Export & International Shipping in India: Step-by-Step Guide

Did you know that over 80% of international trade by volume, or 11 billion tonnes, is done by sea? In terms of value, maritime trade accounts for goods worth $4.5 trillion annually, according to industry estimates. It is, therefore, only right to say that shipping is the backbone of international trade, as it connects countries, markets, businesses, products and people across the globe. It also allows for timely and efficient transportation of goods on a scale that might not otherwise be possible.

This blog serves as a detailed guide to the process of exporting goods by sea. Moving goods internationally is usually done by sea or by air. When shipping by sea, exporters can pick one of two shipping modes – Full Container Load (FCL) or Less than Container Load (LCL). When the consignment takes up an entire shipping container, it is called FCL shipping. This mode is suitable for large consignments that need to be transported in the shortest possible time by sea. Exporters with smaller consignments can share a container with other exporters and pay only for the volume they occupy. This is called LCL shipping and it is suitable for cargo of low or moderate volume that is not time-sensitive. Alternatively, exporters looking for the fastest mode of transportation may ship by air. Air freight is particularly suitable for time-critical and valuable cargo, though it is more expensive than shipping by sea.

Check out Cogoport’s FCL shipping guide here, LCL shipping guide here, and air freight guide here.

Read on to know about:

• The main players in the export shipping process and their roles 
• A step-by-step guide to how the export process works

Main players in the shipping process

1. Importer: The importer is the buyer. He identifies the need for a product at a specific location, searches for the best supplier globally, and places an order for purchase. There are three types of importers:

• Actual user, who utilises the imported goods for himself. An actual user can be industrial (uses the goods for manufacturing in his own industrial unit) or non-industrial (utilises the goods for his own use in a commercial unit, lab, research institute, university, hospital, etc)
• Established importer, who, as the name suggests, is granted a quota to import a product on the basis of past imports 
• Registered exporter, who imports under the government’s export promotion schemes 

2. Exporter: The exporter is the seller. He manufactures or procures the product required by the buyer. The various types of exporters are:

• Merchant exporter, who procures the product from the market or manufacturer and exports it in his name
• Manufacturer exporter, who procures raw material, manufactures the goods and exports the finished product  
• Service exporter, who exports services (software, consultancy services, etc)
• Third-party exporter, who exports goods and services on behalf of another exporter (manufacturer exporter)  
• Project exporter, who provides goods and services on contract (designing, manufacturing, etc) and earns foreign exchange  
• Deemed exporter, who supplies goods that don’t leave the country and receives payment in Indian currency. Such a transaction qualifies as an export because the goods are meant for specific projects (UN agency projects, power projects, nuclear projects, etc)       

3. Bank: Banks play multiple roles in international trade. They act as financiers, providing loans and trade finance products such as Letters of Credit and Documentary Collections. A Letter of Credit is a promise by a bank on behalf of the importer to pay the exporter an agreed-upon sum. A Documentary Collection is when a bank takes charge of collecting the payment due to an exporter from the importer’s bank. In addition, banks negotiate trade contracts and are custodians of goods and documents. Documents are vital to the import-export business. To know about the key documents required for a hassle-free shipping experience, read our other blog here.       

4. Insurance Company: Shipping goods comes with risks, including but not limited to lost or damaged cargo, delays and additional costs due to factors such as natural disasters, human error, theft, piracy and more. Insurance companies help cover these risks.

5. Freight Forwarder: Freight is the cargo carried by ships and a freight forwarder is an agent who, on behalf of the importer or exporter, coordinates with all the other players (port and customs authorities, shipping company, etc) in the ocean freight business. His responsibilities include negotiating for better routes and rates, handling paperwork and other formalities, organising land transportation, being an advisor to the importer/exporter, and much more.    

6. Shipping Company: The company that owns the carrier (ship) that transports the goods from the port of loading to the port of destination.

7. Customs House Agent (CHA): A customs house agent assists exporters and importers in getting clearance for the cargo from customs authorities.

8. Customs Authorities: In international trade, the customs authorities of at least two countries – the country of export and country of import – are involved. They provide clearance for goods to leave the country of export and to enter the country of import.

9. Port Authorities: Like customs authorities, the port authorities of at least two countries are involved in the shipping process. In the exporting country, they provide clearance for goods to be loaded on to the ship. In the importing country, they provide clearance for goods to enter that country. 

10. Intermodal Transport Providers: Rail and road transport providers facilitate the movement of goods from the factory/warehouse to the port of loading and from the port of destination to the final destination.

From Exporter to Importer: How the Shipping Process works

Contrary to popular belief, the international shipping process does not start when a product is loaded onto a ship. It starts much earlier, when an importer identifies the need for that product and floats an enquiry to procure it. As such, the shipping process covers the flow of goods and documents from the place of origin to the place of destination. For the process to be completed successfully, the transfer of goods and documents from one party to another must be highly synchronised.

This infographic is a step-by-step guide to the international shipping process (for a shipment exported from India):

Hurdles in the shipping process   

The shipping process can be troublesome and intimidating for importers and exporters, given the number of steps, players and documents involved. These are some of the most common problems they can face:

• Filing incorrect, incomplete information in the required documents
• Lack of knowledge of exchange rates, packaging and marking rules, restrictions on certain products, etc
• Failure to verify the reputation of a supplier (exporter) or customer (importer)
• Lack of clarity on payments and how to secure them
• Failure to establish good ties with customs authorities
• Failure to find the right intermediaries (freight forwarders, customs house agents) who can ensure a smooth transaction
• Blind dependence on middlemen/intermediaries   

Cogoport for smooth shipping

Online services have eased the shipping process to a great extent. We at Cogoport strive to make it even smoother and simpler. To do so, we have created an integrated supply chain platform that brings together some of the main participants in the international trade ecosystem – all under one roof. We urge you to register on Cogoport to build your own international shipping dashboard. This comes with instant access to transparent ocean freight rates, customs agents and trucking services, and cargo tracking from pick-up to delivery.