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SUMMER TRAINING PROJECT REPORT ON EXPORT IMPORT PROCESS & DOCUMENTATION AT PROMOTIONAL CLUB (Submitted in partial fulfillment for masters in international business, (MIB) C.C.S. UNIVESITY, MEERUT)

INSTITUTE OF MANAGEMENT STUDIES, NOIDA (A UGC Recognized A-8B, Plot C, Sector-62, Noida)

SUBMITTED TO: SUBMITTED BY:Shalini Shreye

Kabhi apni hansi par b aata h gussa.. Kabhi saare jahan ko hasane ko jee chahta h.. ... Kabhi chupa lete h gamo ko dil k kisi kone me.. Kabhi kisi ko sabkuch sunane ko jee chahta h.. Kabi rota nahi dil toot jane par bi.. Or kabi bas yuhi ansu bahane ko ji chahta h.. Kabi hasi si aa jati h bhigi yado me.. To kabi sab kuch bhulane ko ji chahta h.. Kabi achha sa lagta h aazad udna kahin.. kabi kisi ki bahon m simat jane ko ji chahta h.. Kabi sochte h, ho kuch naya is zindgi me.. kabi bas aise hi jiye jane ko ji chahta h..

Certificate from Internal Guide

The project report title EXPORT IMPORT PROCESS & DOCUMENTS AT PROMOTIONAL CLUB submitted by Shalini Shreye Roll No 9190009 may/may not be accepted for being evaluated.

Date

Signature (Name of the internal guide)

Acknowledgement

I welcome the opportunity to acknowledge the generous assistance I received from a large number of people in the course of this project. It is most difficult, to express in words, my heartfelt gratitude, to all those who have more than helped me in my endeavor. I would like this opportunity to extend my gratitude to all the persons without whom this project would not have been completed. I feel immense pleasure in thanking Mr. Satendar Changwal (manager-marketing) at Promotional club at 3KM from THE GIP MALL, NOIDA for his timely help which he generously rendered to me during the completion of the project and without his assistance the project would not have seen the light I am grateful to other faculty members of IMS College Noida learning for the knowledge, which I am imbibed through out the MIB course.

Declaration
I, Shalini Shreye, student of M.I.B. 2nd Sem. (university roll no.09190009) at IMS; hereby declare that I have completed my research report on the topic titled EXPORT IMPORT PROCESS & DOCUMENTS AT PROMOTIONAL CLUB as a compulsory part of my course curriculum.

The information provided in the report is original and has not been copied from anywhere. This report is not submitted to any other university/institute for the award of any other degree/diploma.

Table of Content
Executive Summary..01-01

Introduction to the Topic.02-17 Objective of the Study..18-18 Company Profile ...19-38 Process and Documentation..39-59 Research Methodology60-61 Data Analysis..62-72 Findings...73-76 Swot..77-77 Limitation.78-78 Recommendation And Suggestions.79-79 Conclusion..80-80 Bibliography81-81

EXECUTIVE SUMMARY
The importing and exporting of goods is big business in today's global economy. When goods are produced in one country and sold in another, international trade occurs. It is

so common to find items produced worldwide that people rarely even think about it. Not too long ago, countries consumed goods predominately produced within their borders. As transportation has become increasingly less expensive and telecommunications have improved, international trade has flourished. In general, international trade allows countries to focus on the industries in which they can be most productive and efficient. In this way, trade often raises the standard of living of both producers and consumers. Most international trade transactions require certain transport documents, administrative document, commercial documents and insurance documents. There are a great variety of documents that may need to be produced to complete export/import transactions; some estimates indicate over 200different documents are used in international trade. However, in most export transactions, only a few certain documents are used (invoice, packing list and transport document.). Apart from the documents required for export a set of procedure is also required to complete the whole export procedure. Here I try to focus on both the aspects of export that is export documentation as well as export process.

INTRODUCTION
India has a mission to capture 2% of the global share of trade by 2012, up from the present level of less than 1%. This project is all about to know about export import procedure/ documentation of shipment. This project puts more focus on to know custom

clearness, to make export - import invoice, to get shipping bill number from custom department etc. This project will also find out how PROMOTIONAL CLUB Pvt. Ltd. could sustain in the competitive world by providing vast range of cargo handling through all instruments which flexible prompt and innovative in meeting the requirement of the customer. The purpose of the study was to know about export import documentation in the PROMOTIONAL CLUB. India is the 15th largest economy in the world with a GDP of USD3.319 trillion and a GDP per capita of USD2, 900. It has the 2nd largest population right behind China with around 1.16 billion people (2008 estimates). As of 2008/09, India is the 2nd largest cotton producer and consumer. Cotton is one of the principal crops of the country and is the major raw material for the domestic textile industry. In 2008 the textile industry accounted for 14.4% of the countrys export

earnings. Mill consumption of cotton has one up by about 2% to 4 million tons in 2007/08. Production in 2007/08 totaled a 5,355,000 tons, with an estimated yield of 567 kilograms/hectare. The cotton industry has, employs an estimated 46.6 million people. India is a major exporter of cotton. After emerging as the second largest exporter of cotton behind the U.S. for two consecutive years, Indias cotton exports during 2008/09 faltered as the high minimum support price (MSP) made Indian cotton uncompetitive in the international market. Indias exports reached 751,000 tons in 2005/06 and continued to climb in subsequent seasons (960,000, 1,500,000, tons in 2006/07 and 2007/08, respectively). In 2008/09 estimated at 450,000 tons. Major export destinations are Bangladesh, Pakistan, China (Mainland) and other Far-east countries.

