EXPORT MANAGEMENT

• Introduction to CHA, Logistics, Freight Forwarders,
• Risk assessment for shipping plan

​

BY

Mrs. Navneeta

Introduction

to

CHA, Logistics, Freight Forwarders

​

Shipping lines

• A shipping line is a business that transports cargo aboard ships.
• Diff in container owner and shipping line?

CHA

• In India, a customs house agent (CHA) is licensed to act as an agent for transaction of any business relating to the entry or departure of conveyances or the import or export of goods at a customs station. CHAs maintain detailed, itemized and up-to-date accounts.
• A CHA license may be temporary or permanent.

Is CHA mandatory

• Normally ‘self clearance’ arrangements are done by some of the firms to have a complete transparency between customs authorities and firm. However, most of the companies appoint a CHA for smooth clearance of their goods which saves more time and concentration their own trade, as CHA has more ‘communicating strength’ with the customs authorities as they know exact language of customs.

​

• 6500 Custom House Agents

​

Freight Forwarder or C&FA

• A freight forwarder, forwarder, or forwarding agent, also known as a non-vessel operating common carrier (NVOCC), is a person or company that organizes shipments for individuals or corporations to get goods from the manufacturer or producer to a market, customer or final point of distribution.
• Forwarders contract with a carrier or often multiple carriers to move the goods. A forwarder does not move the goods but acts as an expert in the logistics network. The carriers can use a variety of shipping modes, including ships, airplanes, trucks, and railroads, and often use multiple modes for a single shipment.
• For example, the freight forwarder may arrange to have cargo moved from a plant to an airport by truck, flown to the destination city and then moved from the airport to a customer's building by another truck.

Documents required by CHA / C&FA

• Information typically reviewed by a freight forwarder includes the commercial invoice, shipper's export declaration, bill of lading and other documents required by the carrier or country of export, import, and/or transshipment.

​

​

Benefits/ Services of CHA/ C&FA

• experienced in all modes of transportation – road, rail, air and sea
• able to provide cost-effective and efficient cargo shipping solutions based on the customer’s requirement
• able to arrange storage for the cargo (usually all big forwarders have their own warehouses)
• able to arrange the distribution or “forwarding” of the cargo as per the instructions of their client
• have the capability to negotiate freight rates with the shipping line
• able to book cargo with the shipping line as per the requirement of the client or under their own contract
• process all relevant shipping documents such as certificates of origin, customs and port documentation, bills of lading and associated shipping/negotiating documentation (Eur1, Certificate of Origin, etc)
• issue their own approved house bill of lading (HBL) although they are not an NVOCC
• arrange transportation of the cargo from/to the customers’ premises and port
• have a thorough knowledge of over border cargo movement
• MAY or MAY NOT also do Customs Clearance
• may or may not be accredited to customs, port etc and cannot do customs clearance if not accredited
• acts as a carrier in cases where they issue house bill of lading

Risk

Assessment

for

shipping plan

Risks factors in export - Import

• 1. TRANSIT
• 2. POLITCAL
• 3. FOREIGN CURRENCY

Political risk

• Many export-import businesses are potentially exposed to various types of political risks. War, revolution, or civil unrest can lead to destruction or confiscation of cargo. A government may impose severe restrictions on export- import trade, such as limitation or control of exports or imports, restrictions of licenses, currency controls, and so on. Even though such risks are less likely in Western countries, they occur quite frequently in certain developing nations. Such risks can be managed by taking the following steps.

Minimizing political risk

• Private firms offer monitoring assistance to assess the likelihood of political instability in the short and medium term. Such information can be obtained from specialized sources for specific countries such as political risk services (e.g., Political Risk Services of Syracuse, a unit of International Business Communications, Incorporated), the Economic Intelligence Unit, Euromoney, and Business International Corporation. Risks of Foreign Laws

Foreign laws risks

• Many Acts that are perfectly legal in one country can be illegal in another. Indeed, most travelers to a foreign country could conceivably break a host of laws and not even be aware of it.
• • The same is true for the law of contracts, employment, competition, torts and other business laws.
• • It is virtually impossible to catalog all of the differences between these laws from country to country

Foreign credit risk

• Risks of buyer’s default or delay in payment. Managing foreign credit risk: Appropriate credit management, letter of credit and other conditions, insurance.

Foreign exchange risk

• Changes in currency values that could reduce future exporter’s receipts or increase importer’s payments in foreign currency. Managing foreign exchange risk: Shifting the risk to the other party or to third parties

Transportation risk

• Loss or damage to merchandise during transportation.
• • Transit disasters are an ever present hazard for those engaged in Export-Import business.
• • Every shipment runs the risk of a long list of hazards such as storm, collision, theft, leakage, explosion, spoilage etc. It is possible to transfer the financial losses resulting from perils of and in transit to professional risk bearers known as underwriters.
• • As most goods are transported by marine transport, every exporter should have an elementary knowledge of marine insurance to get the protection at the minimum cost

Why risk calculation is important

• No manager can make a strategic business decision or enter into important business transaction without a full evaluation of the risks involved.
• • Many of the best business plans have been ruined by a miscalculation or a mistake, or an error in judgment that could have been avoided with proper planning.
• If the risk cannot be reduced through advance planning and careful execution, perhaps it can be shifted to some other party to the transaction. • If the risk cannot be shifted to another party to the transaction, it might be shifted to an insurance company.