An eBRC (electronic Bank Realisation Certificate) is an extremely important digital certificate for those in the export business. It is issued by a bank as confirmation that the exporter has received payment from the buyer against the export of goods or services.
As an exporter, why do you need an eBRC? In this piece, we will not only answer this question but walk you through the eBRC process as well as your role in it. Read on to know:
<ul>
<li>What is eBRC?</li>
<li>Why do you need it?&nbsp;</li>
<li>How does it work?&nbsp;</li>
<li>How to check eBRC status</li>
<li>Roles and responsibilities of bank, exporter and DGFT&nbsp;</li>
</ul>
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<h3>What is the purpose of an eBRC?</h3>
In simple terms, an eBRC is proof of export. To fully understand it, though, one must first understand its purpose.
An exporter needs an eBRC to avail of the various<a href="https://www.cogoport.com/blogs/export-incentives-types-benefits-and-everything-else-you-need-to-know" target="_blank" rel="noopener"> export incentives</a> (duty exemptions, subsidies, low-cost loans, etc) offered by the government as part of its<a href="https://www.cogoport.com/blogs/foreign-trade-policy-2021-2026-expectations-for-the-import-export-sector" target="_blank" rel="noopener"> Foreign Trade Policy</a> (FTP). In India, the FTP and many of the export incentives it highlights are formulated and implemented by the Directorate General of Foreign Trade (DGFT). The DGFT also implements the eBRC platform, which allows banks to electronically upload to the DGFT server all foreign exchange realisation-related information related to exports. This information is transmitted through a digital certificate &ndash; the eBRC.
Before the DGFT introduced the eBRC platform in 2012, the process was entirely manual. The exporter had to visit their bank and request a Bank Realisation Certificate (BRC), which the bank provided in physical form. The exporter then submitted the BRC to the DGFT regional authority. The BRC details were entered manually in a DGFT application. This made the process of applying for export incentives lengthy and inconvenient. The eBRC did away with the need for a physical BRC as well as for the exporter to visit the bank or DGFT authority.
<h3>How does the eBRC process work?</h3>
Here&rsquo;s a flow chart of how the eBRC process works:&nbsp;&nbsp;
<ol>
<li>Thebank generates an e-BRC on realisation of export proceeds</li>
<li>Next, it creates a digital<a href="https://blog.hubspot.com/website/what-is-xml-file" target="_blank" rel="noopener"> XML file</a> containing information of the eBRC</li>
<li>The bank signs the XML file using a digital signer provided by the DGFT or developed by itself (the bank must register its signer with the DGFT beforehand)</li>
<li>Next, the bank uploads the XML file to the DGFT server. It does so by accessing the DGFT website, logging in to the e-BRC application and using the &ldquo;Upload eBRC&rdquo; option</li>
<li>Once the file is uploaded, the DGFT server verifies the user and validates the data. Thereafter, it sends an acknowledgement to the bank that the file has been successfully uploaded</li>
<li>Once the file has been uploaded, the exporter can immediately check the status of their eBRC on the DGFT portal&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li>
</ol>
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<h3>How exporters can check their eBRC status &amp; Print</h3>
<ol>
<li>On the DGFT website, go to the &ldquo;e-BRC Details for Trade&rdquo; page</li>
<li>Fill in the required fields, including IEC (Importer Exporter Code), IFSC code of the bank where payment for the exported goods has been received, and the shipping bill number and date</li>
<li>Click on &ldquo;Show Details&rdquo;. This will reveal all the eBRCs issued by the bank</li>
<li>Click on the relevant eBRC. You can also take a printout of the same</li>
</ol>
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<h2>eBRC Roles And Responsibilities</h2>
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<div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/60acdb63e18d4d493125282d_Roles%20%26%20Responsibilities.png" alt="eBRC - Roles &amp; responsibilities of the Bank, DGFT and the exporter" width="auto" height="auto" loading="lazy"></div>
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<h2>What to do in case of an error in your eBRC</h2>
Once an eBRC is successfully uploaded to the DGFT server, it cannot be amended. If you notice an error in your eBRC when checking its status, you must contact your bank to have it rectified. Here&rsquo;s how the process works:
<ul>
<li>The bank will check the status of the eBRC</li>
<li>It the status is not &ldquo;used&rdquo; or &ldquo;utilised&rdquo;, the bank will cancel the eBRC by uploading it to the DGFT server with status &ldquo;C&rdquo; (where C means cancelled)</li>
<li>After the DGFT server has updated the cancellation status, the bank will issue a fresh eBRC with a new eBRC number</li>