Imports have risen slightly. Imports were high at the turn of the century (520,000 tons in 2001/02) but dropped due to the rapid expansion of the domestic cotton industry. However as of July 2008, the Indian government abolished the duty on cotton imports

into the country boosting imports to 130,000 tons in 2008/09. Most of the imports are Extra Long Staple (ELS) and cotton from the U.S., Egypt, and West Africa. The Indian textile industry is composed of two sectors. The "organized" sector (largescale spinning units and composite mills) produces 95% of yarn. The organized sector weaving mills account for 5% of cloth production. The "unorganized" sector, (smallscale spinning units, power looms, handlooms, hosiery units) account for the rest of production. The weaving industry is mainly supplied by the unorganized sector, with power looms accounting for 60%, handlooms for 18%, and hosiery units for 17 % of total cloth production (2008 estimates).

OBJECTIVE OF THE STUDY

The main objectives of the research were:

To know about export import process.

To know what are the documents required before and after sailing the cargo.

To know different type of container used in shipment. To know how cotton industry plays a big role in Indian economy.

SCOPE OF THE STUDY

The scope of marketing research could cover the business problems relating to the followings.

Types of consumers that compromise present and potential markets. Buying habits and pattern of consumption Size and location of different markets, not only in India but also overseas. The prospects for growth or construction for the current markets being served. New mantras of emerging segments. Marketing and manufacturing capabilities of competitors. Most suitable entry timing. The current and prospective competitive position. Chances of improvement of current channels.

COMPANY PROFILE
ABOUT PROMOTIONAL CLUB Is certainly a name to reckon with a name that is synonymous with excellence and quality to reach such lofty echelons of success it had to put in dedicated sincere and consistent efforts? it has grown chapter into a tale of constant Endeavour, great national

purpose and human enterprises. Today the company stands proudly in the rank of the largest organization and assets to its credit are the pioneering development of extensive resources. PROMOTIONAL CLUB has lived up to its name since 1968.

Mr. SRI BAL KRISHN ARORA emerged as not only a strong performer and a resilient survivor but has maintained a steady and consistent track record financial growth, operational strength and a fast forward approach. Along with its own growth

PROMOTIONAL CLUB has endeavored to promote the greater industrial growth of the industry in every succeeding year. This resolve has depended & increased with time/ Diversification & expansion have been undertaken with this in view even now and most assuredly is the future this concern will be paramount as PROMOTIONAL CLUB prepares to accelerate its own & this countrys strides towards full industrialization. To spread knowledge of their product and awareness and about it PROMOTIONAL CLUB ltd, they organize fairs, exhibitions & stalls for their buyers by giving them some attractive information about their product. sample which we develop are reliable We manufacture & supply the goods according to the samples shown in call The material used in the sample is of very good quality. The same is used in the manufacturing process of the product.

Basically consumption is depends on presentation of the product in a new market and obviously quality is also the basic factor of it. Because of excellent quality and cheaper price it was easier for PROMOTIONAL CLUB to enter in this competitive shoe market.

For making their product PROMOTIONAL CLUB brings raw-material or raw leather from Delhi Noida Madras Calcutta

HISTORY:

PROMOTIONAL CLUB starts with the initial investment of 10000 in 1968. There sources of capital & procedure are: Bank provides credit on easy installments They contribute to the foreign currency of the out country government provides incentives loan on easy installments, so that they can increase their production. Assistances provided by government & export promotion council. Loan on easy installments Incentives drawback some relief in imports

EXPORT COUNTRIES

Countries in which they are export to United Kingdom Germany Greece Netherland

SCOMPANY MISSION AND VISION The Promotional club (Pvt.) Ltd. was founded in March 1960 in India with a vision to be a provider of innovative textile solutions worldwide. We are a manufacturer and supplier of distinguished fabric for apparel, home and industrial markets with clients all over the world. Our ability to create forward-thinking solutions that give our clients a competitive advantage is what sets up apart. Our core services include fiber manufacturing, Spinning, Weaving, Knitting, Dyeing and printing of woven and knitted fabrics, Designing, Cutting and Stitching.

Now the company is going to establish its subsidiary in India. At the initial phase fabric units will be installed to produce various fabrics. DESIGN OF SCARF IN PROMOTIONAL CLUB

MAZOR PRODUCTION STEP:

ADVERTISEMENT:

ORGANIZATION CHART

3.4 THEORETICAL BACKGROUND

Logistics system Logistics is defined by the council of Logistics, Ohio USA as the Process of planning, implementing and controlling the efficient, co-effective flow and storage flow and storage of raw materials, in process inventory finished goods and related information from point of origin to point consumption. More simply, the objective of Logistics System is that the right products reach the right place in the right quantity at the right time to satisfy customer demand.

