International trade has increase economic inter dependence of nations. Modern industries are depended on variety of raw materials ail of which cannot be conveniently and economically produced in any one countries.

No country has with in its own boundaries to get resources for economical production of all its requirements through international its possible for a country to obtain goods produced as cheaply as other countries.

Foreign trade or exports, which are part of international trade, make a significant and necessary contribution to the economy and the countries development. A developing country like India with a large and growing industrial infrastructure needs imports of capital equipment and article raw material. To sustain development and also hasten the growth of industry with a view to increase the employments potential exports become necessary.

Obviously shipping industry has a vital role to play, in the growth of international trade. Shipping is a highly competitive and challenging business, serving the needs of international trade in the form of sea transport. It is truly international, both in the nature of its business and in the way it is organized. Shipping the industry devoted to moving goods livestock and passengers by water mostly By sea, The industry connects people from different corners of the world commercially through ship we can transport a Jumbo Jet to tiny electronic parts.

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Commercial shipping probably began in the Mediterranean Sea where the merchants of Phoenicia owned ships and traded widely. Many of their practices were adopted by Ancient Greece and the Roman Empire. Later, in the Middle Ages, the merchants of Venice carried on and further refined these practices. Even today, commercial shipping practices associated with marine insurance and the carriage of goods can still be traced to those early roots. 

From the 15th to the 18th centuries, deep-sea shipping was closely linked to colonial trade especially that of the Spanish Empire, the Portuguese Empire, the Dutch Empire, and the British Empire, and to the growth of the great enterprises like the Hudson’s Bay Company and the East India Companies. During the 19th century and until the middle of the 20th century, most of the world’s merchant fleet operated under the British Flag or the Flag of one of the long established maritime nations like Norway, France, Germany, and Japan. Shipping truly throughout the world have a unilateral rules and regulations in Sea traffic, Port entry clearance, which was derived and developed by the British during their rule across the globe. However cargo movement restrictions vary from country to country depending upon their culture, Domestic Trade and their Government Policy. 

Nature of Shipping Industry, 

Shipping is a mode of transport through sea for cargo as well as passenger transport around 90% of the international cargo transport is being done through sea. Shipping industry and Export and Import are inter dependent. A country where Export and Import are flourishing, there the shipping business also be very active. Compared to air traffic, Sea traffic is safe and economical.

Apart from Cargo Transport many of the European countries use passenger vessels, for human transport as it is economical compared to the Air Transport and it develops the Tourism in such countries. 

Indian Shipping 

The Indian shipping tonnage has developed fairly after independence. India now has a shipping fleet of 6 million gross register tonnage (GRT). 

The Indian shipping industry is classified into two categories, like coastal shipping and overseas shipping. Indian shipping is a very long history and has its roots from the early centuries. 

The position of Indian shipping during 1947 was just 59 vessels. Out of which, 48 were coastal and 11 were overseas. 

There are 45 trade routes that emanated from the Indian continent. During the time of independence the British vessels dominate the coastal scene. So, the government of India declared a "Coal Reservation Policy" in 1950 in reference to coastal trade. Soon, the Indian ship owners formed," Indian coastal Conference" in 1951.This agreement tried to regulate the business through various measures. But still, there were problems like under rating, rebated and other malpractices continued. However, by 1953, Shares of British shipping were reduced to nil. Indian shipping grew in quantum leaps. But the problems faced by the industry are very complex and complicated due to various reasons like increase in operational coasts, railways penetrating the market, etc. 

Regrading, the overseas shipping, after 1850 Indian shipping industry began to decorate due to various reasons. By the end of the century it was practically nil. The British Government was keen on nursing its own interests and never made any attempts to retrieve the Indian industry. 

In 1912 the Scandia steam Navigation Company was incorporated. It launched the first modern overseas services from Bombay to U.K. Later various companies, both from private and public sector came into existence. With the evaluation of new Government polices after independence, the shipping reads began to grow rapidly. Indian Government also signed various trade agreements for the benefit of the Indian shipping industry, like Indo- UAR, Indo-USSR, India - Romania Bulgaria and Indian polish. 

