Industry Profile

The Indian express industry is set for sizzling growth, despite rising usage of facilities like short messaging services or multimedia message services. Several large-sized corporate and multinational express players are keen on acquiring controlling stake in some of established Indian courier companies. India's express industry is expected to register a growth of at least 20 per cent per annum during the next five years and more than double its size by 2012.Opening of banking, insurance, retail, aviation and telecom sectors and their penetration to smaller cities would be the major growth driver. The size of India's courier industry currently stands at around Rs 7,100 crore (Rs 71 billion) and is estimated to have grown at a CAGR of around 33 per cent over the past decade. At its current estimated size, the courier industry is larger than the tea industry and close to the size of paper and shipping industries in India. The industry ranks amongst the fastest growing segments of the Indian economy and over the next five years, it is expected to register a growth rate higher than of industries such as retail, banking, financial, chemical and automobiles. The industry is highly fragmented with more than 2500 express players and a few large sized players account more than half of the industry revenues. The industry contributes more than Rs 1000 crore (Rs 10 billion) to the government revenues by way of service tax, income tax and other levies and it offers employment opportunity to about a million people. The organized part of the express industry in India is 65 per cent of the total market. "Organized sector in the domestic market is little less than 50 per cent. The unorganized and semi organized segments, which consist largely of regional and intra-city service providers account for the rest.

Amongst domestic players Blue Dart, DTDC, First Flight and Overnite Express are leading express services companies in India while UPS, FedEx, DHL and TNT are leading international players presence in the country. These industry players earn about 52 per cent of its revenues from document parcels. Challenges faced by the industry include matching upto the rising expectations of the customer, expanding the network to reach hitherto uncovered areas, containing rising fuel and freight costs and retention of manpower. Need for private express players: While the domestic courier industry in India is booming at a 25% annual growth rate, the amount of mail handled by India's largest 'courier firm', the India Post, the government-run postal service, has shrunk by a whopping 50% over the past five years. There aren't any better examples to capture the collapse of government-controlled institutions at a time when the Indian economic growth is being praised around the world. Also the Speed Post, which is supposed to be one of the fastest and best services of the Indian Post, is under major criticism from the people.

DHL & its competitor strategy: DHL, with its bold yellow and red corporate colors, initiated a major marketing campaign about two years ago with the pitch, Competition. Great for you. Bad for them. While some advertisers shy away from attacking their rivals by name, DHL did exactly that. Some television ads showed DHL drivers and trucks outmaneuvering FedEx and UPS. Obviously, DHL believed acknowledging its two larger competitors created an opportunity for the upstart brand to be seen as a credible third member of the pack. DHL has moved into the next phase of its branding campaign with current advertising that focuses on superior customer service.

DHL & its competitors inception in the Indian market : All the foreign companies UPS, FedEx, TNT and DHL initially entered the Indian market through alliances with Indian players, hoping to leverage the strong distribution network of their domestic partners. DHL tied up with AFL, Fedex with Blue Dart, UPS with Elbee, and TNT with Skypak. Both Elbee and Skypak were strong domestic players and leveraged their networks to garner business for their foreign partners. With the changing market, players who had previously concentrated only on the small packages started delivering packages of up to 25 kg across countries. The industry became technology-savvy and streamlined its operations using e-tracking. As the market grew, competition intensified and business changed, the existing ties floundered and the foreign companies forged new ties and looked for new acquisitions, even as they announced major investment and expansion plans. DHL, the worlds leading express and logistics company, offers express and logistics services in India. In 2004, it acquired a majority stake in Blue Dart Express Limited, South Asias largest integrated air express, courier and logistics company, for Rs 720 crore by buying the stakes of the founding shareholders of Blue Dart and Schroder Capital Partners. While DHL Express offers international express services, Blue Dart caters to the domestic market. Blue Darts operations are supported by a fleet of five Boeing 737 freighters and 3,429 ground vehicles. In 2004-05, Blue Dart handled 42.02 million shipments in India and 0.53 million shipments internationally. India is one of the fastest growing markets for DHL Express in the Asia Pacific region.. In September 2006, the Netherlands based TNT Express, which was the first multinational brand in India to offer both international and domestic services using an integrated air and road network, acquired Speedage Express Cargo Services, a division of Mumbai-based ARC India Ltd, for Rs 200 crore as part of its strategic 3

objective to become the leading provider of express deliveries in India. TNT is going to investing 100 million euro ($121 million) in the Indian market over the next five years. In 2002 Federal Express, which began operations in India in 1984 and 13 years later became the first express company to launch an all-cargo flight to India, parted ways with Blue Dart, with which it had an agreement since 1984, and formed a new association with little-known Prakash Airfreight. In July 2007 Federal Express made an unsuccessful bid to acquire Safe Express, a home grown company that was started by Pawan Jain in 1995 and has grown to be one of the largest logistics companies in India, which has over 3,000 vehicles, 3 million sq ft of warehouse space and delivers over 2.5 million packages a month. As the domestic players seek to expand they have attracted the interest of private equity funds. Anil Ambanis Reliance Private Equity, a division of the listed Reliance Capital, has acquired a 44 per cent stake in DTDC Courier and Cargo Ltd, a large Bangalore-based courier and express player, for Rs 65 crore. First Flight, Indias second largest courier company, which handles over 85 million consignments through its network of 700 offices, is looking to garner investment of over Rs 100 crore from private equity firms. It plans to invest these in setting up 14 warehouses in key cities and acquire larger aircraft. Elbee Express, which offers an integrated express service network for the distribution of consignments, documents, parcels and commercial goods covering 11,600 locations in 1,645 cities and 643 towns in India, has invested significant resources in state-of-the-art customer service centers and staff training, to ensure high and efficient service levels.

