPPING INSTRUCTIONS : These instructions, often prepared along with
a Shipper's Export Declaration, are the exporter's directions to the freight
forwarder on how to handle the exporter's shipment. The information pre­
pared on an Shipping Instruction includes a description of the goods and

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containers, the ultimate consignee, shipping method desired, insurance

requirements, and special instructions pertaining to the shipment.

MATE RECEIPT : Mate's receipt is a receipt issued by the Master or Mate

of the vessel stating that certain goods have been received on board his
vessel.
It is prima-facie evidence that the goods are loaded in the vessel.

It contains:

• the name of shipping line and vessel,

• port of loading, port of discharge and place of delivery,
• marks and numbers,
• number and kind of packages, gross weight,
• description of goods,
• container status/seal number,
• shipping bill number and date and
• condition of cargo at the time of its receipt on board the vessel.

REGULATORY DOCUMENTS :
SHIPPING BILL: Shipping Bill is a document required to seek permission
of customs to export goods by Sea/Air. It is prepared by the exporter and
submitted to the Customs.

The exporter of any goods has to file a "SHIPPING BILL" as an entry for the
purpose of export by air or sea and a "BILL OF EXPORT" in respect of export
by land.

Cargo will be allowed to be carted to Dock/Port sheds only after stamping

and passing of the shipping bill by customs authorities.

The exporter has to sign a declaration in the Shipping Bill regarding the
genuineness of its contents.

Different types of Shipping Bill are:

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FREE SHIPPING BILL: Used for export of goods which neither attract any
Export duty/cess nor entitled to any Duty Drawback

DUTIABLE SHIPPING BILL: Used when export goods are subject to Export
Duty/Cess. Duty is charged either on quantity basis (Fixed amount per kg.
or per Metric tonne) or on certain percentage of assessable value.

DRAWBACK SHIPPING BILL: Used when Duty Drawback is to be claimed.

SHIPPING BILL FOR SHIPMENT EX-BOND: Used when the goods are to be
exported which have been imported earlier and kept in bond prior to re­
export.

DEPB SHIPPING BILL: When DEPB benefit is to be claimed.

DEEC SHIPPING BILL: This shipping bill is used for export of goods under
Advance Authorization (Duty exemption scheme).

DEEC CUM DRAWBACK SHIPPING BILL: This shipping bill is used for export
of goods where both the schemes Duty Exemption as well as Drawback
are to be taken into account.

ARE : ARE stands for "Application for Removal of Excisable" goods for ex­
ports by Air/Sea/ Post/Land. Goods which are sold overseas are exempted
from payment of excise duty or entitled for Rebate of Excise Duty, if excise
paid goods are exported. Under both these circumstances, the document
to be used is ARE.

When goods are removed without payment of duty for the purpose of
export, they will get covered under the provisions of Rule 19 of the Central
Excise Rules. When excise paid goods are exported and rebate of Excise
Duty is to be claimed, they will get covered under Rule 18 of Central Excise
Rules.

ARE is prepared before clearance of goods from the factory gate.

ARE will specify whether goods are to be exported under Rule 19 or under
Rule 18.

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The three types of ARE are:

a. ARE 1: is used for physical export of goods.
b. ARE 2: is used when goods are removed for manufacture and
packing of the goods is to be exported.
c. ARE 3: is used when goods are supplied as deemed exports.

BILL OF ENTRY :

• is a statement of the nature and value of goods to be imported

or exported
• prepared by the shipper and presented to a custom house
• In case of export, it is termed as Shipping Bill
• For goods cleared through the EDI system
• no formal Bill of Entry is filed as it is generated in the computer
system
• the importer is required to file a cargo declaration for processing
of the entry for customs clearance.

DECLARATION FORM :
As per the exchange regulations, exporters, wishing to ship goods abroad,
are required to submit Export Declaration Forms to the Customs authori­
ties (whenever the value of the shipment exceeds US $ 25,000) before any
export of goods from India is made.

It is to be filed by exporter stating that export proceeds would be realized

within 180 days for non-status holder exporters and 360 days for status
holder exporters.

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CUSTOM CLEARANCE PROCEDURE

Export:

Customs Procedure for Export.

The following procedures to be followed for exports from India
1. Registration
2. Processing of Shipping Bill
3. Quota Allocation
4. Arrival of Goods at Docks
5. System Appraisal of Shipping Bills
6. Customs Examination of Export Cargo
7. Stuffing / Loading of Goods in Containers
8. Drawal of Samples
9. Amendments
10. Export of Goods under Claim for Drawback
11. Generation of Shipping Bills
1. Registration
Any exporter who wants to export his good need to obtain PAN based
Business Identification Number (BIN) from the Directorate General of
Foreign Trade prior to filing of shipping bill for clearance of export
goods. The exporters must also register themselves to the authorised
foreign exchange dealer code and open a current account in the
designated bank for credit of any drawback incentive.
Registration in the case of export under export promotion schemes:
All the exporters intending to export under the export promotion
scheme need to get their licences / DEEC book etc.
[Link] of Shipping Bill - Non-EDI:
In case of Non-EDI, the shipping bills or bills of export are required to
be filled in the format as prescribed in the Shipping Bill and Bill of
Export (Form) regulations, 1991. An exporter need to apply different
forms of shipping bill/ bill of export for export of duty free goods, export
of dutiable goods and export under drawback etc.
Processing of Shipping Bill - EDI:
Under EDI System, declarations in prescribed format are to be filed
through the Service Centers of Customs. A checklist is generated for

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verification of data by the exporter/CHA. After verification, the data is
submitted to the System by the Service Center operator and the
System generates a Shipping Bill Number, which is endorsed on the
printed checklist and returned to the exporter/CHA. For export items
which are subject to export cess, the TR-6 challans for cess is printed
and given by the Service Center to the exporter/CHA immediately after
submission of shipping bill. The cess can be paid on the strength of the
challan at the designated bank. No copy of shipping bill is made
available to exporter/CHA at this stage.
3. Quota Allocation
The quota allocation label is required to be pasted on the export
invoice. The allocation number of AEPC (Apparel Export Promotion
Council) is to be entered in the system at the time of shipping bill entry.
The quota certification of export invoice needs to be submitted to
Customs along-with other original documents at the time of
examination of the export cargo. For determining the validity date of the
quota, the relevant date needs to be the date on which the full
consignment is presented to the Customs for examination and duly
recorded in the Computer System.
4. Arrival of Goods at Docks:
On the basis of examination and inspection goods are allowed enter
into the Dock. At this stage the port authorities check the quantity of the
goods with the documents.
5. System Appraisal of Shipping Bills:
In most of the cases, a Shipping Bill is processed by the system on the
basis of declarations made by the exporters without any human
intervention. Sometimes the Shipping Bill is also processed on screen
by the Customs Officer.
6. Customs Examination of Export Cargo:
Customs Officer may verify the quantity of the goods actually received
and enter into the system and thereafter mark the Electronic Shipping
Bill and also hand over all original documents to the Dock Appraiser of
the Dock who many assign a Customs Officer for the examination and
intimate the officers’ name and the packages to be examined, if any, on
the check list and return it to the exporter or his agent.
The Customs Officer may inspect/examine the shipment along with the
Dock Appraiser. The Customs Officer enters the examination report in

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the system. He then marks the Electronic Bill along with all original
documents and check list to the Dock Appraiser. If the Dock Appraiser
is satisfied that the particulars entered in the system conform to the
description given in the original documents and as seen in the physical
examination, he may proceed to allow "let export" for the shipment and
inform the exporter or his agent.
7. Stuffing / Loading of Goods in Containers
The exporter or export agent hand over the exporter’s copy of the
shipping bill signed by the Appraiser “Let Export" to the steamer agent.
The agent then approaches the proper officer for allowing the
shipment. The Customs Preventive Officer supervising the loading of
container and general cargo in to the vessel may give "Shipped on
Board" approval on the exporter’s copy of the shipping bill.
[Link] of Samples:
Where the Appraiser Dock (export) orders for samples to be drawn and
tested, the Customs Officer may proceed to draw two samples from the
consignment and enter the particulars thereof along with details of the
testing agency in the ICES/E system. There is no separate register for
recording dates of samples drawn. Three copies of the test memo are
prepared by the Customs Officer and are signed by the Customs
Officer and Appraising Officer on behalf of Customs and the exporter or
his agent. The disposal of the three copies of the test memo is as
follows:-
Original – to be sent along with the sample to the test agency.
Duplicate – Customs copy to be retained with the 2nd sample.
Triplicate – Exporter’s copy.
The Assistant Commissioner/Deputy Commissioner if he considers
necessary, may also order for sample to be drawn for purpose other
than testing such as visual inspection and verification of description,
market value inquiry, etc.

9. Amendments:
Any correction/amendments in the check list generated after filing of
declaration can be made at the service center, if the documents have
not yet been submitted in the system and the shipping bill number has
not been generated. In situations, where corrections are required to be
made after the generation of the shipping bill number or after the

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goods have been brought into the Export Dock, amendments is carried
out in the following manners.
The goods have not yet been allowed "let export" amendments may be
permitted by the Assistant Commissioner (Exports).
Where the "Let Export" order has already been given, amendments
may be permitted only by the Additional/Joint Commissioner, Custom
House, in charge of export section.
In both the cases, after the permission for amendments has been
granted, the Assistant Commissioner / Deputy Commissioner (Export)
may approve the amendments on the system on behalf of the
Additional /Joint Commissioner. Where the print out of the Shipping Bill
has already been generated, the exporter may first surrender all copies
of the shipping bill to the Dock Appraiser for cancellation before
amendment is approved on the system.
[Link] of Goods under Claim for Drawback:
After actual export of the goods, the Drawback claim is processed
through EDI system by the officers of Drawback Branch on first come
first served basis without feeling any separate form.
[Link] of Shipping Bills:
The Shipping Bill is generated by the system in two copies- one as
Custom copy and one as exporter copy. Both the copies are then
signed by the Custom officer and the Custom House Agent.

