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TKM Global Logistics Ltd.
Training Manual
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Brief Overview of the Logistics Business.
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9/3/2008

Dear Colleague,
I would like to extend a warm welcome to you in the family. As a part of TATA Group, many characteristics are
expected out of us. We work not only to enhance shareholders value but to benefit all the stakeholders. The
reputation has been created over a period of 130 years with commitment, hard work and ethical practices. As a part of
TATA Group now you are also the torchbearer of this legacy.
TM International Logistics Limited (TMILL) is a joint venture company between Tata Steel and IQ Martrade Holding
of Germany which came into existence by venturing into port terminal operations business at Haldia during 2002.We
are a one window logistics solution provider and our vision is to be the most preferred and competitive logistics
solution provider to our clients. In line with our objective of spreading out into multiple geographies and logistics
verticals, through its subsidiary companies is now spread across widely with offices in Germany, China , Dubai and
in Haldia, Paradip, Kolkata Jamshedpur, Mumbai, New Delhi, Bangalore, Chennai, Hyderabad, Pune in India.
Big ticket government projects such as port privatization are challenging for any organization with long project
gestation periods. But these challenges have not stopped the company from forging ahead. In last five years TMILL
has evolved from a port services operator to an integrated logistics service provider with wide domestic network and
global reach. With compounded annual growth rate (CAGR) of more than 40% in turnover , TMILL group is
spreading its wings further by reaching new customers and geographies in steel , automobile and chemical industries
as principal verticals.
Our group company TKM Global Logistics Limited offers freight forwarding solutions and operates out of India,
Germany and China currently. TKM would expand further into other geographies to make its business wide spread
across Europe, south East Asia and the pacific coast, USA and Latin America. To drive business growth in this area
TMILL will consolidate operations in automobiles and auto components, construction equipments, steel and
downstream products, telecom equipment and media, hotels and retail.
TMILLs growth initiatives are driven by the quality of human capital it possesses and nurtures. We are focusing on
attracting and retaining a quality talent pool by offering challenging assignments and creating sense of ownership,
which we feel is essential for success of our organization. TMILL leadership believes in propagating a culture of
performance and aligning the workforce with its philosophy of business, results and people.
TMILL as a good corporate citizen consciously meets its obligations towards corporate social responsibility around
the vicinity of environment in which it operates. Keeping in tune with the affirmative action of the group, we have
gone ahead in creating employment within the framework.
I sincerely believe that you will enjoy your work here and will make your company proud of you.
Best of luck to you.

Dibyendu Bose
Managing Director

2|P a g e

Table of Contents:
LOGISTICS:

LOGISTICS SERVICE IVOLVES:

LOGISTICS SCEARIO I IDIA:

4DS FOR GLOBAL LOGISTICS

PARTIES IVOLVED I LOGISTICS BUSIESS:

MULTIMODAL TRASPORT

MAJOR SEA PORTS I THE WORLD:

SHIPPIG SERVICES:

TRAMP SHIPPING

LINER SHIPPING:

LINER VS TRAMP:

DIFFERENT TYPES OF SHIPS:

10

FEEDER SERVICE:

10

UITIZATIO AD COTAIERIZATIO:

11

CONTAINERS:

12

CONTAINER TYPES:

12

FREIGHT STRUCTURE:

13

AN INDICATIVE EXAMPLE:

14

AIR FREIGHT BUSIESS:

15

AIRCRAFT TYPES:

15

PARTIES INVOLVED IN AIR FREIGHT:

16

FREIGHT STRUCTURE:

16

CARRIERS LIABILITY AS PER IDIA LAW

17

REAL TIME EXAMPLE OF LOGISTICS VALUE CHAI:

18

PROBLEMS FACED I THE VALUE CHAI:

19

DOCUMETS IVOLVED I THE BUSIESS:

21

3|P a g e

ICOMTERM-2000

22

DIFFERET PARTIES IVOLVED I THE BUSIESS:

23

ROLE OF THE AGET:

24

TKM GLOBAL LOGISTICS LTD.

25

BRIEF HISTORY:

25

TKM LIES OF BUSIESS:

26

OPERATIONS (FREIGHT FORWARDING)

26

OPERATIONS (NVOCC)

26

FLOW CHART: TKM-FREIGHT FORWARDING:

27

FLOW CHART: TKM-NVOCC:

29

GLOSSARY OF TERMS

31

4|P a g e

LOGISTICS:
Logistics is the process of strategically managing the procurement, movement and storage of materials, parts and
finished inventory and the related information flows through the organization and its marketing channels for the cost
effective fulfilment of customers orders.

