dhl

Industry Profile The In Indi dian an ex expre press ss in indus dustr try y is se sett fo forr si sizz zzliling ng gr grow owth th,, de despi spite te ri risi sing ng us usag age e of facilities like short messaging services or multimedia message services. Several large-s lar ge-size ized d corp corpora orate te and mul multin tinati ationa onall exp expres ress s pla player yers s are keen on acqu acquiri iring ng 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 ne xt fi five ve ye year ars s an and d mo more re th than an do doub uble le it its s si size ze by 20 2012 12.O .Ope peni ning ng of ba bank nkin ing, g, 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 contributes more than Rs 1000 crore (Rs 10 billion) to the governm government ent reve re venu nues es by wa way y of se serv rvic ice e ta tax, x, in inco come me ta tax x an and d ot othe herr le levi vies es an and d it of offe fers rs 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 domestic marke mar kett is lilitt ttle le le less ss th than an 50 pe perr ce cent nt.. Th The e un unor orga gani nize zed d an and d se semi mi or orga gani nize zed d segments, segment s, which consist largely of regiona regionall 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 netwo network rk to reach hithe hitherto rto uncovered areas, conta containing ining 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 did exac exactl tly y that that.. Some Some tele televi visi sion on ads ads show showed ed DHL DHL driv driver ers s and and truc trucks ks outoutmaneuve maneuverin ring g FedEx FedEx and UPS. UPS. Obviou Obviously sly,, DHL believ believed ed acknowl acknowledgi edging ng 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 brandin branding g campai campaign gn with with current current advert advertisi ising ng that that focuses focuses on superi superior or custome customer r service.

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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 netwo network rk to reach hithe hitherto rto uncovered areas, conta containing ining 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 did exac exactl tly y that that.. Some Some tele televi visi sion on ads ads show showed ed DHL DHL driv driver ers s and and truc trucks ks outoutmaneuve maneuverin ring g FedEx FedEx and UPS. UPS. Obviou Obviously sly,, DHL believ believed ed acknowl acknowledgi edging ng 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 brandin branding g campai campaign gn with with current current advert advertisi ising ng that that focuses focuses on superi superior or custome customer r 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 fore fo reig ign n pa part rtne ners rs.. Wi With th th the e ch chan angi ging ng ma mark rket et,, pl play ayer ers s wh who o ha had d pr prev evio ious usly ly concentrated only on the small packages started delivering packages of up to to 25 kg acro ac ross ss co count untri ries es.. Th The e in indu dust stry ry be beca came me te techn chnol olog ogy-s y-sav avvy vy an and d st strea reaml mlin ined ed it its s operations using e-tracking. As the market m arket grew, competition intensified and business busin ess changed, chang ed, the existing ties flou fl ound nder ered ed an and d th the e fo fore reig ign n co comp mpan anie ies s fo forg rged ed ne new w ti ties es an and d lo look oked ed fo forr ne new w acquisitions, even as they announced major investment and expansion plans. DHL, the world’s leading express and logistics company, offers express and logistics services service s in India. In 2004, it acquired a major majority ity 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 domest ic market. Blue Dart’s operations operations are support supported ed 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 Se Sept ptem embe berr 20 2006 06,, th the e Ne Neth ther erla lands nds ba base sed d TN TNT T Ex Expre press ss,, wh whic ich h wa was s th the e fi first rst multinational brand in India to offer both international and domestic services using an integrated air and road network, acquired Speedage Express Cargo Services, a division of Mumbai-based ARC India Ltd, for Rs 200 crore as part of its strategic 3