Shipping conference administer their own freight rates through their own tariffs. This is unlike the transporting sector where freight rates are determined through the market force of supply and demand, The administered freight rates are which member liner of conference caters to the requirements of shipper have often been a bone of contention between shippers and the concerned conference. As India's foreign trade become modernized. The freight making policies of these shipping conferences also become much more complicated. 

In most cases, the actual carriers of the Shipping lines never touch the Indian port. Instead, reaches the Colombo port the transshipment port for this port of Asia. The cargo from various Indian ports is transported to the Colombo port, through the shuttle service operating between these ports and the Colombo port. From there, the cargo is transshipped to various destinations. This is done in order to reduce the time and cost involved in carrier touching all the ports in the same ports in the same region. The shuttle service will be more or less a regular one and it is know as the 'Feeder Service' and the actual carrier is known as the 'Mother Vessel'

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The Cargo to be handled in different ways. It may be as follows. 

Dry Bulk Shipping (Bulk Carriers) 

The principal dry bulk cargoes carried in merchant ships are: iron ore, coal, phosphates, bauxite, and grain. These are all low value commodities and must therefore be transported as cheaply as possible. Transportation costs for dry bulk commodities are often less Bulk carriers are usually large vessels designed both to carry full cargoes and, when necessary, to make return voyages to loading ports without any cargo.

Bulk Carriers are designed to carry bulk solids. Some bulk carriers are multi-purpose, while others are specially adapted to carry dense cargoes like iron ore, or lighter cargoes like wood chips. They also have substantial water ballast capacity so that they can proceed to sea safely after discharging their cargo. Combination carriers, ore/oil and ore/bulk/oil carriers can carry either bulk solids or bulk liquids. The bulk carriers included as salt, wheat, rice, and coal.

Bulk Oil and Gas Shipping (Tankers)

Tankers carried mainly refined oils from producing areas. crude oil is now transported in huge quantities from the world’s major producing areas Most of it is carried in VLCCs or ULCCs, ultra large crude carriers, which are the largest tankers But products like diesel oil, petrol, and paraffin are now usually transported from refineries in industrialized countries to coastal storage and distribution centers.

International trade in liquefied gases has grown substantially since the 1960s. Many LNG (methane) and LPG (butane and propane) tankers are now in service.

Tankers are designed to carry bulk liquids. Most are engaged in the carriage of oil, but some are specially adapted to carry liquefied gases, chemicals, or even wine. VLCCs ( very large crude carriers), are designed to carry crude oil. Very large crude carriers (VLCCs) became common space required; these ships are generally around 2,50,000 tonnes carrying capacity, much of which is accounted for by the cargo. Loading and discharging rates may be as high as 10,000 tonnes per hour. Products and chemical tankers are usually smaller and more complex than VLCCs.

Tankers can be mostly used with the liquid items.

Liner Shipping (Containers)

Liner shipping is characterized by scheduled sailings on an advertised route. Cargoes may consist of many different kinds of goods, in consignments that are each much less than a shipload. Today many liner services are containerized.

liner cargoes include manufactured and high-value goods that can bear higher transport costs than bulk cargoes.

Container ships are designed to carry standard ISO (20 ft and 40 ft and 40HC and 45 and reefer) containers, either in designated cells within a hold, or on deck. Large cellular container ships are capable of carrying several thousand containers.

Many subsidiary ports do not have container cranes; so small feeder container ships often have their own handling equipment.

Coastal and Short Sea Shipping (Passenger Cruise Ships)

Coastal and short-sea shipping are concerned with the movement of cargo and passengers between ports in the same country, or between ports belonging to adjacent countries on the same continent Cruising is an increasingly important shipping sector. In recent years many new cruise ships have been built. Many older vessels have also been converted for cruising. Cruise ships are like floating resort hotels. The latest are very large, with extensive recreational facilities and amenities for 2,000 or more passengers.