LOGISTICS SERVICE INVOLVES:

Physical Flow-Shipping methods-end to end transport-road/rail/sea/air and combinations-security

considerations
Documents-shipping & Trading documents
Process-EXIM policies of countries involved-Export Import custom entries of respective countries
Funds Flow and Banking

5|P a g e

LOGISTICS SCENARIO IN INDIA:

Logistics Service account for 13% of GDP

3 PL Growing at 21.9 %
Logistics Market 2,60,000 crores

The distribution of logistics costs in India

Description

Cost as Total %

Transportation

35

Inventory

25

Packing

11

Handling & Warehousing

Other costs

20

4DS FOR GLOBAL LOGISTICS

Distance
Documents
Diversity in culture
Demands of the customer

PARTIES INVOLVED IN LOGISTICS BUSINESS:

First Party & Second party -The seller and buyer

Third Party Logistics (3PL) - Service providers with or without assets.
o They provide service without having any capital investment.
o Most of the freight forwarders will be in this category.
Fourth Party Logistics Service (4PL) -Process managers-Normally they become in house shipping &
transport managers.
o Greater degree of outsourcing.
Lead Logistics Service Providers One stop-shop for all logistics activities.
o They take care of the whole supply chain.
o Greater degree of outsourcing than 4PL.
Integrators -They take the title of the goods in addition to providing complete logistics service as greater
degree of out sourcing.
o They provide sourcing service along with logistics service.
o They procure on behalf of the consignee or sell on behalf of the shipper.
o

6|P a g e

MULTIMODAL TRANSPORT
Any national or international transport is made using more than one of the following modes of carriage the goods is
seemed to have been carried by Multimodal transportation covered by one transport document.
For example: If a cargo is to be shipped from Delhi to New York, it will be taken to Mumbai port using a railway
service or road service. From there it will be shipped using ocean ships. Only one agency will take the responsibility
for the whole process and the carrier will issue a B/L from Delhi to NY. This B/L is called Multimodal Bill of Lading.

MAJOR SEA PORTS IN THE WORLD:

7|P a g e

SHIPPING SERVICES:

TRAMP SHIPPING

Ships which chase cargoes they go where the cargoes are available
Generally for bulk movement of grains/fertilizers/ores/coal etc which needs to be moved in millions of
tonnes
o to meet the supply chain demand
o to ensure unit cost of transport becomes low in proportion to low value of such goods
Such ships are large sized to ensure optimal unit cost of transportation

The Freighting system for these movements is:

o

Chartering i.e. Voyage Charter and/or Time Charter

Contract of Affreightment

The document covering contracts is called Charter Party.

This is like a taxi service. Taxis are available on call and can be taken to any place and any route.

8|P a g e

LINER SHIPPING:
1.
2.
3.
4.
5.

6.
7.

Ply on a regular scheduled services between groups of ports.

Offer cargo space irrespective of volume, to all shippers who require them.
Sail on scheduled dates, irrespective of whether they are full or not.
Carry general cargo and unitized cargo in containers. Generally for smaller parcels of value goods which
can sustain a higher freight
Liner shipping is the common arrangement for general cargo and containers, whereas all other trades are
usually accommodated through tramp shipping. However, this divide is not strict, as liner operators may
charter tramp ships to complement their fleets in times of peak demand, and tramp operators may
occasionally engage in regular liner services for limited periods.
Today in view of many advantages of containers 95 per cent of Liner ships are container ships-containers
have been designed to carry all shapes and weights of cargoes
Movement covered by Liner Bill of Lading or Multimodal Transport document.

It is more like a railway service. For example: Everyday Rajdhani Express leaves Howrah station at a fixed time and
goes to New Delhi. If somebody wants to go to New Delhi, he can use this service.

LINER VS TRAMP:

Item

Liner

Tramp

Commodity

General Cargo

Bulk Materials

Ships

Container ships/Break bulk ships

Bulk carriers/Tankers/Gas
Carriers/OBOs

Contract

Liner

Charter party

Bill of Lading

Liner

Charter party

Loading
costs

Part of Freight/ responsibility of ship

Responsibility is that of
shipper/receiver

A large number

One or small numbers

/Discharging

Shippers/ Receivers

9|P a g e

Size of ships

Barring large container vessels of

sizes are not that big

Can go up to 600,000
tonnes in case of ULCC

DIFFERENT TYPES OF SHIPS:

FEEDER SERVICE:
Container ships are growing by size to keep pace with competition and with constant endeavor to reduce unit cost.
Since linear ships cant be called at all the ports, because of the time and costs involved, shipping lines came up with
a concept of feeder service.
This is more like a hub and spoke model. Smaller vessels (Feeders) ply between nearby ports one common big port.
At this big port, all the containers are unloaded from the feeder vessels and loaded on the linear vessel.
In the Far-East Europe trade Singapore and Colombo are hub ports for Indian cargoes.

10 | P a g e

UNITIZATION AND CONTAINERIZATION:

Unitization:
Aggregation of smaller packages cargo into higher Weight/Volume package in order to

Minimize the handling

Improve the productivity in the transport/delivery chain
Avoid handling damage
Improve turnaround of equipment in the system e.g. containers, ships, trucks etc

There are mainly two ways by which unitization can be done:

Palletization.

Conatinerization.

11 | P a g e

CONTAINERS:
These are the most favored and long standing transport unit. These were used first in Korean War for army goods
transport from US to Korea. After that it caused revolution in the field of logistics and supply chain. Today most
general and value freight are moved by containers
Containers are mainly of two types:
1.
2.

20- These are the containers having a length of 20.

40- These are the containers having a length of 40.

ISO sizes (Most commonly used)

1.
2.
3.
4.

20X8X8.5
40x8x8.5
40x8x9.5(High Cube containers)
45x8x9.5(Only used in US trades)

Weight restriction
1.

2.

20:
a.
b.