Elements of logistics system

Nature of Product Location of Manufacturing Plant

Availability of infrastructure such as Road

Availability of different modes of transportation

Dealer/Distributor Network

Government Policy

ELEMENTS OF LOGISTICS SYSTEM

3.5 MODE OF TRANSPORTATION

AIR TRANSPORT OCEAN TRANSPORT

RAIL TRANSPORT ROAD TRANSPORT

OCEAN TRANSPORT More than 95 per cent of international trade is conduced by sea routes since ancient times, sea routes are being used for transportation of cargo from one continent or country to Coastal shipping is also used for transporting the cargo from one port within the country to another.

For example in India the cargo can be transported from Chennai port to Visakhapatnam port using the costal shipping route.

Sea routes are used for carrying bulj commodities like such as coaling and thermal coal mires, fertilizers rock phosphate etc, and liquid go like crude oil ammonium acids etc Ideally the goods with high volume and kiw vakye are suited die ocean transport in the era of containerization even the high value cargo can be safely enabled the cargo carrying capacities of the ship to increase many fold.

In 1956, the first containerized ship belonging to sea land corp. carried 58 twenty feet containers. The modern ships have the capacity to carry 7000 containers.

One of the biggest ships owned by Maersk-sea land is 1,138 feet long from end to end and 140 feet wide at mid ship. Such ships are called Post-Panamax ship.

3.5 CARGO SHIP CATEGORISED INTO FOLLOWINGS:-

Liners ships : Liners ship represent the organized sector of the shipping

industries due to their fixed schedules of arrival and departure, Pre-determined voyages and trade routes and published ocean freight rates. Liner shipping is governed by shipping conference and offers the following advantage to shippers: Regular sailings to scheduled ports of call. Stable freight rates for a long period of time which helps the shipper to quote C & F prices with confidence. Uniform rates for all shippers. Coverage of wide range of ports. Rebates of freight rates based on loyalty agreements.

characteristics

Tramp ships:- Tramp ships on the other hand have the following

They are free to move anywhere on the high seas at their will.

Their voyage routes and schedules are flexible.

They

travel from the port to another port o various trade routes looking for

the cargo and carrying the same to various routes looking for the cargo and carrying the same to various destinations around the world.

They arrive or depart without a fixed route or schedule.

They fix their voyages according to availability of cargo and as per the requirement of the shippers of these cargoes.

The freight rates of tram ships depend upon the demand and supply conditions in the shipping industry. If there is a glut of shipping space the tramp freight rates plummet. Whereas in case of shortage of shipping space, the tramp freight rates shoot up.

The cargo space on the tramps is booked by the brokers located in major port cities like New York, London, Rotterdam Hamburg, and Hong- Kong etc. They work as a link between tramp operators and shippers.

3.5 STANDARD CONTAINER

STANDARD CONTAINERS: Standard 20' inside length inside width Inside height door width door height Capacity tare weight Maxi cargo

19'4"

7'8"

7'10"

7'8"

7'6"

1,172CuFt

4,916lbs 2,230Kg

47,900lbs 21,770Kg

5.900m 2.350m 2.393m 2.342m 2.280m 33.2CBM Standard 40' inside length inside width Inside height door width door height Capacity

tare weight

Maxi cargo

FLAT RACK CONTAINER Flat rack 20' inside length 18'5" 5.620m inside width 7'3" 2.200m inside height 7'4" 2.233m door width door height Capacity tare weight 5,578lbs 2,530Kg maxi cargo 47,333lbs 21,470Kg

Flat rack 40' inside length 39'7" 12.080m inside width 6'10" 2.438m inside height 6'5" 2.103m door width door height Capacity tare weight 12,081lbs 5,480Kg maxi cargo 85,800lbs 39,000Kg

FLATT RACK COLLAPSIBLE CONTAINER Flat rack Collapsible 20' inside length 18'6" 5.618m inside length 39'7" inside width 7'3" inside height 7'4" door width door height door height Capacity Capacity tare weight 6,061lbs 2,750Kg tare weight 12,081lbs 5,800Kg Maxi cargo 61,117lbs 17,730Kg Maxi cargo 85,800lbs 39,000Kg

2.208m 2.233m inside width 6'10" inside height 6'5" door width -

Flat rack Collapsible 40'

12.080m 2.126m 2.043m -

REEFER COINTAINER Reefer 20' inside length inside width inside height door width door height Capacity tare weight maxi cargo

17'8" 5.425m Reefer 40' inside length

7'5"

7'5"

7'5" 2.258m

7'3" 2.216m

1,000CuFt 28.3CBM

7,040lbs 3,200Kg

2.275m 2.260m

45,7 60lbs 20,800Kg

inside width

inside height

door width

door height

Capacity

tare weight

maxi cargo

37'8" 11.493m

7'5"

