Internship report topic indirect customs clearance for impo

VIETNAM MARITIME UNIVERSITY INTERNATIONAL SCHOOL OF EDUCATION INTERNSHIP REPORT TOPIC INDIRECT CUSTOMS CLEARANCE FOR IMPORTED FCL AT DRAGON LOGISTICS CO., LTD Student Name: Pham Anh Nh

VIETNAM MARITIME UNIVERSITY

INTERNATIONAL SCHOOL OF EDUCATION

INTERNSHIP REPORT

TOPIC INDIRECT CUSTOMS CLEARANCE FOR IMPORTED FCL AT

DRAGON LOGISTICS CO., LTD

Student Name: Pham Anh Nhi

INTERNATIONAL SCHOOL OF EDUCATION

DRAGON LOGISTICS CO., LTD

Supervisor: Vu Le Huy

Division: Lecturer of Logistics Department

Faculty: Maritime Business Faculty

HAI PHONG – 2020

TABLE OF CONTENT

LIST OF ABBREVIATIONS

LIST OF TABLES AND GRAPHS

LIST OF FIGURES

PREFACE 1

CHAPTER 1: THEORETICAL BACKGROUND 3

1.1 Definition 3

1.2 The understanding about FCL goods 3

1.3 The concept of import procedure in logistics 4

1.5 12 steps in the process of importing goods by sea 6

1.5 Necessary documents in Customs Clearance 10

CHAPTER 2: INTRODUCTION OF DRAGON LOGISTICS CO., LTD – HAI PHONG BRANCH 12

2.1 History of establishment and development of DRACO 12

2.2 DRACO mission and vision 13

2.3 DRACO’s profile 14

2.4 DRACO’s organizational structure 14

2.4.1 Organizational structure of DRACO’s Head Office 14

2.4.2 Organizational structure of DRACO – Hai Phong Branch 15

2.5 DRACO’s human resources 16

2.6 DRACO’s infrastructures 18

2.7 DRACO’s services 20

2.7.1 Customs clearance, consulting, and export-import mandate services 20

2.7.2 International and Domestic cargo transportation 20

2.7.3 For leasing warehouse, yard 20

2.9 DRACO’s customers 23

2.10 DRACO’s Partners 24

2.11 Actual situation of production of DRACO in the last 3-5 years 25

CHAPTER 3: PRACTICAL INDIRECT CUSTOMS CLEARANCE PROCESS FOR IMPORTED FCL SHIPMENT AT DRACO 27

3.1 Practical customs clearance process for imported FCL at DRACO 27

3.1.1 Prepare necessary documents for import customs declaration 27

3.1.2 Feedback from Customs Office 28

3.1.3 Declaration clearance results 28

3.2 A practical case to illustrate the customs clearance process of imported FCL at DRACO 29

3.2.1 Parities involves in this case 29

CONCLUSION 34

REFERENCE 35

APPENDICES 36

LIST OF ABBREVIATIONS

DRACO Dragon Logistics Company Limited

DGD Deputy General Director

DGM Deputy General Manager

AMD Administration Department

FCL Full Container Load

LCL Less Container Load

C/O Certificate of Origin

LIST OF TABLES

Table 2.4.2.3 Domestics Transport Department 16

LIST OF FIGURES

The Company Logo

Figure 2.4 Organizational structure of DRACO‘s Head

Office

15

Figure 3.1 Process of indirect customs clearance for

imported goods

28

Internship is one of the key factors for an effective study program, because itfamiliarizing students with real-world knowledge, hands-on experience thatschool lessons are missing out sometimes, which helps students to later putthem into action in future career This is especially essential for my major,

