Shipping Intermediaries

Customs Brokers

International trade is regulated through tariffs and trade laws established by the Governments to control the imports and exports of the country. The Customs Departments have the powers vested by their Governments to administer the policies and tariffs on all imports and exports into and out of the country.

Customs Clearance Departments are setup in all ports of entry and exit at the Country’s borders including Airports, Sea Ports and Check Posts at Road. Customs Clearance involves both physical inspection and value assessment of the goods to check the authenticity. On satisfactory valuation they approve the assessment based on appropriate classification. Once the consignment is assessed, the demand for duty is made on the Importer. On receipt of duty payment, the consignment is released out of the Customs bond. All these processes require several commercial documents including that are to be submitted. The customs clearance process and co-ordination with the Customs and other agencies requires the services of an intermediary called the Customs Broker.

Customs Broker is a Third Party Service Agency licensed by Customs Department to operate and represent the Importer. There are many large freight forwarder companies which own and operate Customs Clearance services for their clients. Customs Broker plays a very crucial role in representing the Importer with Customs and assumes the responsibility for compliance of all Rules and Regulations on behalf of the Importer.

Freight Forwarders and Consolidators

The freight forwarder is an individual or firm who renders cargo delivery services.

In domestic (local) freight forwarding, it delivers goods usually from the exporter’s premises to the local customs in exporting, and the reverse in importing. The customs broker also renders local freight forwarding for exporters and importers.

The forwarder advises and assists clients on how to move goods most efficiently from one destination to another. A forwarder’s extensive knowledge of documentation requirements, regulations, transportation costs and banking practices can ease the process of exporting for many companies.

If requested, the freight forwarder will take care of the cargo from “dock to door”.  Generally freight forwarders partner with overseas custom brokers who clear the goods that the forwarders ship to the overseas ports. Conversely, those same foreign customs brokers contract the services of the domestic freight forwarder when the goods are headed in the opposite direction.

The freight consolidator or group age operator is an individual or firm which accepts less than container load (LCL) shipments from individual shippers, and then combines them for delivery to the carrier in full container load (FCL) shipment.

The services of a forwarder are usually available in a consolidator, and the forwarder often engages in the consolidation of cargo. Hence, the term forwarder is often used synonymously with the consolidator.

Functions of a freight forwarder

• Preliminary advice to the exporter.
  • Explaining exporter’s responsibilities/obligations under Terms of Sale.
  • Assist in negotiating inland and ocean rates; provide suggestions on optimal and most cost effective shipping alternatives.
  • Assist in determining the best way to ship i.e. – container vs. Break-bulk, consolidation vs. exclusive use, conference vs. non-conference, air vs. ocean.
  • Packing / Marking recommendations.
  • Explain port functions in connection with export.
  • Advice as to what the exporter should accomplish and what the forwarder will accomplish for him.
  • Review import licenses, where applicable.
  • Recommendations regarding receiving payments for exports — explanation of methods of payment.
  • Interpret and control Letters of Credit.
  • Advice as to possible problems may encounter: Improper packing, cheapest method of shipping not always the best, document discrepancies that can cause slow or non payment and/or confiscation of freight in foreign port, consequences resulting from late delivery of freight and/or late documents.
  • Estimate complete Export transportation and related costs for quotes (on Proforma invoice) and L/C.
  • Advise of drawback opportunities for previously imported cargo being exported.
  • Can put exporter in touch with experts in the fields of trade financing, international marketing, government export requirements, international banking, and marine insurance.
  • Most forwarders have a “library” of information on domestic/overseas ports, which exporters can use as guidance.
• Booking the freight / Shipping Operations.
  • Provide custody and control of material in transit.
  • Expedite production and delivery.
  • Coordination of positioning empty container to be delivered / returned (inland carrier), where stuffing takes place.
  • Choosing the steamship line as required.
  • Mechanics of booking and shipping: special handling considerations, ETA destination required port of export, port of destination, direct vs. transhipment, number/kind of packages, commodity precise description, size and type of container.
  • Handling freight or other moneys advanced by shippers, or remitting or advancing freight or other moneys or credit in connection with the dispatching of shipments.
  • Provide NVOCC consolidation services to exporters for LCL and FCL modes.
• Documentation for shipping.
  • Certify and notarise invoices.
  • Normally prepare dock receipt, bill of lading; warehouse receipt, insurance certificate, AID documents, certificate of origin, special customs invoices, inspection certificate.
  • May prepare or assist in preparing with exporter: commercial invoice, packing list, draft, transmittal letters, consular invoices, export license, drawback forms, shipper’s export declaration.
• Notifications made in connection with the shipment.
  • Notification normally made to exporter/shipper, consignee, and consignee’s broker.
  • Notification made for insurance, L/C, contract, payment, and advice purposes.
  • While shipment is underway, forwarder may trace as necessary, assist in filing claim when necessary and correct errors learned after the fact.
• Distribution of negotiable documents for collections.
  • Forward documents to Bank, exporter’s foreign sales representative, consignee or consignee’s broker.