objective to become the leading provider of express deliveries in India. TNT is going to investing 100 million euro ($121 million) in the Indian market over the next five years. In 2002 Federal Express, which began operations in India in 1984 and 13 years later became the first express company to launch an all-cargo flight to India, parted ways with Blue Dart, with which it had an agreement since 1984, and formed a new association with little-known Prakash Airfreight. In July 2007 Federal Express made an unsuccessful bid to acquire Safe Express, a home grown company that was started by Pawan Jain in 1995 and has grown to be one of the largest logistics companies in India, which has over 3,000 vehicles, 3 million sq ft of warehouse space and delivers over 2.5 million packages a month. As the domestic players seek to expand they have attracted the interest of private equity funds. Anil 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 seco nd lar largest gest cou courie rierr com company pany,, whi which ch han handle dles s ove overr 85 mil millio lion n con consign signment ments s 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 th e in indus dustr try y suf suffe fers rs fr from om co cong nges esti tion on,, fr frag agme ment ntat atio ion, n, ov over er-re -regul gulat atio ion, n, a we weak ak transpo tra nsport rt net networ work, k, ina inadeq dequat uate e inf infrast rastruct ructure, ure, com comple plex x tax law laws s and ins insuff uffici icient ent 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 8

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

Diagram 1.0 - Supply Chain model

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TSP: Shipment Movement Process

Booking

Dispatch

Pick Up

O/Bound

Export

Transfer

Import

I/Bound

Delivery

Four main functional teams of DHL staff are involved during these 9 stages to capture the various checkpoints which provide information on a 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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Export is the standardized process for consolidating international shipments to a moment,lodging shipments with handling agents/carriers and advising destination of flight information.

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

Courier

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

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

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

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

Courier Checkpoint List Checkpoint

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 contents missing at time of delivery

ND – Not Delivered

Reports that a shipment was with a delivery courier 12

Courier Checkpoint List Checkpoint

Description 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

Reports that a shipment is being returned for a

Consignor

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

Reports that a shipment has been allocated to a

Courier

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

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Operations

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

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

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

Operations Checkpoint List Checkpoint

Description

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

Reports the arrival of a shipment at the destination

Facility

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

Collection

collection at a DHL location as per customer request

CO - Transport Collect

Reports that a shipment is to be billed Transport 14


Description 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

Reports that an invoice has been created for

Tax Invoice

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

Reports the hand over of a shipment to a third party

Party Delivery Agent-

delivery agent when DHL has contracted for delivery

Delivery Details Expected

details to be returned by the agent

HI – Lodged into held

Reports that a shipment has been lodged into the

Inventory Control

held inventory control section

HO – Lodged out of held

Reports that a shipment’s “held in inventory” status

Inventory Control

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 15


Description

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

Reports that a shipment has missed the current

Cycle

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

Reports the outbound processing or transfer of a

Location

shipment and its location

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

Reports that a shipment is now scheduled to move on

Movement

a specified date and time

SS – Stopped Shipment

Reports that a shipment’s progress has been stopped 16


Description 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

Reports that a third party will deliver a shipment. No

Party-No Delivery Details

delivery details are expected

Expected

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Gateway

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

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

Gateway Checkpoint List Checkpoint AF – Arrived Facility

Description Reports the arrival of a shipment at a DHL transit facility

BL – Bond Location

Identifies the exact physical storage location of the shipment in the bond facility

BN – Customer Broker

Reports that the customer’s broker has been

Notified

contacted to arrange for the clearance of the shipment

BR – Cleared and

Reports the transfer of responsibility for a shipment

Delivered by Customer’s

and related documentation to a customer nominated

Broker

broker

CD – Controllable

Reports that a shipment’s progress has been delayed

Clearance Delay

because import, export or transit clearance processing requirements cannot be completed due to a reason that has been agreed to be within DHL’s

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Gateway Checkpoint List Checkpoint

Description control

CR – Clearance Release

Reports a shipment’s release from clearance processing or from a bonded area







DI – Customer Duty and

Reports that an invoice has been created for

Tax Invoice

duty/tax/Transport collect charges for a shipment

DM – Damaged




ES – Entry Submitted

Reports that a completed customs entry has been submitted to Customs for processing

HI – Lodged into held

Reports that a shipment has been lodged into the

Inventory Control

held inventory control section

HO – Lodged out of held

Reports that a shipment’s “held in inventory” status

Inventory Control

has been resolved and the shipment is ready to be taken out for further processing

HP – Held for Payment

Reports that a shipment is on hold at a DHL facility pending payment of any applicable fees, and that delivery has not as yet been attempted 19