7'2"

7'5" 2.282m

7'0" 2.155m

2,040CuFt 57.8CBM

10,780lbs 4,900Kg

56,276lbs 25,580Kg

2.270m 2.197m

REEFER HIGH CUBE CONTAINER

Reefer High Cube 40'

inside length

Inside width

inside height

door width

door height

Capacity

tare weight

maxi cargo

37'11"

7'6"

8'2"

7'6"

8'0"

2,344CuFt

9,900lbs

57,761lbs

11.557m

2.294m

2.500m

2.294m

2.440m

66.6CBM

4,500Kg

25,980Kg

HIGH CUBE CONTAINER HIGH CUBE 40'

inside length 39'5"

Inside width 7'8"

inside height 8'10"

door width 7'8"

door height 8'5"

Capacity

tare weight 8,750lbs

Maxi cargo 58,450lbs

2,694CuFt

12.036m

2.350m

2.697m

2.338m

2.338m

76.3CBM

3,970Kg

26,510Kg

PLATEFORM CONTAINER PLATFORM 20' inside length 19'11" 6.058m inside width 8'0" 2.438m inside height 7'4" 2.233m door width door height Capacity tare weight 6,061lbs 2,750Kg Maxi cargo 52,896lbs 24,000Kg

PLATFORM 40' inside length 40'0" 12.180m inside width 8'0" 2.400m inside height 6'5" 1.950m door width door height Capacity tare weight 12,783lbs 5,800Kg Maxi cargo 86,397lbs 39,200Kg

3.6 INTERNATIONAL TRANSACTION

4.0 EXPORT PROCESS AND DOCUMENTATIONS

In India, ships transport more than 90 per cent of the cargo. It therefore interesting to study the export processed by ship documentation related to it

Processing of an export order---- Exporter operation starts with the receipt of enquiry by the exporter from importer. Bar on the enquiry exporter submits his offer giving complete details of products technical specific price delivery payment terms etc. After the process negotiations importer sends a purchase order follow by letter of credit (if applicable). The exporter manufactures the goods according to the specification given in purchase order. As soon as the goods are ready the exporters invites the representative of Export inspections agency (EIA) for pre shipment inspection and obtain the certificate of inspection.

After that, the exporter prepared following documents:--- INVOICE PACKING LIST ARE1 FROM EXSICE DEPARTMENT MARINE INSURANCE POLICY COPY OF PURCHASE ORDER / L/C Above those documentation sends to CHA by exporter. Based on these documents CHA agent completes the octroi formalities, obtain port permit and prepare shipping bill which is a customs documents. Custom department check the export cargo on the basis of information provided on the shipping bill. If satisfy then cargo allow to loaded on the board of ship. The shipping line gives mate receipts to CHA agents after the payment of ocean freights and port due obtains the bill of lading (B/L) from shipping line .B/L is a proof of dispatch of cargo and also a negotiable document. After that, CHA agent send various documents back to exporter which is Customs attested invoice

Copy of shipping bill Full set of non board bill of lading. Copy of purchase order or L/C Copies of ARE1 Form SDF form

After that the exporter submitted above these documents for negotiation to the bank which include :--- Commercial invoice Packing list SDF form Original copy of purchases order Certificate of origin Bill of exchange Shipment advice

After that, bank scrutinizes these documents and if found correct make payment to exporter against documentations.

4.1 EXPORT INVOICE


Element of export invoice: Exporter Consignee Invoice No. and Date Exporter Ref. Buyer order no and date Other reference Buyer (other than consignee) Country of origin of goods Country of final destination Terms of delivery and Payment Pre-carriage by Place of receipt by pre-carrier Vessel/ Flight no. Port of loading

Port of discharge Final Destination Marks and Nos. / No & Kind of pkgs.

Item code

Description of goods Net weight Gross weight Quantity Rate CIF EURO Amount CIF EURO Amount in words Declaration: Authorised signature

EXPORT PROCEDURES

Steps involved in export transactions Step 1 In the case of first time exporters-importers, they need to apply to the Director General of Foreign Trade (DGFT) regional office for getting Importer- Exporter Code (IEC) Number. Step 2 The exporter has to register with the concerned export promotion council in order to obtain various permissible benefits given by the Government, they need to get register with sales tax office and even Export Credit Guarantee Corporation. Step 3 The exporter can now go in for procuring orders, by first sending a sample , if required. The importer sends a purchase order once both exporter and importer have agreed

upon the terms and conditions of the contract like pricing, documents, freight charges, currency etc. Step 4 With export order in hand, the exporter starts manufacture goods or buying them from other manufacturers. Step 5 The exporters make arrangements for quality control and obtains a certificate confirming the quality of the goods from inspectors of quality control. Step 6 Exportable are then dispatched to ports/airports for transit. Step 7 The export firm has to apply to an insurance company for marine/air insurance cover. Step 8 The exporters contacts the clearing and forwarding agents (C&F) for storing the goods in warehouse. A document called shipping bill required for allowing shipment by Customs Authority is presented by the forwarding agent. Step 9 Once the goods are loaded into the ship a receipt called Mate Receipt is issued by the captain to the ship superintendent of the port. Step 10 The superintendent calculates port charges and handover to the exporter/ C&F agent. Step 11 After making the port payments, the C& F agent or the exporter gets the Bill of Lading or Airway Bill from the official age of the shipping company or the airline. Step 12 The exporter applies to the relevant Chamber of Commerce for obtaining Certificate of Origin, stating that the goods originated from India.

