LECTURE 9
( C H AP TE R 1 2 O F R AM A GO PAL
CLEARING AND
FORWARDING AGENTS
INTRODUCTION
Distribution logistics is an important area of planning in exports
Distribution logistics refer to the process of physical flow of goods
from the place of exporter to the location of importer, at right time,
with minimal cost.
In this significant area, Clearing and Forwarding Agents are a link
between the owners of goods and owners of means of transport.
They help cargo owners in efficient movement of goods to the buyers
by completing a number of procedural and documentary formalities.
They are experts and knowledgeable in laws and regulations
governing shipment of goods through the customs authorities.
ROLE OF CLEARING AND FORWARDING AGENTS
Their basic function is to provide different goods, well within the delivery schedule.
range of services to exporters to ensure
smooth and timely shipment of goods. In addition to these activities, he undertakes
most of the functions connected with exports
Clearing and Forwarding Agents play a such as marking, labelling, packing of
pivotal role in the selection of mode and goods, advising on trade laws, arranging
route of transport. local transportation as well as apprising
developments on transportation and
They are the specialised people to guide in claiming dutydrawback claims on behalf of
the selection of the shipping line/air line. the exporter.
Every exporter is concerned with An efficient clearing and forwarding agent,
distribution logistics to ensure that the goods indeed, goes a long way to the exporter in
reach the final buyer, in specified time and the journey of exports to make the matters
at minimal cost, in the condition they are easier, comfortable and may be cheaper
sent. too.
The essence of distribution logistics is the Above all, the agents act trouble-shooters
decision in respect of mode of transport to for the exports, in case of movement
be used. problems. It is well said a real clearing
agent can perform all the functions except
Clearing agent advises exporter about the selling the goods!
availability of alternative modes of
transport and guides exporter in decision-
making about the final choice of transport
to achieve optimal cost in transporting the
ESSENTIAL SERVICES
1. Warehousing before Transportation space contacting the agents of the
shipping company, alternatively, making
Soon after the goods are manufactured arrangements for air- freighting.
and are ready for shipping, warehousing
facility for goods is made available 5. Selection of Mode of Transport
before they are transported to the
docks/port. Mode of transport is a matter of
negotiation between the exporter and
2. Local Transportation importer, invariably, incorporated in the
contract. Either exporter or importer
When clearance is received from Port, arranges transportation,depending on
goods are transported to the docks and price terms. C & F agent provides
warehoused in the port. information about different shipping
lines/ air lines and guides on the
3. Container Arrangement selection of route, optimal from the
standpoint of delivery date and
Movement through containers has been distribution costs. Delivery of goods as
gaining popularity to facilitate export agreed upon is one of the conditions on
goods reach in the original condition, which success in exports depends. As
they are sent. In case of need, this transportation cost occupies a significant
service is provided. place in total cost structure, services of
4. Reservation of Shipping Space clearing agents are highly valuable in
managing timely delivery, containing
Unless shipping space is finalised, there is costs to achieve sales and profit goals
no guarantee about the shipment of for exporter.
goods. C & F agent books the shipping
CONTD….
6. Packing, Marking and procedures. Necessary port
labelling formalities are complied with, in
time, to avoid delays in
Goods are packed, marked shipment of goods.
and labelled so that goods are
ready for inspection and 8. Cargo Insurance
preshipment. These services are
Necessary marine/cargo
also provided by shipping
insurance is made as per the
agents, depending upon the
terms of contract. Risk coverage
requirement.
in insurance policy has to be
7. Completing Customs and earlier to the date of shipment
Port formalities of goods.
Clearing agents prepare the
shipping documents to the
requirements of customs
CONTD….
9. Advising Exporters on Trade Laws certificates or endorsements from
different agencies, required for
They are experts in the field as they shipment of goods. To illustrate, where
deal continuously. They are abreast of necessary, certificate of origin is
the changes in the regulations and procured by them from the local
trade practices of foreign countries. Chamber of Commerce.
Exporters can get benefit of their
advice. 12. Procuring Documents
10. Educating Exporters Finally, clearing agent procures
documents like Bill of Lading and
Clearing agents educate exporters in makes them available to the exporters
respect of developments in transport for negotiation with the bank.
and changing options available to
them to explore new markets that are
earlier remote or inaccessible.
11. Coordination with other
Agencies
Clearing agents arrange to procure
OPTIONAL SERVICES
1. Warehousing facilities abroad can perform that service, exporter can
avert a major chaos in the business of
When goods reach the destination point exports.
and importer refuses to take delivery of
goods, exporter faces an embarrassing 3. Locating Stranded Goods
situation. At some of the major
international markets, the leading At times, it so happens that the goods
clearing agents provide warehousing may be misplaced and do not reach the
facilities. This facility gives breathing intended destination. When the goods
time to plan alternative course of action are misplaced or stranded at some port,
to gain, at least minimal profit to the clearing agents provide neces
exporter. 4. Assessment of Damage
2. Bringing back Goods When goods are sent by ship,
When original importer refuses to take occasionally, goods may get damaged
delivery of goods, it is not easy for partly or totally. In such an event,
exporter to find alternative buyer at clearing agent coordinates with the ship
that place, immediately. If his efforts surveyor for assessment of damage and
fail, there is no option to the exporter obtaining surveyor’s certificate. They
other than bringing back the goods to may provide the assistance to file claim
his own place or sending goods to with the insurance company. sary
another place where sale can be made, assistance in locating them.
with minimum loss. If the clearing agent
FIXATION OF FEES
There are no standardised rates for the services provided by the
clearing and forwarding agents.
The exporter negotiates the fees, depending on the range of services
provided and competence of the clearing agent.
Selection of a competent clearing agent is highly important for the
smooth completion of export contract.
Fees, naturally, depends on experience of the clearing agent in the
product/country exported and on the frequency of exports of the
exporter, above all, bargaining capacity of the mutual parties.