Description

IC – In Clearance

Reports that a declarable shipment is under routine

Processing

clearance processing

MC – Miscode


MS – Missort


NA – Not Arrived

Reports that a pre-alerted WPX shipment has not physically arrived on the advised linehaul movement

OH – On Hold


PL – Processed at


Location


RR – Response Received

Reports that Customs has provided or updated a status for a house airwaybill entry which has been submitted to Customs for processing

RT – Returned to


Consignor








Movement



Reports that a shipment’s progress has been stopped 20


Description by an official government authority and that the shipment will not be delivered or returned to DHL



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

Reports that a shipment’s progress has been delayed

Clearance Delay

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

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 Checkpoint AF – Arrived Facility

Description Reports the arrival of a shipment at a DHL transit 21

Hub Checkpoint List Checkpoint

Description facility







DM – Damaged




MC – Miscode


MS – Missort


OH – On Hold


PL – Processed at


Location


22


Description

RT – Returned to


Consignor








Movement


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Description


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



TD – Transport Delay

Reports that a delay has occurred to a handling unit during transport between two DHL facilities. This may or may not affect the Service Commitment for each individual shipment

Research Objective and Its Background

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Research Background:

Clearance process is an important activity in the express company. In the express company clearance process involve the submission of the required paper work to the customs concerning to a particular shipment arrived (import) at the customs or the shipment that need to be sent to other country (export). So it is important to understand clearance process followed in an organization and what are the activities involved in it. When the shipment arrived at the consignee country, shipment has to get the approval of

customs inorder to clear the shipment on a particular duty.In the

process of clearance from the Mumbai customs,many queries were raised regarding various technicalities and documents of the shipment.Due to this reason,the Bond Rate(number of Shipment remain unclear from customs) of DHL increased.One of the major reason for the above problem was of improper documents submitted by DHL to the Mumbai customs.In DHL shipment documents are submitted by Clearance support agents(CSA) along with the help of Skyline team and Clear on Arrival team(COA). The project given to me was to identify the Non-Value added activities in process of each team and the time they take for submittting documents of each shipment,and suggest recommendations for the same.

Research Objective: •

To study the clearance process.

•

To study the Documents preparation process carried out by respective teams.

•

To identify the Non-Value added activities in the respective teams.

•

To find out the possible reasons causing such problems.

•

To suggest recommendations 25

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

Primary Data Collection Method: •

The Primary Data was collected by personal interaction with responsible employees and through field work.

•

DHL

express

is

divided

into

separate

departments

or

parts

like

COB(Clearance on board), CSA(Clearance support agent), BOE (Bill of entry) filling, NCG(Network control group), Operations & Warehouse. Every department is important to accomplish activities, so information was collected from each department. •

As there are various departments in the express unit, the information was collected from the employees of each department.

•

An activity related to information from different departments with each other was better understood from the IT Department.

•

The entire custom clearance process was understood with the help of the custom officials in the courier department.

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Secondary Data Collection Method: •

For Secondary Data Collection websites were used.

•

From websites, a rough idea regarding services offered and their management was studied. But the actual information was collected through the employee of the various departments.

•

Also websites of Customs and of courier companies were used for the data collection.

•

Companies’ websites provided information mainly on services offered.

•

From Customs websites information on customs rules and regulations was collected.

•

Financial Reports of the last three months of the company was studied to understand the problems in the billing process of the company.

•

In order to understand the core reasons causing the problems, software named Importing Accounting System (IAS) was used. The software IAS helped to give every minute detail like the procedures, date and time of each procedure carried on the shipment from the time it was booked at its origin to the time it was delivered to customer.

•

PC DOC another software was used to get the print of the original DDR.

•

Gone through the software Special Clearance Module(SCM) inorder to study the status of current and past shipment details.

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CUSTOMS CLEARANCE PROCESS

Customs basic Whenever any good(s) enter or leave a country, they are regulated by the law of that country. In India, Custom Regulations are governed by the Indian Customs Act 1962. Why are goods regulated? •

Safeguard industry – Safeguard domestic market from foreign competition, thereby restricting unwanted competition

•

Prevention of Illegal and Illicit commodities– Drugs, Narcotics, Illicit Films, Religious grounds, Smuggling.

