What is Logistics ??

According to the Council of Supply Chain Management

Professionals:

Logistics is the process of planning, implementing

and controlling procedures for the efficient and
effective transportation and storage of goods
including services and related information from the
point of origin to the point of consumption for the
purpose of conforming to customer requirements and
includes inbound, outbound, internal and external
movements.
Contd….

By Paul V Komban
What is Logistics ?? Contd..

Logistics is an integration of information, transportation, material

handling, stock and storage, and packaging operations.

Logistics activities contain purchasing, transportation, quality,

control, customs and insurance, handling, ware housing,
inventory management, order processing, sales-demand forecast,
logistics information management, distribution, labelling,
packaging, fleet management, management of separate parts,
product returns, and shipment planning.

Logistics includes the flow of goods, services, and information

related to movements of goods and services from the suppliers to
a satisfied customer without waste.

By Paul V Komban
Who are Logistics Service Providers

 Freight forwarder
 Multimodal Transporter
 Road transporter
 Rail Company
 Domestic /Coastal water carrier
 Warehousing Company
 Custom House Agent
 Freight broker
 Shipping Company/Agent
 CFS / ICD
 Container Leasing Company
 Port –Terminals (Container, Bulk, Liquid, Gas)
 Container Repairing Company
 Empty Container Yard Management Company

By Paul V Komban
What are the logistics services and who provides them

Logistics
Warehouse Terminal Freight
Services Carrier NVOCC MTO Service
Provider Operator Forwarder
Provider

Carriage

Information
Services, Including
Track & trace
Arranging
Transport
Operators
Warehousing

CFS
Consolidation/
Groupage
Custom
Clearance

By Paul V Komban
What are the logistics services and who provides them

Logistics
Warehouse Terminal Freight
Services Carrier NVOCC MTO Service
Provider Operator Forwarder
Provider

Packing & Labelling

Assembling &
Processing Goods
Technical testing
Quality inspection
Logistics
consulting and
supply chain
design
Management of
supply chain
(including
transport,
warehousing and
inventory)

Localization

By Paul V Komban
What are the logistics services and who provides them
Logistics
Warehouse Terminal Freight
Services Carrier NVOCC MTO Service
Provider Operator Forwarder
Provider
Operation of
supply chain

Project logistics

Procurement

Financial services,
such as collateral
management or
insurance
brokering.

After market
services, e.g.
reverse logistics,
returns and repairs
(e.g. technical and
warranty enquiries)

By Paul V Komban
Working of Logistics Service Providers
• SHIPPING COMPANY

Over 90% of world trade is carried by the international shipping industry.

Without shipping the import and export of goods on the scale necessary for
the modern world would not be possible. Shipping Lines are playing an
important role in global trade by providing containers for domestic and
International trade in the form of Carriage of domestic cargo in international
containers. Shipping line is the only agency that actually moves your goods
from one country to another for a fee and completes the delivery channel. In
globalization, shipping industry is shrinking the world. It is bringing
countries and population close together and making them more
independent. It is also providing easy access to markets abroad.

The shipping industry is principally regulated by the International Maritime

Organization (IMO), which is the London based United Nations agency
responsible for the safety of life at sea and the protection of the marine
environment. The International Labour Organisation(ILO) is also
responsible for the development of labour standards applicable to seafarers
worldwide.

By Paul V Komban
Working of Logistics Service Providers
Activities of Shipping Lines:

1. For Import

 Intimation of vessel to Terminal, Customs & Customers

 Filing of Import General Manifest (IGM)
 Filing of Sub Marine Transshipment Permit (SMTP)
 Booking of Containers for their Final Destination (i.e. for
ICDs/CFS)
 Transportation of Containers through Rail or road or by sea
 Collection of Bill of Lading along with Inland Haulage & other
Charges (IHC)
 Releasing Examination Order for examination of goods
 Issue of Delivery Order for final delivery of goods
 Called for Empty containers back or market it for Export purpose
By Paul V Komban
Working of Logistics Service Providers
Activities of Shipping Lines:

2. For Export

 Freight Negotiation
 Shipment schedule
 Release Order for Container Stuffing
 Export General Manifest (EGM)
 Mate Receipt
 Bill of Lading
 Collection of Payment
 Shipped on Board
 Empty containers are kept in shipping line designated
Containers Stocking Agency located near to sea port.

By Paul V Komban
Customs
What is Customs?

Customs is an authority in a country responsible for collecting tariffs or

custom duties and for controlling the flow & transport of goods including
hazardous items, animals, and personal into and out of a country.

Each country has its own laws and regulations for the import and export of
goods into and out of a country, which its customs authority enforces. The
import or export of some goods may be restricted or forbidden. Most
Countries have mutual agreements regarding the import/ export to their
countries. A customs duty is a tariff or tax on the importation or exportation
of goods. Goods not yet cleared through customs are held in a customs area,
often called a bonded area/ warehouse or store, until processed. All
authorized ports are recognized customs area.

The movement of people is controlled by the immigration department in each

country. However the Customs department plays a major role in stopping
terrorists at borders in coordination with other law enforcing authorities of
each country.

