dhl

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 player’s 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 out-

maneuvering 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.

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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 world’s 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 Asia’s 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 Dart’s 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

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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 Ambani’s 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, India’s

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.

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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 hasn’t prevented a host of logistics operators from

establishing a growing presence in the market.

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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.

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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.

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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

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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

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TSP: Shipment Movement Process

Four main functional teams of DHL staff are involved during these 9 stages

to capture the various checkpoints which provide information on a shipment’s

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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Booking Dispatch Pick Up O/Bound Export Transfer Import I/Bound Delivery

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 re-

consolidating 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 Description

BA – Bad Address Reports that a delivery cannot be completed without

better address information

CA – Closed on Arrival Reports that a receiver’s 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

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contents missing at time of delivery

ND – Not Delivered Reports that a shipment was with a delivery 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 receiver’s private address or

temporary accommodation (hotel)

OK – Delivery Reports the successful delivery of a shipment

PD – Partial Delivery 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

Reports that a shipment is being returned for a

specific reason to the shipper or DHL origin

SI – Security Inspection 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

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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


AD – Agreed Delivery Reports that a shipment has arrived at the destination

Service Centre and is awaiting it’s expected and

scheduled delivery date

AR – Arrival in Delivery

Facility

Reports the arrival of a shipment at the destination

delivery facility

BA – Bad Address Reports that a delivery cannot be completed without

better address information

CA – Closed on Arrival Reports that a receiver’s business premises were

closed and delivery could not be completed

CC – Awaiting Consignee Reports that the shipment is awaiting receiver

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Collection collection at a DHL location as per customer request

CO - Transport Collect 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

Reports that an invoice has been created for

duty/tax/Transport collect charges for a 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

FD – Forwarded to Third

Party Delivery Agent-

Delivery Details Expected

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

HI – Lodged into held

Inventory Control

Reports that a shipment has been lodged into the

held inventory control section

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HO – Lodged out of held

Inventory Control

Reports that a shipment’s “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

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

Reports that a shipment has missed the current

courier delivery cycle

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

OK – Delivery Reports the successful delivery of a shipment

PL – Processed at

Location

Reports the outbound processing or transfer of a

shipment and its location

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RT – Returned to

Consignor



RW – Reweigh 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



SM – Scheduled for

Movement

Reports that a shipment is now scheduled to move on

a specified date and time

SS – Stopped Shipment Reports that a shipment’s 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


AF – Arrived Facility 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 customer’s broker has been

contacted to arrange for the clearance of the

shipment

BR – Cleared and

Delivered by Customer’s

Broker

Reports the transfer of responsibility for a shipment

and related documentation to a customer nominated

broker

CD – Controllable

Clearance Delay

Reports that a shipment’s progress has been delayed

because import, export or transit clearance-

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processing requirements cannot be completed due to

a reason that has been agreed to be within DHL’s

control

CR – Clearance Release Reports a shipment’s release from clearance

processing or from a bonded area






each shipment


of a DHL facility

DI – Customer Duty and

Tax Invoice

Reports that an invoice has been created for

duty/tax/Transport collect charges for a shipment




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

Reports that a shipment has been lodged into the

held inventory control section

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HO – Lodged out of held

Inventory Control

Reports that a shipment’s “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

IC – In Clearance

Processing

Reports that a declarable shipment is under routine

clearance processing







NA – Not Arrived Reports that a pre-alerted WPX shipment has not

physically arrived on the advised linehaul movement




PL – Processed at

Location



RR – Response Received Reports that Customs has provided or updated a

status for a house airwaybill entry which has been

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submitted to Customs for processing

RT – Returned to

Consignor




shipment in transit




Movement








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 shipment’s progress has been delayed

because import, export or transit clearance-

processing requirements cannot be completed due to

a reason that has been agreed to be outside of DHL’s

control

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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.

Hub Checkpoint List


AF – Arrived Facility Reports the arrival of a shipment at a DHL transit

facility






each shipment


of a DHL facility




instructions or

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Hub Checkpoint List


as part of standard procedures










PL – Processed at

Location



RT – Returned to

Consignor




shipment in transit




Movement



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Hub Checkpoint List







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

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Research Objective and Its Background

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

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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)

Allied Laws & Regulations of other related Government

Departments / Ministries.

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World Trade Organisation (WTO) and General Agreement for

Trade and Tariffs (GATT)

Regulatory Bodies:

Ministry of Commerce & Trade:

Is responsible for the country‘s 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

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

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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.

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.

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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

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

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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.

2. Cargo Mode

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Modes

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

Cargo ModeWeight: No weight LimitValue: No value LimitGoods:Commercial & Non commercial Shipments,free goodsDimensions: No Dimension limit

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

7) GATT Declaration

8) IEC (Import Export Code)

9) Purchase Order Copy

10)Authorization letter

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Clearance Process Followed by DHL

DHL follows Global Standard Clearance Process which consists of 5 stages

as follows:

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

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DATA ADMINISTRATION

CLASSIFICATION

BROKER REVIEW

CLEARANCE SUPPORT

DECLARATION

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

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:

36

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

DHL’s 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

(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)

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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

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.

38

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

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

39

and tax amounts payable exceeds DHL’s 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

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:

40

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

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

41

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

Thus, the purpose of each stage is as follows

42

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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Prior Clearance

Data is received at 14.00 hrs

Update ECE

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

Detention Shipments Shipments

Hold Shipments

Formal Clearance Prior Clearance Hold/Detained

COB Clearance

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.

Clearance Support Agents

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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.

Overview of Activities performed by CSA

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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

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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 don’t 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),

I’m 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-To-Import/

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.

http://www.psbedi.com/logisticsinfo_enter.htm

http://exim.indiamart.com/act-regulations/customs-act-1962.html

http://www.dhl.co.in/publish/in/en/about/divisions.high.html

http://www.dhl.co.in/publish/in/en/about/history.high.html