Step 13 The exporter sends a set of documents to the importer, stating the date of shipment, name of vessel etc.

Step 14 Within 21 days after shipment the exporter must present all the documents at his bank which scrutinizes these documents against the original letter of credit/ purchase order. Step 15 The exporters bank sends these documents to the importers bank which should make the payment ion before the due date.

4.2 EXPORT-IMPORT DOCUMENTATION

Performa Invoice Performa Invoice, as the name suggests, is a Performa Invoice. It is prepared by an exporter and sent to the importer for necessary acceptance. It suggests to a buyer what the actual invoice would look like and is sent to him when he is ready to purchase the goods.

Packing list This statement gives the packing details of goods in a prescribed format. It is a very useful document for customs at time of examinations and for warehouse keeper of the buyer to maintain e record of inventory and to effect deliver.

Commercial Invoice An Invoice is very important as it contains the name of the exporter, importer and the consignee, and the description of goods. It has to be signed by the exporter. Other documents are prepared by deriving information from the invoice. It is required to be presented before different authorities for different purposes.

Certificate of Origin This certificate is issued by the local Chamber of Commerce indicates that the goods, which are being exported, are actually manufactured in a specific country mentioned

therein. It is sent by the exporter to the importer and is useful for the clearance of the goods from the customs authority of the importing country.

Shipping Bill It is a requisite for seeking the permission of customs to export goods. It contains a description of export goods by sea/air . it contains a description of export gooda, number and kind of packages, shipping marks, and numbers, value of goods, the name of vessels, the country of destinations etc. on the other hand importers have to submit copies of documents called Bill of Entry for customs clearance . Later a copy has to be given to the bank for verification.

ARE-1_ Form This form is an application for the removal of exercisable goods from the factory premises for export purposes. The ARE 1 form has a multiple copies which are distributed to different authorities including customs, Range office of excise, refund office of excise etc.

Exchange Declaration Form (GR/SDF Form) The RBI has prescribed a GR form (SDF), a PP form, and SOFTEX forms to declare the export transactions. The GR form contains: Name and address of the exporter and description of goods. Name and address of the authorized dealer through whom proceeds of the exports have been or will be realized. Details of commission and discount due to foreign agent or buyer. The full export value, giving break up of FOB, Freight, insurance, and Commission etc. Discounts,

Bill of exchange It is an instrument in writing, containing an order, signed by the maker, directing a certain person to pay a certain sum of money only to the order of person to the bearer of the instrument. It is commonly known as Draft.

Inspection Certificate It is required by some importers and countries in order to get the specifications of the goods shipped attested. The attestation is usually performed by a government agency or by independent testing organizations.

Bill of Lading This documents is issued by the shipping company acknowledge the receipt of goods mentioned in the bill for shipment on board of the vessel. The B/L is the legal document to be referred in case of any dispute over the shipment. It contains: The shipping company name and address The consignee name and address The port of loading and port of discharge Shipping marks and particulars Number of packages and the goods Gross weight and net weight Freight details and the name of the vessels Signature of the shipping companys agent

Airway Bill

This receipt is issued by an airline company or its agent for the carriage of goods is a contract between the owner of the goods and the carrier. It should indicate freight prepaid or freight to collect. The first three digits of the airway bill number represent the code which identifies the carrier.

Insurance Certificate

This document is obtained from the freight forwarder, is used to assure the consigner that insurance will cover the loss of damage to the cargo during transit.

Consular Invoice This invoice is needed to be submitted for certification to the embassy of the country concerned. Its main purpose is to enable the importers country to collect accurate and authenticated information about the value, volume, quantity, source etc of the import for assessing import duties and for statically purposes. It helps the importer to get the goods cleared through customs without any undue delay.

RESEARCH METHODOLOGY

Collect data/information about cargo through: Secondary data collection:

Invoice Packaging list Shipping bill Internet

Research design

Research design is the based framework, which provides guidelines for the research process. It is a map or blue print according to which the research is to be conducts. The research design specifies the methods for data collection & data analysis determine the source of data. Most specifically it was a kind of Descriptive conclusive research who takes care of who, when, where, what, how and why aspects of the investigation further the researcher used the statistical method to serve he purpose of project, it

permitted the research to derive more accurate generalization whose reliability could be measured.