Conclusion There are many risks and obstacles for companies attempting to enter the market the industry suffers from congestion, fragmentation, over-regulation, a weak transport network, inadequate infrastructure, complex tax laws and insufficient technological aids but all this hasnt prevented a host of logistics operators from establishing a growing presence in the market.

Company Profile

DHL is the first letters of the last names of the three company founders, Adrian Dalsey, Larry Hillblom and Robert Lynn. In 1969, just months after the world had marvelled at Neil Armstrong's first steps on the moon, the three partners took another small step that would have a profound impact on the way the world does business. The founders began to personally ship papers by airplane from San Francisco to Honolulu, beginning customs clearance of the ship's cargo before the actual arrival of the ship and dramatically reducing waiting time in the harbour.With this concept, a new industry was born: international air express, the rapid delivery of documents and shipments by airplane. The DHL Network continued to grow at an incredible pace. The company expanded westward from Hawaii into the Far East and Pacific Rim, then the Middle East, Africa and Europe. By 1988, DHL was already present in 170 countries and had 16,000 employees. At the beginning of 2002, Deutsche Post World Net became the major shareholder in DHL. By the end of 2002, DHL was 100% owned by Deutsche Post World Net. In 2003, Deutsche Post World Net consolidated all of its express and logistics activities into one single brand, DHL. The DHL brand was further strengthened by Deutsche Post World Net's acquisition of Exel in December 2005. The DHL expertise is pooled from a number of companies acquired by Deutsche Post World Net. To name a few: Exel: at the time Deutsche Post World Net acquired Exel in December 2005, it had around 111,000 employees in 135 countries. Exel primarily offers transport and logistics solutions for key customers.

DHL is the global market leader in international express, overland transport and air freight. It is also the world's number 1 in ocean freight and contract logistics. DHL offers a full range of customised solutions - from express document shipping to supply chain management. Logistics DHL is the global leader in logistics - with more highly experienced professionals at more locations in more countries than any other provider. DHL goal is to build strong, long-term partnerships with customers by providing world class services, across all operations. The new DHL brand architecture With the acqusition of Exel plc in December 2005, Deutsche Post World Net (currently known as Deutsche Post DHL) further strengthened its logistics power. As a result, DHL is now operating with two new logistics brands: DHL Supply Chain and DHL Global Forwarding. To cover all of customer service needs, DHL operates under five specialist divisions DHL Freight DHL Freight offers international and national transport solutions for part and full load in Europe. DHL move goods by road, rail and a combination of the two. DHL Freight covers the former DHL's non-documents and non-parcels business as well as the former Danzas Euro cargo road transport business.

DHL Express DHL Express is the perfect partner for all worldwide express and parcel needs. DHL Network covers over 4,000 offices and more than 120,000 destinations worldwide. DHL Express is the result of the consolidation of the former DHL Worldwide Express business and the Deutsche Post Euro Express parcels business and offers Same Day, Express, Parcel and Freight services. With DHL, customer can rely on one company for all their express shipment needs - whether local or global. DHL provide the following option to their customer for the service they are looking for. DHL Global Forwarding DHL Global Forwarding is the market leader in air and ocean freight and a project logistics services provider operating worldwide. A range of value-added services rounds off the product and service portfolio, giving an excellent market position and providing customers with a unique service dimension worldwide. DHL Global Mail Global Mail offers comprehensive international mail services and provides outstanding expertise in international direct marketing services and publication solutions. DHL Supply chain Regardless of whether customer operate in the healthcare, technology/aerospace, automotive/industrial or retail/consumer/fashion sectors, DHL can handle all of complex, global logistics tasks: DHL Supply Chain provides customer with customized, IT-based solutions along the entire supply chain. As well as core procurement logistics, warehousing and sales logistics operations, DHL offer top-flight value-added services such as finishing, co-packing, price 8

labelling, billing, order processing - all the way to sales promotion and financial services. DHL goal is nothing less than to transform the logistics industry and to deliver beyond customers' expectations wherever and whenever they need - by offering the most comprehensive suite of services and becoming the only genuine one-stop source for logistics solutions, globally. A supply chain is the flow of goods, information and finance. It typically starts by sourcing raw materials or semi-finished goods, which are scheduled and transported into factories to be made into finished products (see Diagram 1.0). These then pass through warehouses or distribution centres and are delivered to retailers, wholesalers or direct to consumers' homes or business premises. Finally, aftermarket activities involve the maintenance and repair, or the return and recycling, of products at the end of their life. Supply chain planning optimises overall flows and inventories, by balancing resources with demand at all stages.

Diagram 1.0 - Supply Chain model

TSP: Shipment Movement Process

Booking

Dispatch

Pick Up

O/Bound

Export

Transfer

Import

I/Bound

Delivery

Four main functional teams of DHL staff are involved during these 9 stages to capture the various checkpoints which provide information on a shipments status. They are Courier, Gateway, Operations and Hub. Booking: Booking is the standardized process of accepting and processing shipment pick-up requests,changes and cancellations from customers. Dispatch: Dispatch is the standardized process of allocating and submitting pick-up requests to couriers and communicating any pick-up changes,cancellations or messages. Pick-up: Pick-up is the standardized process of accepting shipments for carriage (including packaging and paperwork) from customers. Outbound: Outbound is the standardized process of preparing shipments for onward transportation to the next or final destination by the local Service Centers. Export:

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Export is the standardized process for consolidating international shipments to a moment,lodging shipments with handling agents/carriers and advising destination of flight information.

