Import and Export Management

Muhammad Zahid Malik

zahid.malik@iqra.edu.pk
Key Players in International Business
(Import and Export)
 Players-who are they?
Any Company or Party involved (directly or indirectly) in the overall trading
process
1. Shipping and Forwarding Agents

2. Commercial Banks

3. Insurance Companies

4. Overseas Agents/Distributors/Retailers

5. Indenting Houses/Companies

6. Chamber of Commerce/FPCCI

7. Trade Development Authority of Pakistan (TDAP)

8. Various Export Promotion Bodies

9. Clearing Agents

10.Shipping Companies/Transporters
 Shipping/Forwarding Agents
• Liabilities of a freight forwarder

• The freight forwarder has always played an important role in commerce and
international carriage of goods. Traditionally the freight forwarder was the link
between the owner of the goods and the carrier, and provided forwarding or
clearing services. The forwarder acts as the agent for the cargo owner, and in
some cases at the same time for the carrier. Forwarding agents would have co-
operating partners in other countries, to whom they direct instructions for the
receipt of the cargo at destination and for customs clearance. With the advent
of containerization the forwarder undertook activities such as packing and
cargo consolidation on his own account .

• In modern days the freight forwarder has adopted a new role in which he is not
only assisting the parties in the transportation of goods, but in ‘undertaking’
the carriage by his own means of transport or by making arrangements with
other transport providers. In the role of a principal, the freight forwarder is
known by many names, eg Non-Vessel Owning/ Operating Common Carrier
(NVOCC), Multimodal Transport Operator (MTO), logistics service provider, etc.
 Shipping/Forwarding Agents
Functions of a freight forwarder

1. Transshipment: Transshipment is an essential feature of modern container operations. Due to

high operation costs, large container ships usually serve only a few so called ‘hub ports’. The
carriage from such ports to regional ports is for most of the time sub-contracted by shipping
lines to local operators of feeder vessels. At the hub ports the containers are transshipped from
the mother vessel to feeder vessels or vice versa. Furthermore, as a result of modern
technological developments, such as improved cargo handling facilities at port terminals and the
invention of standardized containers, which permit integrated use on various modes of
transportation, are frequently transferred to other means of transportation (truck, train,
airplane) for inland carriage. Where cargo passes in transit through a country, the freight
forwarder co- ordinates the transfer of the cargo from one transport vehicle to another. This
involves booking space on a transshipment vessel, discharging, sorting, loading and distribution
of the cargo to various consignees. Transshipment agents generally act as agent for the
shipper/consignee or another freight forwarder.

2. Packing, warehousing and distribution: The freight forwarder may arrange for packing,
warehousing and distribution of cargo. He keeps the goods in storage before export and
subsequent to import whilst awaiting transportation or distribution. The freight forwarder can
either operate his own ware-house and offer those ancillary services as principal to the shipper
and other freight forwarders or function as an agent in procuring the service from independent
contractors for his customers.
 Shipping/Forwarding Agents
• 3. Arranging cargo insurance: Freight forwarders are not cargo insurers, but merely
arrange cargo insurance, for a service fee, as agents for their customers. The selling of
ancillary services, such as insurance, for a commission is a traditional source of income
for freight forwarders. However, in some countries it is illegal to sell insurance.
• 4. Documentation and customs clearance: The freight forwarder may provide some
documentation for the import and export of goods having regard to legal-and customs
requirements and the terms of the sales contract.
• 5. Payment of freight and local taxes: The freight forwarder may effects payment of
freight to the performing carrier and some local taxes, on behalf of his customers to
avoid delays.
• 6. Transportation distribution analysis: The freight forwarder is considered the architect
of transport in international trade. He advises his customer - as principal - on the
available transportation options and plans the most efficient route according to the
customer’s needs.
• 7. Transport arrangements: After the customer has decided on the route and mode of
transportation, the freight for-warder makes the necessary bookings and dispatches the
goods as an agent. In his classic role he arranges contracts of carriage and establishes
direct contractual relationships between his customer - the shipper - and the carrier. He
furthermore pays freight charges, insurance, packing, customs duties and then charges
his customer a fee, usually a percentage of the total expenses.
 Commercial Banks
Primary functions of a Commercial Bank

1. Accepting Deposits
2. Advancing Loans

Secondary functions

1. Overdraft Facility:
2. Discounting Bills of Exchange:
3. Transfer of Funds
4. Collection and Payment of Various Items: Commercial banks collect cheques,
bills,’ interest, dividends, subscriptions, rents and other periodical receipts on
behalf of their customers and also make payments of taxes, insurance premium,
etc. on standing instructions of their clients.
5. Purchase and Sale of Foreign Exchange:
6. Purchase and Sale of Securities:
 Commercial Banks
7. Income Tax Consultancy
8. Trustee and Executor
9. Bank Guarantees
10. Letters of Reference
11. Locker Facility
12. Traveller’s Cheques
13. Letter of Credit:
14. Underwriting Securities
15. Collection of Statistics:
 Insurance Companies
Major types of Insurance are:
1. Marine Insurance
2. Road Insurance
3. Motor
4. Theft/ Burglary /etc.
5. Travel
6. Life
7. Marriage/Education and other future based plans
8. Erection All Risk (EAR)
9. Contractor All risk (CAR)
TAKAFUL
Insurance Companies also issue Guarantees, called insurance guarantees.
The purpose of this guarantee is same as that of Bank Guarantee.
 Overseas Agents/Distributors/Retailers
Sales Representative: Manufacturer’s or Exporter’s representative; works for a
commission, does not hold the title of goods, uses Exporters name, brochures and looks
for sellers/orders. May be a Local guy. May handle a range of products that do not
conflict. May have a term contract.

Agent: Same as Representative but has some more powers than Rep. May have power of
attorney to enter into some business with buyers.

