The success of an export transaction depends largely upon how smoothly things work out at the gateway ports. The process involved in clearing goods through customs as well as the logistics of getting them shipped are quite complex and require synchronisation between all entities – paper works, shipping lines, port terminals and custom authorities.Any miss-communication or missing documentation could lead to exorbitant demurrage charges and delay at the terminal.
Key Takeaways from this Insight
- Incoterms – Clearly specify whether your cargo will be shipped on the basis of FOB, CFR or CIF as such helps distributing risk and cost.
- Custom House Agents (CHA) – It’s very important to have an agent who can clear your shipping bills and handle all required documents. He should be certified by authorities for that.
- ICEGATE & Shipping Bills – All the customs declaration is done via electronic mode on the Indian Customs’ ICEGATE website.
- Container Stuffing: Understand the distinctions between FCL (Full Container Load) vs LCL (Less than Container Load).
Understanding Key Export Logistics Terminology
-1) Bill of Lading (B/L):- Most Critical Legal Document Issued By Carrier/Shipping Line Acknowledging Their Receipt Of Cargo. Acts As A Document Of Title To The Goods.
2) Shipping Bill:- Document Filed By TheExporter Through Cha To Get Permission From Customs For Exports (“Let Export Order”).
3) Customs Demurrage:- Penalty Fees Charged By Shipping Line Or Port Terminal If Containers Are Kept Inside The Port Beyond Free Days Allowed.
Standard Documentation Checklist for Customs Clearance
To get a smooth Customs Clearance at Indian ports Exporter needs these documents:. Commercial Invoice (Detailing HSN Code Price Description)
Packing List ( Detailing Weight Container Specs Dimensions Packages )
Bill Of Lading/Airway BillCertificate of Origin( issued from chamber of commerce/Authorized Body)
Phytosanitary Certificate ( Mandatory For Agricultural Products/Fruits/Vegetables)Marine Insurance Certificate (Essential For CIF Shipment)
Fumigation Certificate( often required For Wooden Pallets And Agricultural Goods )
The Customs Clearance Workflow at the Port
Container is either loaded by exporter’s factory OR stuffed @ CFS. CHA Files the shipping bill online. Then customs Officials come & assess the Valuation,Hsn Codes verifies Certificates. In case any Physical examination is needed(customers may require that), They will check on actual goods(batch no etc..) once they are satisfied,Custom Officer gives Let Export order(LEO) Then finally your container is shifted to the terminal & loaded onboard the vessel.
Frequently Asked Questions
Q. What is the difference between FOB and CIF?
FOB means that the responsibility for getting your products on board ship safely falls upon you – the seller – once they reach the point of origin. In other words, the seller will be solely responsible for ensuring the safety of the shipment at its place of origin. This includes loading your goods onto the vessel. However, under this shipping term, you would pay the costs of ocean freight and insurance.CIF means that the exporter pays for ocean freight as well as marine insurance required for transporting goods from the point of origin to the destination port.
Q. How long does customs clearance usually take in India?
Once you have everything documented properly then customs clearance of the container will take anywhere between 24-48hours once your containers arrive at the Custom Freight Station (CFS) in the major ports of India such as JNPT(Mumbai), Mundra etc.