International Business and Logistics, because Vietnam is currently adeveloping country with promising logistics industry, abundant naturalresources, cheap raw materials costs and lower wages, great opportunities for

foreign enterprises to invest in Vietnam economy Especially, importing andexporting goods is one of the most powerful key element in the economy.Acknowledge that, I have decided to do my internship in Dragon Logistics Co.,Ltd, because they directly do all the activities involved in the import-export

process there

My report wouldn’t have been possible without the support and assistance of

the people whom I approached during the process of writing the report Firstly,

I would like to express my heartfelt gratitude to my supervisor, Mr Vu Le Huy,Lecturer of Logistics Department in Maritime Business Faculty for hisvaluable advice, direction, and assistance Secondly, I am extremely grateful to

Mr Vu Duc Tuan, CEO of Dragon Logistics Co., Ltd (DRACO) for creatingthe opportunity for me to study there in my internship days Finally, I wouldalso like to thank Mr Do Hung Hai, Manager of Customs BrokeageDepartment and Mr Tran Anh Nghia, Team Leader 3 of Opening Customs

Declaration Form for being involved with me through my internship programand providing me a lot of knowledge about the company, customs clearanceand relevant documents that were much needed in customs clearance process.Finally, I would like to thank each and every one in the organization who

assisted and guided me throughout the whole process

In the process of completing the document, I tried my best to only put in factsand remove all mistakes but I know my report still have some imperfections

some please receive my apology in advance for any false occur and give mesome advice so that I can improve my next report.

The report consists of three chapters:

Chapter 1: Theoretical Background of Customs Clearance

Chapter 2: Introduction of Dragon Logistics Co., Ltd – Hai Phong Branch

Chapter 3: Practical Customs Clearance at Dragon Logistics Co., Ltd

CHAPTER 1: THEORETICAL BACKGROUND

1.1 Definition

 Customs clearance is the act of taking goods through the customs authority tofacilitate the movement of cargo into a country (import) and outside thecountry (export)

 Also, the customs clearance means a document issued by the customsauthority to a shipper indicating that all duties have been paid and theshipper’s goods is cleared for export

1.2 The understanding about FCL goods

 A Full Container Load (FCL) is a container that is for the use of a singleconsignee In shipping practice, an FCL means a single container that isbooked by the shipper exclusively for the transportation of their cargo only.The shipper doesn’t have to share the container with cargo booked by othershippers This enhances security and simplifies logistics

 To ship an FCL cargo, the shipper will have to book at least one wholecontainer For an LCL shipment, it is not necessary to book a container; only aportion of it needs to be booked Naturally, in the case of FCL, the goods

therein will be owned by one company only In LCL, there may be goods thatare consolidated and are owned by different companies

 In terms of total costs, booking an FCL container will be more expensivegiven the sheer volume However, if the dimension-wise cost is considered,the FCL booking is generally cheaper So, the cost per freight is higher in thecase of LCL booking, although in terms of the total cost it is the moreeconomical option

 FCL delivery happens much faster than LCL As the entire container isbooked, there is no need to sort and unpack the container at separate deliveryports The possibility of delay at ports and in the hands of customs authorities

is also lower In the case of LCL, additional time is required for sorting thegoods, consolidation of documents, and processing The time required inloading and unloading can also be higher in the case of LCL consignments

 Unlike with FCL, there may be less clarity about the handling anddocumentation charges associated with LCL cargoes Although the freightcharge itself is quite low compared to FCL, there may be higher terminalhandling charges and documentation fees, so it is best to discuss the terms

with the shipper beforehand

Figure 1.2: FCL and LCL cargo comparison

1.3 The concept of import procedure in logistics

 The import trade is referred to goods and services purchased into onenation from another The word “import” originates from theword “port” considering the fact that the products are frequentlytransported via ship to foreign countries Similar to exports, imports arealso the backbone of international trade Every country import goodsand services that the domestic country cannot manufacture, maybebecause the country cannot produce effectively or cheaply like anotherexporting country Few countries sometimes also import commoditiesand raw materials which are not available on their premises Forinstance, many nations import oil they cannot manufacture it locally orcannot provide sufficient to meet the demand

 Objectives of Import Trade:

- To speed up industrialization: developing countries import scarce

raw materials, capital goods and advanced technology required for

rapid industrial development

- To meet domestic demand: the goods which are in demand but are

not available in the country are imported

- To overcome natural disasters: during drought, flood, earthquake

and other natural calamities country import food grains and other

essential commodities to prevent starvation

- To improve standard of living: imports enable consumers in the

home country to enjoy a wide variety of products of high quality Ithelps in improving the standard of living of masses

- To ensure national defiance: The importer must get the receipt of

credit from his concerned bank and send it to the foreign supplier

1.4 Direct and indirect import customs clearance

 Direct import customs: the logistics company acts in the name and onaccount of a third party

 Indirect import customs: the logistics company acts in their own namebut on account of a third party

 In the case of indirect customs, the company applies for customs in theirown name but on account of the applicant The difference to directcustoms is that in indirect customs the rights and obligations havebeen transferred to the representative in respect to customs procedures.Indirect representation is rarely used (usually only in the case ofimporters not having residence in the EU customs territory) The reasonfor this is mainly due to incalculable risks and possible fees and dutieswhich can still be imposed upon the indirect representative for up tothree years after completion of clearance Which means that if, for

example, there were a customs inspection, the representative wouldneed access to the importer’s books

 In the case of direct representation, the representative applies in thename of the third-party and is therewith neither the applicant nor theowner in the customs procedure This means that the representative

carries no personal liability in the customs process, but is only subject tocivil law.

1.5 12 steps in the process of importing goods by sea

Step 1: Book train schedule

In the process of importing goods by sea, the first step is to book a ship

However, before doing this step, you need to proceed with signing a foreigntrade contract (the sale contract)

Usually, shipping lines will run out of space early before a week, especially

when it is during the peak season When booking a ship to import goods, youonly need to provide information for the FWD transport service in Vietnam to

get a booking They will then contact your partner to coordinate the packing

according to the previously defined plan

To get a train booking, you need to provide the following information to the

shipping company:

 Port of loading: where your goods are loaded

 Port of transfer: there are two forms: transshipment (transit) and direct(direct) Depending on the rules, the agreement between the two sides

that will choose the appropriate form

 Port of discharge: where the container is dropped

 Name of goods, weight: based on information on the document toprovide

 Travel time (ETD): the estimated date of departure

 Packing time: as agreed upon by both parties

 Other requirements: container type, size, temperature, ventilation,

Step 2: Check and confirm the booking

The next step in the process of importing goods by sea is to check the

information on the booking Please check the information about:

 Port of departure, the port of destination: check if the request is correct,this is a factor affecting the whole process of the shipment.

 Temperature, ventilation: check that the temperature and ventilation arecorrect For frozen items (negative temperatures) there will be noventilation

 Container type, size: dry or reefer container, high or regular type, 20 'or40' type

After checking all the information on the train booking, if there is any

mistake Please ask the booking provider to correct, then continue to

check until it is satisfactory

Step 3: Follow up on the packing process and updated information

from the exporter

For the process of importing goods by sea, the task of supervising andmonitoring the whole process of packing goods for updating to partners will behandled by the exporter, agent or FDW translation branch in Vietnam You are

using do this

The information needs to be updated as:

 Empty container snapshot: to ensure that no damage has occurred.Because in case of damage, the container will pay for shipping lines

 For frozen goods, pictures of temperature tables must be taken

Step 4: Checking to certify documents and records related to the

shipment

Before proceeding to enter a shipment You need to find out what

documents that shipment needs Then ask the partner to prepare the

documents for you

Remember to double-check that the information on the voucher is

matched or not Because when there is any small error, your shipment can

be in big trouble from the customs, state agencies

Step 5: The importer receives a notification when the goods arrive

At least one day prior to the date of arrival, you will receive a notice of

arrival from the shipping line or agent

Arrival notice is a notice of details of the carrier/forwarding agent Tonotify the estimated time of arrival at the shipment The information on

arrival notice will be similar to that on the bill including the name of

exporter, importer, container number, seal, ship name, shipment number,

description of goods, .) In addition, there will be additional charges

(local charges)