24000 kgs(gross)
30000 kgs(gross)- Heavy duty containers

a.

30000 kgs (gross)

40:

CONTAINER TYPES:
1.
2.
3.
4.
5.
6.
7.

General Purpose or Dry Box

Open Tops
Flat Racks
Bulk Containers
ISO Tank containers
Side open Containers
Temperature Controlled Containers (Refrigerated Containers)

12 | P a g e

FREIGHT STRUCTURE:
Break Bulk

Ocean Freight USD per CBM or Tonne which ever higher

o CBM is cubic meter and Tonne = 1000 kilos

In liner freight loading/unloading is the responsibility of the ship/ship-owner/line.

Linear Service:

Freight rate - FAK (Freight all kinds) Box rates or Commodity box rates.
o Box rates could be either per TEU or per 20 or per forty footer.

For Example:
Freight rate from ICD Delhi to Flexistowe (UK) via J#PT.
FCL:

Ocean Freight from JNPT to UK Port of Felixstowe:

o USD 1600/- per 20 (FAK)
o USD 3000/- per 40 (FAK)

13 | P a g e

Inland Haulage Charges:

o Rs26000/- per 20
o Rs 45000/- per 40
LCL:
LCL rate to UK (Felixstowe)
o USD 30 per CBM
LCL Service charges (inland haulage charges)
o Rs 1100 per CBM or Rs 1550 per 1000 kilos whichever is higher.

AN INDICATIVE EXAMPLE:

SL.o

Cost Item

Unit

Indicative Price

Origin Haulage

Per 20

USD 300

SED

Per B/L

USD 35

Handling in US

Per B/L

USD 75

Rail Freight

Per 20

USD 600

Origin THC

Per 20

USD 225

Ocean Freight

Per 20

USD 800

Inland Haulage Charges

Per 20

RS 28000/-

Ancillary
Charges
including
DO/cleaning and Docs charges

Per B/L

Rs 4300/-

Detention charges if any

Per
day
container

per

As per slab

10

ICD/Port Charges

Per
day
container

per

As per tariff

11

Customs Clearance Charges

Per container

14 | P a g e

Rs 10,000/-

12

Destination Transport

Per
container/truck

Rs 3000/-

AIR FREIGHT BUSINESS:

Air freight is used when time is the constraint. This service is mainly used to ship materials like newspapers,
magazines, medicines etc.
Some of the materials shipped through Air:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.

High value Goods. Where freight is a fraction of cost.

CURRENCY , GOLD , SILVER , PRECIOUS AND SEMI PRECIOUS STONES
Fragile / small Items, antiques, art ware, Courier.
BEST BET IS AIR FREIGHT AND INTEGRATOR SERVICES SERVICE DOOR TO DOOR.
Vaccines, unaccompanied baggage, serum.
PHARMA , SHORT SHELF LIFE AND HIGH VALUE LIFE SAVING DRUGS
Live animals
HORSES , PETS , LIVE CHICKS
High Fashion Garment samples or whole orders
DIRECT TO STORES, GARMENT ON HANGER.
Electronic Components, Hard Disks, PCBs.
TRANSFORMMERS, HARD DRIVES, CDS, DVDS, OPTICAL DRIVES.
Spare parts, Line Stoppers, Ship / Aircraft spares.

AIRCRAFT TYPES:

Freighters
o They carry only cargos.
Combis
o They carry both passengers and cargo.
Passenger or PAX
o They carry only passengers.

15 | P a g e

PARTIES INVOLVED IN AIR FREIGHT:

1.
2.
3.
4.
5.
6.

GSA General Sales Agent

IATA International Air Transport Organization
ICAO International Civil Aviation Organization
IATA Accredited Freight Forwarding Agents.
Sub Agents
IATA Agents

FREIGHT STRUCTURE:
Airfreight is based on a per kg rate. The total weight on which the tariff is charged is based on the actual or the
volume weight of the shipment, whichever is higher.
It has been fixed that 1000 kg should occupy 6 cubic metres.
It means that for a shipment, if the volume is 6 cubic metres and the weight is 900 kg, then the rate will be applied of
1000 kg.
Similarly, if the weight of the shipment is 1000 kg, and the volume is 7 cubic metres, then the rate will be applied of
(1000/6)x7 Kg.

16 | P a g e

CARRIERS LIABILITY AS PER INDIAN LAW

The carrier has limited liability in case of any loss in transit. This limited liability can be invoked only if the loss is
due to the negligence of the carrier.

Liability based on Carriers negligence

Exceptions
o Error in Navigation
o Fire , Acts of God
o Nature of Cargo, Packaging etc

Limited Liability:

Ocean 667.67 SDR per package or 2 SDR of Kilogram of the gross wt of goods lost or damaged
Multimodal (Rail-Truck) 8.33 SDR per Kilogram.

17 | P a g e

REAL TIME EXAMPLE OF LOGISTICS VALUE CHAI:

Suppose a manufacturer e.g. TATA Steel wants to export steel coils to some buyer e.g. Toyota Motors in Japan. The
problems in this transaction will be:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Picking of coils from the plant (Jamshedpur).