•

Natural Laws – Protect nature and the environment

•

International laws – Eg. WTO Due to these regulations, goods crossing over international boundaries are

regulated Import or Export of Goods is regulated by whom: -

•

Director General of Foreign Trade (DGFT) under the Ministry of Commerce and Trade (MoC&T)

•

Central Board of Excise and Customs (CBEC) under the Ministry of Finance (MoF)

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•

Allied

Laws

&

Regulations

of

other

related

Government

Departments / Ministries. •

World Trade Organisation (WTO) and General Agreement for Trade and Tariffs (GATT)

Regulatory Bodies: Ministry of Commerce & Trade:

Is responsible for the 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

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Excise and Narcotics to the extent under CBEC's purview. The CBEC implements the policies relating to customs and excise laid down by the Ministry of Fina Scope of the customs: Objectives of Customs Department: •

Protection of national economic, commercial & business interests & combating economic & commercial fraud

•

Protecting Domestic Industry

•

Collection of duties & taxes & compliance to fiscal & statistical regulations

•

Regulating trade with other countries in applying national rule.

•

Facilitating trade with other countries

•

Combating illicit trafficking, particularly in drugs & other threats to society

•

Check and oversee the laws that have been framed by the GOI and the DGFT, are being followed.

Process for clearance followed by Custom Authorities:

When goods enter the country, the Custom Authorities will follow regulatory clearance procedures to oversee the entry of the goods and for calculation of the duty. The broad process is as follows:1) The authorities ensure that the various laws are being abided. (Eg: If a drug is

prohibited under a certain act, that will not be cleared by Customs and the action will be taken as per that law). 2) The commodity is also checked according to the policy it falls under

(Prohibited, Restricted, Canalized, and Free). 3) The commodity is then classified according to the ITC code. 4) If it comes under the purview of the free policy, then the allied laws are

checked.

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5) The duty is calculated based on the type of commodity as per the ITC

classification 6) The commodity is cleared by the customs after ensuring duty payment.

Classification of Goods:

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

According to the Policy: •

Prohibited goods

•

Restricted goods

•

Canalized goods

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•

Free goods

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

Modes of Clearance

Modes Courier Mode Weight: <70 kgs. Value:
Cargo Mode Weight: No weight Limit Value: No value Limit Goods:Commercial & Non commercial Shipments,free goods Dimensions: No Dimension limit

Two Modes of clearance: 1. Courier Mode

•

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

•

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

•

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

•

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

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2. Cargo Mode

•

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

•

Import:Goods be imported through cargo are (a) animals and plants; (b) perishables;

(c)

publications

containing

maps

depicting

incorrect

boundaries of India; (d) precious and semi precious stones, gold or silver in any form; and (e) chemicals falling within Chapters 28, 29 and 38 of the Customs Tariff. •

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

Paperwork required for Customs Clearance:

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

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

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

DATA ADMINISTRATION

CLASSIFICATION

CLEARANCE SUPPORT

BROKER REVIEW

DECLARATION 34

1) Data Administration DATA CLEANSING •

Shipment Movement

•

Ensure shipment information is complete and accurate

•

Full names & addresses

•

Check against registered names / addresses (where required)

•

Commercial

•

Ensure commercial information is complete & accurate

•

•

Accurate reflection of commercial invoice Multi line information is required

DATA CLEANSING PROCESS •

Do data cleansing from the Customs Alert – do not wait for WPX alert

•

Retrieve documents from Clear in the Air (CIA)

•

Check for accuracy in ALL key fields

•

Complete ALL multi-line information

•

After Data Cleansing, the data should be 100% accurate including details of ALL line items

•

Classifier and / or Broker should not need to refer to images

CLEARANCE AGENTS are responsible for Data Administration

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

The tasks of the DAA include: •

Validate and if needed, correct the data elements in the shipment records to ensure that the data elements in the records are in accordance to the approved format and structure acceptable to the regulatory agencies and systems.