CENTRE RESEARCH RESEARCH TECHNIQUE TOOL USED DATA SOURCE

: : : : :

DELHI NCR EXPLORATORY QUALITATIVE & QUANNTATIVE TELEPHONIC & E-MAIL SECONDARY

6.0 DATA ANALYSIS

How Big is a Cubic Meter?


Calculation: Length x Width x Height divided by 1728 = cubic feet divided by 35 = cubic meters.

23 BOOK BOXES

= one cubic meter

11 MEDIUM BOXES

8 LARGE BOXES

13x13x17 inches 1.5 cubic feet 0.043 Cubic Meters


(approx)

18x18x17 inches 3.1 Cubic Feet 0.091 Cubic Meters


(approx)

18x18x24 inches 4.5 Cubic Feet 0.125 Cubic Meters


(approx)

Or mix and match:

= one cubic meter = one cubic meter = one cubic meter

6.1 AIR FREIGHT CALCULATION


Introduction

Airlines that are members of the International Air Transport Association (IATA) are bound by their membership to comply with tariffs issued by IATA. However since 11th September 2002, airfreight rates are now extremely negotiable. Airfreight rates cover transportation from the airport of loading to the airport of discharge. These rates do not include the following: Collection of air cargo from the consignor's/exporters premises Delivery of cargo from the airport of destination to the consignee's premises Storage of cargo before or after loading Customs clearance in the country of destination Any duties and taxes that may have to be paid Insurance

Chargeable/volumetric weight Airline freight rates are based on a "chargeable weight", because the volume or weight that can be loaded into an aircraft is limited. The chargeable weight of a shipment will be either the "actual gross mass" or the "volumetric weight", whichever is the highest. The chargeable weight is calculated as follows: 1 metric ton = 6 cubic metres. In order to establish if the cargo will be a weight or volumetric based shipment. Step 1 Measure the parcel/cargo along the greatest length, width and height of that parcel. For example; 100 cm (L) X 100 cm (W) X 100 cm (H) = 1 000 000 cm3. Next, weigh the parcel; assume it weighs 150kg.

Step 2 Now divide the 1 000000 cm3 by 6 000 = 166, 66 kg. You have now converted the centimeters (cm) into kilograms (kg) Step 3

Now compare the weight to the volume. If the weight is 150 kg then the airline would base the freight on the higher amount being: 166,66 kg Air freight calculations The airline calculates freight based on weight or volume, which ever yields the greatest amount. Airlines quote freight rates based on the following rate structures: A basic minimum charge per shipment. General cargo rates quoted for per kilogram. This rate applies without reference to the nature or description of the parcel, which is to be freighted. Specific commodity rates apply to certain goods of specific descriptions, such as fresh produce. These rates are lower than the general cargo rate, and they provide breakpoints at which the level of the rate reduces further. Example 0 - 50 Kg @ R22.00/per kg 50 - 100 Kg @ R19.00 per kg 100 - 150 Kg @ R17.00 per kg Unit Load Device charges These rates are charged per container/ULD without reference to the commodity loaded therein. The The Calculation freight weight of of freight rate the ratesLet is parcel us assume R18.00 is the following per 300 figures: kg kg

The dimensions are: 114,6 cm X 120,4cm X 132,5 cm (round the cm's up or down)Therefore: 115 cm X 120 X 133 cm = 1 835 400 divide by 6 000 = 305.9 kg (having converted cm's to kg's now round up the kg's to the next half a kilogram = 306 kg. As the freight rate quoted by the airline is R18.00 per kg, we calculate the price as follows: 306 kg X R18/kg = R5 508.00 The freight rate will not be calculated on the actual mass 300 kg X R18.00 = R5 400.00 as the airline will always use the greater amount either the kg, or volumetric weight.

Consolidation Consolidation is an economical method of moving cargo by employing a consolidator. The consolidator receives cargo from a number of suppliers/shippers and then combines these cargoes into one consignment by packing the goods into a Unit Load Device. The consolidator then books the Unit Load Device with an airline. The supplier/shipper would have a contract of carriage with the consolidator of the cargo and in turn the airline would have a contract of carriage with the consolidator. The airline would issue an air waybill to the consolidator when accepting the Unit Load Device and in turn the consolidator would issue the supplier/shipper with a house air waybill. The air waybill The air waybill, unlike the ocean bill of lading is not a document of title to the goods described therein, however it does perform several similar functions these are: It is a receipt for the goods It is evidence of the contract of carriage between the exporter and the carrier It incorporates full details of the consignor/shipper, the consignee/receiver and the consignment/goods It is an invoice showing the full freight amount It must be produced, be it in an electronic format, at the airport of discharge for clearing purposes All copies of the air waybill, together with the commercial invoice, packing list, certificate of origin and any other document which may be necessary for clearing the goods through customs, these documents are carried in the flight captain's bag. 6.2 SEA FREIGHT CALCULATIONS Introduction Seafreight calculations can broadly be divided into two main components; breakbulk and containerised. In this section we deal with how you should calculate the freight costs of both of these two types of seafreight. Break bulk cargo calculations

Break bulk cargo, is cargo that is unitised, palletised or strapped. This cargo is measured along the greatest length, width and height of the entire shipment. The cargo is also weighed. Shipping lines quote break bulk cargo per "freight ton", which is either 1 metric ton or 1 cubic metre, which ever yields the greatest revenue. Example:

A case has a gross mass of 2 Mt. The dimensions of the cargo are: 2.5X1X2 meters The tariff rate quoted by the shipping line is: USD 110.00 weight or measure (freight ton) Step 1 Multiply the meters 2.5 X 1 X 2 = 5 meters Compare to the mass = 2 Mt.