Taking it to nearest port. (Haldia/Kolkata).
Getting it passed from the customs.
Loading it to a ship.
Taking the ship to some port in Japan.
Unloading the coils there.
Getting it cleared from Japanese customs.
Transporting the coils from port to Toyota Factory.
Guarantying the quality of coils.
Making sure that the money reaches TATA Steel on time and the buyer doesnt default.

There are two ways of shipping coils from one port to other:
1.
2.

Break Bulk: In this method, the coils will be stacked in the ship one by one and will be unloaded likewise.
Containerized: In this method, coils will be put in a container, and the containers will be loaded and
unloaded.

Since containers can be used for almost all kind of commodities, these are used for movements quite often. But if the
quantity of commodities is very large, exporters go for break bulk.
As we have seen that there so many problems in exporting commodities from one place to other and so many parties
involved, TATA Steel might not have the expertise to take care of all these. Moreover it will be costly for them to
take care of each and every formality on their own, hence they outsource it some service providers. These service
providers are generally called FREIGHT FORWARDERS.

18 | P a g e

1. Coils will be picked from the

plant and will be taken to the
warehouse/yard in Haldia.

TATA Steel Jamshedpur

2. It can also be done that empty

containers be taken to Jamshedpur
and are stuffed there in the plant
itself.

1. If stuffing has not

been done at plant,
than it will be done in
yard/wrehouse.

Warehouse/YardHaldia

2. Customs clearance
can be obtained here
(In case of CFS). Initial
Survey will also be
done here.

Port- Haldia
(India)

1. Containers will be loaded on the ship

and THC (Terminal Hadling Charges) will
be paid to the port.
2. The carrier will issue B/L to the
shipper/Agent.

Warehouse/YardOsaka

1. The importer will submit B/L

and will get delivery after
getting customs approval.
2. Destuffing of the containers
will be done either at the port
or in yard/warehouse.

Port- Osaka
(Japan)

1. Containers will be
unloaded from the ship
and THC (Terminal Hadling
Charges) will be paid to
the port.

Ship

1. Coils will be transported

from Warehouse to Toyota
Works.

Toyota Works

PROBLEMS FACED IN THE VALUE CHAIN:

Problem 1- Picking of coils from the plant (Jamshedpur).
Solution: One transporter will be hired to take the coils from Jamshedpur works to the port. The transporter will have
trailers. Coils will be loaded on the trailers and then taken to the port.
It can also be done that, empty containers will be taken to the Jamshedpur works and the coils will be put in those
containers. Then, containers will be transported to the port.
Handling of containers is much easier than handling the coils.

19 | P a g e

Problem 2- Taking it to nearest port. (Haldia/Kolkata).

Solution: The transporter will take these coils (Coils/Containers) to nearest port (Haldia/Kolkata). There it will be
unloaded and will be stored either in ports premise or some other designated warehouse.
Problem 3- Getting it passed from the customs.
Solution: Everything being exported and imported from or to any country have to be duly checked by the customs
department of that country. There are many formalities to be followed and government issues license to agencies who
can file those documents. These licenses are issued on port basis. These agencies are called CHA (Customs House
Agencies). In this case TATA Steel or any designated Freight Forwarder will appoint a CHA to file the documents
and get the cargo cleared from the customs.
Problem 4- Loading it to a ship.
Solution: Port authorities issue licensees to agencies called Material Handling Agents. These agencies provide
equipments for material handling e.g. Cranes, Payloders etc. Licensees are also issued to Stevedores, which provide
manpower at the ports.
In this case TATA Steel or its freight forwarder will hire some stevedores and material handling agent to load the
containers/coils to the ship.
Problem 5- Taking the ship to some port in Japan.
Solution: There are many shipping lines (Companies having ships), which have regular service from Haldia/Kolkata
to Japan.
In this case TATA Steel or its freight forwarder will take the service of any of such shipping lines and will load the
containers/coils to their ship. The ship will go to some port in Japan.
Problem 6- Unloading the coils there.
Solution: Similarly some stevedores and material handling agent will be hired in Japan to unload the containers/coils
at that port.
TATA Steel or its Freight Forwarder will have some agent in Japan to take care of formalities there.
Problem 7- Getting it cleared from Japanese customs.
Solution: Similarly the agent in Japan will take the services of some CHA over there.

Problem 8- Transporting the coils from port to Toyota Factory.

Solution: The Japanese agent will hire some transporter to take the containers/coils from the port to the factory.
Problem 9- Guarantying the quality of coils.
Solution: TATA Steel or its freight forwarder will appoint a surveyor on the port. The surveyor needs to have a valid
license from the port authorities. It will certify the physical condition of the coils before loading.
Similarly at the port of discharge, importer will also have a surveyor. It will certify the physical condition of the coils
after unloading.

20 | P a g e

Problem 10- Making sure that the money reaches TATA Steel on time and the buyer doesnt default.
Solution: In the case of international business, all the transactions are done through banks only. Importer will go to
its bank and request to open an LC (Letter of Credit) in favour of the importer. This document will have all the
details of the transactions and it will be sent to the bank of the exporter. After receiving this document, exporter will
export the cargo to the importer. After receiving all the documents from all the parties, exporters bank will again
send it to the importers banks. Importers bank will pay to exporters bank and the money will be reimbursed to the
bank by the importer.
In this case Toyota Motors will go to HSBC bank in Tokyo. HSBC bank will open an LC in favour of TATA Steel
and will send it to SBI in Kolkata. Then TATA Steel will send the material to Toyota Motors. After receiving all the
relevant documents from all the parties, SBI, Kolkata will send all the documents to HSBC, Tokyo. HSBC, Tokyo
will remit the money to SBI, Kolkata. HSBC will get the reimbursement from Toyota Motors of equivalent amount.
For this service HSBC, Tokyo will charge 2-3% of the total transaction value from Toyota Motors.

