Reducing Dwell Time Related to Clearing and Forwarding of Export and Import Goods at Kolkata Sea and Air Ports
| Author | Subhra Koley,Biplab Datta,Srabanti Mukherjee |
| DOI | 10.1177/0015732516650808 |
| Published date | 01 November 2016 |
| Date | 01 November 2016 |
| Subject Matter | Articles |
Reducing Dwell Time
Foreign Trade Review
51(4) 298–327
Related to Clearing
©2016 Indian Institute of
Foreign Trade
and Forwarding of Export
SAGE Publications
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and Import Goods
DOI: 10.1177/0015732516650808
http://ftr.sagepub.com
at Kolkata Sea and
Air Ports
Subhra Koley1
Biplab Datta1
Srabanti Mukherjee1
Abstract
The article traces the opportunities for reducing the dwell time taken during
clearing of export and import (EXIM) goods at Kolkata sea and air ports.
As observed in the Government of India reports, the dwell time in Indian
airports is considerably higher than that of global benchmarks. Drawing from the
literature, we figured out that reduction in dwell time can reduce opportunity
cost and lead to increased productivity and higher efficiency of the ports and air
terminals. In the first phase of the study, using the Ishikawa Fishbone diagram,
we have analyzed the reasons behind the higher dwelling time in Kolkata air and
sea ports. In the second phase, fol owing the value stream mapping process
indicated by Barber and Tietje (2008), the current state map of the EXIM clearing
process has been mapped and possible future state maps have been proposed for
reduction in dwell time.
JEL: N5, B2
Keywords
Dwell time, cargo, EXIM, fishbone diagram, value stream mapping
1 Vinod Gupta School of Management, Indian Institute of Technology, Kha-ragpur, West Bengal,
India.
Corresponding author:
Biplab Datta, Vinod Gupta School of Management, Indian Institute of Tech-nology, Kharagpur 721302,
West Bengal, India.
E-mail: bd@vgsom.iitkgp.ernet.in
Koley et al.
299
The Context
In order to successfully integrate nations with cross-border trading across the
world, increasing port efficiency is crucial (Nordås, Pinali, & Grosso, 2006).
In the recent past, researches (Hummels & Schaur, 2012) in the domain of customs
and trade validated that elongated transport time theatrically shrinks trade. Arvis,
Raballand and Marteau (2010) established that in developing nations more than
half of the time required to transport shipments from port to neighbouring countries
is spent in ports. Earlier researches (Djankov, Freund, & Pham, 2006; Tongzon &
Lavina, 2007) demonstrated that reducing cargo dwell time in ports needs critical
attention. Suarez-Aleman and Hernandez (2014) have established that port inef-
ficiency is mainly a matter of time: the more the movement of cargo in port/terminal
takes time, the more inefficient the port/terminal is. According to the Planning
Commission, Government of India (2007), dwell time is the duration for which an
entity, that is, cargo/container remains in a terminal’s in-transit storage area while
awaiting shipment by vessels for export or evacuation by rail/road for import.
Similarly, dwell time of a vessel is defined as the duration from the time a vessel
reports at anchorage to the time it is cast-off from the berth. In addition to the long
duration that a container stays in the port, Arvis et al. (2010) identified that the
capriciousness of cargo dwell times is the major contributor to the escalating trade
costs in countries like India since shippers have to ‘compensate for the uncertainty
by raising their inventory levels’ (Arvis et al., 2010).
According to Ministry of Civil Aviation, Government of India (2012), the dwell
time in Indian airports is higher than that of global benchmarks (see Table 1).
Table 1. Global Benchmarks of Dwell Time vis-à-vis Indian Airports
Dwell Time - Exports
Dwell Time - Imports
Airport
(Hours)
(Hours)
Sharjah
4
4–8
Singapore
6
3 to 6
Frankfurt
6
NA
Incheon
2 to 3
2 to 7.5
Dubai
2 to 3
2 to 6
Hong Kong
3 to 6
4 to 8
Delhi
36
119
Mumbai
48
96
Chennai
48
72
Hyderabad
12
36
Kolkata
48
72
Bengaluru
36
48
Source: Ministry of Civil Aviation, Government of India (2012).
Note: Indian Airports includes 72 hours free period both on Exports and Imports.
