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The pain of registering an Ad Code every time an exporter used a different port is history! 

CBIC has issued an advisory No: 10/2022 dated June 14, 2022, which was in demand from the trade for a long time.

Multiple ports multiple AD-code registrations, delays in export for not having the AD-code registered at the port and many such pains of exporters have been addressed in the advisory. 

Trade demanded that the AD code had to be registered only once in the Customs for all the port locations, and not every time they used a different port for operations.

Previously, it was mandatory to register the AD Code at every port the document had to be filed. There could be 1 or many AD codes associated with one IEC code at various ports. A whole bunch of documents with KYC and bank letters had to be submitted to each port to register the AD code. Even after the submission of documents, it was at the discretion of the port officer to accept or ask for further documents or reject the registration as a whole.

Now, the Ad code has to be registered at only one port, and thereafter the details would be available to all EDI systems at any port in India. If in case the exporter needs to update the details they can do so through an online request from the ICEGATE portal by logging in to their account. The same AD Code can be used for filling the documents on all the ports. There can still be multiple AD Codes and accounts registered for one IEC, but all of them have to be registered in any one of the ports.

What happens to the existing registered AD codes? Is there Anything exporters need to do?

No, for all existing AD code(s) and associated accounts registered for an IEC, the Customs port, where the last Shipping Bill with a particular AD code was filed, will be taken as the port of registration for that AD code in the System.

Thanks for reading, you can write to us with your suggestions at [email protected].

With the world turning into a Global Village through the Liberalization of Trade, exports and imports have flourished. In the 21st Century, exporting and importing is all about stacking the containers, clearing the required papers, and setting the ship afloat for its destination.

However, there have been reports that container prices to countries like America and Africa have more than doubled in the last couple of weeks, the reason being- Container Imbalance. 

The world has a fixed number of containers that are in use for exports and imports. When the goods are in transit, the vessel carries the exported goods to the importing country. Again the importing country uses that container to re-export goods. As a result, a constant inflow and outflow of the vessels are in balance, and no country faces any deficit or surplus of containers.

However, COVID has brought about unforeseen situations in International trading. Most countries had closed their borders for trading due to the pandemic. As a result, the flow of containers had stopped. With the gradual resumption of transactions, countries like India have a lot of goods lined up for exporting. According to Maersk, Indian exports in terms of volume grew 24% from a year earlier, even as imports reduced by 28%. The importing countries do not have enough ready products to send back. Hence, while India is facing a container deficit, some other country or countries have a container surplus.

This phenomenon is called container- imbalance.

For managing this drawback, containers have to be empty to countries with a deficiency in vessels to keep up the flow. Shipping empty containers imply incurring huge expenses without any returns. Moreover, if containers are lying idle in the dockyard, it attracts heavy expense too. To compensate for all these extra expenses, there is no option but to increase the price of containers.

Now the million-dollar question: If a country like India is facing a container deficit, then there must be some other countries that have containers in surplus. 

Which is that country?

China happens to be the country with the container surplus. When the entire world was falling sick to the Virus, China was reopening its doors for trade. Adding to it, China’s actions at Indian borders propelled India to bring strong restrictions on trade with China. As a result, the containers which were shipped to China could not be shipped back to India.

Faceless Customs Clearance - A Blessing or an Agony

Central Board of Indirect Taxes and Customs (CBIC) introduced the faceless, paperless, and contactless Custom Clearance Process under the “Turant Customs” program.  This process would be an anonymous assessment process, automated clearance of bills of entry, and digitisation of the necessary Custom papers and documents.

We might think that automation and digitisation of Customs processes would help in reducing corruption and would supposedly make the process easy and seamless. However, Freight Forwarders have a different story to tell.

Before moving to the nitty-gritty of the Faceless Assessment Process, we need to know how this process came into existence and who would be in charge of running the system.

The customs process automation started in the year 2005 and aimed at the non-personnel clearance of 80% of the imports being made. The faceless clearance assessment process applies to the remaining 20% of the imports.