DOCUMENTS INVOLVED IN THE BUSINESS:

There are so many documents involved in this whole chain. But most important and most visible are these four only:
Contract

Parties
Involved

Description

Law/Rules

Commercial Invoice

Seller(Exporte
r) & Buyer
(Importer)

Exporter issues Invoice to the

Importer. This has the exact
description of the material and the
value of the material. Duties are
calculated on the basis of invoice.

INCOTERMS-2000

Letter of Credit

Bank of both
the parties

Bank of the importer opens LC in

favour of the exporter and send it to
the exporters bank

UCP 500

Insurance

Insurer
and
buyer/seller

Insurance is issued by the insurer and

can be taken by either exporter or
importer based on the contract.

Marine Insurance Act

1906

Bill of Lading

Carrier
Seller

B/L is issued by the shipping carrier

to the seller. It is a declaration from
carriers side that they are carrying
the cargo. Importers need to have the
B/L to get the cargo cleared at Port of
Discharge.

Hague-Visby
Rules/
Hamburg Rules.

21 | P a g e

and

INCOMTERM-2000
These are formally called International Commercial Terms and were amended in 2000. Hence now its called
Incoterms 2000.
These are 14 different types of standard types of contracts. These are followed all over the world and provide the
basis on which transaction is done between exporter and importer.
Lets continue with the same example:
TATA Steel is selling steel coils to Toyota Motors in Japan. Lets say the price of one coil in India is 1000 USD per
MT. This price is at the TATA Steel warehouse in Jamshedpur. Now, in process of transporting this coil to Japan,
money will be spent on each and every node of the supply chain. Lets put some value for all the activities:
1.
2.
3.
4.
5.
6.
7.

Transporting the coils from Jamshedpur to Haldia- 50 USD per MT.

Getting the customs clearance- 10 USD per MT.
Loading the coils on ship- 20 USD per MT.
Freight from Haldia to Japan- 200 USD per MT.
Unloading at Japan port- 20 USD per MT.
Getting the customs clearance at Japan- 10 USD per MT.
Transporting from port to Toyota warehouse- 50 USD per MT.

Hence the price of the coil at Toyota warehouse will be 1000+50+10+20+200+20+10+50= 1360 per MT.
TATA Steel can quote the price of coils in the forms as stipulated in INCOTERMS-2000. There are mainly 4
categories in INCOTERMS-2000.
1.
2.
3.
4.

Ex: Price is quoted on Ex works basis. In this case price will be 1000 USD per MT Ex works Jamshedpur.
F Series: In this case price is quoted on the port of loading basis. Here price will be quoted on the basis if
Haldia port, and will be 1000+50+10+20= 1080 USD per MT.
C Series: In this case price is quoted in the port of discharge basis. Here price will be quoted on the basis of
Japan port, and will be 1000+50+10+20+200+20+10= 1310.
D Series: In this case price is quoted on the basis of point of final destination. Here it will be quoted on the
basis of Toyota basis and will be 1000+10+20+200+20+10+50=1360.

There are further sub divisions of this INCOTERMS-2000 and total number is 14.

22 | P a g e

Haldia Port
TATA SteelJamshedpur
Price- 1000$

Transportation- 50 $
Customs Clearance- 5$
THC- 20 $
Documentation- 5$

Price1000+50+5+20+5
= 1080 $

EX- Works
FOB

Freight- 100$
Insurance-20 $

Toyota- Japan
Price1200+20+5+5=12
30 $

THC- 20$
Customs Clearance- 5$
Documentation- 5$

Osaka Port
Price1080+100+20= 1200
CIF

DDP

The agreement between TATA Steel and Toyota Motors will be guided by any one of these terms. These terms not
only specify the basis of price but also make base for transfer of ownership and responsibility of the cargo.
For example: If the contract is on Ex Works basis, then 1000 USD per MT will be the price and ownership will be
transferred to Toyota Motors as and when the coils leave the TATA Steel warehouse in Jamshedpur.
Similarly if the contract is on DDP basis, price will be 1360 USD per MT and TATA Steel will be responsible to
deliver the coils to Toyota Motors warehouse. Till that point the ownership will remain with TATA Steel only.

DIFFERENT PARTIES INVOLVED IN THE BUSINESS:

1.
2.
3.
4.
5.

6.
7.