Transfer: Transfer is the standardized process for Break-bulk,trans-shipment and/or reconsolidating shipments and handling units at an intermediate point in the network. Import: Import is the standardized process for clearing international shipments for Inbound or to Bond management(for shipments not cleared on arrival at destination). Inbound: Inbound is the standardized process of sorting ahipments to delivery routes at the local Service Center. Delivery: Delivery is the standardized process oftransferring the custody of shipments to consignees or the nominees.

Courier

Couriers have direct contact with our customers and therefore their interaction with our customers is either during the pick-up of a shipment or during the delivery of a shipment.

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As soon as a shipment is picked up from the customer, the courier scans the shipment to capture the PU Shipment Pickup checkpoint.

When a shipment is ready for delivery, the courier scans the shipment to capture the WC With Delivering Courier checkpoint. This reports that a shipment has been allocated to a delivery route and a delivery attempt will be made. Upon the successful delivery of a shipment, the courier enters the OK Delivery checkpoint that reports the successful delivery of a shipment.

The courier may capture other checkpoints for events that are variations to the generic shipment movement process flow. All checkpoints that may be captured by a courier are listed in the table below.

Courier Checkpoint List Checkpoint BA Bad Address Description Reports that a delivery cannot be completed without better address information CA Closed on Arrival Reports that a receivers business premises were closed and delivery could not be completed CM Customer Moved Reports that the receiver is no longer at the delivery address shown on the AWB DD Delivered Damaged Reports that the receiver has accepted delivery of a shipment but considers the shipment damaged or contents missing at time of delivery ND Not Delivered Reports that a shipment was with a delivery 12

Courier Checkpoint List Checkpoint Description courier but delivery has not been attempted or completed and where no other service incident applies NH Not Home Reports that no one was available or authorised to accept the shipment at the time delivery was attempted to the receivers private address or temporary accommodation (hotel) OK Delivery PD Partial Delivery Reports the successful delivery of a shipment Reports that a delivery has been made and signed for, but with one or more shipment pieces unavailable at the time of delivery PU Shipment Pick-up Reports the physical receipt of a shipment from the shipper RD Refused Delivery Reports that the receiver has refused to accept delivery of the shipment

RT Returned to Consignor SI Security Inspection

Reports that a shipment is being returned for a specific reason to the shipper or DHL origin Reports that all pieces of a shipment have been inspected by DHL for security purposes

WC With Delivering Courier

Reports that a shipment has been allocated to a delivery route and that a delivery attempt will soon be made. (Delivery details are expected on the same day as the shipment is reported out for delivery)

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Operations

Operations are facilities where shipments are prepared for export or, for delivery after having completed import procedures.

Checkpoint capture in these facilities may be at individual shipment level or at a handling unit level (eg. a batch of shipments in a container).

The checkpoints to be captured during this phase of the shipment movement process in Operations are listed in the table below.

Operations Checkpoint List Checkpoint AD Agreed Delivery Description Reports that a shipment has arrived at the destination Service Centre and is awaiting its expected and scheduled delivery date AR Arrival in Delivery Facility BA Bad Address CA Closed on Arrival Reports the arrival of a shipment at the destination delivery facility Reports that a delivery cannot be completed without better address information Reports that a receivers business premises were closed and delivery could not be completed CC Awaiting Consignee Collection Reports that the shipment is awaiting receiver collection at a DHL location as per customer request 14

Operations Checkpoint List Checkpoint CO - Transport Collect Description Reports that a shipment is to be billed Transport Collect and to indicate the billing amount for the shipment CS Closed Shipment Reports that a shipment is missing after all standard efforts have been made to locate it CU Confirmed Uplift Reports that the handling unit/shipment uplift by a movement operator has been confirmed to DHL. This may or may not affect the Service Commitment for each shipment DI Customer Duty and Tax Invoice DF Depart Facility Reports that an invoice has been created for duty/tax/Transport collect charges for a shipment Reports the departure of a shipment from the control of a DHL facility DM Damaged Reports damage to all or part of the shipment or packaging. May or may not result in a service failure DS Destroyed/Disposal Reports that a shipment has been destroyed under instructions or as part of standard procedures FD Forwarded to Third Party Delivery AgentDelivery Details Expected HI Lodged into held Inventory Control HO Lodged out of held Inventory Control Reports the hand over of a shipment to a third party delivery agent when DHL has contracted for delivery details to be returned by the agent Reports that a shipment has been lodged into the held inventory control section Reports that a shipments held in inventory status has been resolved and the shipment is ready to be taken out for further processing HP Held for Payment Reports that a shipment is on hold at a DHL facility pending payment of any applicable fees, and that 15

Operations Checkpoint List Checkpoint Description delivery has not as yet been attempted IA Image Available Reports that images of shipment paperwork have been made available to the network MC Miscode Reports that a shipment has been received at a DHL Facility with an incorrect service area code shown on the Airwaybill, shipment or product label MD Missed Delivery Cycle MS Missort Reports that a shipment has missed the current courier delivery cycle Reports that a shipment has been incorrectly sorted, despite the correct destination service area code present on both the Airwaybill and the package OH On Hold Reports that the progress of a shipment has been suspended, and that the shipment is being held securely at a DHL facility until progress can continue OK Delivery PL Processed at Location RT Returned to Consignor RW Reweigh Reports the successful delivery of a shipment Reports the outbound processing or transfer of a shipment and its location Reports that a shipment is being returned for a specific reason to the shipper or DHL origin Reports that a piece has been reweighed during the outbound process SC Service Changed Reports that a change in service has been made to a shipment in transit SI Security Inspection Reports that all pieces of a shipment have been inspected by DHL for security purposes

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Operations Checkpoint List Checkpoint SM Scheduled for Movement SS Stopped Shipment Description Reports that a shipment is now scheduled to move on a specified date and time Reports that a shipments progress has been stopped by an official government authority and that the shipment will not be delivered or returned to DHL ST Shipment Intercept Reports that a special handling instruction has been raised against a shipment TP Forwarded to Third Party-No Delivery Details Expected Reports that a third party will deliver a shipment. No delivery details are expected

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Gateway

Gateway is the DHL facility that processes shipments through import and export procedures. Many of the procedures at Gateway involve a third party such as customs, other government regulatory authorities, airlines and airport ground-handling agents.