Distributors: A representative who purchases goods and holds the title and then resells.
They provide services to Exporter. They carry inventory and personnel. They can set their
own prices.

Foreign Retailers: Growth of major retails chains has created opportunity to sell directly
to these stores.

Direct Sale to end user: This is applicable in case of big buyers like governments,
Companies or manufacturers or projects.
 Indenting Houses
• Import of goods from a foreign country can be effected in two ways. The import of
goods can take place directly or through a middleman. The middleman or intermediary
is called an Indent House. Indent houses are of two types. They may be representative
or agents of foreign producers or exporters or they may be independent firms engaged
in foreign trade.

• The indent house brings the following advantages:

1. It helps the small dealers to participate in foreign trade.
2. The bargaining is done by the indent house and therefore helps in getting the
goods at a cheaper rate.
3. They consolidate small orders into bigger ones, thereby negotiating more discounts
and lesser freight costs.
4. Some big indenting Houses may have foreign affiliates who can inspect the goods
before shipment and can also confirm the status of the foreign supplier.
5. Importer has more confidence in dealing with Foreign Companies who have their
local indenters.
6. They facilitate claim settlement and complaint handling.
 Chamber of Commerce/FPCCI
A Chamber of Commerce and Industry is an autonomous organization of businesses and
individuals aimed at promoting commerce and industry.

It may be a private set-up with voluntary membership (as in Singapore) or one established
under public law, with compulsory membership (as in Germany) or one regulated under
public law status with voluntary membership (as in Japan).

It could take the form of a national establishment e.g.. the Thai Chamber of Commerce, a
provincial body e.g.. The West Java Chamber of Commerce and Industry, a town or district
setup e.g.. Karachi Chamber of Commerce , an ethnic grouping e.g.. The Singapore Chinese
Chamber of Commerce and Industry.

Despite their wide diversities, Chambers of Commerce and Industry generally share a
common mission, which is ... to promote, develop and further the economic well-being of
members by providing • a collective voice in advocacy to represent and protect members’
interests
• quality services to help members enhance their competitiveness and succeed in their
businesses thereby contributing significantly to the economic progress of the nation.
 Chamber of Commerce/FPCCI
In present trend of globalization and free trade regime, the national chambers
are considered as engines of growth and partners in the supply side economic
policies.

FPCCI currently has:

– 51 Member Chamber of Commerce (46 and 35 in 2016 and 2015)
– 11 Women chamber of Commerce (10 and 8 in 2016 and 2015)
– 120 Associations of Trade and Industry (107 and 94 in 2016 and 2015)

The aim of the chambers of commerce and industry in today’s world is not
limited to the extent of the protection of business and economic interests of the
member organizations, they describe their role as “to advance human progress
through an economic, political and social system based on individual freedom,
incentive, initiative, opportunity, and responsibility. It is believed that trade
bodies can play a pivotal role in determination of the global linkages and
implementation of polices.
 TDAP
• The Trade Development Authority of Pakistan (TDAP) is a body corporate established on
8 November, 2006, under a Presidential Ordinance. The TDAP is the successor organization
to the Export Promotion Bureau (EPB) and is mandated to become a dedicated, effective and
empowered organization that is professionally managed. TDAP, as part of its trade
‘development’ mandate, as opposed to ‘export promotion’ only, will be dedicated to the
‘holistic’ development and promotion of goods and services for exports globally. TDAP in this
enhanced responsibility and role will create direct linkages with stakeholders, local and
abroad, aiming for a ‘Quantum Leap’ in exports. The administrative ministry of the TDAP will
be the Ministry of Commerce, with the objective of promotion of sustainable growth in the
quantum and value of export of goods and services.

• Functions of TDAP

Marketing
Market research
• Fairs and exhibitions – local and international
• Trade delegation for exploring International Market
• Overseas publicity to create brand / country /product awareness
• Participation in trade related events
• Facilitation through Commercial Counselors abroad
• Expo center- holding of international / local exhibitions
• Seminar / conferences/ workshops to create awareness about export related issues.
 Facilitation
TDAP
Face to face counseling
Export Facilitation committee – to resolve related problems
Standardization and simplification of procedures
Establish buyer- seller contacts
Information dissemination through website/Fax-on-Demand/Pakistan Export information
Bulletin

Regulation

To assist Government in formulation of export policies and setting of export targets

To monitor export and implementation of export strategy
To recommend establishment of export oriented industries
Issuance of GSP certificates

Enhancement of Competitive Edge of Export Sector

Skill development Council

Establishment of training institutes for capacity development in sectors like Textile, Leather,
Surgical, etc.
Seminars on export related issues
ISO-9000 and 14000 – helping industry to adopt the standards
 Clearing Agents
Companies that clear the goods for Export or Import are called Clearing Agents.
They mainly deal with the Customs/Port authorities. Their Main responsibilities are:

Roles and Responsibilities

1. Registration and Renewal of License
2. Authorization from Client
3. Preparing and collecting documents for Customs Valuation
4. Coordination with Port and Customs Authorities during valuation and Duty calculations
5. Communication with Client on continuous basis.
6. Asking for Duties from Client or payment of duties on behalf of clients.
7. Recordkeeping.
8. Additional services like transport, loading/unloading etc.
 Shipping Companies/Agents/Transporters

Responsibilities of shipping agents include:

• ensuring a berth for the incoming ship

• arranging for the pilot and the tugs if necessary
• drawing up the documents for the customs and harbor services
• arranging for the necessary doctor for the crew any medical assistance
• arranging for the necessary repairs
• conveying instructions to and from the ship owner
• organizing the supply, transport and the handling of the goods
• organizing the necessary contacts with the stevedores
• collecting freights, cargoes
• contacting shippers and the receivers of the goods