<li>It will upload the new eBRC file to the DGFT server with the status &ldquo;F&rdquo; (where F means fresh)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&zwj;</li>
</ul>
<h2>How to claim export incentives using eBRC</h2>
When an exporter claims export incentive under a DGFT scheme, the DGFT decides on the value on which incentive is to be provided by matching the<a href="https://www.cogoport.com/vi-VN/knowledge-center/resources/shipping-terms/free-on-board-fob-3" target="_blank" rel="noopener"> FOB (Free on Board)</a> value of the goods exported, as contained in the shipping bill, and the total realised value against export, as mentioned in the eBRC. Whichever of the two is lower forms the basis on which incentive is granted.&nbsp;&nbsp;&nbsp;&nbsp;
In India, the shipping bill (also called a bill of export) is generated electronically on Icegate, Indian Customs&rsquo; electronic data interchange (EDI) platform. It includes relevant details from the commercial invoice and packing list, two other documents critical to exports. The information contained in the shipping bill is automatically and electronically shared by Icegate with the DGFT, which it stores in a repository on its server. To claim an export incentive, an exporter must merely link the relevant shipping bill with the eBRC.
If the shipping bill has multiple products, the consolidated realisation value or FOB value, whichever is lower, is proportionately distributed among the various products based on a Multiplication Factor. Multiplication Factor M = FOB value actually realised in Rs as per eBRC / FOB value as per shipping bill.
As an exporter, there are two things to pay attention to when applying for an export incentive:&nbsp;
<ol>
<li>Make sure the eBRC value reported by the bank reflects the total realised value. If the eBRC value is less, have it corrected by the bank right away.</li>
<li>Enter the commission, insurance and freight values in the refund application as the eBRC does not include these details.</li>
</ol>
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<h2>eBRC and FIRC &ndash; GST refund requirements&nbsp;</h2>
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An eBRC is proof of export. So, an exporter of services claiming a GST refund &ndash; either of input tax credit (ITC) paid on inputs or on integrated GST (IGST) paid on the export of services &ndash; must attach the eBRC with the refund application to support their claim. This requirement applies only to the export of services and not of goods. This is because, in the export of goods, the shipping bill is itself considered a deemed application for GST refund. But in the export of services, no shipping bill is required. Hence, the need for an eBRC to serve as evidence that export of services has taken place.
In 2016, the DGFT signed a <a href="https://www.thehindubusinessline.com/economy/gst-network-signs-mou-with-dgft-for-sharing-of-foreign-exchange-realisation-data/article9280902.ece" target="_blank" rel="noopener">memorandum of understanding</a> (MoU) with the GST Network (GSTN) for the integration of eBRC with GSTN. This paved the way for the sharing of foreign exchange realisation and IEC data. The objective was to strengthen the processing of export transactions under GST, make the process more transparent and reduce human interference.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Apart from eBRC, a services exporter might also be required to submit a Foreign Inward Remittance Certificate (FIRC) with their GST refund application. An FIRC is similar to an eBRC in that it is a certificate issued by a bank against money received from a foreign country. However, while an eBRC is issued strictly against export proceeds, the inward remittance in an FIRC could be payment for exports or for ocean or air freight, wages for consultancy services provided, or anything else for that matter. An FIRC is first and foremost proof that an individual has received payment in foreign currency from a foreign country. However, in GST refund claims, an FIRC &ndash; like an eBRC &ndash; acts as proof of export.
<h2>Other uses of eBRC</h2>
Apart from helping exporters avail of export incentives under the Foreign Trade Policy and claim GST refunds on services exports, an eBRC is an important source of financial information and economic indicator. To this end, the DGFT has signed MoUs with 14 state government and two central government agencies for data-sharing. Before the introduction of GST in 2017, state governments also required eBRC for the refund of value-added tax or VAT (an indirect tax that was later subsumed by GST).&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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To know more about GST refunds in the export business, read our two-part series<a href="https://www.cogoport.com/blogs/gst-refunds-part-1-export-without-payment-of-igst" target="_blank" rel="noopener"> here</a> and<a href="https://www.cogoport.com/blogs/gst-refunds-part-2-exports-with-payment-of-igst" target="_blank" rel="noopener"> here</a>.