By Paul V Komban
Who is Custom House Agent ?
A Custom House Agent essentially takes care of the customs
clearance aspect of the Import/Export business.

1. CHA is a company accredited with the local customs authorities,

border agencies, port etc.

2. CHA arranges to pass/process the relevant documents at

customs

3. CHA arrange for customs inspections as required

4. CHA check and process Duty and GST payments as applicable

5. CHA apply for refunds / Incentives etc. where applicable

6. CHA cannot issue own bills of lading if not registered or acting

as a freight forwarder

By Paul V Komban
Who is a Freight Forwarder ?

Essentially secures the business of various manufacturer/ trader/

seller/ shipper/exporter and/or end-user/trader/ buyer/ consignee/
importer and has the ability/facility to :

• store cargo belonging to the clients at their warehouse;

• arrange the distribution of the cargo as per the instructions of

their client;

• negotiate freight rates on behalf of his client, with the

transporter –trucking company, rail company, shipping line
and/or air line.

• book the cargo with the transporter as per the requirement of

the client.

Contd…
By Paul V Komban
Who is a Freight Forwarder ? Contd…

• Prepare documentation necessary including lorry / rail

receipt, bills of lading and/or airway bill and associated
documentation as per requirement of statutory authorities
and banks. (Shipping Bill, Bill of Entry, Certificates of Origin,
Insurance, etc.)

• issue their approved cargo receipt -Forwarder’s Bill or house

bill of lading/airway bill as applicable

• Do / arrange Customs Clearance.

• Keep the clients updated about his cargo;

• Update the customer on the changes in Rules and

regulations.

By Paul V Komban
Role of Freight Forwarder

A freight forwarder is responsible for the movement of merchandise

between one location to another, within one country or multiple or
another country and distribution, after completing all
documentation as per law and the requirement of his client.
Freight forwarding companies specialise in arranging the whole
process from :
a. collection of merchandise from factory/ warehouse, at origin
b. arrange intermediate storage,
c. sort & pack, repack, and label,
d. transport to the warehouse of client’s customer, by road, rail,
waterways, sea and/or air,
e. complete all documentation required complying with all rules
and regulations of the countries involved in the movement of
cargo and international trading and banking regulations and to
safe guard his client’s legitimate interest.
f. Give update information to client on timely manner.
Contd…
By Paul V Komban
Role of Freight Forwarder Contd…

a. Collection of merchandise from factory/ warehouse, at origin:

As the Freight Forwarder (FF) helps to organize, safe, efficient
and cost-effective movement of goods, he recommends the
appropriate routing and arranges to collect cargo from Factory.
b. Arrange intermediate storage:
In the process he recommends whether the cargo should be
temporarily moved to a warehouse or should be taken to rail
station or port warehouse or port itself, so as the factory or
clients warehouse can be emptied for storage to new
production or other materials. If so FF has to arrange storage
at optimum cost.

Contd…..

By Paul V Komban
Role of Freight Forwarder Contd……

c. Sort & pack, repack, and label:

If his client requires additional sorting and packing and

labeling or if the cargo requires palletizing or additional
bundling or any other packing change, the FF arranges the
same at the origin. He arrange to do the same at the
destination if it is more economical to do the above activities
at the destination.

d. Transport to the warehouse of client’s customer, by road, rail,

inland waterways, sea and/or air:

If the client so require the FF is capable of moving the cargo

by pre-decided mode of transport, to the client’s customer.
He will have capabilities to sort, repack or label the cargo as
required by the customer.

Contd….
By Paul V Komban
Role of Freight Forwarder Contd…….

e. Complete all documentation required complying with all rules

and regulations of the countries involved in the movement and
international trading and banking regulations, safe guarding his
client’s legitimate interest:

The FF has the responsibility to safe guard the interest of his

client and comply with all rules and regulations –Country
regulations (Customs, Border security, Import-Export Policy,
Foreign Exchange Regulations, etc..), International trading
regulations (INCO Terms, Shipping Laws, etc..) and banking
regulations (UNIFORM CUSTOMS & PRACTICE (UCP) 600,
INTERNATIONAL STANDARD BANKING PRACTICE (ISBP), etc.).
The FF has to complete all documentation, as required by
international laws and laws of all the countries from, to and
through the cargo is moved.

Contd……
By Paul V Komban
Role of Freight Forwarder Contd….

f. Give update information to client on timely manner:

It is most important for the trade to know the whereabouts of
their cargo. The IT (Information Technology) revolution has
made it as one the most important function of FF. In most of the
cases the customers usually depend on the FF for updating him
of changes in the rules and regulations relevant to international
trade.
The Freight forwarder may be asked by the manufacturer/trader to
undertake all or part of the responsibilities mentioned above,
depending on his ‘Term of Sales’.

They act as an intermediary between the manufacturer/trader and

the service provider/s for all the above services and liaising with
various service providers including carriers to negotiate on price
and decide on the most economical, reliable and fastest route.

Contd….
By Paul V Komban
Role of Freight Forwarder Contd…

A freight forwarder acts as an agent when he performs functions

on behalf of, and under the instructions of, the principal (the
exporter or importer).