Shipper: The exporter is called the shipper. He is the one who exports the cargo.
Consignee: The importer is called the consignee. He is the one who imports the cargo and will take the
delivery.
Shipping Line: The Company which owns the ships. They take the cargo from one port to other.
CHA: The agency which does the customs clearance at the ports. They have license to do that and file the
documents on behalf of shipper or consignee (or their agents).
Stevedores: The agency which has the license to provide manpower at the ports. They provide manpower to
operate the machines and slings to load and unload the cargo from ships. In most of the cases, port has its
own manpower and dont employ and stevedores.
Material Handling Agents: The agency which has the license to supply material handling equipments at the
port for loading and unloading cargo from the ships.
Freight Forwarders: The agency which co-ordinates with all the other parties on behalf of either shipper or
consignee. In short they are the service providers to whom all the requirements are outsourced by the shipper
or consignee.

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8.

VOCC (on Vessel Operating Common Carrier): The agency which owns the containers and work as a
shipping line. They supply containers to the shippers and issue B/L. These containers are then handed over to
the shipping lines which take these to the designated ports. In short NVOCC operators are just like shipping
lines without vessels. These days most of the shipping lines have their own containers and they supply these
to the shipper.

If the containers are owned by the shipping lines its called CoC (Carrier Owned Containers) and if the containers
are supplied by some other agency (NVOCC), its called SoC (Shipper Owned Containers).

ROLE OF THE AGENT:

Since this business of freight forwarding and NVOCC involves operations in many different countries, it is necessary
to have either your own office or some contact in other countries. It is economically not viable to have own offices in
so many countries, hence freight forwarders and NVOCC operators have agents in other countries.
Role of the agents involves primarily following things:
1.

2.

In case of export shipment:

a. Take care of all the formalities at Port of Discharge.
b. Arrange for inland transportation, if required.
In case of import shipment:
a. To get in touch with different shipping lines and get competitive freight rates.
b. Take care of all the formalities at Port of Discharge.
c. Arrange for inland transportation, if required.

For these services agents are paid on commission basis. The commission depends on the contract between agent and
Principal (Freight Forwarders/NVOCC operator).

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TKM GLOBAL LOGISTICS LTD.

BRIEF HISTORY:
TKM Global Logistics Ltd. (Formerly TKM Transport Management Services Ltd.) was incorporated in 1987 as a JV
between TATA Steel Ltd and Korf Shipping and Maritime Transport Overseas (A German Logistics Company). It
was incorporated with the purpose of providing efficient and cost effective services to the TATA Group of
Companies and the trade at large. TKM had its headquarters at London, with a network of global offices and
associates. In India, TKM Transport Management Services Ltd was formed to act as the Break Bulk agent of TKM.
In 2003, TKM was formally merged with another subsidiary of TATA Steel: TM International Logistics Ltd as its
Freight Forwarding division. The idea behind the merger was to bring all the logistics support services under a single
umbrella.
TKM Global Logistics Ltd is the holding company for TKM Global Gmbh, Hamburg as well as TKM Global China
Ltd, Shanghai.

IQ Martrade Gmbh.

TATA Steel Ltd.

51%

49%
TM International Logistics Ltd.
100%
TKM Global Logistics Ltd.
100%

TKM Global China Ltd.

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100%
TKM Global Gmbh.

TKM LINES OF BUSINESS:

TKM is operating as a Freight Forwarders. It has a NVOCC arm too.
Initially TKM was catering to the needs of the needs of TATA Steel and its subsidiaries only. Later on it diversified
its clients portfolio. Presently a major portion of its business is coming from Non TATA companies.
The NVOCC arm of TKM is providing the service to many locations including Middle East, Far East etc. Freight
Forwarding arm works as a customer to the NVOCC arm.
Not every requirement of Freight Forwarding arm is being served by NVOCC arm and similarly not every service of
NVOCC arm is aimed towards Freight Forwarding.

OPERATIONS (FREIGHT FORWARDING)

FF operations mainly include co-ordinating with all the parties. A Freight Forwarder mainly does following things:

egotiating with Carriers: They negotiate with different carriers, so that they can get the cheapest fright
rates for a particular voyage. The carrier may be shipping lines or NVOCC operator.
Co-ordinating with Agents: They co-ordinate with agents across the globe to get competitive rates for
import shipments and to take care of the formalities at agents locations.
Following up with Surveyor, Transporter, CHA etc: It follows up with all the other parties in the value
chain e.g. Transporter, Surveyor, CHA etc. In short, a FF works on the behalf of shipper or consignee.
Documentations: It files all the necessary documents on behalf of shipper/consignee.

OPERATIONS (NVOCC)
NVOCC operations mainly include taking care of the asset (Containers) and co-ordinating with all the concerned
parties. An NVOCC operator mainly does following things:

egotiating with Shipping Lines: They negotiate with different shipping lines, so that they can get the
cheapest fright rates for a particular voyage.
Co-ordinating with Agents: They co-ordinate with agents across the globe to get competitive rates for
import shipments and to take care of the formalities at agents locations.
Maintaining optimum inventory of containers: Their strategy depends on maintaining optimum inventory
of containers and to look for profitable routes for their containers. The basic idea of the business is to
maximize utilization of the containers.
Following up with FF, Transporter etc: They follow up with other parties in the value chain e.g. Freight
Forwarders, Transporter etc. In short, they also work for streamlining the value chain.
Documentations: They file all the necessary documents necessary. Most importantly, they issue Bill of
Lading.

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FLOW CHART: TKM-FREIGHT FORWARDING:

TKM is contacted by the Shipper for shipment. All the details like Cargo, POL, POD, Terms of LC and
other details are conveyed to TKM by the Shipper.