What is an eBRC & Why Do Exporters Need It

Each fortnight, at Cogoport, we put together news that has the most significant impact on the ocean and air freight industry, to help global importers and exporters plan their trade and international shipping more effectively.Get relevant updates on cargo volumes and booking availability, near-term forecasts of freight rates, and freight rate trends in our Ocean &amp; Air Freight Outlook 8 June, 2021 edition. ‍<a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 2.png" width="auto" style="width: auto; height: auto;"></a><h3>India </h3>Volume of output reduced significantly in India due to the spread of COVID 19. Space isn’t full, and there have been many cancelations recently due to the effect of the second wave. Even though the market is slow, freight rates have maintained their strength. We do not expect rates to come down any time soon. Furthermore, considering the existing scenario, we expect carriers to be hesitant to take booking from/ to India in the near term. They will instead prefer to swap equipment and use it on more profitable trade routes like EU and Pacific.On the Air cargo front, resuming International Flights Ex- India has not yet been cleared by the Aviation Ministry. Only limited cargo/freighter flights are working with limited space Ex- India. We recommend booking at least 3 weeks in advance. Land transport is operational but is subject to individual state laws.<h3>Middle East </h3>Space is overbooked till mid-June already. We expect the same trend to continue till end of June. In view of increasing COVID-19 cases in India recently, there has been some concern about severe equipment shortages in the near future. We will have to see how this plays out. We’re seeing a 25-48% decrease in capacity for the Middle East trade lane due to the abovementioned reasons. <h3>Red Sea </h3>Red Sea space is extremely overbooked till end of June. We expect the space will not improve till mid-July at the earliest. We also expect the rates to go up on a weekly basis, purely because of the supply-demand dynamic. Expect an increase of 15-20% in rates on this trade lane. <h3>S.E. Asia</h3>In view of the effect on COVID-19 on SE Asian countries, the market can best be defined as slack. A new breakout was reported in Vietnam recently, and the government there has now imposed new restrictions on economic activity. Consequently, volumes have dropped significantly, and vessel schedule has been extremely volatile due to port congestion. Most carriers are still offering reduced free time to improve equipment availability. For the Vietnam export market, the space and equipment are extremely tight till end of May. We recommend booking 3-4 weeks in advanced. Similarly, the Malaysian Government has implemented a “Movement Control Order” until 14 June. For the Malaysia import market, space is available now. For the Malaysia export market, space is overbooked until the end of June and there are severe equipment shortages. We recommend booking Malaysian exports at least 3 weeks in advance. Philippines is facing restrictions due to COVID-19 too. Delayed schedule of feeder vessels is causing port congestion. This is further accentuated by customs delays at Manila port. A major fire on the access road to Manila port didn’t help matters. The situation is similar in Indonesia, where the government has extended the emergency period till end of July. Ocean shipments are operational, but there are extremely severe equipment shortages. 40HC and 45’ containers are severely constricted too. <h3>China </h3>Trade is normal considering the current times we are living in. Air, ocean sailing are limited, and there were breakouts reported at the Shenzen port. Due to this, some carriers are swapping for nearby ports like Nansha. Similar congestion is also being seen at Yantian port. We expect this situation to continue till end of June, with equipment shortages persisting for a few more weeks. Air and Land shipments are running normally, but capacity is limited.

Ocean & Air Freight Outlook: 8 June, 2021

India's steel prices soar, impact on exports 

When it comes to feeding the global demand for manufactured goods, China is the leader of the pack. <a href="https://chinapower.csis.org/much-trade-transits-south-china-sea/" target="_blank" rel="noopener">Sixty percent of the country&rsquo;s trade in value</a> travels by sea. Transporting goods by sea - it goes without saying - is risky. Accidents, bad weather, and other circumstances beyond your control can lead to your valuable cargo being damaged or lost. The only protection against losing your goods to the perils of the sea is marine cargo insurance. Really, there is no good reason not to insure your cargo.
In this piece, we discuss the importance of cargo insurance for your China shipments, how much it costs, and where to buy it from.
