Logistic Chalenges in UAE

8/8/2019 Logistic Chalenges in UAE

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Logistical challenges inLogistical challenges in

purchasing function in UAEpurchasing function in UAERaja Dhanapal

Rajiv Devnani

Muammed Ali SaeedHitesh Gangrade


2/19

Cost ComponentsCost Components

Basic PriceBasic Price

Freight (Inclusive of Port Charges)Freight (Inclusive of Port Charges)InsuranceInsurance

Customs DutyCustoms Duty

Clearing ChargesClearing ChargesDelivery chargesDelivery charges


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Documentation RequirementsDocumentation Requirements

Payment Terms (CAD, L/C, 30 Days afterPayment Terms (CAD, L/C, 30 Days afterDelivery)Delivery)

HS Code (preferably on the invoices)HS Code (preferably on the invoices) Legalized Documents (Minimum 2 original setsLegalized Documents (Minimum 2 original sets

of Invoice & Packing List + Certificate of Originof Invoice & Packing List + Certificate of Origin+ Bill of Lading + COA)+ Bill of Lading + COA)

MSDSMSDS Health Certificate (in case of perishable goods)Health Certificate (in case of perishable goods) Environment Health Certificate (in case ofEnvironment Health Certificate (in case of

perishable goods)perishable goods) Each item to be embossed with the Country ofEach item to be embossed with the Country of

Origin or Assembly (in case of Ready to wear /Origin or Assembly (in case of Ready to wear /

accessories / watches etc.)accessories / watches etc.)


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Present ChallengesPresent Challenges

Delay in Documents from ShipperDelay in Documents from Shipper Delay in Documents from BankDelay in Documents from Bank

Registration of HS code for new productsRegistration of HS code for new products

Application for increase in quantity under thatApplication for increase in quantity under that

HS code for existing productsHS code for existing products

Mismatch in HS codeMismatch in HS code

Port Congestion SurchargePort Congestion Surcharge

Non availability of Health CertificateNon availability of Health Certificate Environment Health and Safety Certificate fromEnvironment Health and Safety Certificate from

Asian SuppliersAsian Suppliers

Negotiation with Shipping line for Free PeriodNegotiation with Shipping line for Free Period


9/19

Present ChallengesPresent Challenges

There is a congestion charge levied on theThere is a congestion charge levied on the

importer.importer.

Delay in processing documents by theDelay in processing documents by the

authorities during Eid breaks and duringauthorities during Eid breaks and duringRamadan.Ramadan.

Delays due to IT related issues (recentDelays due to IT related issues (recent

development)development)

Closure of Ports like Port Rashid increasesClosure of Ports like Port Rashid increasesinland transportation cost and time lags.inland transportation cost and time lags.

Transparency of rules & regulations.Transparency of rules & regulations.


10/19

Present StructurePresent Structure

Material Movement

Documents Flow

Shipping Line

Shipment

FromSource

To

Dubai

SupplierC&F

Source

xyz

Dubai

C&F

Dubai

Bank


11/19

Present ProblemPresent ProblemStorage Charges to be Paid to Dubai Port because of theStorage Charges to be Paid to Dubai Port because of the

delays in clearing the documentationdelays in clearing the documentation Day 1 - Vessel Sails from Mumbai PortDay 1 - Vessel Sails from Mumbai Port Day 2 Shipping Line provides the Bill of Lading to C&FDay 2 Shipping Line provides the Bill of Lading to C&F

agentagent

Day 3 Bill of Lading reaches the originator of RM/ PMDay 3 Bill of Lading reaches the originator of RM/ PM (The Ship has reached Dubai)(The Ship has reached Dubai) Day 4 Legalization of the documents happenDay 4 Legalization of the documents happen Day 5 All the Papers are submitted to BankDay 5 All the Papers are submitted to Bank Day 7 Bank in Dubai receives the DocumentsDay 7 Bank in Dubai receives the Documents Day 8 Bank sends Presentation Advice ( this is beingDay 8 Bank sends Presentation Advice ( this is being

optimistic that they get the documents and they are veryoptimistic that they get the documents and they are veryprompt in sending us Fax of Presentation advice)prompt in sending us Fax of Presentation advice)

(The Free Storage Period at Dubai Port is over (The Free Storage Period at Dubai Port is over Storage Charge Starts)Storage Charge Starts)

Day 9 - We send Bank confirmation of Presentation adviceDay 9 - We send Bank confirmation of Presentation advice

Day 11 The Consignment is cleared but with Demurrage.Day 11 The Consignment is cleared but with Demurrage.