Shipping Agents

A shipping agent is a person who deals with the transactions of a ship in every port that the ship visits or docks. In other words, it is a shipping agent who as a local expert acts as a representative of the owner of the ship and carries out all essential duties and obligations required by the crew of the ship.

All Shipping companies delivering to ports of call require shipping agents at the ports to coordinate the various details associated with international shipping by sea. These agents are knowledgeable in shipping for all jurisdictions the shipper will visit, maintain certified paperwork and arrange all points of contact for the vessel. The shipping agents are well versed in the International Maritime Dangerous Goods code, or IMDG, for the necessary containment and transportation of any hazardous materials. Ship agents should be versatile and have multitasking abilities.

A ship agent coordinates the with the ship’s schedule, synchronizing vendor requests, arrival dates and needs or directions from the pilot or captain. A ship’s needs while in port are arranged and coordinated through the ship agent. The agent is responsible for maintaining a formal schedule, disseminating information to involved parties and creating an in/outbound list of personnel and ship occupants. A ship agent coordinates the personnel resources required on vessel for scheduled pick-ups or offloads and is contact for any certified signatures.

A ship agent should know all shipping regulations for all ports, ensuring compliance with international shipping regulations, safety practices and policies of the ship’s owner. The agent should also know all applicable publications containing regulations and certifying authorities. Agents should maintain copies of all documents, including bills of lading, and insurance and inspection certificates.

A ship agent is available during arranged hours for communications involving the ship’s owner. The agent is also the point of contact for all stakeholders, crew and port authorities, serving as the ship’s main liaison while in port. These communication duties include cultivating various relationships at port with appropriate agencies, as well as fulfilling commercial and public relations needs.

Customs House Agents

The clearance of goods on Import or Export, including unaccompanied baggage, involves quite a lot of procedural formalities under Section 46, 47, 50, 51 etc., These formalities have to be observed by Importer / Exporter / Passenger, as the case may be. But in most cases the Customs station would be far away and it may not be possible for the Importer / Exporter / Passenger to attend to such work promptly. Unlike the work related to Central Excise or Income Tax, the Customs formalities cannot be attended to leisurely, as clearance is allowed only after the completion of formalities and payment of duty, where due. To meet this situation, a provision for licensing Custom House Agents, to represent the Importer / Exporter for the clearance work, has been made in the Customs Act 1962.

In terms of Section 146, the Board (Central Board of Excise and Customs) has issued certain Regulations known as Custom House Agents Licensing Regulation 1984 laying down the conditions and procedures to be followed. The extent of liability of the agents is indicated in Section 147.

A person, who desires to become a Custom House Agent, has to make an application, in the prescribed form. When such applications are invited by the Commissioner of Customs under Rule 5. Initially only a temporary licence, valid for two years is issued (Rule 8). To be eligible to make this application, the person should have experience in the line for at least one year and should have assets to the extent of Rs.1 lakh (Rule 6).

He has also to execute a bond with security for Rs.25, 000/-. The temporary licence can be made a regular licence on his passing a qualifying examination (Rule 9) within a period of two years. The regular licence (Under Rule 10) is issued for five years, and can be renewed thereafter on payment of a fee of Rs.3, 000/- for further period of three years.

The most important part of the Customs House Agents Regulations is Rule 14, which lays down the obligations of Customs House Agents, as under.

