From Pre-Shipment To Post-Shipment: Demystifying the International Logistics Value Chain
A glance into some of the key constituents of pre and post-shipment operations that will help demystify the international logistics value chain
The growing intensity of supply chain operations is transforming the world into a highly connected business ecosystem. It’s increasing accessibility to both necessities and luxury items, impacting bilateral relations, generating revenue and more importantly bridging the gap that existed for decades between brands and their customers.
Today, a pair of shoes a customer ordered online from her home in Delhi is probably shipped out of a warehouse in Memphis, Tennessee. The Parmesan cheese we use here to make spaghetti exquisite is shipped from a small province in Italy. The beautiful silk apparel the Indian diaspora wears to celebrate their culture is shipped from a large metropolitan city in South India. Life-saving medicines and medical equipment that we use to treat our population, are shipped from countries such as Germany, the US, France, Japan, Oman and more.
As we get all these and more delivered to our home, workplace, and institutions seamlessly, we seldom think about the journey of the product. In other words, how did it get there? Well, in many ways, from a customer perspective, that should be the case. As long as what we order arrives on time in its full glory, we are complacent. But homegrown businesses who are willing to explore the global shipment economy or drive supply chain innovation in the global retail or e-commerce segment need to delve deeper into the nuances of how exactly end-to-end shipment operations are executed.
Here’s a glance into some of the key constituents of pre and post-shipment operations that will help demystify the international logistics value chain.
Let us analyze the pre-shipment process in greater detail:
- To initiate pre-shipment, it is necessary to get registered as a veritable exporter from the established regulatory body. Every exporter must receive the Import Export Code (IEC), a vital identification number that is essential for exporting from the country or importing goods inside India. It is extended by the Directorate General of Foreign Trade, ministry of commerce, government of India, after due inspection and verification of the prospective exporter’s credentials.
- The next step involves associating with a potential buyer and finalizing an agreement on the payment terms involved in actualizing the transaction.
- Thirdly, there needs to be proper planning in terms of gaining schedules and fixing the freight rate, a price requested for transporting cargo from destination A to B.
Post freight procurement, the shipment execution begins.
- This part involves real-time execution of the transporting operation. The exporter must book a container aboard a vessel or the carrier.
- Then comes the delivery order. Once the DO has been issued as per availability, the empty containers are picked up from the yard for container stuffing. This process involves the loading of goods into a container before they are shipped off to their eventual destination. On the arrival of the goods at their destination, the process is inversed and is known as container de-stuffing wherein the products are checked for damage, cataloged, and unloaded by authorized shipyard personnel.
- Then comes the all-important documentation aspect, which actually runs simultaneously with other on-ground operations. Before the container filled with goods is dispatched, the exporter must comply with essential documents such as the VGM, Form 13, SI Filing, and shipping bill generation on the customs portal.
- The next stage in the process is the export haulage as the stuffed container arrives at the port. After gaining due clearance and approval from the customs authorities, the stuffed container is loaded onto the awaiting vessel.
- Post loading, a document referred to as the Bill of Lading is issued by the carrier to corroborate the receipt of cargo due for shipment.
- As the vessel embarks on its chosen destination, the shipment status of the goods is updated to ‘In Transit.’ It then braces for transshipment, whereby the cargo is shifted from one vessel to another at an intermediary port while en route to its ultimate destination. Whenever there is a lack of connection between two ports, transshipment proves useful.
- When the shipment finally reaches the point of discharge, a process similar to the initial point of loading ensues. After gaining clearance, the container is released and transported to the destination warehouse for the de-stuffing process. Finally, the empty container returns to the yard or the port of destination.
- The transaction is finally concluded when the exporter receives the payment and the authorized dealer bank of the exporter acknowledges the same and closes the transaction on the EDPMS system.
The extant shipping process is prone to cost surges due to mismanagement and can also prove to be a highly time-consuming affair. The central reason behind this is a lack of visibility on present market rates for freight procurement and containers during the shipment journey. This can result in a highly tedious and confusing process.
The Need To Digitize Supply Chain Operations
Savvy businesses are deploying intelligent supply chain management tools to simplify shipment operations, absorb transportation disruptions, drive profitability and make fulfillment operations customer-centric. Modern logistics management solutions are making cross-border retail logistics more streamlined. These solutions automate compliance processes, empower shippers to scale delivery operations seamlessly, helping enterprises and 3PLs gain end-to-end visibility of bulk shipment movement, compare quotes on the fly and achieve much more.
According to Statista, 40 per cent of retail supply chain executives are willing to invest in real-time supply chain visibility and improve integrated operational planning, 56 per cent in production planning and demand forecasting, while 53% want to enable flexible operations. Moreover, the post-COVID world requires a specialized, agile, and technologically simplified logistics and supply chain framework that can effectively respond to the challenges witnessed in the new normal. Hence, emerges the need for businesses across the country to embrace digital transformation.