12/19

Present ProblemPresent ProblemStorage Charges to be Paid to Dubai Port after receiving allStorage Charges to be Paid to Dubai Port after receiving all

the required documents)the required documents)


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23 % documents23 % documentsreceived in 4 daysreceived in 4 daysor Less than 4or Less than 4

days.days. 77 % documents77 % documents

received in 5 daysreceived in 5 daysor more than 5or more than 5days.days.

Total Documents 53 In Percentage

Documents Released in 1 Day 1 2 23

Documents Released in 2 Days 8 15



Documents Released in 5 Days 6 11 77












100.00


14/19

Gaps in the Existing SystemGaps in the Existing System

Delay in document flowDelay in document flow

From source C&F to supplier (delay in B/LFrom source C&F to supplier (delay in B/L

copy & Legalization)copy & Legalization)

From Supplier to bankFrom Supplier to bank From Bank to xyzFrom Bank to xyz

Any shortfall in documents making itAny shortfall in documents making it

very difficult to get the material releasedvery difficult to get the material released

Potential inefficiency in C&F/shipmentPotential inefficiency in C&F/shipment

charges at supplier endcharges at supplier end

Bank Doc. Delays


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Proposed StructureProposed Structure

Same C&F agent at Source as well as Destination (Dubai) To cut down document flow time

To avoid repeated follow-ups for documents with the supplier

Note: Refundable security deposit of AED 500 to be deposited with customs for

releasing of the container against House B/L

Shipping Line

Shipment

From

Source

To

Dubai

Supplier C&FSource

xyz

Dubai

C&F

Dubai

Bank

HouseB

/L


16/19

Proposed SystemProposed System

Same C&F at Source & DestinationSame C&F at Source & Destination

C&F for CIF delivery shall be nominated by xyzC&F for CIF delivery shall be nominated by xyz

to the supplierto the supplier

Complete compilation & flow of documentsComplete compilation & flow of documentsshall entirely be the responsibility of C&Fshall entirely be the responsibility of C&F

Any demurrages/detentions occurring due toAny demurrages/detentions occurring due to

documents delay shall be borne by C&Fdocuments delay shall be borne by C&F

Shipment status & track of the consignment onShipment status & track of the consignment ona daily basisa daily basis


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Proposed Structure- Cost ImplicationsProposed Structure- Cost Implications

Capricorn Logistics and IALCapricorn Logistics and IAL 5 to 8 percent additional savings (in C&F)5 to 8 percent additional savings (in C&F)

C&F shall share the charges being levied forC&F shall share the charges being levied forclearance/forwarding/shipping at the source,clearance/forwarding/shipping at the source,thus bringing in more transparencythus bringing in more transparency

Services from India, Singapore, Malaysia,Services from India, Singapore, Malaysia,France, Italy & other locationsFrance, Italy & other locations

Trial held for consignments from VarahiTrial held for consignments from Varahi

Plastics (India), Betts Tubes (India) &Plastics (India), Betts Tubes (India) &Ultra (India), Alban Muller (France) ,Ultra (India), Alban Muller (France) ,PolyconPolycon


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Implementation PlanImplementation Plan

Nomination of C&F at source as well as destination byNomination of C&F at source as well as destination byxyz Internationalxyz International Vendor to quote CIF price and provide deliveryVendor to quote CIF price and provide delivery

accordingly through xyz nominated C&Faccordingly through xyz nominated C&F C&F to be responsible for schedule adherence and timelyC&F to be responsible for schedule adherence and timely

deliverydelivery C&F to provide delivery against House B/L (against aC&F to provide delivery against House B/L (against a

refundable deposit to customs)refundable deposit to customs) Original documents from bank to be submitted toOriginal documents from bank to be submitted to

customs within 4 days (else security will be forfeited)customs within 4 days (else security will be forfeited) C&F to submit all bills (with supporting) within 36 hoursC&F to submit all bills (with supporting) within 36 hours

of deliveryof delivery The process and terms shall be documented as aThe process and terms shall be documented as a

contract with the C&Fcontract with the C&F Once the system stabilizes, volume discounts from C&FOnce the system stabilizes, volume discounts from C&F

may also be expectedmay also be expected


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Thank YouThank You