Freight rate is negotiated by TKM with different shipping lines/NVOCC operators for the shipment.

The Freight rate

is offered to the
shipper.

Freight Rate is not acceptable to

shipper. Contract Lost.

Carrier is informed by TKM. Pick up letter is issued by the carrier for the required number of containers. Pick
up letter is sent to the Transporter, Surveyor and the Shipper by TKM.

Shippers
Place

Whether the stuffing will

be done at TKM yard or at
shippers Place?

The containers are taken to the shippers place by the

Transporter. Stuffing is done there and brought to the
port.

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TKM yard

Stuffing Yard is informed by TKM. Transporter takes

the containers to the yard, Cargo is brought to the yard
and stuffing is done. Containers are taken to the port.

CHA and Carrier are informed in advance by TKM about the arrival of the containers.

Cart-in order is issued by the Carrier. Once this is issued, containers are taken inside the port. EGM is
filed by the Carrier.

Customs clearance is done by the CHA. Shipping bill is prepared by the CHA and endorsed by the
customs. Duties, if any, are paid. After this containers are ready to be loaded on the vessel.

Containers are stored inside the port at designated slot. Once vessel arrives, containers are loaded on
board. Mates Receipt and Goods Receipt (GR) are issued by the master of the vessel to TKM to the
CHA respectively.

Draft B/L is issued by TKM to the Carrier. Final B/L is issued by the Carrier to the TKM based on Draft
B/L. This B/L is called Master B/L. After this House B/L is issued by TKM to the shipper.

Invoice is issued by carrier to TKM for Freight and THC. Invoice is issued by TKM to carrier for brokerage.
Invoice is also raised by TKM to the shipper for Freight and THC. B/L is handed over to the shipper by
TKM for negotiation.

Shipper

Who is responsible for

taking care of cargo at
POD as per INCOTERM
in LC.

The agent in the country of discharge port is informed

by TKM to take care of shipment. All the formalities
for import cargo clearance are done by the agent.
House B/L is presented. NOC and DO is issued by TKM
to consignee. Cargo delivery can be taken against
these documents.

28 | P a g e

Consignee

All the Import formalities are done by the

Consignee. All the charges are paid to TKM and
House B/L is presented. NOC and DO is issued by
TKM to consignee. Cargo delivery can be taken
against these documents.

FLOW CHART: TKM-NVOCC:

TKM is contacted by the Shipper/FF for shipment. All the details like Cargo, POL, POD, Terms of LC and
other details are conveyed to TKM by the Shipper/FF.

Does TKM have

services on that
route?

Yes
Query will not be
entertained by TKM.

NO
Slot rate is negotiated by TKM with different shipping lines for the shipment. Freight Rate is quoted
based on slot charges.

The Freight rate

is offered to the
shipper.

Freight Rate is not acceptable to

shipper. Contract Lost.

Accepted by Shipper

Shipping bill is issued by Shipper. Pick up letter is issued by TKM to Shipper/FF.

The containers are taken to the shippers place by the Transporter. Stuffing is done there and brought to the
port.

Cart-in order is issued by TKM. Once this is issued, containers are taken inside the port. EGM is filed
by the TKM.

Customs clearance is done by the CHA. Shipping bill is presented by the CHA and endorsed by the
customs. Duties, if any, are paid. After this containers are ready to be loaded on the vessel.

29 | P a g e

Containers are stored inside the port at designated slot. Once vessel arrives, containers are loaded on
board. Mates Receipt and Goods Receipt (GR) are issued by the master of the vessel to TKM to the
CHA respectively.

Freight is paid to TKM in case of Freight Prepaid based shipment. Master B/L is issued by TKM to the
Shipper/FF. In case of Freight to Collect basis, freight is collected at POD.

Invoice is issued by Shipping Line to TKM for Freight and THC.

IGM is filled by TKM or its agent at POD. B/L is surrendered by Shipper/Consignee/FF to TKM and after
payment of all the local charges, DO is issued by TKM. If the shipment is on Freight to Collect basis,
freight is also collected at POD.

Custom Clearance is done by the CHA and containers are taken to the designated warehouse. Destuffing is
done and containers are returned to TKM yard by the consignee. Detention income, if any has to be paid by
the consignee. If container is damaged, repair expense has to be paid by the consignee.

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GLOSSARY OF TERMS

S..

Term

Full Form

Description

3PL

3rd Party Logistics

A third party, who takes care of the logistics value chain.

BAF

Bunker Adjustment Factor

A kind of fuel surcharge added to the freigt rates.

Barge

A kind of small ship

Flat Bottomed cargo carrying boat. It is used for movement of

small quantity cargo. Mainly used for coastal or river
movements.

BL

Bill of Lading

BL is issued by the carrier (Shipping Line/NVOCC). This is the

document which is presented to the shipping line at POD, and
then only cargo can be cleared.

Break
Bulk

Break Bulk Cargo

The cargo which can be counted (Other than Containers). It

includes Steel coils, Vehicles etc.

Bulk
Cargo

Bulk Cargo

The cargo like coal, limestone etc. These are loaded in the
hatches of the ships with the help of cranes having grabs.