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<h3>What is marine cargo insurance?</h3>
Marine cargo insurance covers the loss of or physical damage to goods while in transit by sea. Your cargo is covered against losses or damage (partial or total) caused by:
<ul>
<li>Natural disasters such as storms and earthquakes</li>
<li>Theft, hijacking, piracy, and violence</li>
</ul>
<ul>
<li>Vessel disasters such as sinking, stranding, and collision</li>
<li>Accidents during loading and unloading</li>
<li>Spillage from other containers</li>
<li>Marine cargo insurance also covers expenses such as forwarding charges, survey fees, and reconditioning fees &nbsp;</li>
</ul>
Note: Forwarding charges kick in when the journey is aborted and the cargo has to be forwarded to its intended destination. A survey fee is paid to a marine surveyor for inspection of the insured cargo. A reconditioning fee is paid to repair or recondition damaged cargo. &nbsp; &nbsp; &nbsp; &nbsp;
Marine cargo insurance doesn&rsquo;t cover losses or damage caused by:
<ul>
<li>Inappropriate packaging, negligence, misconduct, and delay</li>
<li>Inherent vice (damage to the goods due to their inherent nature, such as iron rusting and food spoiling)</li>
<li>Cargo abandonment</li>
<li>Rejection by customs</li>
</ul>
<ul>
<li>Failure to pay or bankruptcy of the cargo owner</li>
<li>Use of weapons</li>
<li>War, strikes, riots, and civil commotions</li>
</ul>
What are the top China ports driving global trade? Click<a href="https://www.cogoport.com/blogs/china-ports-driving-global-trade-and-growth" target="_blank" rel="noopener"> here</a> to find out
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<h3>Why buy cargo insurance for your China shipment</h3>
When shipping to and from China, these are the main reasons why your cargo is safer with insurance than without: &nbsp;
<ol start="1">
<li>High incidence of cargo loss: Recently, accidents involving shipments from China are on the rise. In the past year, there has been a worrying pattern of containers stacked precariously high on over-crowded ships falling into the sea. More than 3,000 containers were lost at sea in 2020 while the number for this year stands at over 1,000. This is the biggest jump in container losses in seven years. It&rsquo;s also millions of dollars worth of cargo damaged or lost forever. Bloomberg estimates more than<a href="https://www.supplychainbrain.com/articles/33002-shipping-containers-are-falling-overboard-at-a-rapid-rate" target="_blank" rel="noopener"> $150 million in losses for 2020</a> and<a href="https://www.supplychainbrain.com/articles/33002-shipping-containers-are-falling-overboard-at-a-rapid-rate" target="_blank" rel="noopener"> $54.5 million</a> for this year so far. Most of these incidents took place in the Pacific Ocean, one of the busiest shipping routes connecting suppliers in Asia with consumers in North America. A big chunk of the containers lost were on board ships sailing from China. Earlier this year, the<a href="https://theloadstar.com/maersk-essen-loses-750-boxes-into-the-pacific/" target="_blank" rel="noopener"> Maersk Essen</a> and Maersk Eindhoven were both en route from Xiamen to Los Angeles when they encountered bad weather. The Essen lost 750 containers in January and the Eindhoven 260 containers in February.</li>
</ol>
<ol start="2">
<li>Natural disaster zone: China has one of the<a href="https://www.swissre.com/dam/jcr:eb1aba5f-05ca-4bd4-bfe6-d42a6ed6b8c5/150Y_Markt_Broschuere_China_Inhalt.pdf" target="_blank" rel="noopener"> highest frequencies</a> of earthquakes, floods, and typhoons. According to CGTN, a cable TV news service run by China&rsquo;s state media, the country is currently exposed to<a href="https://news.cgtn.com/news/2021-05-18/China-to-launch-comprehensive-survey-on-natural-disasters-10mBdT1xX4Q/index.html" target="_blank" rel="noopener"> 22 types of natural disasters</a>, including ocean disasters such as thunderstorms, typhoons, cyclones, and storm surges. This is all the more reason to insure your China cargo as it makes the long journey by sea to your shores. In 2017, a<a href="https://shipsandports.com.ng/chinese-cargo-ship-sinks-12-crew-rescued/" target="_blank" rel="noopener"> freight ship