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3. INCOTERMS
1. DEFINITION:
INCOTERMS is a short form for International Commercial Terms. They are a
series of international sales terms published by International Chamber of
Commerce (ICC) and widely used in commercial transactions in interna­
tional trade.

Besides they are also accepted by governments, legal authorities and prac­
titioners for the interpretation of the terms in international trade.

2. SCOPE OF INCOTERMS:
The scope of INCOTERMS covers matters relating to the rights and obliga­
tions of the parties to a Sale Agreement. The parties to a sale are Seller and
Buyer. In international trade, they are known as Exporter and Importer, or
Consignor and Consignee.

The terms are therefore used to divide all transaction costs, responsibili­
ties between the Seller and Buyer. At the same time, these terms reflect
needs of state-of-the art transportation practices. The terms are subject to
effects of changes in mode of transport, means of transport, equipments
and technology changes, evolving and ever-changing transport and ware­
housing practices.

The INCOTERMS correspond to the UN Convention on contracts for inter­

national sale of goods. lncoterms therefore have acceptance and recogni­
tion of the UN ,Governments, legal institutions, carriers, all types of logistic
service providers and parties to sale agreements. Thus the terms are uni­
versally recognized as legal terms.

3. RESPONSIBILITIES AND LIABILITIES:

As described above, the relationship between Seller and Buyer is defined
with regard to responsibilities and liabilities on either side with reference
to:

a. The cost of the goods.

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b. ost of packing, labeling, marking, warehousing, pick up etc at

different stages.
c. Customs clearance costs and duties at origin.
d. Freight charges from origin to destination.
e. Insurance Charges
f. Customs Clearance at destination and cost.
g. Door-delivery at importer's premises.
These costs and functions could lead to a lot of misinterpretation, mis­
understanding and neglect and ultimately lead to losses and litigation
between the Seller and the Buyer. The situation is even more aggrevated
given the fact that in international trade, the Seller and the Buyer belong
to two different countries, cultures, languages, social, legal and political
systems. Hence the chances of misinterpretation and misunderstanding
are more. To remove the possibilities, lncoterms are necessary, which in­
terpret legal responsibilities in a language that is understood by people
all over the world in the same way. Hence, the imperative need to have
INCOTERMS.

4. CHANGING CIRCUMSTANCES:
The INCOTERMS were first published in 1935, they underwent changes in
interpretation in 1953, 1967, 1990 and 2000. The changes in lncoterms
were necessitated due to fast changing patterns and practices in transpor­
tation. The following factors were responsible for these changes:

a) Introduction of Sea Containers:

The advent of containers in sea transport brought about a revolu­

tion in ocean mode of transport. The important developments that
came about as a result of containers are three-fold:

i. Door-to-door transport was made possible, as containers could

be moved easily by road and rail to exporters' and importers'
factory for loading. This was not possible earlier as cargo had
to be necessarily brought to ports for loading on ships. This
changed the point of loading or stuffing thereby affecting

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the responsibilities and liabilities of the Carrier, exporter and

importer.
ii. Multi-modal transport was made possible with the entry of
containers .The containers are so designed and built as to enable
them to be carried by road, rail and ship. The entire transport
by various modes became possible under a single Document
of Carriage, making multimodal transport a reality and a viable
mode of transport.
iii. Since containers could be carried anywhere, even inland points
where there are no sea ports, it gave rise to creation of Inland
Container Depots(ICD) and Container Freight Stations (CFS).
These are cargo processing hubs/centres located away from sea
ports. Exports and imports brought to these cargo centres could
be customs cleared, warehoused, stuffed into containers and in
turn moved from there to sea ports for export or to importers'
premises thus making possible creation of hubs close to and
immediately accessible to export/import centres in inland areas
of the country.

b) Introduction of EDI (Electronic Data Interchange):

With the invention and wide-spread use of computers and telex,

e-mail and fax, speed at which information could be transferred to
any point in the globe became phenomenal. Transfer of informa­
tion is the backbone of logistics. As nervous system to the human
body, so is transfer of information to logistics. Information transfer,
vertically, horizontally and criss-cross is necessary to have a live lo­
gistics industry. This had an impact on INCOTERMS since informa­
tion on cargo at any given time could be obtained at the click of a
button .This changed the cost factors between the Seller and Buyer
and therefore the responsibilities/liabilities of both changed.

c) Introduction of Air Cargo:

The movement of cargo by planes phenominally increased the

speed and decreased the time taken to transport cargo from one
point to another. With the invention of wide-bodied, high- speed

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planes and exclusive cargo carriers, the time taken for transport was
drastically reduced and volume of cargo carried by air increased,
thus making possible air cargo as a commercial venture. Cargo
could now be carried over long distances in a matter of hours or 2 or
3 days. This again affected the interpretation of lncoterms. The
responsibilities and liabilities shifted in matter of hours from Seller to
Buyer. Hence the lncoterms had to be re-interpreted to accom­
modate this speed of carriage.

5. LIST OF INCOTERMS:
Group E ExW Ex Works

Group F FCA Free Carrier

FAS Free Alongside Ship

FOB Free on BOARD

Group C CFR Cost & Freight

CIF Cost Insurance & Freight

CPT Carriage paid to

CIP Carriage & Insurance paid to

Group D DAF Delivered at Frontier

DES Delivered ex ship

DEQ Delivered at Quay

DDU Delivered Duty Unpaid

DDP Delivered Duty Paid

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6. INTERPRETATION OF INCOTERMS:
a) 'E'TERMS

Ex W-Ex-Works:

Under this term, the Seller makes the goods available, packed and ready
for carriage, at his premises. All costs from that point and liabilities are to
be borne by the Buyer.

b)'F'TERMS

FCA- Free Carrier:

The Seller hands over the goods, cleared for export, into the custody of the
first carrier( named by the Buyer) at the named place. This term is suitable
for carriage by air, road, rail and containerised and multimodal transport.
From this, point the Buyer bears all costs and liabilities up to his factory in
his country.

FAS-Free Alongside Ship:

The Seller undertakes to place the goods cleared for export, alongside
the ship at the harbor. It is suitable for maritime transport only. From that
point, the Buyer bears the costs and liabilities till the goods reach his fac­
tory in his country.

FOB-Free on Board:

Having cleared the goods for export, the seller must arrange to load the
goods on board the ship nominated by the Buyer. The costs and risks up
to the board of the ship are borne by the Seller. After that all costs and li­
abilities are to the account of the Buyer.

c) 'C'TERMS:

CFR- Cost & Freight:

The Seller pays all the pre-shipment costs like pick-up, customs-clearance,
port charges etc. and also the freight charges up to destination port. The
Buyer bears the costs after that point up to his factory in his country. How-

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ever, the risk is transferred to the Buyer the moment the goods are placed
on board the ship. This term is suitable for maritime transport only.

CIF- Cost, Insurance & Freight:

It is the same as CFR, but in addition, the Seller must pay for insurance
cover. This again applies to maritime transport only.

CPT- Carriage Paid To:

It is an equivalent of CFR but suitable for general, containerised/multi­

modal transport. The Seller pays all pre-carriage costs and freight up to
destination point, but risk alone passes to the Buyer once the goods are
handed over to the first carrier.

(IP-Carriage & Insurance Paid To:

It is CIF equivalent of general containerized transport/multimodal trans­

port. The Seller pays for all pre-shipment charges and freight up to the point
of destination. The risk, however passes to the Buyer as soon as goods are
handed over to the first carrier.

d) 'D 'Terms:

DAF- Delivered at Frontier:

The Seller makes the goods available, cleared for export, at the named
place at the border of the importe'rs country. It is suitable for road and rail
transport.

DES- Delivered ex Ship:

The Seller makes the goods available to the Buyer on board the ship at the
port of destination, and pay for all the costs pertaining to pre-shipment
procedures. The Buyer has to make arrangements to clear the shipment
from Customs.

DEQ- Delivered ex Quay:

This is one step further than DES. The Seller must pay for all costs till the
cargo is unloaded from the ship and placed on the wharf. The Seller pays

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for import clearance in his country and pays the duties. From there the im­
porter makes arrangements to take the goods to his factory at his cost.

DDU- Delivered Duty Unpaid:

The Seller agrees to deliver the goods at importer's premises in his country
at his own cost: pick-up, customs clearance at origin, freight and customs
clearance at destination and delivery at the importer's factory. The Seller
pays the customs duty alone.

DDP- Delivered Duty Paid:

Here the maximum obligation is on the Seller. He, not only, pays all charges
up to importer's factory, but also pays the customs duty in the importer's
country.

7. LATEST CHANGES:
As of 1st January 2011, all the terms in Section Dare obsolete and replaced
with:

DAT - Delivered at Terminal: Seller bears cost, risk and responsibility until
goods are unloaded (delivered) at named quay, warehouse, yard, or ter­
minal at destination. Demurrage or detention charges may apply to seller.
Seller clears goods for export, not import. DAT replaces DEQ DES.

DAP - Delivered at Place: Seller bears cost, risk and responsibility for goods
until made available to buyer at named place of destination. Seller clears
goods for export, not import. DAP replaces DAF, DDU.