The checkpoints to be captured by Gateway are listed in the table below.

Gateway Checkpoint List Checkpoint AF Arrived Facility Description Reports the arrival of a shipment at a DHL transit facility BL Bond Location Identifies the exact physical storage location of the shipment in the bond facility BN Customer Broker Notified Reports that the customers broker has been contacted to arrange for the clearance of the shipment BR Cleared and Delivered by Customers Broker CD Controllable Clearance Delay Reports the transfer of responsibility for a shipment and related documentation to a customer nominated broker Reports that a shipments progress has been delayed because import, export or transit clearanceprocessing requirements cannot be completed due to a reason that has been agreed to be within DHLs 18

Gateway Checkpoint List Checkpoint Description control CR Clearance Release CS Closed Shipment Reports a shipments release from clearance processing or from a bonded area Reports that a shipment is missing after all standard efforts have been made to locate it CU Confirmed Uplift Reports that the handling unit/shipment uplift by a movement operator has been confirmed to DHL. This may or may not affect the Service Commitment for each shipment DF Depart Facility Reports the departure of a shipment from the control of a DHL facility DI Customer Duty and Tax Invoice DM Damaged Reports that an invoice has been created for duty/tax/Transport collect charges for a shipment Reports damage to all or part of the shipment or packaging. May or may not result in a service failure DS Destroyed/Disposal Reports that a shipment has been destroyed under instructions or as part of standard procedures ES Entry Submitted Reports that a completed customs entry has been submitted to Customs for processing HI Lodged into held Inventory Control HO Lodged out of held Inventory Control Reports that a shipment has been lodged into the held inventory control section Reports that a shipments held in inventory status has been resolved and the shipment is ready to be taken out for further processing HP Held for Payment Reports that a shipment is on hold at a DHL facility pending payment of any applicable fees, and that delivery has not as yet been attempted 19

Gateway Checkpoint List Checkpoint IC In Clearance Processing MC Miscode Description Reports that a declarable shipment is under routine clearance processing Reports that a shipment has been received at a DHL Facility with an incorrect service area code shown on the Airwaybill, shipment or product label MS Missort Reports that a shipment has been incorrectly sorted, despite the correct destination service area code present on both the Airwaybill and the package NA Not Arrived Reports that a pre-alerted WPX shipment has not physically arrived on the advised linehaul movement OH On Hold Reports that the progress of a shipment has been suspended, and that the shipment is being held securely at a DHL facility until progress can continue PL Processed at Location RR Response Received Reports the outbound processing or transfer of a shipment and its location Reports that Customs has provided or updated a status for a house airwaybill entry which has been submitted to Customs for processing RT Returned to Consignor SC Service Changed Reports that a shipment is being returned for a specific reason to the shipper or DHL origin Reports that a change in service has been made to a shipment in transit SI Security Inspection Reports that all pieces of a shipment have been inspected by DHL for security purposes SM Scheduled for Movement SS Stopped Shipment Reports that a shipment is now scheduled to move on a specified date and time Reports that a shipments progress has been 20

Gateway Checkpoint List Checkpoint Description stopped by an official government authority and that the shipment will not be delivered or returned to DHL ST Shipment Intercept Reports that a special handling instruction has been raised against a shipment TD Transport Delay Reports that a delay has occurred to a handling unit during transport between two DHL facilities. This may or may not affect the Service Commitment for each individual shipment UD Uncontrollable Clearance Delay Reports that a shipments progress has been delayed because import, export or transit clearanceprocessing requirements cannot be completed due to a reason that has been agreed to be outside of DHLs control Hub

The Hub is the facility where shipments are consolidated for loading onto departure flights or, shipments are received on behalf of a Gateway. Many of the procedures at the Hub involve a third party such as airlines and airport ground handling agents.

The checkpoints to be captured by the Hub are listed in the table below.

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Hub Checkpoint List Checkpoint AF Arrived Facility Description Reports the arrival of a shipment at a DHL transit facility CS Closed Shipment Reports that a shipment is missing after all standard efforts have been made to locate it CU Confirmed Uplift Reports that the handling unit/shipment uplift by a movement operator has been confirmed to DHL. This may or may not affect the Service Commitment for each shipment DF Depart Facility Reports the departure of a shipment from the control of a DHL facility DM Damaged Reports damage to all or part of the shipment or packaging. May or may not result in a service failure DS Destroyed/Disposal Reports that a shipment has been destroyed under instructions or as part of standard procedures MC Miscode Reports that a shipment has been received at a DHL Facility with an incorrect service area code shown on the Airwaybill, shipment or product label MS Missort Reports that a shipment has been incorrectly sorted, despite the correct destination service area code present on both the Airwaybill and the package OH On Hold Reports that the progress of a shipment has been suspended, and that the shipment is being held securely at a DHL facility until progress can continue PL Processed at Location RT Returned to Reports the outbound processing or transfer of a shipment and its location Reports that a shipment is being returned for a 22