• obtain an authorization from each of the companies, firms or individuals by whom he is, for the time being, employed as Customs House Agent and produce such authorisation whenever required by an Assistant Commissioner of Customs;
• transact business in the Customs Station either personally or through an employee duly approved by the Assistant Commissioner of Customs, designated by the Commissioner;
• does not represent a client before an officer of Customs in any matter to which he, as an officer of the Department of Customs gave personal consideration, or as to the facts of which he gained knowledge, while in Government service;
• advise his client to comply with the provisions of the Act and in case of non compliance, shall bring the matter to the notice of the Assistant Commissioner of Customs;
• exercise due diligence to ascertain the correctness of any information which he imparts to a client with reference to any work related to clearance of cargo or baggage;
• not withhold information relating to clearance of cargo or baggage issued by the Commissioner of Customs from a client who is entitled to such information;
• promptly pay over to the Government, when due, sums received for payment of any duty, tax or other debt or obligations owed to the Government and promptly account to his client for funds received for him from the Government or received from him in excess of Government or other charges payable in respect of the clearance of cargo or baggage;
• does not procure or attempt to procure directly or indirectly ,information from the Government records or other Government sources of any kind to which access is not granted by proper officer;
• not attempt to influence the conduct of any official of the Customs Station in any matter pending before such an official or his subordinates by the use of threat, false accusation, duress or the offer of any special inducement or promise of advantage or by the bestowing of any gift or favour or other thing of value;
• not refuse access to, conceal, remove or destroy the whole or any part of any book, paper or other record, relating to his transactions as a Customs House Agent which is sought or may be sought by the Commissioner;
• maintain records and accounts in such a form and manner as may be directed from time to time by an Asst. Commissioner of Customs and submit them for inspection to the said Asst. Commissioner of Customs or an officer authorised by him whenever required;
• ensure that all documents prepared or presented by him or on his behalf are strictly in accordance with orders relating thereto;
• ensure that all documents, such as Bills of Entry and Shipping Bills delivered in the Customs Station by him show the name of the Importer or Exporter, as the case may be, and the name of the Customs House Agent, prominently, at the top of such documents;
• in the event of the licence granted to him being lost, immediately report the fact to the Commissioner;
• ensure that he discharges his duties as Customs Hose Agent with utmost speed and efficiency and without avoidable delay; and
• Not charge for his services as Customs House Agent in excess of the rates approved by the Commissioner from time to time under Regulation 25.
• It should be noticed that the above ‘obligations’ cover not only certain procedural aspects, but also a Customs House Agents’ conduct and character. Any lapse on the part of Custom House / Agent or violation of any rule can invite action which might result in suspension or revocation of licence under Rule 21.
• A Custom House Agent has to be not only well informed of the Customs laws and procedures and documentation, but has to be alert all the time, closely following the instructions or change in the public notices, issued from time to time. His is a very peculiar position in that, though he is employed by the Importers/Exporters, he is licensed by the department and hence he can satisfy them only to the extent the law permits and within the procedures laid down by the Customs House. He has, accordingly, to function under two masters, the tax payer and tax collector, both simultaneously satisfactorily.
• A Customs House Agent can attend to the Custom work himself or employ persons to assist him, but after obtaining necessary permission from the Asst. Commissioner of Customs. Such assistants appointed by Custom House Agents will have to pass an examination conducted by the Asst. Commissioner of Customs within six months from the date of such appointment.
• The charges levied by Custom House Agents from the Client should be at such rates as notified by the Commissioner from time to time which is done under Rule 25(b). The same rule, sub section (2) requires that Customs House Agents should enrol as members of the registered Custom House Agents Association of the Port.

Stevedores

A Stevedore is a firm or individual engaged in the loading or unloading of a ship.

Loading and unloading of cargo, stacking or stowing them on-board the ship or on-shore, operating cranes, derricks and various cargo-handling equipment are among the range of tasks performed by the stevedore. With the introduction of containerisation, stuffing and de-stuffing of containers and the related logistical activities are also performed by the stevedores.

The scope and responsibility of a stevedore, or the stevedoring firm vary from one port to another. In accordance with the contract or understanding with the  principal (who may be the shipping company, steamer agent or the port authority), and subject to regulatory framework, ongoing practices and  rules of  local agencies like port, dock labour boards and union bodies a stevedore may be responsible for.

• on-shore operations,
• ship-board operations or
• The complete terminal handling operations and associated logistics.

It is necessary to recognize the operational complexities of stevedores in cargo operations.

The on-shore cargo receiving, stacking and delivery operations are distinctly different from the on-board cargo-loading and stowing in terms of technologies and methodologies. In on-board loading operation, particularly for break-bulk cargo, the challenge primarily relates to various factors like

The cargo-stowage techniques to efficiently utilize the cubical space of the hatch, as to any shipping company every cubic inch mean money.

• The first-in-last-out stacking rule depending on the sequence of the ports of call,
• Facilitating ease of cargo accessibility at the time of discharge
• Cargo-compatibility to prevent any contamination
• The principles of cargo-unitization (like pallets, pre-slung units) for quick- handling
• Even distribution of cargo across various hold/hatches not only to facilitate simultaneous multiple hatch-operations, but also to obviate hogging/sagging of the vessel.

For on-board operations, a stevedoring unit needs multiple specialized hands like ships clerk, hatch foreman, deck foreman, signaler, crane drivers and hatch-workers. On the contrary, the on-shore operations – which pertain to handling/movement of cargo when it is discharged on quay head- are typically similar to what we know as warehouse management operations. It has its familiar complexities like receiving, stacking, manifesting, delivery and associated usage of mobile cargo handlers like forklifts, yard cranes etc.

The stevedores or stevedoring companies have further become diversified in their operation with the advent and progress of containerization. The usual container operations call for stevedoring functions like cargo-stuffing, de-stuffing, container freight station management, container yard stacking and tracking, maintaining and operating a fleet of container gantries, trucking operations. With diversification and growing scope of operations, many large stevedoring firms have also laterally integrated their functions with inter-modal transport, comprehensive shipping and logistical services and packaging various service add-ons like door-to-door delivery.