DDP - Delivered Duty Paid: Seller bears cost, risk and responsibility for
cleared goods at named place of destination at buyers disposal. Buyer is
responsible for unloading. Seller is responsible for import clearance, du­
ties and taxes so buyer is not “importer of record”.

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8. CONCLUSION:
From the above it is clear that

a) lncoterms are necessary to clear all possible misinterpretation and mis­

understanding between the Seller and the Buyer, and

b) lncoterms are subject to constant changes in interpretation, brought

about by technological and social changes in the world.

It is important to remember that all international transactions, if done ac­

cording to the scope of INCOTERMS, would be within the ambit of the ac­
cepted legal frame-work.

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 AREA OF ORIGIN MAIN TRANSPORTATION DESTINATION AREA
Packaging Licenses Load at Inland transport export Handling costs Main Insurance Handling costs Import Inland transport Unload
verification authorizations the truck or country of clearance at origen. transport merchandise. at origenl. Port, clearance at origen
control others container origin. From Formalities Port, airport, Transport airport, shot, duties and From port, airport
formalities in factory or factory to port, shot, train, etc. insurance from train, etc. taxes or factory terminal
warehouse airport to the point of or logistics operator
terminal or delivery to
carrier destination

RemAir RemTrain RemLine

RemLine
Incoterms® 2020 ICC - RULES FOR ANY WAY OR TRANSPORT WAYS

EXW Cost
Ex works.
Risk

FCA Cost
Free carrier.
Risk

Cost
CPT
Carriage paid to.
Risk

CIP Cost
Cariage and
insurance paid to. Risk

Cost
DAP
Delivered at place.
Risk

DPU Cost
Delivered at place unload.
Risk

DDP Cost
Delivered duty paid.
Risk

RemLine
Incoterms® 2020 ICC - RULES FOR MARITIME TRANSPORTATION AND INLAND WATERWAYS

FAS Cost
Free alongside ship.
Risk

FOB Cost
Free on board.
Risk

Cost
CFR
Cost and freigth. Risk

CIF Cost
Cost, insurance
and freigth. Risk

Seller Buyer The seller must provide the necessary documentation for Depending on the agreed Mandatory / Compulsory / Required
export and import clearance at the the buyer's request, delivery point Mandatory / Compulsory / Required
risk and cost

Training in company / In-company consulting and training in International Supply Chain

 Reference Material for SCM Pro

4. LETTER OF CREDIT
1. INTRODUCTION:
The success of Export business depends to a large extent on efficient
management of finance, which are subject to risk of losses due to interest
on export loans, exchange rate fluctuations and possibilities of not receiving
payments from Buyers after the shipments are effected. Export business
becomes a profitable venture as long as payments are received promptly
by the Sellers from the Buyers.

2. MODES OF PAYMENT:
There are several modes of making payments in exports from the Importer
to the Exporter. Some of these are:

a. Documents Against Payment (D/P)

b. Documents Against Acceptance (D/A)
C. Consignment Sales (Stock and Sale)
d. Open Account
e. Bill of Exchange
f. Telegraphic Transfer (TT)
g. Mail Transfer(MT)
h. Demand Draft
i. Letter of Credit (L/C)

All these are different ways in which Exporters realize their payment from
Importers. There are varying degrees of risk involved. The mode of
payment chosen depends on the level of trust and business relationship
existing between the Exporter and Importer.

Among the various modes, the Letter of Credit is rated as the most trust­
worthy Banking instrument where the interests of both exporters and
importers are taken care of equally.

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3. DEFINITION:
A reliable Bank undertakes to pay the exporter on behalf of the importer
once the exporter fulfils certain obligations.

The L/C may be defined as an arrangement whereby a Bank (issuing L/

C } acting at the request of a customer is to make a payment to or to the
order of a third party (the beneficiary) against stipulated terms and
conditions laid by the beneficiary. The beneficiary, in turn , is to submit
to the Bank specified export documents.

4. MODE OF OPERATION:
The following are the step­ by­ step operations involved in opening a L/C :

1. The importer opens a LJC through his bank which is known as

OPENING BANK/ISSUING BANK.
2. This bank will advise credit to the exporter through its
correspondent bank in the exporter's country.
3. The correspondent bank is called the ADVISING BANK/NOTIFYING
BANK.
4. The bank which negotiates the draft under L/C is called the
NEGOTIATING BANK.
s. The opening bank itself may become negotiating bank.
6. The opening bank may request any bank in the importer's country
to confirm the credit­ called the CONFIRMING BANK, which
undertakes all obligations of the opening bank.
7. The opening bank is the bank on which the draft has to be drawn
as per the L/C . It may be the issuing bank, confirming bank or
advising bank.
8. a} The exporter has to ship the goods first, by carrying out all
the Customs/carrier formalities.
b) After the shipment is effected, he has to submit the shipping
documents as per L/C terms to the negotiating bank

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c) he negotiating bank will forward the documents to the

importer through the opening bank.
d) The payments to the exporter is guaranteed by the
importer's bank, provided all the conditions on the L/C are
fulfilled by the Exporter in terms of shipping documents and
submission of the same to the negotiating bank.

5. TYPES OF LETTER OF CREDIT:

There are primarily seven types of L/C. The exporter and Importer may
agree on the type of L/C that is most suitable to their requirements.

a) Revocable/Irrevocable L/C:
Irrevocable L/C cannot be cancelled, amended or changed by the
importer once it is established. Most exporters would prefer an Ir­
revocable L/C to a Revocable one.

b) Confirmed/Unconfirmed L/C:
This L/C constitutes a definite undertaking of the confirming bank and issuing bank
that payment would be made to the exporter. Only Irrevocable Lies are Confirmed. In
an Unconfirmed L/C, the correspondent bank merely notifies the credit to the export

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er.

c) Transferable L/C:
Transferable L/C carries instructions that the benefits can be
transferred to a third party/parties. Generally merchant exporters
prefer this type of L/C since they have several supporting
manufacturers, to whom the benefits of the L/C can be transferred.

d) Revolving Credit:
When there are periodic and continuous orders for exports on an
exporter, the exporter would prefer Revolving Credit, whereby the
payments are reinstated on the same L/C and made available to
the beneficiary again after a period of time. This type of L/C is
good for long­term transactions. It saves a lot of time and money.

e) Back­to­back Credit:
The exporter uses his export L/C as a cover for opening credit in
favor of local suppliers. This type of L/C is favored by merchant
exporters as identity of ultimate Buyers is kept secret. Since Back­
to­ back UC is opened in INR, it is in effect a domestic L/C .

f) Restricted/Unrestricted L/C :
When L/C does not specify a particular negotiating bank, it is called
an Unrestricted L/C But where a bank is nominated on the L/C it
is called a Restricted L/C .

g) Red Clause UC:

There is a Red Clause on the L/C which authorizes the negotiating
bank to release advance payment to the exporter before the
shipment is effected. The advance paid may be liquidated from the
sale proceeds of the bill when it is negotiated finally after the
shipment. This facility is available only in an Irrevocable L/C . The
advance is granted against the exporter's undertaking to tender
the shipping documents on completion of shipment.

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6. CONDITIONS OF PRESENTATION:
After the shipment is completed, the exporter has to submit the export/
shipping documents to the bank as proof of shipment. There are certain
conditions to be met while presenting the same to the bank:

a. All L/C s stipulate an expiry date before which the documents

have to be submitted to the bank and also the place of bank
where
they should be submitted.
b. Therefore, the documents should be submitted on or before the
expiry date.
c. The L/C also stipulates the last date of shipment. The transport
document or document of carriage should bear a date as on or prior
to this date. The bank will not accept a document which is dated
later than that date.
d. The documents must be presented within 21 days from the date
of shipment. The Bank would refuse to accept documents
presented after that period.
e. If the expiry date falls on a holiday, the next day is considered as
expiry date.
f. The documents may be presented only during bank working
hours.
g. The banks deal with the documents only, but not with actual
shipment transactions. The banks are not expected to verify the
actual transactions.

7. SCRUTINY OF LETTER OF CREDIT:

The L/C must be scrutinized by the exporter for the details on it, as per
below points:
a. Whether the L/C is Revocable or Irrevocable
b. Verify the name/address of the beneficiary
c. Whether L/C is transferable or not
d. Check the expiry date on the L/C
e. Whether the value of the L/C covers the full value of the goods in

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appropriate currency
f. Whether the L/C mentions the correct quantity and quality of
goods as per the Purchase Order of the importer
g. Whether all the documents called for in the L/C can be furnished
by the exporter
h. Whether payment terms like advance, credit, instalments shown
on the L/C are as per Sale Contract/Purchase Order or not.
i. Various terms on the L/C should not be contradicting each other.
any unfortunate event, the bank may turn the Policy in its favour.
6. The risk coverage as per the Policy should not start later than the
date of shipment.

8. CONCLUSION:
In conclusion, the L/C is the best form of payment mode because

a. the exporter is sure of receiving his payment as soon as the

shipping documents are submitted.
b. the importer is also assured that the bank ensures that the
exporter meets all his export obligations with regard to shipment,
documentation and payment.

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h.

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5. PACKING,LABELLING & MARKING

1. INTRODUCTION:
Packing, labelling and marking, though they sound like very basic
requirements and of no major importance in transportation of cargo,
these factors are essential and integral part of logistics.

There is a scientific method behind these activities if they are to serve

the purpose for which they are meant. Basically, the purpose of packing,
label­ ling and marking is to ensure the safety and identity of cargo.

