A Study on Coastal Shipping Operations and Customs House Agent Activities

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EXECUTIVE SUMMARY

The report is prepared on Shreyas Relay System Ltd and PROCAM Logistics Pvt. Ltd. which have two distinct business.

SRS provides coastal shipping services and PROCAM deals with Over Dimensional Cargo (ODC) and Customs Clearance. The first main focus is on SRS Operation which include Marketing, Inventory, Customer care, Import and Export Department. Each department functions and their process is explained in detail and some of the documents related to coastal shipping is also explained. A study is made on VGM implementation in the company which became mandatory from 1st July 2016, as per IMO regulation.

In PROCAM Customs House Agent activities are being observed and the role of CHA in export and import clearance is being mentioned and also some of the duty draw back schemes is highlighted in the report.

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CHAPTER 1 INDUSTRY PROFILE

- WORLD SEABORNE TRADE

It is difficult to quantify the value of volume of world seaborne trade in monetary terms, as figures for trade estimates are traditionally in terms of tones or tone-miles, and are therefore not comparable with monetary-based statistics for the value of the world economy.

However, United Nations Conference on Trade and Development (UNCTAD) estimates that the operation of merchant ships contributes about US$380 billion in freight rates within the global economy, equivalent to about 5% of total world trade.

Throughout the last century the shipping industry has seen a general trend of increases in total trade volume. Increasing industrialisation and the liberalisation of national economies have fuelled free trade and a growing demand for consumer products. Advances in technology have also made shipping an increasingly efficient and swift method of transportation. Indeed, following several years of incredibly buoyant shipping markets, for many trades the best in living memory, much of the international shipping industry has fallen prey to the worldwide economic downturn.

Notwithstanding the current situation, the longer term outlook for the industry remains very good. The world’s population continues to expand, and emerging economies will continue to increase their requirements for the goods and raw materials that shipping transports so safely and efficiently. As the below graph illustrates, the volume of world trade carried by sea has again begun to steadily increase in recent years. In the longer term, the fact that shipping is the most fuel efficient and carbon friendly form of commercial transport should work in favor of an even greater proportion of world trade being carried by sea.

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Shipping and Global Economy

Throughout history the oceans have been important to people around the world as a means of transportation. Unlike a few decades ago, however, ships are now carrying goods rather than people. Since the rise of intercontinental air travel, sea travel has become limited to shorter trips (ferry services across the Baltic and North Seas, the Mediterranean, Japan and Southeast Asia) and recreational cruises. The latter have recently experienced a tremendous boom and represent an increasingly lucrative source of tourist income. As markets became increasingly globalized, shipping volumes soared. From the 1950s to the latest global economic crisis, the growth rate of international trade was almost consistently twice that of economic activity as a whole. From 2000 to 2008 world trade increased by an average 5.4 per cent each year, while economic activity, as measured by the global Gross Domestic Product (GDP), increased by only 3 per cent per annum. Due to the spectacular rise of trade vis-à-vis economic growth, world trade since the 1950s has more than trebled to 45 per cent of the global GDP, while goods destined for the processing industry have in fact more than quadrupled.

According to research by economists, higher-income households purchase higher-quality products. The residents of wealthy countries therefore tend to buy more quality goods. Accordingly, rising incomes influence the demand for transport in three ways. First, quality goods are more expensive. Their value-to-weight ratio is therefore higher and the cost of transporting them is lower compared to their value. Second, as incomes rise, consumers are more likely to purchase certain expensive products and fancy goods. At the same time they expect to receive the articles within a very short time. Third, the delivery period itself is a key element of product quality, having an increasing influence on purchasing decisions; customers are no longer prepared to tolerate long delays. All of these factors have contributed to the even higher growth rates of air freight in comparison to shipping.

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Liners

INTRODUCTION

Approximate 90% cargo volume of international is transported by sea. Often, the shipping industry is categorized into two major sectors: (1) the bulk shipping which provides services mainly in the transportation of raw materials such as crude oil, coal, iron ore, and grains; and (2) the liner shipping which provides services in the transportation of final and semi-final products such as computers, manufacturing product and other consumption goods…etc. Cargo carried by liner shipping has come to be known as general cargo. Liner shipping is to provide regular services between specified ports according to time-tables and prices advertised well in advance. The service is, in principle, open to all shippers and in this sense it resembles a public transportation service. The provision of such a service, often offering global coverage, requires extensive infrastructure in terms of ships, agencies, and equipment.

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HOW LINER SHIPPING WORKS

Liner shipping is the service of transporting goods by means of high-capacity, ocean-going ships that transit regular routes on fixed schedules. There are approximately 400 liner services in operation today, most providing weekly departures