Then you proceed to take D/O including the following documents:

 Referral

 Original Bill

 Power of attorney (if required)

Step 6: Register the certification related to the shipment

Depending on the type of goods, HS code, etc the regulations of the

State that you must register what procedures to be granted the relevant

certification If you do not register the certification related to the

shipment Then your shipment will not be cleared as well as having

difficulty processing goods with the authorities

Step 7: Customs declaration of imported goods

This is an important step in the process of importing goods by sea In the

process of customs clearance, document preparation is the most important

step

To be able to carry out a customs declaration, you need to fully prepare

the following documents:

In addition to the above documents, you need to pay attention to the

digital signature to log in and transmit the declaration form on the

electronic customs declaration software

Step 8: Open and clear customs declarations

The next step in the process of importing goods by sea is to open and

clear the customs declaration First, you have to do the customs clearance

physical inspection of goods

Next, you can proceed to open the declaration To do this step, you need

to prepare the following documents:

 Other necessary documents (C / O, freight bill, import license, )

When presenting documents to customs, if the documents are valid

Customs will conduct customs clearance on the system

Step 9: Liquidation of declaration

After completing the tax payment and customs clearance, you can

proceed to print the barcode You submit the barcode + customs

declaration for customs supervision at least 2 sets Customs will affix a

stamp on the bar code and return it to the enterprise 1 set, while 1 set will

be kept by the customs

Step 10: Article warehouse transport of goods to the warehouse

After clearing the declaration, please go to the port's trade office and

bring D / O to pay the fee Next, give the driver documents such as EIR,

D / O, for the driver to submit to the customs office to supervise the

port and let the car leave the port to wait for the goods to arrive at the

warehouse

Step 11: Withdraw goods and return the empty car

When the delivery truck arrives at the warehouse, please check the

documents such as seal, container status or delivery vehicle, etc After the

withdrawal is complete, the driver will bring the container back to the

port or ICD

Step 12: Keep records and vouchers

All documents relating to the process of importing goods by sea need to

be carefully stored For comparison in case of arising, complaining,

Documents to be kept include:

 Customs dossier, additional declaration dossier, a dossier of registration

of list of duty-free goods, and report on the use of duty-free goods

 Documents for consideration of tax exemption, reduction, refund, andnon-collection

 Dossier requesting for the handling of tax, late payment interest, finesfor overpayment,

 Transport documents, packing slips, technical documents, etc

 Accounting books and vouchers

1.5 Necessary documents in Customs Clearance

 Bill of lading.

- The Bill of Lading (B/L) is a document issued by the shipping

company to the operating shipper, which acknowledges that thegoods have been received on board In this way the Bill ofLading serves as proof of receipt of the goods by the carrierobliging him to deliver the goods to the consignee It contains thedetails of the goods, the vessel and the port of destination

goods, meaning that the bearer of the Bill of Lading is the owner

of the goods

- The Bill of Lading may be a negotiable document A number of

different types of bills of lading can be used 'Clean Bills ofLading' state that the goods have been received in an apparent

good order and condition 'Unclean or Dirty Bills of Lading'indicate that the goods are damaged or in bad order, in this case,

the financing bank may refuse to accept the consignor'sdocuments

 Certificate of origin (C/O)

If your cargo is being imported from a country where a free trade

agreement exists then a Certificate of Origin needs to be provided by

your supplier so that duty free concessions can be claimed If this

document is not available or your goods originate from a country

where no free trade agreement exists then import duty might be

payable

 Commercial invoice.