2. PACKING:
Packing is a method of storing cargo in a container like a cardboard box,
crate etc. for the purpose of transportation. The material used for packing
depends on the nature of the cargo and the rigours of transport and
handling. Solids are packed in cardboard boxes or crates depending on
the material, weight and volume. Liquids are stored in drums and cans,
gases are transported in cylinders. Besides, there are prescribed
specifications for packing of cargo that is of hazardous nature in order to
protect other cargo, handlers and handling equipment.

i. Purposes of packing:
Packing is expected to serve the following purposes:

a) to ensure safety of the cargo.

Packed consignment is less prone to loss, pilferage or damage.

b) to enable easy handling.

Packed cargo can be moved or transported easily from place to

place. It is easy to store them in warehouses and showrooms
etc.

c) to maintain temperature.
Packed cargo is not exposed to extreme weather conditions,
like
pharmaceutical products, chemicals, crackers etc.
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d) to enable longevity of cargo

Cargo that is packed can be stored for a long time. When it is
ex­ posed, it is open to damage, contamination and spoilage.

e) to prevent theft and pilferage

Packed contents cannot be pilfered as much as open

contents. Packing therefore provides a protection against
vandalism also.

f) to help in storage.
Packed boxes/crates are easy to store on racks in a
warehouse, one on top of the other or display them in a
showroom.

g) to help display information.

Packing helps to display information on the nature of the

cargo, contents and constituents of the finished product.

h) to display handling information.

Special handling instructions and storage requirements are

shown on the boxes in writing and pictorial form.

i) to display warning and cautions.

There are warnings and cautions shown on the packing to indicate

any hazard, caution in handling and storing etc. For example, 'keep
away from children' is a caution displayed on pharmaceutical products.

ii. Nature of Packing:

The kind of packing used depends on the nature of cargo and its
features such as,

a) liquid, solid or gas

b) volume/weight of the cargo

c) perishability of cargo- eg. Food, vegetables, fruits, meat etc.

d) shelf-life of cargo
e) hazardous nature of cargo - cargo may pose dangers to
other
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cargo or persons like acids, flammable cargo, poisons,

radioactive material etc.

f) sensitive nature of cargo- like medical, telecommunication

equipment.

g) mode of transport- sea cargo has to be packed securely in

view of the rigors of sea transport, sea water/air and time
taken as compared to air transport.

h) climatic conditions - it also determines the kind of packing

required and the packing material to be used. Temperature
can affect the contents.

i) number of transshipments and re-working required -

depending on number of transshipment points where re-
working of cargo is needed to be done, packing has to be
stronger in order to avoid breakage/spillage of contents.

j) value of cargo - valuable cargo like gold, silver etc., currency

notes have to be securely packed in metal packing as they are
prone to pilferage and should be stored in a Strong Room.

k) In the case of Dangerous Goods, especially when carried by

air, there are strict rules about packing prescribed by IATA
(International Air Transport Association). IATA has classified nine
classes of Danger, and the type of packing prescribed depends
on the degree of danger. Packing instructions in such cases are
contained in the DGR Manual of IATA.

3. LABELLING:
Labels are printed paper with writings on them. Labels are primarily
used to highlight details about the cargo like description and to display
special handling instructions.

There are two types of labels:

1. Hazardous Cargo Labels

2. Orientation Labels
Orientation Labels carry instructions on special handling required,
nature of hazard it may pose or caution to be exercised.

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Package Orientation Labels carry instructions on how packages are to

be handled or not handled and how they are to be stored.

Labels play an important role in safe and sound way of handling cargo
by air, sea, road and rail. Handling labels carry instructions like "THIS
WAY UP': "FRAGILE':"PROTECT FROM RAIN 'CARGO AIRCRAFT
ONLY"'etc. with pictorial depictions.
Ground rules on labeling are:

i. Labelling is the responsibility of the shipper.

ii. Labels must be clearly visible and legible
iii. Folding or overlapping of labels is not permitted.

4) MARKING
Marking on packages is necessary primarily in maintaining the identity
of cargo. Hence, packages are marked with Consignor/Consignee
name and address, trademarks of the manufacturer, the Airway Bill or
Bill of Lading numbers or any other identifying marks and signs. This
ensures the security and individuality of the cargo.

If there are no markings, there are possibilities of the consignment

get­ ting mixed with other cargo and identity being lost. Again for air
cargo, IATA has prescribed stringent rules about markings to be shown
on pack­ ages to indicate certain warnings to handlers and carriers.
Hence there are some ground rules in marking:

1. Marking is the responsibility of the sender.

2. Marking should be clearly legible and visible.
3. Marking should be of a permanent nature.

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5) CONCLUSION:
We see from the above that Packing, Labelling and Marking are as
important as the consignment itself. Mistakes in these basic activities
could result in misplacement of shipments, damage, loss, claims,
litigation and even danger to life and property .There are several
cases of such instances resulting from small errors in packing,
labeling and markings. Care and caution has to be exercised to
prevent untoward incidents and these three activities should be
carried out in conformity with rules and existing practices.

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6. RISK MANAGEMENT

1. INTRODUCTION:
Business in general is ridden with risks, more so is export business,
where business is done between two individuals living in two different
countries, with different political, legal and social systems, speak
different languages and have different social and cultural backgrounds.

Under all these adverse circumstances, the success of an export

business depends, apart from above adverse factors, on effective
management of finance. Management of finance consists of three
aspects:

i. To be able to avail of export finance at best terms possible, at

low rates of interest.
ii. To ensure that sale proceeds are received without delay, that
is, payments from Buyers.
iii. To be aware of exchange rate fluctuations in receipt of
payments this could cause losses in a business.
Effective management of these three aspects is what will make a
difference will affect whether the business will win or lose. Rate of
interest at which an exporter is able to raise loans has an effect on his
profitability in business. Managing foreign exchange risks and
techniques connected with it also has an equally lasting effect on export
business. Given the marginal profits currently available in business,
these two losses can eat into those meagre profits and make the entire
effort a waste.

2. RISKS IN PAYMENTS:
Unless payment for export goods is received in advance or by Letter
of Credit, the exporter runs the risk of not getting the payment at all from
the importer. There are several risks that the exporter may face in
realizing sale proceeds. The exporter has two options to cover these
risks:
The more popular option is to take a Shipment (Comprehensive Risks)
Pol­ icy from the Export Credit Guarantee Corporation of India (ECGC).

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The ECGC provides cover against commercial risks and political risks,
both of which can pose hurdles to receiving payments. Examples of
commercial risks are insolvency of the Buyer, failure to make
payments, failure to accept goods by the importer at the destination
for various reasons etc. Political risks that make payments difficult are
Government restrictions in importer's country, war, civil war,
revolution, introduction of import licenses, interruption in voyage or any
other cause outside India.

The ECGC policy is meant to cover these risks on all shipments that
may be made on credit terms during a period of 24 months from the
date of policy.

The second option available to the exporter are forfaiting and

factoring. Forfaiting means discounting of export receivables by the
agency, which offers this facility. Currently, EXIM bank and SBI are
offering forfaiting services. Under this scheme, the exporter can get his
credit sales converted into cash sales, by handing over the right of
receiving payment against such credit sales to the forfaiting agency.
The agency will deduct a percentage from such receivables as their fee
and pay the balance to the exporter. The exporter thus overcomes the
uncertainty of receiving payments. The risk and responsibility of
collecting payment is passed on to the forfeiting agency.

Factoring is a new concept in India. Canbank Factors Ltd, sponsored by

Canara Bank, and SBI Factors and Commercial Services Ltd of S81 are
among the leading factoring companies. Factoring is a financial service
wherein specialized agencies called factors take over the debts and
receivables of their clients. The factors are well versed in credit and
financial dealings and hence are in a position to advise their clients on
these aspects.

On receipt of the export order, the exporter approaches a factoring

agency. They consider the transaction and fix limits on the percentage
of the in­ voice value which they will pay to the exporter, which is
normally around 80% of the total value. The exporter dispatches the
goods to the Buyer and then submits the export invoice to the factoring
agency. The exporter adds a notification on the invoice that the debt
due on the invoice is as­ signed to the factoring agency. The agency
then makes 80% of the payment to the exporter and sends the invoice
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to the correspondent in the importer's country. Once the

correspondent gets the payment from the Buyer, the amount is
transferred to the factor. The factor then pays the balance 20% to the
exporter.

Factoring is thus a highly successful means of providing credit risk

protection to the exporters. The factoring charges are quite high, but
the exporter runs no risk of non-payment and therefore, he can offer
better terms to the Buyer.

3. RISKS IN FOREIGN EXCHANGE:

Foreign exchange is a system or process of converting one national
currency into another and of transferring the ownership of money from
one country to another. As per Foreign Exchange Management Act
1999 of the Government of India, "foreign exchange" means foreign
currency, ie . any currency other than Indian currency.

In export and import trade, payments are made and received in

foreign currencies and invoices are raised in currencies other than
Indian currency.

Remittances from foreign countries have to be converted into Indian

rupees and conversely, remittances made to foreign countries have
to be converted into their currency. Inevitably, therefore, the question
of con­ version of foreign currency into Indian rupees and vice versa
arises. As per FEMA 1999 (Foreign Exchange Management Act), only
an authorized person or bank can deal in foreign exchange. While
converting from INR to foreign currency or vice-versa, there is a rate
of exchange applied for conversion which could affect the profitability
of a trader.

The process of conversion in export/import trade is done through the

medium of banks throughout the world. Handling inward remittance
of foreign currency is called 'purchase' and outward remittance of
foreign currency is a 'sale' This purchase and sale is done at a
particular rate among banks which could affect traders adversely or
positively, depending on the rate of exchange applicable for each
such transaction, which in turn depends on the rate of exchange
which is prevailing at the time. The rate of
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exchange is not steady but volatile, depending on several socio-economic

and political reasons.