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Below the Basis Docs required for clearance,

Authorization letter to handle the clearance

AD Code (if not registered)

IEC Copy /PAN

Invoice

Packing list

SDF Form (Self Declaration Form)

Shipping Instruction for filling Shipping bill

Scheme Declaration (if app).

Obtain customer approval for the check list.

After approval pick up the cargo & document and arrange export movement.

Shipping documents collect and hand over to clearance team for clearance process.

Follow up with clearance team for status of the shipment.

After clearance, collect shipping bill from customs.

Update the shipping instructions to the shipping line.

Operation team to handover the cargo to the co loader or liner agents,

Take vessel schedule from the shipping line and update to the customer.

Ask shipping line for debit and make cheque or DD request.

Send to the account department.

MBL has to be released with shipping line within seven days of vessel departure.

Prepare HBL and send to shipper approval.

Make final HBL once approval obtained.

Check the JFN for releasing the B/L for payment terms. Send pre alert to counterpart agent

Coordinating with counterpart agent regarding arrival of the shipment at destination.

Tracking of movement of the cargo till destination and updating to the customer

Inform arrival, customer clearance & delivery confirmation at destination to customer.

Payment collections-submit bills to the customer according to the terms and condition.

Documents need to handover to Shipper

Bill of lading

Export cleared shipping bill

Export cleared invoice and packing list for record

Any other shipper related documents duly signed by the customs.

Documents attached with Pre-alert

HBL copy

MBL copy

Commercial Invoice

Packing List

Agent Debit/ Credit Note 

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LCL is the short form for less than container load. 

If the volume of the shipment does not need full container, then such a shipment is offered to forwarder who closes the container of their own.

These forwarders are known as co-loaders.

The rate is offered on weight or measurement (w/m) and žThe weight of the cargo is expressed in terms of weight and measurement expressed as cubic meter (CBM). The minimum rate is charged on weight or per CBM whichever is higher. 

LCL – Less Container Load, LCL shipping is a good way to ship large orders and items that are large or heavy. LCL shipping is based primarily 

on volume with a minimum shipment volume of one cubic meter.

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Introduction

Introduced in 31st December 1980,by Ministry of Commerce.

Purpose
To boost exports by creating additional production capacity.
Notification No. is 052/2003

Duty Free Imports allowed under EOU Scheme

Second Hand Captial Goods

Repair and Return of Goods

EHTP/STPI

Decision are taken by Board Of Approvals (BOA) ,under Ministry of Commerce.
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EOU’s are licensed to manufacture goods within the bonded premises.
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Period of bond is 5 years (extendable for another 5 years with the permission of development of commissioner)
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The imported capital goods are allowed to be warehoused for a period of 5 years. For other goods the period is 1 year.

Eligibility Criteria—

EOU can be set up by any entrepreneur for manufacturing of goods and also for rendering services. 

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EOU can be set up for repair, reconditioning , re-engineering also.
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EOU unit is required to achieve only positive NFE over a period of 5 years.

Main Objective

The main objectives of the EOU scheme is to :-
—
Increase Exports
—
Earn Foreign Exchange for the country
—
Generate additional employment

Salient Features—Exemption on customs duty on imports of capital goods, raw materials, consumables, spares, packing materials etc.
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100% foreign direct investment permissible.
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Even second hand plant and machinery can be imported.
—
EOU’s get up to 5 years for utilization of imported capital goods, and up to 3 years for other items.

Documents Required for EOU—

LOP (Letter of Permission)
Green card with LOP
Bonded warehouse license copy
I.E Code Registration certificate
B-17 bond with B.G (Bank Guarantee)
Require STPI Approval for STPI clearance.