sank</a> off the coast of Guangdong province when its cargo shifted due to high waves and strong winds caused by Typhoon Roke. In December 2020, a Chinese bulk carrier carrying 4,700 tonnes of cement sank in the South China Sea after encountering strong waves, which caused its cargo hold to flood. Both incidents resulted in significant cargo loss. Over just three days in July 2021, China has received its <a href="https://www.reuters.com/world/china/heavy-rainfall-kills-12-central-chinas-henan-provincial-capital-xinhua-2021-07-20/" target="_blank" rel="noopener">heaviest rainfall in a thousand years</a>, leading to unprecedented flooding in Henan, a major logistics hub, and endangering transportation operations as well as people and property. China watchers say the intensity and frequency of natural disasters will only increase with climate change. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</li>
</ol>
<ol start="3">
<li>Peak season risks: When shipping goods to and from China, traders must keep peak season in mind. This is the time cargo volumes entering and exiting China surge dramatically, leading to a jostle for space on carriers and a huge spike in cargo handling operations at ports and warehouses. As this is arguably the busiest time of the year for cargo handlers, accidents and oversights can happen, resulting in lost and damaged goods. With cargo insurance, you can remain calm through this chaotic period. Peak season comes every year and extends from August to November, in the run-up to the Christmas and New Year holidays. Peak season in 2020 was particularly busy. As the world slowly recovered from the first wave of Covid-19, cargo traffic from China to the US and Europe<a href="https://www.freightwaves.com/news/port-of-long-beach-again-breaks-container-record" target="_blank" rel="noopener"> broke all records</a> as businesses started restocking inventory, anticipating a rush of holiday shoppers. So strong was the demand for goods from Asia, particularly China, that the peak season spilled over into 2021. Apart from peak season, there are other dates and periods in the Chinese calendar that importers and exporters must pay attention to. The first is a mini peak season in January and February that comes ahead of the week-long Lunar New Year holidays in China. The second is Golden Week in October, when the Chinese celebrate National Day, again with a week-long break from work. Both periods are associated with a significant rise in cargo traffic from China and severe logistics headaches for everyone involved in the shipping industry. &nbsp; &nbsp;</li>
</ol>
<figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center">
<div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/60fe48e693b32e370fec76d0_container-2380546_640.jpg" alt="Containers stacked precariously high on carriers are a common sight in Asia, especially China" width="auto" height="auto" loading="lazy"></div>
<figcaption>Containers stacked precariously high on carriers are a common sight in Asia, especially China (Image by Erich Westendarp from Pixabay)</figcaption>
</figure>
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<h3>How much does marine cargo insurance cost?</h3>
Marine cargo insurance is generally affordable. According to Steve Fodor, Director of the US-based Association for Trade Compliance, cargo insurance costs less than half a percent of the shipment value. So, it makes little sense to cut back on it to save on shipping costs.
How do you calculate the insurance amount and premium? There&rsquo;s a simple formula used by insurance companies across the world, including in China. &nbsp;
First, you need to know the &lsquo;insured value&rsquo; of the consignment. Usually, insured value is CIF plus 10 percent, or 110 percent of CIF. The<a href="https://www.cogoport.com/blogs/incoterms-2020" target="_blank" rel="noopener"> CIF Incoterm</a> stands for Cost, Insurance, and Freight. The additional 10 percent covers incidental costs in case of cargo loss, such as the fee for processing the insurance claim. Therefore: &nbsp;
Insured value = CIF + 10%
The insured value is the maximum amount the insurance company is liable for in the event of cargo loss or damage covered under the insurance policy.