Hub Checkpoint List Checkpoint Consignor SC Service Changed Description specific reason to the shipper or DHL origin Reports that a change in service has been made to a shipment in transit SI Security Inspection Reports that all pieces of a shipment have been inspected by DHL for security purposes SM Scheduled for Movement Reports that a shipment is now scheduled to move on a specified date and time

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Hub Checkpoint List Checkpoint SS Stopped Shipment Description Reports that a shipments progress has been stopped by an official government authority and that the shipment will not be delivered or returned to DHL ST Shipment Intercept Reports that a special handling instruction has been raised against a shipment TD Transport Delay Reports that a delay has occurred to a handling unit during transport between two DHL facilities. This may or may not affect the Service Commitment for each individual shipment

Research Objective and Its Background

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Research Background: Clearance process is an important activity in the express company. In the express company clearance process involve the submission of the required paper work to the customs concerning to a particular shipment arrived (import) at the customs or the shipment that need to be sent to other country (export). So it is important to understand clearance process followed in an organization and what are the activities involved in it. When the shipment arrived at the consignee country, shipment has to get the approval of customs inorder to clear the shipment on a particular duty.In the process of clearance from the Mumbai customs,many queries were raised regarding various technicalities and documents of the shipment.Due to this reason,the Bond Rate(number of Shipment remain unclear from customs) of DHL increased.One of the major reason for the above problem was of improper documents submitted by DHL to the Mumbai customs.In DHL shipment documents are submitted by Clearance support agents(CSA) along with the help of Skyline team and Clear on Arrival team(COA). The project given to me was to identify the Non-Value added activities in process of each team and the time they take for submittting documents of each shipment,and suggest recommendations for the same.

Research Objective: To study the clearance process. To study the Documents preparation process carried out by respective teams. To identify the Non-Value added activities in the respective teams. To find out the possible reasons causing such problems. To suggest recommendations 25

Research Methodology
DHL express is divided into separate departments or parts like COA(Clearance on Arrival), CSA(Clearance support agent), BOE (Bill of entry) filling, NCG(Network control group), Operations & Warehouse. The clearance process is undertaken by all of the above teams. For understanding the clearance process & to improve the process, both Primary as well as Secondary data collection methods were adopted. More emphasis was given on Primary Method of data collection.

Primary Data Collection Method: The Primary Data was collected by personal interaction with responsible employees and through field work. DHL express is divided into separate departments or parts like COB(Clearance on board), CSA(Clearance support agent), BOE (Bill of entry) filling, NCG(Network control group), Operations & Warehouse. Every department is important to accomplish activities, so information was collected from each department. As there are various departments in the express unit, the information was collected from the employees of each department. An activity related to information from different departments with each other was better understood from the IT Department. The entire custom clearance process was understood with the help of the custom officials in the courier department.

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Secondary Data Collection Method: For Secondary Data Collection websites were used. From websites, a rough idea regarding services offered and their management was studied. But the actual information was collected through the employee of the various departments. Also websites of Customs and of courier companies were used for the data collection. Companies websites provided information mainly on services offered. From Customs websites information on customs rules and regulations was collected. Financial Reports of the last three months of the company was studied to understand the problems in the billing process of the company. In order to understand the core reasons causing the problems, software named Importing Accounting System (IAS) was used. The software IAS helped to give every minute detail like the procedures, date and time of each procedure carried on the shipment from the time it was booked at its origin to the time it was delivered to customer. PC DOC another software was used to get the print of the original DDR. Gone through the software Special Clearance Module(SCM) inorder to study the status of current and past shipment details.

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CUSTOMS CLEARANCE PROCESS

Customs basic Whenever any good(s) enter or leave a country, they are regulated by the law of that country. In India, Custom Regulations are governed by the Indian Customs Act 1962. Why are goods regulated? Safeguard industry Safeguard domestic market from foreign competition, thereby restricting unwanted competition Prevention of Illegal and Illicit commodities Drugs, Narcotics, Illicit Films, Religious grounds, Smuggling. Natural Laws Protect nature and the environment International laws Eg. WTO Due to these regulations, goods crossing over international boundaries are regulated Import or Export of Goods is regulated by whom: -

Director General of Foreign Trade (DGFT) under the Ministry of Commerce and Trade (MoC&T) Central Board of Excise and Customs (CBEC) under the Ministry of Finance (MoF)

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Allied

Laws

&

Regulations

of

other

related

Government

Departments / Ministries. World Trade Organisation (WTO) and General Agreement for Trade and Tariffs (GATT)

Regulatory Bodies: Ministry of Commerce & Trade: Is responsible for the countrys external trade and related matters connected with it. It formulates policies in the sphere of foreign trade, in particular the Export Imports (EXIM) Policy of the country also known as Foreign Trade Policy. Director General of Foreign Trade (DGFT): Is primarily responsible for the issuance of import-export Code numbers, grant of import-export Licenses, issue of Advance Release Orders and other matters specified in the import-export Policy & Procedures (EXIM policy). The DGFT is responsible for actually framing the various laws to promote trade as well as safeguard the industry. The DGFT is responsible for implementing policies laid down by the Ministry of Commerce and Trade. Ministry of Finance: Has overall responsibility of Customs rule regulation and procedure. It announces the budget in every financial year depending upon which, duties and taxes change every financial year. Central Board of Excise and Customs (CBEC): Central Board of Excise and Customs (CBEC) is a part of the Department of Revenue under the Ministry of Finance. It deals with the tasks of formulation of policy concerning levy and collection of Customs and Central Excise duties, prevention of smuggling and administration of matters relating to Customs, Central