Import Procedure for EOU

Application for registration to Deputy/Asst Commissioner of customs at port of import. Accompanied with following documents: 

Copy of LOP, Pvt.bonded warehouse License copy, Green card, IEC no.

The B/E should filled and assessed based on the import documents. 

B-17 block transfer should be debited for movement of goods (Procurement Certificate in case if unit is located outside i.e., not within the city limits)

After all clearance formalities goods shall be sent to bonded premises of the EOU. 

Importer have to apply for open examination of the cargo from superintendent of EOU.

The EOU Inspector will inspect the goods to ensure the quantity, marks and numbers etc and the inspector will give his report. After inspection the superintendent will verify all the documents and will issue the re-warehousing certificate.

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A freight forwarder is a person or company that organizes Export/ Import shipments for individuals or companies and may also act as carrier or agent. The agent can book the cargo with main agent and get the space for the shipments,

Main Activities of Forwarding

•Customer care through follow-up, pre alerts and post landing updates to customers for all air imports shipments for all branches.
•Online filing of cargo manifest.
•Maintaining 4 sets of documents-Account/Customer/Clearance/Consol copy.
•Filing of branch CANS.
•Maintaining of MIS reports.
•Customer visits for service updates and requirements.
•Sales leads and follow-ups

Freight Forwarding Procedure

Enquiry- Receipt of enquiry from the customer and to obtain the required rates/info from agents. Quotations- Prepare the quote as per the standard formats with standard conditions. 

Import follow up- Forwarding PO reference to agents and to chase for pick up, booking info, pre alerts and filing manifest. 

Issue of CAN- Ensuring arrival of shipments as per pre alerts, preparing and dispatching Cans as per the quote.

Issue of Do- On receipt of authorization letter, BRO, payment, or credit as per the quote and approval from finance, issues DO. 

Preparation of Docket- Opening of docket with Can no and accumulation of all documents as per the defined procedure. 

Verification of Agents- D/N or C/N-Verification of cost and revenue as per the agreed terms, if any discrepancy is found, to take corrective actions. 

MIS reports- Based in info in the main register to prepare various MIS reports as defined, daily reports, sector wise performance reports(monthly), objectives status(as per periodically defined)

Objectives of Freight forwarding

To achieve and sustain an average on-time arrival of 90% for shipments booked on committed time. 

To achieve and sustain the existing period for submission of quotations to customers with in a day from the date of the enquiry.

Main Barriers and constraints,

TERMS OF SHIPMENT
COMMUNICATION GAP
TRANSIT TIME
TRANSSHIPMENT

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Import duty:

Custom duty is the duty is been charged on goods on their importation in to India.  Basic custom duty-Levied as per the first schedule to the custom tariff act,1975. 

• Additional custom duty –This is commonly known as countervailing duty(CVD) is the duty leviable on imported goods equal to the central excise duty leviable on like articles, produced or manufactured in India. This duty is leviable as per section 3 of customs tariff act,1975.

• Special additional duty –This duty is leviable as per section 3A of custom tariff act 1975.It is leviable in all imported goods at 4% except those specifically exempted.

• Educational cess-To give a boost to primary education in the country and in conformity with the Common Minimum Program of the UPA government, Finance Minister P Chidambaram on July 2004 proposed to levy a Education cess of 2% on income tax, corporation tax, excise and customs duties and service tax.

• Secondary higher educational cess- An additional 1% Secondary and Higher Education cess was imposed in 2007 to help fund new seats in higher education that are required to implement the 27% reservation of seats for other backward classes. “It has been introduced to fund secondary and higher education.

Documents required for Duty Calculation

• Simple Import :-

Invoice, Packing List, CAN (Cargo Arrival Notice), Insurance ce certificate

• High Sea Sale :-

Invoice, High Sea Sale Invoice, CAN (Cargo Arrival Notice), Insurance certificate

Merit Duty

• Merit duty is the standard duty which is calculated without any exemption.