Step 2 Calculate the freight with the greater amount either the mass or the dimension. 5 X USD 110.00 = USD 550.00 Freight would be paid on the measurement and not the weight. All shipping lines carrying cargo in a break-bulk form insist on payment based on a minimum freight charge which is equivalent to one freight ton, one cubic meter or one metric ton. Full Container load calculations and surcharges Freight rates for containers are based on the container as a unit of freight irrespective of the commodity or commodities loaded therein, (FAK) Freight All Kinds. The shipping lines quote per box (container) either a six or twelve metre container. From time to time, abnormal or exceptional costs arise in respect of which no provision has been made in the tariffs. For example a shipping line cannot predict the movement of the US Dollar or the sudden increase of the international oil price. These increases have to be taken into

account by the shipping line in order to ensure that the shipping line continues to operate at a profit. These increases are called surcharges. All shipping lines accordingly retain the right to impose an adjustment factor upon their rates taking into account these fluctuations. All surcharges are expressed as a percentage of the basic freight rate. Surcharges are regularly reviewed in the light of unforeseen circumstances, which may arise and bring cause for a surcharge increase.

Bunker Adjustment Factor (BAF) "Bunkers" is the generic name given to fuels and lubricants that provide energy to power ships. The cost of bunker oil fluctuates continually and with comparatively little warning. Example: Freight rate: Port Elizabeth to Singapore Freight rate: US Dollar: 1 250.00 per 6-M container + BAF 5.2% US Dollar 1 250.00 X 5.2% = US Dollar 65.00 Add the two amounts together Freight rate: U S Dollar 1 315.00 Currency Adjustment Factor (CAF) The currency adjustment factor is a mechanism for taking into account fluctuations in exchange rates, these fluctuations occur when expenses are paid in one currency and monies earned in another by a shipping company. The currency adjustment factor is a mechanism for taking into account these exchange rate fluctuations. It is always expressed as a percentage of the basic freight and is subject to regular review. Example: Freight rate: Port Elizabeth to Singapore Freight rate: US Dollar: 1 250.00 per 6-M container + CAF 6.3% US Dollar 1 250.00 X 6.3% = US Dollar 78.75

Add the two amounts together Freight rate: U S Dollar 1 328.75 War Surcharge The outbreak of hostilities between nations can have a serious effect upon carriers servicing international trade even though they may sail under a neutral flag. Carriers sailing within the vicinity of a war zone may impose a war surcharge on freight to compensate for the higher risks involved and the higher levels of insurance premium, which they may be obliged to pay. Example: Freight rate: Port Elizabeth to Singapore Freight rate: US Dollar: 1 250.00 per 6-M container + WAR 5% US Dollar 1 250.00 X 5% = US Dollar 62.50 Add the two amounts together Freight rate: U S Dollar 1 35.50 All of the above surcharges may be applied to a single freight rate. Example: Freight rate: Port Elizabeth to Singapore Freight rate: US Dollar: 1 250.00 per 6-M container + BAF 5.2% + CAF 6.3% + WAR 5% Total amount of surcharge 16.5% US Dollar 1 250.00 X 16.5% = US Dollar 206.25 (add to freight rate) US Dollar 1 456.25 Port Congestion Surcharge Congestion in a port for a period of time can involve considerable idle time for vessels serving that port. When a ship lies idle, this creates a huge amount of loss for the ship's

owner. Shipping lines therefore have the right to impose a surcharge on the freight to recover revenue lost. Another factor which influences port congestion surcharge would be labor disputes. Port congestion surcharges are calculated as a percentage of the freight rate as expressed in the previous examples. Consolidation services The consolidator or group age operator hires a container from a shipping line and then sells that space to his clients/exporters. The benefit for the exporter is that small quantities which, would not fill a full container load, can be shipped by sea freight in a shipping container as an alternative to air freighting the goods. The consolidator would charge per metric ton or cubic meter, which ever yields the greatest. Example: US Dollar 89.00 Weight or Measure. The shipping line would have a contract of carriage with the consolidator and in turn the consolidator would have a contract of carriage with the exporter. The consolidator would be issued with an combined through bill of lading from the shipping line and then present the exporter with a house bill of lading (See bill of lading below) The bill of lading The bill of lading performs the following functions: A contract of carriage between the shipper of the cargo and the carrying shipping company. The name of the shipper and the receiver of the goods the consignee. The contents of the packages as declared by the shipper. Shipping details such as: port of loading and the port of discharge. The bill of lading is a freight invoice and indicates if the freight costs have been prepaid by the exporter or will be paid by the importer, "freight collect". The bill of lading states the number of packages, weight and dimension of the shipment. It is a document of title to the goods stated thereon.