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Excise and Narcotics to the extent under CBEC's purview. The CBEC implements the policies relating to customs and excise laid down by the Ministry of Fina Scope of the customs: Objectives of Customs Department: Protection of national economic, commercial & business interests & combating economic & commercial fraud Protecting Domestic Industry Collection of duties & taxes & compliance to fiscal & statistical regulations Regulating trade with other countries in applying national rule. Facilitating trade with other countries Combating illicit trafficking, particularly in drugs & other threats to society Check and oversee the laws that have been framed by the GOI and the DGFT, are being followed. Process for clearance followed by Custom Authorities: When goods enter the country, the Custom Authorities will follow regulatory clearance procedures to oversee the entry of the goods and for calculation of the duty. The broad process is as follows:1) The authorities ensure that the various laws are being abided. (Eg: If a drug is prohibited under a certain act, that will not be cleared by Customs and the action will be taken as per that law). 2) The commodity is also checked according to the policy it falls under (Prohibited, Restricted, Canalized, and Free). 3) The commodity is then classified according to the ITC code. 4) If it comes under the purview of the free policy, then the allied laws are checked. 30

5) The duty is calculated based on the type of commodity as per the ITC classification 6) The commodity is cleared by the customs after ensuring duty payment.

Classification of Goods:

1) The basic reason for classification is for understanding the nature of the goods, without physical checking of the goods. 2) Goods that enter international trade are not charged to a single rate of customs duty by the importing / exporting country. It is required that such goods which enter the international trade are grouped into exclusive similar categories / class of goods [chemicals, metals, textiles, machinery, etc.] and enumerated on the basis of well defined criteria. 3) The sub division and enumeration of all goods entering International trade along with well defined rules of interpretation, form what is normally termed as the nomenclature of goods, in a country. 4) Governments utilizes the nomenclature as the basis for prescribing appropriate duty on goods imported / exported. The nomenclature combined with the duty rates is called the Tariff. As the tariff is normally a part of the Tariff Act in a country, it is called the Tariff Schedule. There are various methods of classifying the goods: According to the Policy: Prohibited goods Restricted goods Canalized goods 31

Free goods

According to the nature of the commodity this is done through the ITC (International Tariff Code) which is a 8 digit harmonization code.

Modes of Clearance Modes

Courier Mode Weight: <70 kgs. Value: <INR 1,00,000 Goods: Samples (<INR 25000) Gifts (<INR 50000) Dimensions: <=118x88x120 cm

Cargo Mode Weight: No weight Limit Value: No value Limit Goods:Commercial & Non commercial Shipments,free goods Dimensions: No Dimension limit

Two Modes of clearance: 1. Courier Mode

For regulating such imports and exports, the Government has framed the Courier Imports and Exports (Clearance) Regulations, 1998. Any goods not within Courier Mode regulations go under the Cargo Mode.

Courier mode can have 1 BOE for 10 shipments. Authorized couriers (Such as DHL) can clear the shipment

Import:Except for certain excluded categories, all goods are allowed to be imported through the courier mode.

Export:All goods are allowed to be exported though courier mode, except for certain excluded categories. 32

2. Cargo Mode

Cargo mode requires a separate formal BOE for each shipment. Only the CHA can clear the shipment.

Import:Goods be imported through cargo are (a) animals and plants; (b) perishables; (c) publications containing maps depicting incorrect boundaries of India; (d) precious and semi precious stones, gold or silver in any form; and (e) chemicals falling within Chapters 28, 29 and 38 of the Customs Tariff.

Export:Goods to be exported through cargo mode are those which attract any duty on exports or those exported under export promotion schemes, such as Drawback, DEPB, DEEC, EPCG etc. Other exclusions form courier mode include goods where the value of the consignment is above Rs.25, 000/- and transaction in foreign exchange is involved.

Paperwork required for Customs Clearance: 1) Commercial Invoice 2) AWB (Airway Bill)/ Shipping Bill 3) Catalogue or Write up 4) BOE (Bill of Entry) 5) Packing List 6) Any duty exemption certificates 33

7) GATT Declaration 8) IEC (Import Export Code) 9) Purchase Order Copy 10)Authorization letter

Clearance Process Followed by DHL

DHL follows Global Standard Clearance Process which consists of 5 stages as follows:

DATA ADMINISTRATION

CLASSIFICATION

CLEARANCE SUPPORT BROKER REVIEW

DECLARATION
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1) Data Administration DATA CLEANSING Shipment Movement Ensure shipment information is complete and accurate Full names & addresses Check against registered names / addresses (where required) Commercial Ensure commercial information is complete & accurate Accurate reflection of commercial invoice Multi line information is required

DATA CLEANSING PROCESS Do data cleansing from the Customs Alert do not wait for WPX alert Retrieve documents from Clear in the Air (CIA) Check for accuracy in ALL key fields Complete ALL multi-line information After Data Cleansing, the data should be 100% accurate including details of ALL line items Classifier and / or Broker should not need to refer to images

CLEARANCE AGENTS are responsible for Data Administration 35

The Data Administration Agents (DAA) are responsible for preparing shipment records (or files) for customs clearance entry by ensuring that the information available in the shipment record reflects the available data to DHL (in DHL systems, including CIA images, and Customer Database Records). The DAA also assists with general administrative duties related to customs clearance such as the printing, collation, distribution and filing of customs clearance-related documentation ( facility size relative ).