For example, an exporter may raise an invoice on his Buyer for USD10,
000.00. The payment received by the exporter's bank in INR would depend
on the sale price of USD against the INR. The rate may be, for example, INR
47.50/ USD. At this rate the INR equivalent received into his account would
be INR 475,000.00. If the rate were INR 45.00/USD, the incoming INR at
this rate would be reduced to INR 450,000.00

Thus the exchange rate fluctuation could affect the sale proceeds of an ex­
porter dramatically. Therefore, handling of risks due to foreign exchange
fluctuation can make or break a deal.

In order to overcome this risk, exporters may enter into Forward Exchange
contracts with the bank. Under this agreement, the rate of exchange for
a particular transaction takes place, the amount fixed is received by the
exporter into his account. Thus the exporter protects himself against the
vagaries of exchange of rate fluctuation. This kind of contracts are possible
when the transaction is very big.

4. RISKS IN TRANSPORTATION:
Besides the above financial risks, there are risks involved in transportation
of cargo across thousands of miles from one country to another. In inter­
national transport anything could happen to cargo, given the conditions
under which transportation is carried out.

5. TYPES OF RISKS:
In international transportation, there are two types of risks: Internal Risks
and Extraneous Risks. The following are the examples of these risks.

Internal Risks

a. Fire, Sinking, Capsizing

b. Overturning, derailment
c. Collision, breakage of bridges
d. Air Crash

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a. Acts of God such as earthquake, volcanic eruption, landslide,

floods, storms, tsunami etc.
Extraneous Risks

a. Theft, Pilferage
b. Non-delivery of cargo
C. Damage due to oil/hook/sweat
d. Damage by mud ,acid
e. Breakage, denting
f. Bending, cutting
g. Scratching, chaffing
The internal risks are factors that have source of risks from within.

Extraneous risks are caused by external factors. It is only natural to expect

that risks are part of international transportation and should be guarded
against. Otherwise, they can cause irrecoverable losses to exporters.

6. MARINE INSURANCE:
In order to guard against such risks in international transportation, there is
Marine Insurance. It is defined as a "system of financial protection against
happening of accidental or fortuitous events like sinking, damage. loss,
fire, theft etc.”

The word INSURANCE means a CONTRACT where one party, the INSURER
agrees in consideration of money paid to him called the PREMIUM by an­
other party, the INSURED, to INDEMNIFY the latter against loss resulting to
him on the happening of an event or events specified in the POLICY.

This means that the exporter is given financial protection against such
losses, and not replacement of goods.

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7. FEATURES OF POLICY:
The following are the features of an Insurance Policy:

a. It is issued in duplicate or triplicate

b. The name/address of the insured should be mentioned on the
policy
c. The Policy should have the date of issue - policy without date is
invalid.
d. The insured value on the Policy should be equal to CIF value of
the consignment plus 10%.
e. The value on the Policy should be mentioned in the same
currency as the L/C.
f. The clauses and conditions on the Policy should correspond to
L/C conditions.
g. Claims should be settled at destination in the same currency as
that on the L/C.
h. The Policy should be signed and stamped by the Insurance
Company. Unsigned/Unstamped Policy is invalid.

8. RISKS NOT COVERED:

Despite the Policy, there are some risks that are not covered by Insurance.
They are:

a. Inevitable events- events that cannot be avoided like transporting

cargo on aircrafts that are not air-worthy or ships that are not sea­
worthy. These are bound to result in damage or loss.
b. Loss due to wear and tear - normal wear and tear due to usage is
not covered by Insurance. For example, wear and tear of car tyres
cannot be insured.
c. Inherent deficiency or deficiency in manufacture- an inbuilt fault
or deficiency at the time of manufacture, if proved, cannot be
insured and claims may be rejected.
d. Insurance coverage is not available for perishable goods like
vegetables, fruits, meat, fish etc.

CII Institute of Logistics

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e. Loss due to evaporation or leakage at the time of storage is not

compensated by Insurance, since these are natural events.

9. CLAIM PROCEDURE:
In the event of loss or damage, there is a complex procedure to be
followed for making a claim against Marine Insurance Policy. The
following are the steps involved:

An insurance survey should be conducted by an independent surveyor, in

order to assess the circumstances of the loss, cause of loss, nature of cargo
and value of the loss. This survey should be conducted in the premises of
the carrier before taking delivery.

The following documents are required to file a claim:

a. The Policy in original.

b. Original Document of Carriage.
c. Shipper's Commercial Invoice.
d. Packing List of the consignment.
e. Copy of Customs Clearance Document.
f. Ships Survey Report.
g. Insurance Survey Report.
h. Landing Remarks Certificate from the custodian of the cargo or
carrier.
i. Non-delivery Certificate from the custodian or carrier.
j. Customs Certificate of short age/ damage.
k. Claim Bill.
I. Any other documents required by the Insurance Company.

A claim may be lodged with the Insurance Company with all these
documents. Before that, a formal claim should be lodged with the carrier or
the custodian of cargo at destination port/airport. This is because, the
Insurance Company, after settling the claim, will proceed against the carrier
or custodian by right of subrogation. Hence a copy of claim lodged earlier
on the carrier/custodian should be sent to the Insurance Company.

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10. CONCLUSION:
As seen from the above, import/export business is full of risks at every
stage from various sources. Therefore, an efficient fund flow management
is needed to run the business, minimize the loss and optimize the profit.
Close monitoring and control over foreign exchange alone can help to run
a profitable business. Only persons with complete knowledge of how to
raise loans at best possible rates, avoid exchange rate losses and handle
transportation risks and claims can run the business successfully.

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7. CONTAINERISATION

1. INTRODUCTION:
The invention of sea containers and introduction as alternative carriers of
cargo is recent, perhaps about 35 years ago. But this marvelous techno ­
logical invention has revolutionised transport of cargo by sea in the sense
that the container replaced the vessel in terms of liability and responsibil­
ity of the shipping line .The moment cargo was stuffed into a container the
shipping line's liability started.

The most important development that containers brought about and im­
pact on sea transport is three-fold:

a. It made possible door-to-door transport.

b. It made possible multimodal transport of cargo.
c. It introduced the concept of Group age Services.
The containers are designed and built uniformly all over the world, mak­
ing it possible to move them anywhere in the world by road, rail and sea.
Thus multimodal transport, a boon to exporters and importers, became
viable. By the same means it became possible to move containers to the
premises of exporters and importers by road or rail, thus making viable
door-to-door service. Before the invention of containers, the trade had to
necessarily transport the cargo by trucks to and from the ports. Thus con­
tainers themselves became carriers. Again, with the advent of containers,
several LCL cargo can be grouped together to fill one container, thus mak­
ing possible Groupage services of LCL cargo. This greatly helped to
reduce freight costs for exporters.

2. DEFINITION:
A container refers to a storage and carriage device, that is, an equipment
used to store and carry goods. It is also known as a 'box' or a 'van’.

ISO has defined a Freight Container as:

a. an article of transport equipment.

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b. An equipment of permanent nature, strong enough for

repeated use.
c. equipment fitted with devices for ready handling .
d. an article so designed to fill and empty cargo easily and fast.

These unique features of the container are discussed in the following para­
graphs.

3. CONTAINERS BY SIZE:
There are two sizes of containers: 20Ft container and 40Ft container.
Generally these are the two standard sizes into which cargo can be stuffed
and carried.

There are two types of consignments:

a. LCL- Less than Container Load
b. FCL- Full Container Load

LCL cargo is smaller than one container load and several LCL
consignments are needed to fill one full container. A FCL shipment is
enough to fill one full container. Each 20' container is known as one TEU-
Twenty Foot Equivalent Unit. Therefore one 40' container is equivalent to
2 TEUs.

The standardization of containers is prescribed by the ISO and they are

built according to the dimensions prescribed as below:

20' Container OD {outside dimension) 20'x 8’'x 8.6' {Ix bx h)

ID 19'4"x 7'8"x 7'9"

Volume: 33.02 CBM

Capacity: 17,863 kgs

40' Container OD {outside dimension) 40'x 8'x 8.6' {Ix bx h)

ID 39'6"x 7'8"x 7'10"

Volume: 68.19 CBM
Capacity: 27.866 KGS

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4. FEATURES:

All containers have uniform features, so that they are suitable for multi
­ modal use and all over in the world.

a. They are rectangular in shape, and as per the dimensions

discussed above.
b. They are weather-poof, that is, the contents are not affected
by weather conditions and the containers themselves are
strong and resistant to damage in all weather conditions.
c. They are meant for storing and transporting a number of unit
loads, packages or bulk materials.
d. Being strong steel boxes, they protect the contents from loss
due to pilferage and damage due to vandalism or weather
conditions.
e. The whole container is handled by the shipping line as a unit
load that is each 20' container is one TEU- Twenty Foot
Equivalent Unit. The volume of cargo handled is measured in
terms of so many TEUs.
f. Cargo can be transshipped at a port from one ship to another
or from one shipping line to another, without having to re-
work or re-load the cargo. The containers are transshipped,
thus saving time and labour costs.
g. Containers are made from three different materials:
• Stainless Steel
• GRP (Glass Fibre Reinforced Plastic)
• Aluminum
Generally, they are made of steel. Only in a few cases, the other two
types of material is used. The steel containers are weather-proof and
repairs to damages is easy. In case of damage to other material, they
cannot be re­ paired easily and containers may have to be discarded.