The commercial invoice is a record or evidence of the transaction

between the exporter and the importer Once the goods are available, theexporter issues a commercial invoice to the importer in order to chargehim for the goods

The commercial invoice contains the basic information on thetransaction and it is always required for customs clearance

 Packing list (P/L)

The packing list (P/L) is a commercial document accompanying thecommercial invoice and the transport documents It providesinformation on the imported items and the packaging details of eachshipment (weight, dimensions, handling issues, etc.)

It is required for customs clearance as an inventory of the incoming

cargo

 Delivery Order (D/O)

A fee charged for preparing a delivery order on behalf of a customer ADelivery Order (D/O) is defined as a document issued by a carrier,carrier’s agent, or breakbulk agent authorizing or ordering its terminal

or another carrier or terminal operator to release cargo to a named party,

or another agent or carrier on behalf of the named party Delivery ordersare typically issued only after the consignee named on the delivery orderhas surrendered a properly endorsed B/L

CHAPTER 2: INTRODUCTION OF DRAGON

LOGISTICS CO., LTD – HAI PHONG BRANCH

Figure 2: DRACO Head Office Source: DRACO website

2.1 History of establishment and development of DRACO

Dragon Logistics Co., Ltd was established based on the Investment license No.179/GP issued by Ministry of Planning and Investment dated 19th October

1996 The company is a joint-venture company between Japanese parties

(Sumitomo Corporation, Suzuyo & Co., Ltd) and Vietnamese parties(VINAFCO and Hanel) with total investment capital of USD 9,290,000 (of

which USD 4,000,000 is legal capital)

The company has established a wide range of updated information andknowledge about the international market which is very useful for carrying outthe import-export activities, along with a service slogan: “Service Quality -Customer’s Satisfaction - Company’s Strong Development”

North Thang Long Customs office was established in Dragon’s area, in which

has a place to do Customs procedure off border gate with area is over 2,000m2,

this creates convenient conditions to do Customs clearance for cargoes to go in

and out Thang Long Industrial Park

DRACO has already been an associated member of famous international anddomestic freight forwarder, transportation organization such as IATA, FIATA,VIFFAS The company also got the Certificate of Approval ISO 9001:2000 inAugust 2001 issued by QMS

Over 20 years of operation, the company has expanded the scope of providing

logistics services across the country The company currently has: 1 head office

in Hanoi, 1 representative office in Hanoi and 5 branches located in cities and

provinces such as Ho Chi Minh City, Hai Phong City, Da Nang City, Dong Naiprovinces and Quang Ninh provinces

With offices operating in important seaport areas of Vietnam such as HaiPhong city, Da Nang city, Ho Chi Minh city, etc DRACO Logistics isbecoming a professional and trustworthy maritime logistics service providerfor domestic and foreign companies

2.2 DRACO mission and vision.

- Continuous service improvement: towards the vision of becoming one of theprofessional logistics service providers, DRACO always trying to improve thetransport and the working ability of the equipment, save labor, optimize human

resources to perfect supply chain management

- Customer oriented: DRACO Logistics always aims to meet the needs of

customers This is the company's service standard

- Active and creative working style: In order to survive and thrive in today's

competitive business environment, DRACO Logistics always attempt tooperate proactively and creatively Since then, the company has built aprofessional and dynamic working environment for all employees to developtheir full abilities

2.3 DRACO’s Profile

Figure 2.3: Company Logo

 Vietnamese Name: CÔNG TY TNHH TIẾP VẬN THĂNG LONG

 English Name: DRAGON LOGISTICS COMPANY LIMITED

 Transaction Name: DRACO LOGISTICS

 Motto: Challenge Commitment Communication – Cooperation Compliance

- Head Office: Plot E4A Thang Long Industrial Park, Dong Anh District,Hanoi

 Hai Phong Branch: No 5 Nguyen Binh Khiem Street, Hai Phong City

 Tel: 024 38812488 Fax: 024 38812489

 Email: dragonlogistics@draco.com.vn

 Website: www.draco.com.vn

2.4 DRACO’s organizational structure

2.4.1 Organizational structure of DRACO’s Head Office