• Concessional duty is the duty which is applicable if any exemption is applicable on that particular commodity.

• The exchange rate is applicable is the rate prevailing on the date of presenting bill of entry is presented in the custom under section 46.the same rate is applicable for all types of clearance(warehouse, home consumption, or bonded)

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Please find specimen for the Export documents

Commercial Invoice

Packing List

Self Declaration form

Export Value Declaration

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The quotation for job should be given in the standard format and documented approval should be taken from the client before accepting the job. The customer are should be taken that credit term given to the customer has the approval of the required person before offering it to the customers

Also the documents such as IEC CODE, authorization letter are taken before executing the job. Before taking the receipt of the goods it is important that the condition of goods is checked and if any damage is there it recorded and informed.

For business approval it is important to confirm the customers address, IEC in JDFT website meet the client and know about their business. Traders have to be scrutinized very carefully.

After clearance the dispatch of the goods to the customer has to carefully done. Any damage at the time of handing over to the transport has to be noted also care should be taken that the goods are protected while on journey.

The Govt of India has initiated process like RMS and green channel facility which are meant for the faster clearance of the goods. The onus lies with the CHA to ensure that the declaration is proper and accurate. Any lapse would   invite penalty which can be legal as well as monetary. Hence proper care  should taken to ensure that such lapses are avoided. 

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Export clearance

A check list is attached and given to EDI, The EDI printout is checked for any errors. If  any errors are there it is rectified and shipping bill is generated. The documents are submitted to assessment with attached shipping bill. The inspector passes on the shipping bill to the asst commissioner. If satisfied the documents are taken to the goods registration officer and then examination by another inspector and report is  given. The superintendent will sign the bill and give let export if everything is satisfactory.

Import clearance

The Bill of Entry along with the documents are given for assessment. The inspector if satisfied passes the bill to the commissioner. If the assessment is accepted the duty is paid. The documents are then taken to registration and examination. After the physical goods are examined and after the satisfaction is done the goods are allowed to be imported.

The privately managed container warehouse corporation manages most of the LCL shipments while FCL cargo is managed by the container corporation of India.

Examination  process

The container to the examined is brought to the examination  by the CONCOR cranes. The one time lock no should match with the no given in the documents and is opened in front of the custom inspector. The physical goods should tally with the details given in the documents. Also it is important that all the necessary certificates are available at the time of the examination. After examination a new lock is put on the container and the number is noted down. 

Bonding warehouse

The goods for which the duty is not paid immediately  are bonded to the warehouse by executing bond with customs. For exbonding a exbond bill of entry is filed for clearance of the bonded goods.   

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TRANSPORT

Transport will be playing vital role for the cargo industry, Thee are various clearing agents, forwarders who have regular movement of cargo from remote locations,

In Transport Three types of loads can operate.

FTL ( FULL TRUCK LOAD)

SUNDRIES ( SMALLS)

PART LOAD

1. Booking
2. Assign Vehicle for Booking
3. Placed time at loading point
4. Assigning LR for particular shipment
5. Vehicle Departure from Loading point
6. Update all Trip sheets / LR’s for particular C/nee.
7. Closing Trip Sheet at destination point.

FULL TRUCK LOAD 

If there is FTL booking then concern team need to get the details from consignor like destination,weight,volume(length & height). 

Then have to enquire the rate from the Lorry vendor or Lorry Brokers for the particular destination by informing those consignor given details.  Once will get the rate from them then they have add margin with minimum of 15-20% and inform to the consignee.

Once the cargo is confirmed then tranport division have to place the vehicle as per consignor’s requirement.  After loading the truck driver has to collect Invoice, Vat and relevant documents like wherever permits applicable or forms applicable.

SUNDRIES 

If transport division will get a call from consignor for booking sundries then they have to place company local vehicle for picking up the cargo from the consignor place and bring it to transporter or warehouse hub and to be unloaded.