300
Foreign Trade Review 51(4)
While examining the major obstacles that India faces in the realms of global
trade, it was recognized that port logistics, in particular the higher cargo dwell
time, is the most crucial factor and the reduction in dwell time can reduce opportu-
nity costs and lead to increased productivity (Sengupta, 2008). This study has
been undertaken to identify opportunities for reducing the time taken during
clearance of export and import (EXIM) goods at Kolkata sea and air ports and
recommend a more efficient future state map for the same.
Clearing and Forwarding Agents
The role of clearing and forwarding (C&F) agents is to carry out the EXIM process
at river ports, seaports or international airports. They do customs clearance to collect
customs revenue, forwarding, transportation, warehousing, packaging and many
more. Most of the big importers/exporters have their own C&F departments but
they like to outsource the complicated C&F services to specialized C&F agents.
In C&F industry it is important to maintain the standard of quality in service,
for which there are additional expenses on different heads for smooth and
speedy clearance to deliver raw material or finished goods on time and in full.
However, some C&F agents quote a lower rate and avoid spending on different
heads that leads to delay in clearance of the shipment. In fact, there is an
unhealthy competition in the trade at Kolkata ports. Nevertheless, good clearing
agents do not compromise in this matter and always offer workable rates in
order to maintain service quality.
The Process of EXIM Clearing at Kolkata Ports
The import clearing process starts when importers contact their C&F agents with
necessary information and shipping documents about the import of materials. After
the shipping documents are received, it is the responsibility of the agents to start
processing the same by filing bill of entry (B/E) through Indian Customs and Central
Excise Electronic Commerce/Electronic Data interchange Gateway (ICEGATE).
The B/E filed electronically is transmitted by The Indian Customs EDI System
(ICES) to the risk management system (RMS), which processes the B/E through a
series of steps and produces an electronic output for the ICES. This output will
determine whether the B/E will be taken up for action (appraisement or examination
or both) or be cleared after payment of duty and out-of-charge order will be given
without any assessment by the examination officer or the out-of-charge officer.
Under RMS, the B/E is assessed for duty on the basis of declaration/submission
made by importer/C&F agent and physical examination of the goods is not
required. RMS is used on trust basis. The cargo-related information given by the
importer is accepted by customs without verification. On the other hand, under
non-RMS, B/E is assessed for duty by customs assessing officer after scrutinizing
all the shipping documents and physical examination of the goods is required.
Koley et al.
301
In case the B/E is not assessed under RMS, the concerned agent is to contact
the assessing officer (AO) at customs house with relevant documents, to get the
B/E assessed. A copy of B/E with TR 6 Challan is available online for taking
print-out and payment of customs duty through designated bank as per Government
of India norms. TR 6 Challan is for payment of custom duties under Treasury
Rules 92. The duty can be paid in the designated banks through TR-6 Challan.
It is necessary to check the name of the bank and the branch before depositing the
duty. Bank endorses the payment particulars in Challan that is submitted to the
customs. Facility of e-payment of duty through more than one authorized bank is
also available since 2007 at all major customs locations (Customs Act, 1962).
After completion of all the customs formalities about assessment, the C&F
agent goes to port/container freight station (CFS) for taking delivery of the mate-
rials from the custodian.
CFSs are set up for the purpose of examination/assessment of the containerised
cargo. They are generally managed by public sector organization. Of late, some
private agencies have also been permitted to manage CFS. They are appointed as
custodians of the imported goods by the Commissioner of Customs, under Section
45 of the Customs Act, 1962. The imported goods shall remain in the custody of
such person as approved by the Commissioner of Customs until they are cleared
for home consumption or are warehoused or are transhipped. The minimum area
required for a CFS would be 1 hectare. However, a proposal could also be consid-
ered having less area on consideration of technological upgradation and other
peculiar features justifying such a deviation (Customs Act, 1962).
In the CFS/port, the C&F agent registers the B/E, so that they can approach the
Dock Customs Appraiser for physical examination of the goods on the same day.
If everything is all right, the customs officer issues a pass-out-order through EDI
system and hands over the same to the C&F agent along with the print-out of
duplicate and triplicate B/E for taking delivery of the goods from the custodian.
Then the custodian checks the identity of the goods and releases the same to the
C&F agent after realization of their dues.
After goods are examined, it is verified that import is not prohibited and after
customs duty is paid, customs officer issues ‘Out of Customs Charge’ order under
Section 47. Goods can be cleared from customs area only on receipt of...
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