The tasks of the DAA include: Validate and if needed, correct the data elements in the shipment records to ensure that the data elements in the records are in accordance to the approved format and structure acceptable to the regulatory agencies and systems. Verify and if needed, correct the shipment details in the shipment record to ensure that the information in the shipment records are in accordance to the information available in commercial documents provided by the customer and/or customer instructions available in DHLs Customer Database Records Note: In relation to the task stated above, the DAA will ensure that multi-commodities in a shipment are recorded in the shipment record. The DAA will verify the actual number of shipment commodities from the commercial documents available in the shipment. If a shipment record is not available (example over-landed shipments), the DAA will assist to create an initial shipment record

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(or file) for the over-landed shipment using the commercial documents available on the physical shipment Assist in administrative duties within the clearance department such as the printing, collation and distribution of the required customs documentation needed for lodgment of a customs entry. Perform filing and archiving of customs documents for shipments that have been cleared by DHL ( facility size relative ). Perform co-ordination duties within the clearance department as assigned by the duty supervisor, and/or between the clearance department and other DHL departments (e.g. between the clearance department and NCG, or warehouse operations or the accounting department ) and/or external agencies (e.g. between Customs and the DHL clearance department) 2) Classification Auto Classification Manual Classification Goods can be manually classified by Classifier. Calculate duty/tax Check compliance forProhibited & Restricted Commodities Update Categarization

CLASSIFIERS are responsible for Classification The Classification Agents (CA) are responsible for classifying the commodities in a shipment in accordance to the national tariff tables, and determining a preliminary

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assessment of the duties and taxes payable for shipments imported/exported through DHL Express. The tasks of the CA include: Determine the shipment value in accordance to the local valuation guidelines provided by the local authorities Determine and classify the shipment commodities in accordance to the national tariff classifications tables available, and determining the corresponding duty and tax rates, taking into consideration: (1) Country of origin for preferential treatment; (2) Concessions or Exemptions applicable to the shipment commodity or importer/exporter; and (3) Applicable customer instructions recorded in the Customer Instruction Database Records. Compute a preliminary assessment on the duty and taxes payable to the external agencies (including any additional taxes e.g. countervailing or anti-dumping taxes), and fees or charges payable to DHL 3) Clearance Support Contact DHL Origins Contact Destination Customers Permit and licence handling Contact Regulatory Authorities Other Special Handling Third party broker handover

CLEARANCE SUPPORT AGENTS are responsible for Clearance Support 38

The Clearance Support Agents (CSA) will act as the voice of the clearance department to external parties. The CSA will facilitate the clearance of DHL shipments by communicating with customers the clearance requirements and any discrepancies preventing the successful clearance of these shipments. He/She will coordinate with the customer to obtain the necessary shipment information and documents for the clearance department to successfully clear the shipments through the regulatory agencies when the existing information or documents are insufficient to permit successful clearance of the shipments. The tasks of the CSA include: Contact DHL customers (both origin and destination) for clearance-related shipment information or documents when the existing documents or information available are not sufficient for DHL to clear the shipments Provide customer with duty and tax advice notification and to seek payment approval from these customers when the duty and tax amounts payable exceeds DHLs payment limits Collate the clearance documents and coordinate handover of these documents to the assigned broker for BTO shipments. Review the Shipment in Bond inventory report to ensure that these shipments are worked on a daily basis. Maintenance of the customer instructions and customer general information databases to ensure that the databases are up to date and accurate 4) Broker Review Review and finalise declaration prior to lodgement

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Risk management based Final categorisation Create appropriate declaration Assemble supporting paperwork The Broker is responsible for lodging customs entries for shipments that are imported, exported or transshipped through DHL. In lodging this entry, the Broker will ensure that the entry is performed in a timely manner in accordance to DHL performance standards (e.g. COA and BOS) and that both the regulatory compliance requirements and the instructions of customers (if any) are met.

The tasks of the Broker include: Ensure the timely submission of customs entries in order to attain the clearance performance standards set for the location Validate, approve and submit a shipment declaration for the shipment after satisfying himself that the preliminary assessment performed by the Classification Agent is in order, the information in the shipment record is reasonably accurate and complete, and that the regulatory compliance requirements of the governmental agencies and customer instructions have been satisfied. Ensure that the duty and tax payment approvals are obtained before submission of the customs declaration 40

Approve and submit the cargo manifest to the appropriate agencies in accordance to the local requirements

Maintenance of the tariff databases (National, Product and Commodity Databases) , including approving any additions to these databases, to ensure that the databases are up to date and accurate.

Provide technical advice on customs related matters to customers (internal and external), including solutions design inputs for new DHL products

Assist in the preparation of clearance-related reports as assigned by the Customs Clearance Supervisor or Manager

Provide assistance as when required in regulatory audits performed on DHL customs clearance operations

Assist as required by clearance management to prepare for TSP certification, and ensure that compliance is maintained

5) Declaration Lodge declaration with Customs Various declaration types Obtain clearance status Pay Customs Update other systems e.g. Finance, Shipment Movement BROKERS are responsible for Broker Review and Declaration

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Thus, the purpose of each stage is as follows

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In the above 5 stages,my project comes under Classification and Clearance Support.Under this,there are 2 different teams known as Clear on Board(COB) and Clearance Support Agents(CSA).