Once for the particular route loads are gathered then they have to place Route Vehicle and load the cargoes and dispatch the same to the route.

PART LOADS:

Procedure as per sundries only.

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The Export Cargos can be dispatched through the following means :

1. Road,
2. Rail
3. Air
4. Sea
5. Post / Courier

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The Export Dept shall interact with shipping line/airline or their agents for the rates, space availability, sailing ( sea) schedule,route,ETD & ETA.  The options are given to the customer to decide on the appropriate liner.  Based on the confirmation from the customer.  The cargo is handed over to the liner or their agent after custom formalities & Cutting the B/L.

Basic Documents required for Export :

• Invoice
• Packing List
• IEC
• A.D Code Letter from Bank (Authoriszed dealer code)
• DEPB/DFRC Declaration. Where applicable
• SDF(Statuatory Declaration Form) – In case of EDI
• GR (Exchange Cointrol Declaration)
• Copy of Contract
• Shipping Instruction
• Permits – where applicable
• ARE-1 & 2 – where applicable
• GSP/GSTP forms – Need to be arranged if required before the shipment of the cargo.

Without Involvement of Foreign Exchange :

The following types of export do not involve foreign exchange repatriation.

• Free Gift
• Free Trade Samples
• Warranty Replacement and
• Un-accompanied baggage

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Goods which are exported out of India would on their re-import attract customs duty like any other import unless specifically exempted by a notification. However by issue of certain exempted Notifications and following certain conditions stipulated there in, the Re imports goods can be cleared as per the following procedures. The main criteria in case of Re imports is there should be no change in the identity of goods between the time of their export & Re import. Each item must be identified by Methods Appropriate to nature of the good as involved in it.

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The criteria for High Sea Sale is that as the name itself indicates the deal should have taken place between the Importer ( Seller) and the ultimate Buyer when the goods are on High seas. In other words the deal would have taken place when the goods have left the foreign port and not landed in Indian port (Air or Sea). This is between the dates of Airway Bill / Bill of Lading and the CAN date indicating arrival of Aircraft / vessel. That means High sea sale is not predetermined sale. The documents required is High Sea Sale Agreement on a judicial stamp paper & High Sea Sale Invoice between Importer ( Seller) and ultimate Buyer.

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Assessable value (for FOB) = Total Invoice value + Freight + Insurance + 1 % Handling (I.V+Freight + Insurance)

               

Assessable value (for CIF) = Total Invoice value only

Note: In Air, freight will be actual or 20% of Invoice value  

        Whichever is lesser.

If there is no insurance policy we have to take 1.125 %  of Invoice value according to Customs Law.

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The Guidelines for online filing for Imports in the customs EDI system will broadly contain the following data:

1.Importer , Exporter code (IEC)

2.CHA License Number

3.Port OG Shipment

4.Country of Origin

5.Country of Consignment ( Name of country from which the imported goods have been consigned)

6.IGM Number

7.IGM date

8.MAWB / MBL number & date

9.HAWB / HBL number & date

10.Marks & nos. are given on the package

11.No. of packages

12.Gross Weight

13.Type of Bill of Entry

14.Category of Import

15.Whether First check required

16.Whether Green Channel clearance required

17.Invoice details

18.Claim of assessment

19.Nature of Transaction

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The duty payable on the importable must be shown in bill of entry.  The computation of duty involves taking into consideration the various types

These may be listed as under:

1.Basic Customs Duty (BCD)

2.Additional duty of customs / CV Duty equivalent to excise under section 3 ( 3)

3. Cess on CV Duty ( 2+1%)

4.Higher education of secondary Higher education cess on total duty ( 2+1%)

5.Additional duty of customs (on value + total duty ) payable  under section 3 (5) of customs tariff act 4%

6.There are professional rates of duties chargeable under section 4 & 5 of the act.

7.National climatic Contingency of 1% on certain articles.

8.There are certain items which attract antidumping duty if he is imported from certain countries as specified rates.  

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