The faceless assessment would be available at all importing ports of the country and would be a centralised process. A particular freight would be assigned to an anonymous clearing officer by the software system, who would undertake the process of assessing the freight.

This program is going to be handled by the Directorate General of Analytics and Risk Management, Government of India.

The advantages you ask?

As we have already pointed out, it would reduce the extensive corruption in the world of Custom Clearance. Not knowing the customs officer would cut down a lot of unaccounted transactions. The digitisation would make the process smart and savvy. Data, being stored in the electronic format would help in several analyses and surveys which would help in better quality assessment and keep the system in sync.

Two sides of a coin!

The import and export business is more complex than it looks. The trade runs on the immaculate management of space and time, supported by a top-notch supply chain. For a country with a steady mentality, changes are not readily welcomed. The digitised faceless process has resulted in a significant increase of delay, mainly because of anonymous clearance officers who know nothing about the clearing agent.

Putting it this way, every importing port so long had its dedicated clearing officers and clearing agents. There was a sense of acquaintance and the officers used to respect the goodwill of the better clearing agents whom they knew had their papers clear. However, when the same clearance task started getting assigned to an officer from a different part of the country, it became necessary for him to go through the entire assessment process of checking all the papers. Thus, instead of reducing time, the faceless process became more time-consuming. 

In the import-export business, time is money. A cargo sitting at the dock for a day or two would attract heavy demurrage, thus increasing the cost and pulling back the profit margins of firms.

Though many critics have criticised this faceless process openly, many believe that the new process is a positive change the clearance officers are purposefully delaying the process for you know what reasons.

In a nutshell

India still has a long way to go before it becomes completely digital. What our leaders might have to find is the right blend between the online and offline processes. As our Prime minister rightly said, “India, with the right blend of the physical and the virtual, can emerge as the global nerve center of complex modern multinational supply chains in the post-Covid-19 world.”

Recently we reached out to as many as 1000 companies to know about the challenges they face in the logistical supply chain of export or import in India.

After analyzing all the responses, we came out with a quick 3 minutes summary of the survey.

The first question was generic, as to whether the businesses felt that the logistical supply chain of India was a headache?

The logistics sector in India is quite immense and provides daily bread and butter to many. It is a matter of concern that about 2/3rd of businesses feel this way.

It was surprising to note that about 67% of business owners felt that the logistical supply chain of India is a headache for them. 

The next question was to know as to what part of the logistical supply chain was a pain for them. The survey takers were allowed to choose from more than one answer in this case.

The results are quite evident in the direction that documentation is a big problem for them. The fact that many of them also choose Customs Clearance, which is kind of a superset of documentation, supports our analysis. 

Then we wanted to understand the main challenges faced by Importers/ Exporters which made them feel that the logistics supply chain in India was a headache.

In this case, the businesses were a little overwhelmed and quite a few had marked all the options. Let me talk about them one by one:

Reliability and transparency from the existing logistics partner did stand out to be a big challenge businesses felt. The fact that they couldn’t rely on their existing logistics partner was a little heartbreaking. We understand this as there are many factors responsible for this problem. A few good examples can be - 

Over-billing

Lack of technical support

Delayed goods delivery

Lack of communication

Government duties & taxes: Several factors cause this concern. Multiple slabs of duties, IGST, added cess. But the government has to earn from somewhere right?

Adding to this, the Government does come-up with duty and tax rebate on certain products now and then. We would request our readers to check for any notifications that the government might offer to lower the burden of duties and taxes.

Rate of freight and other logistical services: The reason for this is quite known. The presence of “middlemen” in the market does increase the rates by nearly 20%. What you are paying can be a profit of 3 logistics companies in the chain.

In a nutshell

Approximately 70% of international commercial trade involves container ships; this implies that out of all the methods to ship a product, cargo shipping stands out to be the favourite among the traders. But, will it suffice with your business needs? Let's find out!