As an agent, the forwarder will procure the services of third

parties, if he does not have needed capabilities.

The freight forwarder works out the best method and route for
moving large volumes of freight from the point of origin to the
destination, utilizing several modes of transport (e.g. road, rail,
air and sea) and ensuring that the cargo reaches its destination
in the least possible amount of time, in an environmentally
friendly and safe manner and at the most affordable rate.

Contd….

By Paul V Komban
Role of Freight Forwarder Contd…

Well-established freight forwarders will have experience in the

business and incredibly strong network of his own or contracted.

In a nutshell a International FF should have strong capabilities

and expertise in routing, networking, costing, finance,
international trading and banking laws, laws of customs,
transportation and warehousing in various countries, international
transportation laws (Road, Rail, Water –Sea, river, canals - Air)
and have a strong network of people or companies.

International freight forwarders typically handle international

shipments. There are Freight forwarders who manages only
domestic movements of the cargo.

By Paul V Komban
Freight Forwarders Associations in India

Some of the major associations of freight forwarders in India are

 Federation of Freight Forwarders' Associations in India -

(FFFAI),

 Air cargo Agents association of India -(ACAAI),

 Association of Multimodal Operators of India -(AMTOI),

 Consolidators Association of India -(CAI).

Contd….

By Paul V Komban
Freight Forwarders Associations in India Contd…
FFFAI:
The main object of the Federation is to organize united action to project and
promote the interests of the profession in all its aspects at the national
level; and for that purpose to co-ordinate the activities of the Customs
House Agents Associations and their members ; to collect and disseminate
information to members on subjects of common interest ; to take part in
conferences; to help members and to acquaint the authorities with their
common problems, to protect and to improve the common benefits, to get
redressal of legitimate grievances by all peaceful and constitutional means
and procedures to exercise beneficial supervision over the clearing trade
with a view to maintain a high standard of integrity and public confidence;
to evolve a code of ethics for the Customs House Agents and/or members
of the Federation.

Federation of Freight Forwarders' Associations in India (FFFAI) is the Apex

Body and the Sole Representative of 28 Member Associations from all over
India representing 6500 Customs Brokers (employing over 1,10,000 people).
In addition, organisation that is directly or indirectly connected with freight
forwarding, shipping and commerce are also associated with FFFAI.
Contd….
By Paul V Komban
Freight Forwarders Associations in India Contd….
ACAAI:

ACAAI is the National Association representing the air cargo industry in

India. Founded in 1970 with 16 members, currently has a strength of almost
700 members. ACAAI endeavors to safeguard and promote the interests of
it’s members by providing them professional assistance and guidance on
relevant matters of concern to them and the industry.

ACAAI promotes the growth, development and professionalism of the air

cargo industry in India. The Association provides a regular medium for
dialogue with the members’ principals, the airlines, their customers, the
exporters and importers, and various Government Departments and
Authorities. ACAAI maintains close contacts with world bodies related to the
air cargo trade, and represents matters affecting our country's air freight
forwarding industry at various international fora. ACAAI gathers useful
information about different aspects of the industry, and disseminates the
same to it’s members through regular circulars and updates.

Contd…

By Paul V Komban
Freight Forwarders Associations in India Contd…

AMTOI :

AMTOI was established in the year 1998. The main objects of the
association are to organize multimodal transport operators at national
level, to study the issues faced by MTOs and seek resolution with
appropriate authorities, to promote multimodal transport services in
domestic and foreign trade, to improve the quality of such services and
reduce transaction costs, to facilitate skill development for logistics
sector, and to promote implementation of cargo community system.

CAI:

Consolidators Association of India CAI came into existence to protect

and promote the interest of consolidators at international level so that
they could continue to benefit the eximtrade by providing competitive
transaction cost for export and import of LCL Cargoes with top notch
quality service.

Contd…

By Paul V Komban
Difference between MTO and FF
As defined in THE MULTIMODAL TRANSPORTATION OF GOODS
ACT, 1993 Chapter1, Article 2 Section (m):

“multimodal transport operator” means any person who--(i)

concludes a multimodal transport contract on his own behalf or
through another person acting on his behalf; (ii) acts as principal,
and not as an agent either of the consignor, or consignee or of the
carrier participating in the multimodal transportation, and who
assumes responsibility for the performance of the said contract;
and (iii) is registered under sub-section (3) of section 4;.

As already discussed earlier, the Freight Forwarder even though

undertake all the activities as an multimodal Transport operator
(MTO), a freight forwarder acts as an agent when he performs
functions on behalf of, and under the instructions of, the principal
(the exporter or importer). As an agent, the forwarder will procure
the services of third parties, if he does not have needed capabilities.
Contd…
By Paul V Komban
Difference between MTO and FF Contd…

So both, MTO & FF is responsible for the movement of

merchandise between one location to another, within
multiple countries and distribution, after completing
all documentation as per law and the requirement of
his client, FF does it as an agent of the owner of the
cargo while the MTO does it as owner of the cargo with
defined liabilities and responsibilities

By Paul V Komban