The premium you pay is a percentage of the insured value specified by the insurance company. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
To know about incidental charges related to buying marine cargo insurance, click<a href="https://www.cogoport.com/blogs/incidental-shipping-charges-part-ii-transport-insurance-related-extra-costs" target="_blank" rel="noopener"> here</a> &nbsp;
<h3>Where to get cargo insurance in China</h3>
<ul>
<li>From your freight forwarder: If you have a freight forwarder handling your China shipments, you can ask them to get your cargo insured as well. In fact, a diligent forwarder will always make sure your goods have adequate insurance cover while in transit. Most forwarders in China have ties with insurance firms, brokers, and agents. They offer a wide range of cargo insurance products, including &lsquo;All Risk&rsquo; policies that offer the most comprehensive risk cover. China has a booming cargo insurance market with its hub in <a href="https://www.swissre.com/dam/jcr:4e236d6d-8142-441a-b682-ba9f0a8580ae/chinese_ins_market_feb2018_en.pdf" target="_blank" rel="noopener">Shanghai</a>, which is also home to the<a href="https://www.seatrade-maritime.com/ports-logistics/shanghai-port-retains-crown-worlds-busiest-container-port-2020" target="_blank" rel="noopener"> world&rsquo;s busiest container port</a>. Thanks to generous state support, marine insurance policies issued in Shanghai are<a href="https://www.swissre.com/dam/jcr:4e236d6d-8142-441a-b682-ba9f0a8580ae/chinese_ins_market_feb2018_en.pdf" target="_blank" rel="noopener"> exempt</a> from many local taxes and surcharges. With the right freight forwarder working for you, you can avail of these cost-saving benefits while getting your cargo insured. Additionally, you can try out Cogoport&rsquo;s <a href="https://www.cogoport.com/" target="_blank" rel="noopener">end-to-end shipping services</a>, which will take care of everything from your freight and local transport to documentation, customs, insurance, and more.<a href="https://www.cogoport.com/signup" target="_blank" rel="noopener"> Sign up</a> and speak with our in-house experts to find out what&rsquo;s on offer. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</li>
</ul>
Read our guide to finding a freight forwarder in China<a href="https://www.cogoport.com/blogs/how-to-find-select-a-freight-forwarder-in-china-asian-countries" target="_blank" rel="noopener"> here</a> &nbsp;
<ul>
<li>From an insurance company: Shippers also have the option of buying an insurance policy for their cargo directly from an insurance firm. If you&rsquo;re buying cargo insurance in China, you can choose from well-known global insurers who have their offices in the country as well as established domestic companies. Ping An Insurance and the state-owned<a href="https://www.prnewswire.com/news-releases/peoples-insurance-company-of-china-picc-one-of-the-largest-insurers-globally-with-126-billion-total-assets-is-opting-to-embrace-blockchain-technology-with-the-help-of-dnv-gl-and-vechain-300705596.html" target="_blank" rel="noopener"> People&rsquo;s Insurance Company of China</a> are two of the most recognised home-grown insurers.</li>
<li>From the carrier: Like freight forwarders, major shipping lines offer marine cargo insurance in partnership with well-known international insurers. For example, Maersk has partnered with Zurich Insurance while Hapag-Lloyd has a tie-up with Chubb (for some countries). &nbsp; &nbsp; &nbsp;</li>
</ul>
<h3>Insurance certificate and its importance</h3>
Most trade experts say an insurance certificate is a must-have document when importing from China. The insurance certificate captures the main points of the marine cargo insurance policy in a single document. It acts as proof that a particular consignment is insured. It is issued by the insurer or insurance broker. In China (or anywhere else where it is required), the insurance certificate is an important document that must be presented during customs clearance. Because it allows for faster access to information regarding the shipment&rsquo;s insurance status, it hastens the customs clearance process. &nbsp;
In an insurance certificate, you&rsquo;ll find the following details:
<ul>
<li>Name of the policy holder</li>
<li>Policy number</li>
</ul>
<ul>
<li>Policy validity period</li>
<li>Policy limit, or the maximum amount of compensation allowed</li>
<li>Insurance premium amount</li>
<li>Details of the shipment, such as description of the goods, vessel name, ports of origin and destination &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</li>
</ul>
Click<a href="https://www.cogoport.com/blogs/best-practices-for-efficient-communication-with-your-chinese-supplier" target="_blank" rel="noopener"> here</a> to know how to effectively communicate with your Chinese supplier

Why Marine Cargo Insurance for China Shipments ?