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5. TYPES OF CONTAINERS:
There are different types of containers depending on its usage and type of
cargo that is loaded in them. They are:

a. General Cargo Container- standard container in which all kinds of

general cargo is loaded.
b. Insulated Container- it is temperature controlled for cargo that
cannot withstand extreme temperatures.
c. Reefer Container- it is refrigerated and has a refrigerating
machine on one side with provisions for attaching to power
source. It is used for carrying perishables like food, meat,
vegetables and other perishables.
d. Bulk Containers - they have openings on top through which
cargo like grains, minerals etc. can be loaded and used to store
bulk cargo.
e. Flat Rack Container- It is a container with a base, but no sides or
roof. It is ideal for loading odd-sized machinery.
f. Open Top Container- container without a roof but has side walls.
This again is used for voluminous and odd-sized cargo like
machines, long pipes etc.
g. Platform Container- It has only a floor on which cargo can be
loaded.

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The exterior dimension of all containers conforming to ISO standards are 20 feet
long x 8 feet wide x 8 feet 6 inches high or 9 feet 6 inches high for high cube
containers.

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6. ADVANTAGES:
a. With the use of containers there is reduction in port time of
ships, because it is easier and faster to load or unload
containers into/ from ships and move them to CFS where they
are stuffed or de­ stuffed.
b. There is reduction in cases of damage, theft and pilferage. It
is very difficult to damage or pilfer from a strong steel box.
Hence sealed containers can be stored in open yards without
the danger of loss or damage.
c. The cost of inland transportation is greatly reduced as
several shipments can be moved to and from ports in one
single unit load, thereby reducing transport costs for
exporters, importers and carriers.
d. Fragile and contaminative cargo is well protected inside the
container. Fragile cargo can be carried long distances
without breakage. Moreover, contaminated cargo, stored
inside a steel chamber, cannot contaminate or poison other
cargoes on board the ship.
e. Since containers have reduced chances of loss or damage,
the marine insurance premium is much reduced.
f. Containers ensure faster and reliable delivery of cargo for
reasons discussed above.
g. The original quality of cargo stored inside the boxes is retained
for long time. Sea water or salty air does not affect the cargo
inside the containers. Perishable commodities are preserved
for long time in Reefer Containers.
h. Different commodities are physically separated in different
containers. For ex, hazardous substances are kept separately
so that they do not pose a danger to other cargo or crew.
Similarly, no chemical reaction between different
commodities is possible.
i. For the carriers, the documentation is simplified and made
easy. A container is covered by one Ocean Bill of Lading
only. The LCL shipments in a container are covered by
Forwarder's Bills of Lading.

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j. For consumers, the inventory costs are reduced since there

is a shorter transit time. Inventories also becomes stable
because shipping lines now have fixed periodic sailings or
operating schedules. Hence inventory planning becomes easy
for purchase managers.

7. DISADVANTAGES:
There are also several apparent disadvantages in use of containers:

a. Container operation is capital-intensive:

Cost of containers, specially built ships, special handling
equipment to handle containers, monitoring and tracking
movement of containers, maintenance of containers and
handling equipment and cost of infrastructure like ports,
yards etc. all these make the whole operation capital-intensive
and a lot of investment is needed.
b. For the shipper, he has to re-design his production process,
systems and machinery and factory premises to suit the
requirements of containerization. Fast and bulk production is
now needed. Warehouse facilities should be upgraded to help
in stuffing and de-stuffing containers and storing of
containers etc.
c. For shipping lines and container owners, there are
unexpected problems. Some cargo like livestock cannot be
containerized. Preponderance of one type of cargo in one
way makes it compulsory to bring back empty containers. For
eg. Reefer containers are used to carry vegetables, fruits and
food stuff from Cochin to Gulf countries. The return traffic
consists of consumer goods which do not need reefer
containers. The lines therefore have to closely monitor full
utilization of containers.

Cargo Ships - Types and Classification

A cargo ship or freighter is any sort of ship or vessel that carries

cargo, goods, and materials from one port to another. Thousands of
cargo carriers ply the world's seas and oceans each year; they handle
the bulk of international trade. Cargo ships are usually specially

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designed for the task, often being equipped with cranes and other
mechanisms to load and unload, and come in all sizes. Today, they are
almost always built of welded steel, and with some exceptions
generally have a life expectancy of 25 to 30 years before being
scrapped

Cargo ships/freighters can be divided into four groups, according to

the type of cargo they carry. These groups are:

1. General Cargo Vessels ( Container Vessels)

2. Tankers (Wet Cargo Carriers)

3. Dry-bulk Carriers ( Dry Cargo Carriers)

4. Multipurpose Vessels

General Cargo Vessels carry packaged items like chemicals, foods,

furniture, machinery, motor vehicles, footwear, garments, etc.

Tankers carry petroleum products or other liquid cargo.

Dry Bulk Carriers carry coal, grain, ore and other similar products in
loose form.

Multi-purpose Vessels, as the name suggests, carry different classes of

car­ go - e.g. liquid and general cargo- at the same time.

Cargo ships are categorized partly by capacity, partly by weight, and

partly by dimensions (often with reference to the various canals and
canal locks they fit through). Common categories include:

Dry Cargo Ships:

There are two main types of dry cargo: bulk cargo and break bulk
cargo. Bulk cargoes, like grain or coal, are transported unpackaged in
the hull of the ship, generally in large volume. Break-bulk cargoes, on
the other hand, are transported in packages, and are generally
manufactured goods. Before the advent of containerization in the
1950s, break-bulk items were loaded, lashed, unlashed and unloaded
from the ship one piece at a time. However, by grouping cargo into
containers, 1,000 to 3,000 cubic feet (28 to 85 m3) of cargo, or up to

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about 64,000 pounds (29,000 kg), is moved

at once and each container is secured to the ship once in a

standardized way. Containerization has increased the efficiency of
moving traditional break-bulk cargoes significantly, reducing shipping
time by 84% and costs by 35%. As of 2001, more than 90% of world
trade in non-bulk goods is transported in ISO containers. In 2009,
almost one quarter of the world's dry cargo was shipped by container,
an estimated 125 million TEU or 1.19 billion metric tons worth of cargo.

Dry Cargo Carriers - Types

• Small Handy size, carriers of 20,000 long tons deadweight (DWT)- 28,000
DWT

• Handy size, carriers of 28,000-40,000 DWT

• Seawaymax, the largest size that can traverse the St Lawrence Seaway

• Handymax , carriers of 40,000-50,000 DWT

• Panamax, the largest size that can traverse the Panama Canal
(generally: vessels with a width smaller than 32.2 m)

• Capesize, vessels larger than Panamax and Post-Panamax, and must

traverse the Cape of Good Hope and Cape Horn to travel between
oceans

• Chinamax,carriersof380,000-400,000DWTwithmaindimensions limited
by port infrastructure in China

Container Vessels:
Container vessels owe their existence to an American trucker by the
name of Malcom McLean. In 1931, McLean purchased his first truck to
send and pick up loads to and from vessels in various port s. During
this time, while he used to wait impatiently for the truck's contents to
be loaded on to the ship he kept thinking of a more efficient and quick
way to load and unload vessels and thus save enormous time and
labor.
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Wet Cargo:

A tanker (or tank ship or tankship) is a ship designed to transport liquids

in bulk. Major types of tank ship include the oil tanker, the chemical tanker,
and the liquefied natural gas carrier.

Tankers used for liquid fuels are classified according to their capacity.

In 1954, Shell Oil developed the average freight rate assessment (AFRA)
system which classifies tankers of different sizes. To make it an
independent instrument, Shell consulted the London Tanker Brokers' Panel

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(LTBP). At first, they divided the groups as General Purpose for tankers
under 25,000 tons deadweight (DWT); Medium Range for ships
between 25,000 and 45,000 DWT and Large Range for the then-
enormous ships that were larger than 45,000 DWT. The ships became
larger during the 1970s, and the list was extended, where the tons are
long tons:

+ 10,000-24,999 DWT: General Purpose tanker

+ 25,000-54,999 DWT: Medium Range tanker
+ 55,000-79,999 DWT: Long Range 1 (LR1)
+ 80,000-159,999 DWT: Long Range 2 (LR2)
+ 160,000-319,999 DWT: Very Large Crude Carrier (VLCC)
• 320,000-549,999 DWT: Ultra Large Crude Carrier (ULCC)

Petroleum Tankers

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Specialized Ships:
Specialized types of cargo vessels include container ships and bulk
carriers (technically tankers of all sizes are cargo ships, although they
are routinely thought of as a separate category). Cargo ships fall into
two further categories that reflect the services they offer to industry: liner
and tramp services. Those on a fixed published schedule and fixed tariff
rates are cargo liners. Tramp ships do not have fixed schedules. Users
charter them to haul loads. Generally, the smaller shipping companies and
private individuals operate tramp ships. Cargo liners run on fixed schedules
published by the shipping companies. Each trip a liner takes is called a
voyage. Liners mostly carry general cargo. However, some cargo liners
may carry passengers also. A cargo liner that carries 12 or more
passengers is called a combination or passenger-cum -cargo line.

POST PANAMAX SHIPS:

The Panama Canal joins the Atlantic and Pacific oceans across the Isthmus
of Panama. It runs from Cristobal on Limon Bay, an arm of the Caribbean
Sea, to Balboa, on the Gulf of Panama. The length of the Panama Canal is
80 kilometers (SO miles) from the deep waters of the Atlantic to the deep
waters of the Pacific.