Imagine a big ship, a massive ship containing thousands of containers stacked one over another, in which every container contains different goods and materials that need to get transported from one port to another.

If you imagined a ship like this

you have a smart brain, my friend!

On average, there exists thousands of these cargo carriers ply around the world's seas and oceans every single year, handling the bulk of international trade.

Did you not mention air freight is faster and more reliable in this post?

Oops Guilty! In my defence, I also said: "speed and reliability come with a price." 

Let me elaborate :

Cargo shipping could be one of the cheapest ways to ship your goods overseas. The cost gets calculated on a per-container basis (20ft or 40ft). Unlike Airfreight, where the volumetric weight of the package determines the rates.

It also stands out to be a secure means of transporting goods as the goods are in containers which usually provide excellent protection. Once the sealing procedure is complete, it becomes a physical barrier against any factors like bad weather, temperature variations, fire, theft, and impacts during handling. 

Container shipping is always versatile and is a highly flexible means of cargo transport. It allows you to transport dangerous liquid substances, such as hydrocarbons and other flammable chemicals, which is unlikely in the case of Airfreight.

It is not necessary for you to book a whole container if you do not need one. Freight Forwarders provide a way to share a container for LCL(Less than a container load) goods. Hence, giving flexibility only to pay for space you use.

It would be best if you were sure that the goods which need to get exported are not time-bound. Cargo shipping, although cheap, may require some time to reach the destination port. For time-bound products, you can always start the exporting procedure well in advance to ensure goods reach the destination in time.

In the era of fast delivery and less patience, Air route provides the best means to transport your goods from one country to another. This book today and get delivered tomorrow method of transporting goods is our personal favourite read along, and you will understand why.

Let me get it straight IATA (the air transport association) declared that it expects the air cargo revenue to be USD 116.1 billion in 2019, up from USD 109.8 billion in 2018. The market is growing, and there is a reason for it. 

Let's understand why?

Fast and Furious.

Multiple delivery options like -

One Day Delivery

Next Day Delivery.

Next Flight out. 

Tracking at your fingertips.

Landlocked country direct access - Not all country have access to water and sea transportation but the air they sure have, I know they have trade routes over the roads, but it takes a lot of valuable time for the goods to reach their destination.

But wait, all of it comes with a price.

Freight Rates

Air Freight rates can be four times (just an estimate based on experience) the Ocean Freight rates. It's not rocket science to understand why.  There are different other charges associated with Air Freight like, fuel surcharges that may increase their rates further.

How is the Freight rate calculated?

There is a thing called Volumetric weight, and air Freight rates are decided upon them (not always though). You may be wondering how to calculate the Volumetric Weight of your good. 

Follow the steps -

Step 1: Pick up your calculator if you are not good with maths(important). Step 2: Multiply the dimensions of your pallet  [LxBxH] in cm or m scale. Step 3: If you have used cm as your scale convert the product to cubic meters. Step 4: Divide the product by 0.006. Step 5: The result is your Volumetric weight in Kgs.

*Don't forget to multiply the Volumetric weight of one pallet with the number of pallets you have.

Example:  A pallet whose Length is 1.5m, Breadth is 1m, Height is 0.5m will have its product [LxBxH] = 0.75 cubic meter hence, its volumetric weight will be 0.75/0.006 = 125kg.

But there is a catch if the volumetric weight is lower than its actual weight. The Air Freight will be charged on your actual weight.

When should I use Air route?

By now you know that Air route is the fastest but not the cheapest means to transport your goods overseas. So when should you go for it?

The answer to the above questions is it depends. If you have the money you could even transport a car via Air but is it feasible? Hell No!  

If your goods have to reach the market just in time like for example chocolates or cookies before Christmas Holiday. If the goods are perishable like fruits, food items etc. Light-weighted goods like pharmaceuticals and precious metals and ornaments can also be sent through Air. You get the gist of it right?

In a Nutshell