Clear on Board(COB)
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COB Clearance Prior Clearance Formal Clearance

Hold/Detained

Hold Shipments
Prior Clearance Data is received at 14.00 hrs Update ECE

Detention Shipments Shipments

Download images of AWB and Invoice through CIA Print BOE Attach BOE to images Update ICD and CPF in ECE Prepare BOE for assessment Assessment of BOE Duty payment preparation Re updatation in ECE

Shipments on Hold and Detained Shipments 44

Any shipments left after prior clearance ie they are not cleared, follow the hold shipment process 1. Hold Shipments Prepare BOE for assessment Update ICD and CPF in ECE Assessment of BOE Detention (Warehouse deposit) Duty preparation

Any shipments left after Hold shipment process ie they are not cleared, follow the detained shipments clearance process 2. Detention Clearances Examination Assessment Duty Preparation Clearance (Gate pass)

Formal Clearance For Formal Clearance, all documents are handed over to the Broker for Broker Clearance for which DHL levies a charge of Rs. 1200.

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Clearance Support Agents

Introduction This document deals with the Clearance Support Group Agents (CSA) who form an integral part of the Clearance Department as they communicate and co-ordinate with DHL customers. Purpose The objective of the document is to give an understanding of the working of the CSA and the functions and activities performed by them. Basic Definitions Clearance Support Group Agents (CSA) are those that act as the voice of the clearance department to external parties. The CSA facilitates the clearance of shipments by communicating with customers the clearance requirements and any discrepancies preventing the successful clearance of these shipments. They coordinate with the customer, to obtain the necessary shipment information and documents for the clearance department to successfully clear the shipments through the regulatory agencies when the existing information or documents are insufficient to permit successful clearance of the shipments. Detention Receipts (DR) are receipts, which contain the details of the various shipments that are held by the customs due to various reasons.

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Overview of Activities performed by CSA

Clearance related shipment information CSA contact the customers at both, the origin and destination for any kind of clearance-related shipment information or documents when the existing documents or information available, is not sufficient to clear the shipments.

Repeated Reminders They send reminders and make repeated calls to the customer when shipments are held by customs due to insufficient paperwork or due to non-payment of a large duty amount, which exceeds DHL payment limits. These calls are made everyday, till the customer reverts and completes the necessary formalities or till such time as NCG receives the message so as to abandon the shipment.

Seek payment approval They provide the customer with duty notification and seek payment approval from these customers when the duty and tax amounts payable exceed DHL payment limits.

BTO shipments Collate the clearance documents and coordinate handover of these documents with the assigned broker for BTO shipments.

Shipment in Bond Review the Shipment in Bond inventory report to ensure that these shipments are worked on a daily basis.

Maintain database They maintain databases of customer instructions and customer general information to ensure that the databases are up to date and accurate 47

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Issues Identified
After Studying the complete Process of Import Clearance,certain issues were found out in the process In COB Team Improper Checking of CPF Approximate entry of Freight details Putting shipment on Hold Lack of cooperation between COA team member and CSA Arguments on CTH details among themselves

In CSA Team Lack of time management Number of calls are made to the consignee for asking required documents Lack of co-ordination between CSA and clearance team on field Arguments between CSA and Skyline team member on BoE CSA's dont pick up consignees calls or incoming calls

RECOMMENDATIONS
Majority of their time gets utilized in explaining, or updating others regarding the status of their BoE, there should 1 person in a team to whom all the information about the BoE should be given and all the other people should approach him for any queries rather then disturbing others. In case of regular BoE, team leader should distribute the the files to his team, and for those files Skyline team leader should be a link between CSA and his team members, this will help CSA to know who is preparing which BoE. A lady preparing Cargo BoE spend her half of the time in preparing folders, she can utilized this time in preparing regular BoE and folders can be prepared by the people who make folders for regular BoE. About 3-4 hours of her time can be saved by doing this. Due to large number of calls, pressure is increasing on CSA's and because of this, the effectiveness of calls are going low. Team should set some target calls per day and based on that each CSA should be given average of 50 calls per day. This way they will concentrate on only these number of calls and inturn effectiveness will improve. Communication gap between NCG and delivery team causes release of shipments duty free even if they bear duty due to delay in the billing. In order to bridge the gap between the two, the first process before billing can be the identification and segregation of dutiable goods and separating them from non dutiable ones. Technical Suggestions

1. Updating the database of customer consistently can be useful in long run. 2. Sufficient backup must be available in case of hardware failure such as if a printer is not functioning, the other must be used. 3. Maintaining the centralize database of the paper work required for the various type of shipment can be useful in the long run

LIMITATIONS

As DHL counter present at the airport is the Customs controlled area it was difficult to get much information regarding rules and regulations which were largely

The relevant literature review on the billing process in DHL was not available. Primary data was collected only through interviews and observations and not by collecting first hand data through questionnaires.

CONCLUSION

The suggestions made above for the improvement of the process are feasible and can be applied with ease. The study done can be useful as a part of a large level project for the overall improvement. The method described above does not require any substantial costs. Some attention and carefulness is required to detect the problem at an early stage to eliminate it. If the above described points are allowed and followed (as a test drive), Im sure substantial progress can be made.

BIBLIOGRAPHY
Websites http://www.dhl.co.in/publish/in/en/about/history.high.html http://www.dhl.co.in/publish/in/en/about/divisions.high.html http://exim.indiamart.com/act-regulations/customs-act-1962.html http://www.psbedi.com/logisticsinfo_enter.htm http://www.infodriveindia.com/Exim/Guides/How-ToImport/Ch_19_Custom_Clearance_of_Imported_Goods.aspx

Interviews Mr. C S Mishra, Deputy Commissioner, Customs. Mr. Sanjay Matre, Appraiser, Customs. Mr. Santosh Shelar, Examining officer, Customs.