An impressive engineering feat, it was built 1904 - 1914 at an initial cost of

$366,650,000. Unlike the Suez, which is at sea level for its entire length, the
Panama Canal has locks to raise and lower ships. The Panama Canal locks
is a lock system that lifts a ship up to the main elevation of the Panama
Canal and down again. It has a total of six steps (three up, three down for
a ship's passage). Dams hold back two artificial lakes, Gatun and Madden,
which supply water for the locks.

Panama Canal prevents a long detour around South America, thus sup­
porting the maritime flows of world trade. It is composed of three main
elements, the Gatun Locks (Atlantic Ocean access) the Gaillard Cut
(continental divide) and the Miraflores/ Pedro Miguel Locks (Pacific
Ocean access).

Although there are 12 sets of locks total, there are only six massive pairs
of locks that ships use for transit, each 1,000 feet long and 110 feet wide.
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Each may be filled or emptied in less than 10 minutes, and each pair of
lock gates takes two minutes to open. A 30,000-pound fender chain at the
end of each lock prevents ships from ramming the gates before they open.
Water is not pumped into and out of the locks, but flows from the artificial
lakes through culverts 18 feet in diameter. Electric towing locomotives,
Called “mules”, pull ships by cable through the locks. Most ships require
six of these mules, three on each sides.

Though traffic continues 1D increase 'through the canal, many oil

supertankers and military battleships and aircraft carriers cannot fit
through the canal. There’s even a class of ships known as “Panamax”,
those built to the maximum capacity of the Panama canal and its locks.

The largest ships that can pass through the Panama Canal are called
“Panamax” because many modern ships surpass the parameters of
Panamax. Post-Panamax or over-Panamax denotes ships larger than
Panamax that do not fit in the canal such as supertankers and the largest
modem container ships.

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The Suez Canal, is an artificial sea-level waterway running north to south

across the Isthmus of Suez in Egypt to connect the Mediterranean Sea and
the Red Sea. The canal separates the African continent from Asia, and it
provides the shortest maritime route between Europe and the lands lying
around the Indian and western Pacific oceans. It is one of the world's most
heavily used shipping lanes. With a ship breadth of 60 m and a draught
of 21 m, this ship size would be classified as a post-Suezmax ship, as the
cross-section of the ship is too big for the present Suez Canal.

8. OVERCOMING DISADVANTAGES:
As said earlier, these are apparent disadvantages which are over come
through proper planning and co-operative efforts of all connected with
trade:

a. Shipper
b. Shipping lines
c. Industry
d. Container-owners
They have managed to overcome these problems by establishing com­
mon cargo facilities like.

a. Container Freight Stations (CFS)

b. Inland Container Depots (ICD)
These cargo hubs provide common services on cost-sharing basis. These
hubs are centres where cargo and documents can be processed through
customs, cargo can be stored, stuffed into containers and de-stuffed from
containers, containers can be stored and rail lines are provided to move
the containers to/from ports. While CFS are established around ports, ICD
are set-up in inland areas where there are no sea-ports like Bangalore, Del­
hi, Tirupur etc. which are also centres of export.
CFS and ICDs provide the following common services on cost-sharing basis:

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a. Container services- storage, cleaning, transport.

b. Handling equipment for containers/cargo.
c. Common labour used by lines, exporters and importers etc.
d. Providing storage space and facilities for LCL cargo, thus
helping small traders to store their cargo till there is enough
cargo to fill a container.
CFS and ICDs also provide value- added services like

a. export packing and handling services for FCL and out of

guage cargo.
b. Customs clearance services in inland areas through Custom
House Agents.
c. provide safe and secure storage for loaded and empty
containers.
d. cleaning and repair services for containers
e. Office space for operators, forwarders, CHAs and maritime
service companies.
f. Exporters and importers in hinterland are provided common
services close to their location, instead of having to travel to
inland cities. Moreover, establishment of ICDs in hinterland
and CFS around ports relieves cargo congestion in ports, as
part of the exports and imports are customs-cleared or stored
away from ports, thereby making port functioning easier and
smoother.

The apparent disadvantages and high-costs are thus overcome with

container bases like CFS and ICD, making containerization
convenient and economical and hence an acceptable mode of
shipping.

9. SHIPPING LINE STRATEGIES:

Shipping lines extend certain facilities in order to make shipping an
affordable and reliable mode of service. The strategies they adopt
are:
a. Container Consortiums- it is an amalgamation of lines into a
separate legal and commercial entity. They share capital,

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effort and market-share on a specific route. The partners to

the consortium supply and man the vessel on time-sharing
basis.

a. Slot Charter Arrangement- lines come together without losing their

identity to share a slot capacity on a vessel. For each TEU/ Slot,
shipping line is paid a certain amount by the partners.

b. Joint-Sailing Schedule-The lines mutually agree to operate joint

sailing schedules and the revenue is shared.

c. Feeder Services - Feeder vessels are operated regularly to feed bigger

Mother Vessels at bigger ports. Each feeder vessel may carry around
300/400 TEUs per vessel. For example, there are Feeder Vessel
services between Chennai and Colombo, where Mother Vessels call
and are berthed.

10. CONCLUSION:

Containerization is actually a boon to the trade and it has indeed

changed the way cargo is carried by sea.

Today one cannot imagine a port without containers, ICD and CFS. On
ac­ count of introduction of containers, Multimodal Transport and
Door-to­ door Transport have become a reality and an accepted and
legal modes of transport.

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8. MULTIMODAL TRANSPORT
1. INTRODUCTION:
Invention of Containers and their widespread usage in ocean freight
made possible three important developments:

i. Multimodal Transport became a possibility

ii. Door-to-door deliver of cargo became feasible.
iii. Groupage services of LCL cargo became a viable
commercial venture.
Of these, Multimodal Transport occupies a place of importance, as a
novel method of transporting cargo. That is, a single consignment
could be car­ ried on various modes of transport. Road, rail, ocean and
waterways on a Single Document of Carriage known as Multimodal
Transport Document.

Government of India legalized Multimodal Transport through

Multimodal Transportation of Goods Act 1993 dealing with regulation
of Multimodal Transport in India and it is practiced all over the world.

In order to make possible this mode of transport, the most important

feature in sea containers is the fact that they are designed and built
uniformly throughout the world according to dimensions and thickness
and set specifications accepted all over the world. The dimensions of a
20'container and 40'container make it possible to carry them on trucks,
rail, ships and barges. They can be transferred from one mode to
another, one carrier to another with relative ease and much effort.

2. MODE OF OPERATION:
The operation of Multimodal Transport is organized and carried out
by a single Multimodal Transport operator, who a) co-ordinates the
various modes, b) organizes transport on different modes at various
points, c) is­ sues a single Document of Carriage and d) accepts
liability for the cargo from the point of origin to the point of destination.

The container can be transported by road or rail to the shipper's or

con­ signee's premises for stuffing and de-stuffing of cargo. They can
be
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transported to or stored in Container Freight Stations or Inland

Container De­ pots for processing and handling of cargo. In such
cases, the container itself becomes the vessel. The liability of the
carrier starts from that moment, once the Transport Document is
issued.

The operator of the Multimodal Transport is called Multimodal

Transport Operator (MT0). The Document of Transport issued by him
is called The Multimodal Transport Document (MTD) and the mode of
transport is called Multimodal Transport.
The concept of Multimodal Transport is that the consignor entrusts
the goods to a single body, who
a. Undertakes Multimodal Transport
b. Makes all the intermediate arrangements for through
transport to destination
c. Delivers the cargo to the consignee at the Port of Discharge
or consignee's premises, depending on the terms of the MTD.

3. BASIS OF MULTIMODAL TRANSPORT:

The basis of Multimodal Transport lies in carriage of goods from one
country to another by more than one mode of transport.
ONTHE BASIS OF A SINGLE CONTRACT, Multimodal System is based on
the principle that the maximum efficiency is achieved if goods are
transported from door-to-door on the basis of a
a. SINGLE OPERATOR
b. SINGLE DOCUMENT
c. SINGLE RATE, and
[Link] LIABILITY
To explain further, there is a single Agreement between the Operator
and the Consignor based on a single contract or Transport Document.
Trans­ port Document does not vary according to changing modes of
transport. Therefore the task of transporting the cargo from origin to
destination be­ comes simple and the responsibility of the operator,
who issues the MTD. In case of loss or damage, the consignor has to
contact the MTO and no other agency.
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4. ADVANTAGES:
This has several advantages for the consignor and consignee:

a. Since there is a single point of contact, the client needs to deal

with one operator only. He does not need to deal with various
operators depending on mode of transport used.
b. A lot of time and labour is saved because, there is no re-working
and multiple handling of cargo normally associated with each
mode of transport. The container is transferred as it is from one
mode to another.
c. There is more security to cargo, as there is no re-working and it is
stored in a steel containers throughout the transport.
d. Less documentation is involved as there is a single MTD covering
all modes. If each mode required a different Transport Document,
then there would be more paper work and forms to be filled.
e. There are less chances of loss or damage en route, as there is no
re-working of containers anywhere.
f. Door-to-door transport is made possible on a single document,
thereby making it unnecessary to contact various transport
agencies to track and trace the shipments.

5. CONCLUSION:
Multimodal Transport is indeed a unique form of transport made possible
with the introduction of containers only because of their unique feature,
that is, they are designed to suit all modes of transport and therefore can
be transferred without much effort from one mode to another.
This mode of transport has gained popularity with the setting up of
Container Freight Stations and Inland Container Depots. They act as
hubs where cargo can be stuffed, containers can be transferred from one
mode to another. They provide the space, handling equipment and labour
required to achieve this. Multimodal Transport has now come to stay as
an accepted and reliable mode of transport.

