The most overlooked, though vital element in a Bill Of Lading (BL) is its centrality of the Credibility of the issuer. This however, mostly is camouflaged by the most academic interpretation: evidence of receipt of goods & the power of its negotiability. The system followed in India is almost fully market-driven, much to my liking. The shipper decides the credibility of the issuer of the BL for his cargo, before he makes his buying decision. In practice however, there are several serious failures & frauds due to this open and no-strings-attached use of BL. We hear frequently, the repudiation of legitimate claims, cargo just being abandoned by the Issuer of the BL after receipt of the freight, and in some instances cargo being sold or plain stolen. It creates a lot of bad blood between the buyer and the seller, in addition to the financial pains caused to many innocent ones in any of these transaction chains. This continues to damage the creditability of the improving business-environment image of India. Why does this happen? We have an impressive number of freight forwarders, freight brokers, LCL consolidators, NVOCCs, in addition to the myriad multi-national & a handful of national shipping lines. All it takes is just a telephone, a chair & table and one man with half-baked knowledge of the complexity of the transport chains to set up & run a freight forwarding company in India. Even I know of individuals, having no offices, conducting their daily businesses just on a mobile phone on the go. Thousands of these one-man-band companies print & use BLs with impunity. Having said that, this reveals the entrepreneurial power of a typical Indian mind, displaying the potential to excel with scanty resources in a tough a business terrain. This needs to be applauded and encouraged to create wealth for them as well as the nation. In order to this, the abuse of the centrality of the BLs, needs to be managed well, while making sure that, the entrepreneur is guided and cheered in his efforts. Even though it looks a tough ask, we can achieve this objective very quickly and at the same time create plenty of surplus funds in the coffer of the government. This fund can be judiciously invested to transform our lethargic & toothless maritime legal & justice system to a lean, mean fighting machine.
Let me be very candid that I love our system in India, despite its serious flaws, more than what they practice in China or USA for that matter. This is simply because our system is largely free & devoid of meddling with regulations, except a negligible tinkering to distort the dynamics by the senseless & directionless Multi Modal Transport Act by the bureocracy. In China, they have broadly categorised the industry into Freight-forwarding, NVOCC, & Liner Trade. It is compulsory to register in MOC (Ministry Of Communications) before you can issue BLs. The companies need to make a refundable deposit of Security with MOC. The process takes long and needs greasing too. However, once registered the shippers can check this information on line. The result is good. The government sits on a huge pile of security cash, because the companies cannot withdraw until they are in business. Without exception they are. The system runs neat, even though a very few do flout the rules of not registering and doing business in low scale. The drawbacks are red tapes, delays & of stifling of competition by foreign companies in China. For example, it becomes impracticably difficult to set up a shipping agency business in China by an Indian company, though you can set up a freight forwarding company with relative ease. Therefore, you do not see any Indian Shipping Agent in China, even indirectly using the corridors of Hong Kong or Singapore. On the contrary, you have innumerable Chinese companies doing unhindered shipping agency business in India, both directly and indirectly through their corridors of Hong Kong, Taiwan, & Singapore. This appears to be a constriction of Indian business interest in China and free hand to Chinese business in India. However, this will tell on China, because they increase their costs of doing business by stifling competition & forcing scarcity.
All that DG Shipping in India needs to do is to categorize the Chinese way. Then sub categorize the Indian way : Freight Forwarding 'A', 'B', 'C', from deposits ranging from as low as Rs 25k to Rs 250k (Depending on the maximum liability the company wants to guarantee on its BL), similar for NVOCCs, & a higher deposit for Liner Shipping. The grading would help the shippers know the extent of liability protection with each BL. Publish the registered ones on line, where customers could check & verify. Government can guarantee the users of the BLs against claims in line with the Security Funds held & gradation awarded. A small amount of the funds could be set aside for premium to an Insurance company, against defaults. Any default will result in cancellation of the BL, a deterring penalty & forfeiture of the deposit. The small deposits do not create a problem for a small start up business. Make this registration a very simple procedure and ensuring issue of Registration in 3 working days. A small annual fee can be collected with the ease of an on line system to keep the registration live. Even this job can be out-sourced to a private company to manage. This process not only shall make the government stashed with funds to invest further in an efficient & speedy maritime legal & justice infrastructure, this will also clean up the system from bottom up, without hurting the enterprising & hard-working Indian.
Reported by
Capt Rath, CEO, Maxicon Container Line
================================
Let me be very candid that I love our system in India, despite its serious flaws, more than what they practice in China or USA for that matter. This is simply because our system is largely free & devoid of meddling with regulations, except a negligible tinkering to distort the dynamics by the senseless & directionless Multi Modal Transport Act by the bureocracy. In China, they have broadly categorised the industry into Freight-forwarding, NVOCC, & Liner Trade. It is compulsory to register in MOC (Ministry Of Communications) before you can issue BLs. The companies need to make a refundable deposit of Security with MOC. The process takes long and needs greasing too. However, once registered the shippers can check this information on line. The result is good. The government sits on a huge pile of security cash, because the companies cannot withdraw until they are in business. Without exception they are. The system runs neat, even though a very few do flout the rules of not registering and doing business in low scale. The drawbacks are red tapes, delays & of stifling of competition by foreign companies in China. For example, it becomes impracticably difficult to set up a shipping agency business in China by an Indian company, though you can set up a freight forwarding company with relative ease. Therefore, you do not see any Indian Shipping Agent in China, even indirectly using the corridors of Hong Kong or Singapore. On the contrary, you have innumerable Chinese companies doing unhindered shipping agency business in India, both directly and indirectly through their corridors of Hong Kong, Taiwan, & Singapore. This appears to be a constriction of Indian business interest in China and free hand to Chinese business in India. However, this will tell on China, because they increase their costs of doing business by stifling competition & forcing scarcity.
All that DG Shipping in India needs to do is to categorize the Chinese way. Then sub categorize the Indian way : Freight Forwarding 'A', 'B', 'C', from deposits ranging from as low as Rs 25k to Rs 250k (Depending on the maximum liability the company wants to guarantee on its BL), similar for NVOCCs, & a higher deposit for Liner Shipping. The grading would help the shippers know the extent of liability protection with each BL. Publish the registered ones on line, where customers could check & verify. Government can guarantee the users of the BLs against claims in line with the Security Funds held & gradation awarded. A small amount of the funds could be set aside for premium to an Insurance company, against defaults. Any default will result in cancellation of the BL, a deterring penalty & forfeiture of the deposit. The small deposits do not create a problem for a small start up business. Make this registration a very simple procedure and ensuring issue of Registration in 3 working days. A small annual fee can be collected with the ease of an on line system to keep the registration live. Even this job can be out-sourced to a private company to manage. This process not only shall make the government stashed with funds to invest further in an efficient & speedy maritime legal & justice infrastructure, this will also clean up the system from bottom up, without hurting the enterprising & hard-working Indian.
Reported by
Capt Rath, CEO, Maxicon Container Line
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