CHAPTER ONE

INTRODUCTION

This chapter comprises of the research context of the study following a trickle down approach from global to local, statement of the problem, research question that is main and specific,   research objective which main and specific, hypothesis also main and specific, there is the scope of the study, significance, operational definition of key terms, organization of the study and chapter synthesis.

1.1. Research Context

The Business world continues to be competitive and with technological advancement organizations are focusing on strategies like high customer service levels, lower costs and managed lead times as a competitive advantage (Christopher, 2005). The time from getting an order to shipment is called lead time. In this competitive global market, one can only survive by providing its order in time. The key to success for any industry is to ensure shorter lead time, cost reduction, higher productivity. Organizations have become more custom focused hence putting in significant efforts to delight customers for survival (Arnold, 2014). Lead Time which provides companies with process consulting and decision support tools to profitably manage planning, scheduling, and inventory optimization at all production and distribution locations. Lead time simultaneously considers all business processes, constraints, costs, and sinless objectives to determine the most profitable flow of materials, inventory levels, and utilization of resources for any given planning horizon. The most important key for the international competitiveness is to shorten the time to release imports, thus drastic change and modernization of the customs clearance system is critical for the progress of the economy and for the improvement of the total logistics system (Rushton, 2014).

The Australian Government conducted time release studies for three years in a row starting from 2007. The Australian customs and border protection service was the responsible organ for conducting these studies. Under these studies, changes in the performance of the reporting periods were analyzed and the results used for further improvement in customs procedures. The results of the Australian 2009 TRS show that ocean cargo is on the average released more than 16 hours before becoming physically available for collection. On the other hand, air cargo is on the average released more than four hours before becoming physically available for collection. The study further indicates that 86% of all cargo is either released or ready to pay at the time of first physical availability. Moreover Self Assessed Clearance (SAC) cargo comprises 80% of reported air cargo. Release and clearance time for SAC occurs in more than 21 hours (0.9 days) before availability. More than 80% of the sea cargo is fully reported and has a customs unimpeded status within 24 hours of arrival, irrespective of the day of the week. More than 60% of the cargo is reported, released and cleared within 24 hours of arrival on all week days (Australian Customs and Border Protection Service, 2009).

There are delays in import clearance procedures in Ethiopia (Africa). Such delays entail a series of costs to importers/exporters and to the national economy at large. Some of these costs have cascading effects. Among the costs associated with delays in border clearance in Ethiopia. This delay is responsible for a 10 to 12-day free storage in Djibouti. Beyond the free storage period at the Djibouti Customs territory, a 17 US Dollar demurrage is charged per 20ft container for a day (Ciuriak, 2010) If the container is not cleared within five months, the container load of the cargo is confiscated by the authorities in Djibouti. This constitutes a total loss to the importer and the country at large. Also, Studies indicate that a one-day delay in clearance procedures is tantamount to a 0.8 % ad-valorem tariff. As indicated above, the journey from Gadhafi to Addis Ababa has to be made in three days. But as a result of delays along the route, two more days are spent on travelling, making the total transit time five days. This is the equivalent of 4 % ad-valorem tax on imports, which is directly transferred to end-users, including consumers and export-oriented producers that make use of imported inputs for export production and are as a result rendered uncompetitive because of the delays (Federal Democratic Republic of Ethiopia, 2004).

With an increase in import and export in Cameroon, there has been need for custom brokers in the country to ensure that goods imported are cleared. Society Brad Transit being an authorized custom broker known by the state is involved in carrying out clearance procedures. Custom Clearance procedures works include formation and submission of documentation needed to help export or imports into the country, describing the client while customs examination, evaluation, payment of duty and taking delivery of cargo from customs after clearance with documents (www.legalraasta.com). Brad Transit is involved in carrying out custom clearance procedures; the purpose of this study is to investigate the effects of clearance procedures on lead time, the effects of clearance procedures on lead time in Brad Transit is caused by delays in Clearance procedures. The effect of clearance procedures on lead time in Brad Transit is that there is always an increase in lead time which reduces customer satisfaction making them to switch to other custom brokers. The purpose of this study is to investigate the effects of clearance procedures on lead time in Brad Transit. The customer clearance practices and procedures applied for importing and exporting goods are examined. Also, the various custom clearance procedure used by brad transit will be examined.

1.2. Statement of the Problem

With the increase rate in export and import in the world, there is need for a good clearance system which will help in minimizing lead time. Countries involved in import and export have to enquire clearance procedures in point of destination before engagement. Despite the preparations made by clearing officers, delivery of good from port to the warehouse is still frequently delayed, a swift and rapid clearance procedures helps in fostering good to their various destination which is an advantage on lead time management.  Brad Transit being an authorized custom broker act in facilitating clearance procedures, while carrying out clearance procedures brad transit encounter difficulties such as; poor internet connection to connect to platforms like CAMCIS (Cameroon Custom information System) which is because only one network (CAMTEL) is allowed to be used to access this platform. Also, SGS (Société Générale de surveillance) always delay to send the RVC (Valuation and Classification Report) for codification. This delays codification and as such clearance procedures. The expensive rates charged on port access are also a difficulty brad faces during clearance given the fact that most custom offices and maritime companies are found at the port. All these difficulties will cause delays in clearance procedures by brad transit and will negatively affect lead time.

1.3. Research Questions

1.3.1. Main Question

What are the effects of clearance procedures on lead time in Brad Transit Douala?

1.3.2. Specific Questions

• What are the custom clearance procedures at Brad Transit?
• What is the situation and trend of lead time on the clearance of goods by Brad Transit?
• What are the effects of clearance procedures on lead time in Brad Transit and proposed recommendations?

1.4. Research Objective

1.4.1. Main Objective

The aim of this study is to investigate the effects of clearance procedures on lead time in Brad Transit.

1.4.2. Specific Objective

1. To examine the custom clearance procedures at Brad Transit.
2. To determine the situation and trend of lead time in the clearance of goods by Brad Transit.
3. To investigate the effects of clearance procedures on lead time in Brad Transit and proposed recommendations.