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9. CONSOLIDATION OF AIR CARGO

1. INTRODUCTION:
Air Consolidation may be defined as a shipment consisting of
consignments originating from one or more shippers via one Consolidation
Agent at Origin, which is destined to one or more ultimate consignees
through one Break-bulk Agent at Destination shown on the Master Airway
Bill.

2. DEFINITION:
In airfreight parlance, Consolidation would mean combining of
consignments intended for despatch from a point of origin taking
advantage of lower rates available for higher weight consignments as
airline rates are based on weight structure: HIGHER THE WEIGHT, LOWER
THE RATE. The freight advantage thus obtained is passed on to the
customer.

3. RATE STRUCTURE:
To understand the above concept better, let us look at the following
illustration:

For example: Air Freight Rates from New York to Chennai :

Minimum USD 100.00/ shipment

-45kgs 3.50/kg

+45kgs 3.25/kg

+100kgs 3.00/kg

+S00kgs 2.75/kg

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From the above illustration it is seen that as the weight of the

consignment goes up, the per unit rate keeps coming down. That is,
the rate per kg decreases as the weight increases.
The crux of Consolidation, therefore, is to consolidate several
consignments and achieve a higher weight and book the consignment
under a single Airway Bill. The per kg rate in such cases would be
lower than the rate applicable for individual shipment separately. The
Consolidator there­ fore puts together many consignments from
various shippers or a single shipper meant for several consignees or a
single consignee at a single air­ port and get a rate advantage from the
airline. The benefit of lower rate is passed on to all the customers in
the Consolidation.

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4. PARTICIPANTS:
a. Consolidation Agent: This is a freight forwarder who undertakes
to put together several consignments. He enjoys a low freight
rate from the airlines because of volumes.
b. Break-bulk Agent: This is the counterpart of the Consolidation
Agent in the destination country. He undertakes to segregate the
individual consignments and delivers the shipments to individual
consignees.
c. Shippers: This is the exporter of cargo. He uses the services of a
Consolidator to ship his goods.
d. Consignees: This is the ultimate Buyer of the export goods in the
destination country.
e. Airlines: They undertake the job of carrying the goods from origin
to destination. They negotiate freight rates with the Consolidator
based on volume of business assured.

5. DOCUMENTATION:

a) MAWB - Master Airway Bill

It is the airline Document of Carriage in which the Consolidator is shown
as SHIPPER and the Break-bulk Agent as CONSIGNEE. It also contains the
total number of pieces and total weight/volume of all the consignments
put together under the MAWB. The MAWB therefore covers the whole
Consolidation.

b) HAWB - House Airway Bill

Hence, the shipper here is the ACTUAL Shipper (exporter) and the Con­
signee is the ACTUAL Consignee (importer). The details of number of
pieces, weight/volume pertains to that individual consignment.

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c) Consolidation Manifest
The Consolidator prepares a list of consignments in a Consolidation
with all details : MAWB number, HAWB number, flight details, origin,
destination, shipper and consignee as per each shipment , individual
weight and number of pieces as per each HAWB etc., In other words, it
is a complete list of details of every shipment in a Consolidation.
All these documents are put into a Consolidation Pouch and handed
over to the airline at the time of booking the consolidation. The airline
carries the pouch along with the cargo on the same flight and delivers
it to the Break-Bulk agent, to whom it is addressed.

4. MODE OF OPERATION:
a. The Consolidation Agent consolidates several shipments
each under a HAWB meant for the same destination airport
under the same MAWB.
b. The Agent books the consolidated shipment with the airline,
completes the customs formalities and gets confirmed flight
details.
c. Having done that, a pre-alert advice is sent by the Consolidator
to the Break-Bulk Agent. A copy of the Consolidation Manifest
may be emailed/faxed, as it contains all the details of the
individual shipments.
d. On receipt of Pre-alert, the consignees are kept advised of
the arrival details in advance, so that they can be prepared for
customs clearance, duty etc.
e. The Break-Bulk Agent keeps in touch with the airline, arranges
to pick-up the consolidation pouch from the airline.
f. He segregates the documents as per each HAWB and
prepares/ issue a Cargo Arrival Notice(CAN) cum Bill to each
consignee on the HAWBs. The CAN contains details of the
shipment, flight details, freight and other charges to be
collected etc.
g. On collection of payment from the consignee, Delivery order
is issued by the Break-Bulk Agent. This document authorizes
the consignee to complete the customs formalities and take
delivery of the cargo from the airport
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7. ADVANTAGES:
There are advantages to all the participants in this mode of operation:

To Shipper:
a. Savings in freight costs because the consolidation rates are
cheaper than airline rates.
b. The security and identity of each consignment is maintained
because a HAWB is issued for every consignment.
c. Efficient and safe handling of cargo is ensured at both ends
as there is a Consolidator at origin and a Break-Bulk Agent
at destination.
d. Shipments are monitored till arrival at destination because
the consolidator sends a Pre-alert advice and the Break-Bulk
agent keeps monitoring the shipments with the airline.
e. The shipper gets confirmed space allocation on a flight as
the Consolidator has negotiated periodic departures for his
cargo.
f. The shipper gets pick-up service provided by the
consolidators so as to reach the Gateway airport in time for
pre-planned departures.
g. The shipper gets free consultancy service from the
consolidator on rates, flights, destination, country's
regulations, best routing etc.

To Consignee:
a. Progress chasing of consignments is done by the Break-
Bulk agent from origin to destination.
b. Pre-alert Advice on arrival of shipments is given by the
Consolidator.
c. Safe handling and transportation is ensured from both ends.
d. There are savings in freight and other costs wherever these
are payable by the consignees.
e. The Agents closely monitor the shipments till arrival.
f. The Break-Bulk agent keeps the consignee advised on the
status

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of supply from the time they are nominated to handle the

cargo.
a. There is no delay in advising the consignee about the arrival
of the shipments by the Break-Bulk Agent.

To Consolidation Agent:
The Consolidator makes a margin of profit between the rate obtained
from the airline (Net Rate) and the rate sold to the consignor/consignee
(Selling Rat e). Apart from this, there may be commission payable by
airlines to freight forwarders.

To Break-Bulk Agent:
The Break-Bulk Agents gets a share of profit from the Consolidation
Agent. Besides, he also has remuneration by way of Break-Bulk fee,
Delivery Order Fee and Charges Collect Fee etc.

To Airline:
a. The airline is assured of pre-booked cargo on a definite,
periodic manner, as this is the basis of agreement between
airline and consolidator.
b. Multiple handling and documentation is avoided because the
Consolidation Agent prepares the cargo and the documents
for each HAWS.
c. Several Shipments are carried under a single Document of
Carriage, the MAWS. The airline has to deal with one
Consolidator and one Break-Bulk agent instead of individual
shippers/consignees.
d. There are less claims as element of risk of loss/damage to
packages of consolidated shipments is remote because they
are taken care of at both ends.

5. CONCLUSION:
As seen in the above discussion, consolidation of air cargo provides
definite advantages to all participants. Hence, more and more cargo
is now airlifted in Consolidation service.

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 About us
The Confederation of Indian Industry (CII) works to create and sustain an environment conducive to the
development of India, partnering industry, Government, and civil society, through advisory and consultative
processes.
CII is a non-government, not-for-profit, industry-led and industry-managed organization, playing a proactive
role in India's development process. Founded in 1895 and celebrating 125 years in 2020, India's premier
business association has more than 9100 members, from the private as well as public sectors, including
SMEs and MNCs, and an indirect membership of over 300,000 enterprises from 291 national and regional
sectoral industry bodies.
CII charts change by working closely with Government on policy issues, interfacing with thought leaders, and
enhancing efficiency, competitiveness and business opportunities for industry through a range of specialized
services and strategic global linkages. It also provides a platform for consensus-building and networking on
key issues.
Extending its agenda beyond business, CII assists industry to identify and execute corporate citizenship
programmes. Partnerships with civil society organizations carry forward corporate initiatives for integrated
and inclusive development across diverse domains including affirmative action, healthcare, education,
livelihood, diversity management, skill development, empowerment of women, and water, to name a few.
India is now set to become a US$ 5 trillion economy in the next five years and Indian industry will remain the
principal growth engine for achieving this target. With the theme for 2019-20 as 'Competitiveness of India Inc -
India@75: Forging Ahead', CII will focus on five priority areas which would enable the country to stay on a
solid growth track. These are - employment generation, rural-urban connect, energy security, environmental
sustainability and governance.
With 68 offices, including 9 Centres of Excellence, in India, and 11 overseas offices in Australia, China,
Egypt, France, Germany, Indonesia, Singapore, South Africa, UAE, UK, and USA, as well as institutional
partnerships with 394 counterpart organizations in 133 countries, CII serves as a reference point for Indian
industry and the international business community.
To address the need of sharpening India Inc’s competitive edge through better Logistics and Supply Chain
practices, CII Institute of Logistics (CIL) was established in 2004 by the confederation of Indian Industry as a
center of Excellence in Logistics and Supply Chain. With a relentless aspiration to enhance logistics
competitiveness in the industry, CIL provides a complete range of services such as:
 Supply Chain Consultancy
 Corporate Training
 Research
 Warehouse Certification
 Supply Chain Transformation

Confederation of Indian Industry

Phase II, “B” Block, 9th Floor, IITM Madras Research Park , Kanagam Road , Taramani.
Chennai -600 113, Tamil Nadu , India
Phone : +91-44-66360300 Website : [Link] / [Link]
email : scm@[Link]