Every original bill of lading signed by or on behalf of the shipping company is a document of title to the underlying goods. This special function of a bill of lading is achieved by a form of words which state: "In witness whereof the undersigned on behalf of the shipping company has signed three bills of lading all of this tenor and date, one of which being accomplished the others to stand void". "Accomplishing" the bill of lading requires the surrender to the shipping line or its agents in the port or place of destination one of the signed original bills of lading duly endorsed by the consignee/importer. Unless and until one of the original bills of lading as described above is surrendered, the shipping line will not release the cargo to the consignee/importer. Upon surrender of any one of the originals the other originals bills of lading become void.

Endorsed Bills of Lading Bills of lading can only be issued with the words "shipped on board", if the cargo has actually been loaded onto the named vessel at the port of loading. By insisting that the exporter supplies the importer with a "shipped on board" bill of lading, the importer obtains conclusive evidence that the goods have been loaded on board the intended vessel. Some importers insist that the exporter presents "shipped on board" bills as a condition for payment. "Received for shipment", bills of lading can be issued as soon as the goods have been delivered into the custody of the carrying shipping company or its agent either at the point of receipt or at the port of loading. Thus, a 'received for shipment", bill of lading will only indicate the ship in which the cargo is intended to be loaded on. The risk remains that the loading may, for many reasons delayed or the cargo may not be loaded at all. Banks responsible for the payment of funds in payment for goods under letters of credit will not release the funds if the bill of lading has been endorsed "received for shipment".

FINDINGS

Procedure of Settlement of Letter Of Credit

IMPORTER

EXPORTER CERTIFICATE INVOICE OF INSPECTION

PACKING LIST

GR FORM

ARE1 FORM

MARINE INSURANCE POLICY

CUSTOMS ATTESTED INVOICE

SHIPPING BILLS

FULL SET COPY OF DUPLICATE DUPLICATE OF ON L/C COPY ARE COPY GR BOARD FORM FORM BILL OF LADING

C & F AGENT EXPORTER COMMERCI PACKI AL NG INVOICE LIST

DUPLICA NEGOTIAB ORIGIN TE COPY LE COPIES AL L/C GR FORM OF B/L

CERTIFICA BILL OF TE OF EXCHAN ORIGIN GE

NEGOTIATING BANK

L/C AMOUNT EXPORTER

SHIPPING DOCUMENT IMPORTER

SWOT ANALYSIS

Opportunities Rising potential in the domestic market Growing fashion consciousness globally Use of information technology and decision support software to help eliminate the length of the production cycle for different products Use of e-commerce in direct marketing

Strengths High Growth Ready availability of highly skilled and cheap manpower Large raw material base Policy initiatives taken by the Government Capability to assimilate new technologies and handle large projects Continuous emphasis on product development and design up gradation

Weaknesses Lack of warehousing support from the government International price fluctuation Huge labour force resulting in high labour charges Lack of strong presence in the global fashion market Unawareness of international standards by many players

Threats Major part of the industry is unorganized Limited scope for mobilizing funds through private placements and public issues (many businesses are family-owned) Difficulty in obtaining bank loans resulting in high cost of private borrowing

Stricter international standards


High competition from East European countries and other Asian countries Lack of communication facilities and skills

LIMITATIONS

Not a panacea Not an exact science Limitation of time Erroneous findings Not exact tool for forecasting In experience research staff Narrow conception of marketing research

10. RECOMMENDATIONS AND SUGGESTIONS

1) To improve in new development of product cycle


2) To consider an international price fluctuation 3) To take a help of govt for develop a warehouse. 4) To improve strong presence in the global fashion market 5) Creating required infrastructure and long-term plans. 6) Treating us and Europe as focus market. 7) Innovative product design at competitive rates

11. CONCLUSIONS
The entire analysis stated that in my internship I have worked on export and import documentation etc. During that time I have studied in documentation: Mr. Satendra shipping manager he helped me a lot during whole internship .he explained me all the problems regarding shipping and other department also. He explained me all the methods and programming of the entire department. He enhances my knowledge through practical exercises. Shipping department work is physically transport of goods and cargo .Objective is: The act or business of transporting goods. The body of ships belonging to one port , industry or country, often referred to in aggregate to arrange Passage or transport on a ship

In documentation process Satendra, he helped me all the problem regarding merchandising To know about export import process.

To know what are the documents required before and after sailing the cargo. To know different type of container used in shipment

The study identifies major concern including better access to finances policies to attract FDI in tanning, infrastructure development in leather clusters, rationalization of excise customs and other internal revenue policies

12. BIBILIOGRAPHY

Export Import Documentation Logistics in International Business

- Prof. D.C. pai - Prof. Rajeev Aserkar

REFERENCES INTERNET

www.promotion club.com www.google.co.in www.ask.com www.exit.net