Logistical challenges in

purchasing function in UAE

Raja Dhanapal
Rajiv Devnani
Muammed Ali Saeed
Hitesh Gangrade
 Cost Components

Basic Price
Freight (Inclusive of Port Charges)
Insurance
Customs Duty
Clearing Charges
Delivery charges
 Documentation Requirements
 Payment Terms – (CAD, L/C, 30 Days after
Delivery)
 HS Code (preferably on the invoices)
 Legalized Documents (Minimum 2 original sets
of Invoice & Packing List + Certificate of Origin
+ Bill of Lading + COA)
 MSDS
 Health Certificate (in case of perishable goods)
 Environment Health Certificate (in case of
perishable goods)
 Each item to be embossed with the Country of
Origin or Assembly (in case of Ready to wear /
accessories / watches etc.)
 Present Challenges
 Delay in Documents from Shipper
 Delay in Documents from Bank
 Registration of HS code for new products
 Application for increase in quantity under that
HS code for existing products
 Mismatch in HS code
 Port Congestion Surcharge
 Non availability of Health Certificate
 Environment Health and Safety Certificate from
Asian Suppliers
 Negotiation with Shipping line for Free Period
 Present Challenges
 There is a congestion charge levied on the
importer.
 Delay in processing documents by the
authorities during Eid breaks and during
Ramadan.
 Delays due to IT related issues (recent
development)
 Closure of Ports like Port Rashid increases
inland transportation cost and time lags.
 Transparency of rules & regulations.
 Present Structure
C&F
Supplier
Source
Shipping Line

Shipment
Bank From
Source
To
Dubai

xyz C&F
Dubai Dubai

Material Movement
Documents Flow
 Present Problem
Storage Charges to be Paid to Dubai Port because of the
delays in clearing the documentation
 Day 1 - Vessel Sails from Mumbai Port
 Day 2 – Shipping Line provides the Bill of Lading to C&F
agent
 Day 3 – Bill of Lading reaches the originator of RM/ PM
 (The Ship has reached Dubai)
 Day 4 – Legalization of the documents happen
 Day 5 – All the Papers are submitted to Bank
 Day 7 – Bank in Dubai receives the Documents
 Day 8 – Bank sends Presentation Advice ( this is being
optimistic that they get the documents and they are very
prompt in sending us Fax of Presentation advice)
 (The Free Storage Period at Dubai Port is over –
Storage Charge Starts)
 Day 9 - We send Bank confirmation of Presentation advice
 Day 11 – The Consignment is cleared but with Demurrage.
 Present Problem
Storage Charges to be Paid to Dubai Port after receiving all
the required documents)
 Total Documents 53 In Percentage
 23 % documents
Documents Released in 1 Day 1 2 23
received in 4 days
or Less than 4 Documents Released in 2 Days 8 15

days. Documents Released in 3 Days 1 2

 77 % documents Documents Released in 4 Days 2 4

received in 5 days Documents Released in 5 Days 6 11 77

or more than 5 Documents Released in 6 Days 4 8

days. Documents Released in 7 Days 9 17

Documents Released in 8 Days 5 9

Documents Released in 9 Days 4 8

Documents Released in 10 Days 4 8

Documents Released in 11 Days 1 2

Documents Released in 12 Days 2 4

Documents Released in 13 Days 2 4

Documents Released in 14 Days 1 2

Documents Released in 15 Days 2 4

Documents Released in 17 Days 1 2

100.00
 Gaps in the Existing System

 Delay in document flow

• From source C&F to supplier (delay in B/L
copy & Legalization)
• From Supplier to bank
Bank Doc. Delays

• From Bank to xyz

 Any shortfall in documents making it
very difficult to get the material released
 Potential inefficiency in C&F/shipment
charges at supplier end
 Proposed Structure
C&F
Supplier
Source Shipping Line

House B/L
Shipment
Bank From
Source
To
Dubai
xyz C&F
Dubai Dubai

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
 Proposed System
 Same C&F at Source & Destination
• C&F for CIF delivery shall be nominated by xyz
to the supplier
• Complete compilation & flow of documents
shall entirely be the responsibility of C&F
• Any demurrages/detentions occurring due to
documents delay shall be borne by C&F
• Shipment status & track of the consignment on
a daily basis
Proposed Structure- Cost Implications
 Capricorn Logistics and IAL
• 5 to 8 percent additional savings (in C&F)
• C&F shall share the charges being levied for
clearance/forwarding/shipping at the source,
thus bringing in more transparency
• Services from India, Singapore, Malaysia,
France, Italy & other locations
 Trial held for consignments from Varahi
Plastics (India), Betts Tubes (India) &
Ultra (India), Alban Muller (France) ,
Polycon
 Implementation Plan
 Nomination of C&F at source as well as destination by
xyz International
 Vendor to quote CIF price and provide delivery
accordingly through xyz nominated C&F
 C&F to be responsible for schedule adherence and timely
delivery
 C&F to provide delivery against “House B/L” (against a
refundable deposit to customs)
 Original documents from bank to be submitted to
customs within 4 days (else security will be forfeited)
 C&F to submit all bills (with supporting) within 36 hours
of delivery
 The process and terms shall be documented as a
contract with the C&F
 Once the system stabilizes, volume discounts from C&F
may also be expected
Thank You