•

Verify and if needed, correct the shipment details in the shipment record to ensure that the information in the shipment records are in accordance to the information available in commercial documents provided by the customer and/or customer instructions available in 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

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(or file) for the over-landed shipment using the commercial documents available on the physical shipment •

Assist in administrative duties within the clearance department such as the printing, collation and distribution of the required customs documentation needed for lodgment of a customs entry.

•

Perform filing and archiving of customs documents for shipments that have been cleared by DHL ( facility size relative ).

•

Perform co-ordination duties within the clearance department as assigned by the duty supervisor, and/or between the clearance department and other DHL departments (e.g. between the clearance department and NCG, or warehouse operations or the accounting department ) and/or external agencies (e.g. between Customs and the DHL clearance department)

2) Classification •

Auto Classification

•

Manual Classification

•

Goods can be manually classified by Classifier.

•

Calculate duty/tax

•

Check compliance forProhibited & Restricted Commodities

•

Update Categarization

CLASSIFIERS are responsible for Classification

The Classification Agents (CA) are responsible for classifying the commodities in a shipment in accordance to the national tariff tables, and determining a preliminary assessment of the duties and taxes payable for shipments imported/exported through DHL Express. 37

The tasks of the CA include: •

Determine the shipment value in accordance to the local valuation guidelines provided by the local authorities

•

Determine and classify the shipment commodities in accordance to the national tariff classifications tables available, and determining the corresponding duty and tax rates, taking into consideration: (1) Country of origin for preferential treatment; (2) Concessions or Exemptions applicable to the shipment commodity or importer/exporter; and (3) Applicable customer instructions recorded in the Customer Instruction Database Records.

•

Compute a preliminary assessment on the duty and taxes payable to the external agencies (including any additional taxes e.g. countervailing or anti-dumping taxes), and fees or charges payable to DHL

3) Clearance Support •

Contact DHL Origins

•

Contact Destination Customers

•

Permit and licence handling

•

Contact Regulatory Authorities

•

Other Special Handling

•

Third party broker handover

CLEARANCE SUPPORT AGENTS are responsible for Clearance Support

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 38

any discrepancies preventing the successful clearance of these shipments. He/She will coordinate with the customer to obtain the necessary shipment information and documents for the clearance department to successfully clear the shipments through the regulatory agencies when the existing information or documents are insufficient to permit successful clearance of the shipments. The tasks of the CSA include: •

Contact DHL customers (both origin and destination) for clearance-related shipment information or documents when the existing documents or information available are not sufficient for DHL to clear the shipments

•

Provide customer with duty and tax advice notification and to seek payment approval from these customers when the duty and tax amounts payable exceeds 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 39

•

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

The tasks of the Broker include: •

Ensure the timely submission of customs entries in order to attain the clearance performance standards set for the location

•

Validate, approve and submit a shipment declaration for the shipment after satisfying himself that the preliminary assessment performed by the Classification Agent is in order, the information in the shipment record is reasonably accurate and complete, and that the regulatory compliance requirements of the governmental agencies and customer instructions have been satisfied.

•

Ensure that the duty and tax payment approvals are obtained before submission of the customs declaration

•

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

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to these databases, to ensure that the databases are up to date and accurate. Provide technical advice on customs related matters to

•

customers (internal and external), including solutions design inputs for new DHL products •

Assist in the preparation of clearance-related reports as assigned by the Customs Clearance Supervisor or Manager Provide assistance as when required in regulatory audits

•

performed on DHL customs clearance operations •

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

5) Declaration •

Lodge declaration with Customs

•

Various declaration types

•

Obtain clearance status

•

Pay Customs

•

Update other systems e.g. Finance, Shipment Movement

BROKERS are responsible for Broker Review and Declaration

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Thus, the purpose of each stage is as follows

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). 42

Clear on Board(COB)

COB Clearance Prior Clearance

Hold/Detained

Hold Shipments

Formal Clearance

Detention Shipments Shipments

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 43

•

Assessment of BOE

•

Duty payment preparation

•

Re updatation in ECE

Shipments on Hold and Detained Shipments

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 44

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 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 45

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

•

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.

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•

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.

dhl

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