CAF

Currency Adjustment Factor

A kind of surcharge added to freight rates, to mitigate the

currency risk.

CAN

Cargo Arrival Notice

A document issued by carrier/agent to the importer, notifying

him about the arrival of cargo.

CBU

Completely Built Unit

Vehicles being shipped in fully built form.

10

CFS

Conatiner Freight Station

CFS is a kind of customs bound warehouse, where stuffing and

destuffing of containers are done. These are near to the ports.

11

CKD

Compeletly Knocked Down

Vehicles being shipped in parts. One vehicle is knocked down

in many small small parts and these parts are shipped in
containers.

12

CY

Container Yards

These are genaral purpose yards, where generally empty

containers are stacked.

13

DBL

Draft Bill of Lading

The B/L issued by the Carrier to Freight Forwarder. This is just

to check the actual format of the B/L as per LC. Master B/L is
issued on the basis of DBL and after MBL is issued, this

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remains null and void.

14

DC

Dangerous Cargo

Cargos like petroleum, chemical etc. Special equipments are

required to handle these.

15

Demurrag
e

Demurrage

The penalty paid by the charterar to the owner of the ship for
delay in completing the voyage.

16

Dispatch

Dispatch

The money paid by the owner of the ship to the charterar for
completing the voyage in advance. Genarally the rate will be
half of demurrage rate.

17

DO

Delivery Order

A document issued by carrier/agent to the importer, giving him

the authority to collect the cargo. This is issued after B/L is
surrendered to the carrier/agent.

18

EGM

Export General Manifest

A document issued by carrier/agent to the port authorities

stating that a container is going for export.

19

FAK

Freight of all Kind

Freight charged by linear operators. Quoted in terms of per

TEU.

20

FCL

Full Container Load

When one container contains cargo for only one consignee.

21

Feeder

Feeder Service

A kind of shipping service in which ships ply between a distant

port and some port having linear service. For Ex- service
between Haldia and Colombo. In this case Haldia is a distant
port whereas many linear routes pass through Colombo.

22

FEU

Forty Feet Equivalent Unit

A conatiner of 40' length. One FEU is equal to 2 TEU.

23

FR

Flat Rack

A kind of container which has just the bottom, like a rack.

Generally used for oversized cargo. Freight is more.

24

Freight

Freight

Money charged by shipping lines to take the cargo from one

port to another.

25

HBL

House Bill of Lading

The B/L issued by Freight Forwarder to the Shipper. In this

B/L the name of actual importer will reflect as consignee.

26

IATA

International Air Transport

Organisation

An organisation of all the air transporters across the world. Any

new air transporter needs an IATA licene to operate.

27

ICD

Inland Container Depot

ICDs' are a kind of CFS only. The only difference is that ICDs'
are far from the ports. These are generally called Dry Ports.

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28

IGM

Import General Manifest

A document issued by carrier/agent to the port authorities

stating that a container is coming for imports.

29

LC

Letter of Credit

LC is the master document. It is opened by the bank of

consignee in favour of the shipper. All the terms & conditions
of the trade are mentioned in this document.

30

LCL

Less than Container Load

When one container contains cargo for more than one

consignee.

31

Lo-Lo

Lift On Lift Off

It is generally used to describe the kind of terminals where

vehicles/containers or any cargo are lifted thorugh lifts and put
onto the ship.

32

Mate's
Recepit

Mate's Recepit

A declaration given by the captain of the ship about the cargo.

B/L is issued based on this.

33

MBL

Master Bill of Lading

The B/L issued by Carrier to the Freight Forwarder. In this B/L

Freight Forwarder will be shown as consignee. This is done to
hide the actual importers details from the Carrier.

34

MLO

Main Line Operator

The shipping lines, having linear services.

35

MTO

Multimodal
Operator

36

OT

Open Top

A kind of container which has no ceiling. Used for oversized

cargo. Freight is more than general container.

37

POD

Port of Discharge

The port where cargo is to be discharged.

38

POL

Port of Loading

The port where cargo has been loaded on the ship.

39

Reefer

Refrigerated Container

The containers having refrigeration units. They have a battery

to operate on and are connected to external power at ports and
on ships. Used for shipping meats, fruits etc.

40

RMQ

Rail Mounted Quay

A kind of crane used at conatiner terminals.

41

Ro-Ro

Roll On Roll Off

It is a kind of terminal used to ship the vehicles in CBU forms.

Vehicles are just driven through the terminal and parked in the
ship.

42

SKD

Semi Knocked Down

Vehicles being shipped in parts. One vehicle is knowcked

down into 4-5 major parts and these parts are shipped.

43

Slot

Slot

Money charged by shipping lines from NVOCC operators to

take containers from one port to another.

44

TAMP

Tariff Authority of Major

Ports

A statutory body formed by GoI. It regulates the tariffs charged

at all the 12 major ports in India.

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Tranport

A Kind of license issued by DG-Shipping. It authorises carriers

to issue multimodal B/L.

45

TEU

Twenty Feet Equivalent Unit

Represents a unit for containers. One TEU is equal to one

container of 20' length.

46

THC

Termainal Handling Charges

Charges to be paid to terminal operator (Most of the casesPorts). It includes loading charges and charges paid to the
stevedores.

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