One of the obvious challenges of trading with China or Chinese suppliers is overcoming the language barrier. Understanding the Chinese business and relational culture among other nuances can go a long way in improving communication and subsequently enabling the formation of strong relationships. Fortunately, there are multiple ways in which the communication can be made more efficient and fruitful for both parties. Read on to understand what they are. &nbsp;Check out our comprehensive <a href="https://www.cogoport.com/blogs/everything-you-need-to-know-about-importing-from-china-to-india" target="_blank">guide on importing from China to India</a> <h3>Make your initial contact fruitful with these tips </h3><ul><li>Restrict slang – Avoid the use of slang, idioms and flowery English to minimize communication difficulties. &nbsp;</li><li>Speak slower – For most Chinese suppliers, English will not be their first language. If you are speaking with them in English, talk slowly to help them understand you better. </li><li>Learn language basics – It can be a good move to learn the basics of their language, such as greetings and work-related words and phrases. It will show them your willingness to develop the business relationship. </li><li>Have one point of contact – Limiting the number of intermediaries can help in relationship building and to avoid confusion. It is also more effective as this one person will grow to inculcate the necessary requirements and understanding to strengthen and keep the relationship intact. &nbsp;</li></ul><ul><li>Use visual aids where possible – The use of visual aids can come to your use while working with Chinese suppliers. For instance, pictures of products can be much easier for the supplier to understand rather than a long paragraph of complicated words or jargon.</li></ul><figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 2.png" width="auto" style="width: auto; height: auto;"></a></figure><h3>Get clarity on your supplier’s language </h3>China is a country with many local dialects and languages. While Mandarin is the official language of China, Cantonese is spoken in many regions such as Shenzhen, Hong Kong and Guangzhou. Knowing which dialect is spoken in which part of the country and by your supplier can help you prepare yourself by learning important phrases and greetings, and hiring translators familiar with that language/dialect. &nbsp;<h3>Hire an interpreter </h3>Most Chinese suppliers don’t speak English at all. So, hire a translator or interpreter who also understands trading terminology. It would be ideal to find someone who has some understanding or experience working with people from your country. The knowledge of cultural aspects will also help them convey messages appropriately. &nbsp;Select someone who speaks and understands enough English or the language you need translation from. &nbsp;A skilled interpreter is important for the following reasons: <ul><li>To understand cultural interpretations – They should be able to appropriately translate from one language to another while keeping the context, sentiments, and cultural nuances intact. &nbsp;</li><li>To rightly interpret a ‘yes’ or ‘no – Culturally, it is rude to say ‘no’ in China, so a translator can help understand any hesitancy on your suppliers side, rightly communicate that to you, and help you maneuver around it. </li><li>To reduce doubts – You or your Chinese supplier might not be able to understand each other in one go, even if you know each other’s language a bit. An interpreter can double-check every statement and make sure there is no doubt on either side. This will help increase the trust between both parties. </li></ul><h3>Use technology to aid your communication </h3><ul><li>Google Translate – Use it to translate words you most frequently use and will need to use in order to get your communication right and establish a connection. It can also help you understand how a word should be pronounced. </li><li>Social Messaging Apps – WeChat, a popular social messaging app in China, is a great platform to instantly and regularly communicate with your Chinese suppliers. It has very helpful features such as a translator, as well as free voice and video calls. &nbsp;</li></ul><h3>Make a personal visit </h3><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-2.png" alt="" width="300px"> A well-planned visit can be worth the investment as it allows for stronger relationship building. This will: <ul><li>Improve your personal rapport with your supplier, and subsequently lead to smoother business </li></ul><ul><li>Help in developing a long-term relationship with the supplier </li></ul><h3>Ensure your emails are effective </h3>Here are some quick tips to optimize communication with your Chinese supplier via email: <ul><li>Less is more - It’s never a good idea to send a host of emails in a short period of time - something importers are often guilty of. It increases the possibility of jargon, slang and spelling errors. </li><li> Keep it simple - Keep sentences short and crisp. Use bulleted points and lists to help your supplier quickly identify important points and respond accordingly.</li></ul><h3>Call your Chinese supplier every now and then </h3>Direct phone calls are one of the fastest means of communicating and ensuring that your supplier understands your requirements, and remembers to respond to them. &nbsp;By reviewing important details on the phone, many misunderstandings can be avoided, making business communication across oceans simpler. The Chinese are also wary of losing face and hesitate to ask questions such as – “We can’t understand, please clarify” over email. Speaking to them over the phone will help you gauge from their tone and responses whether they are confused, so that you can provide clarity. <h3>Understand the Chinese culture </h3>It is important to understand Chinese culture when you are sourcing from Chinese suppliers. It will also come in handy when you visit the country for your business transactions. If you are planning to do a lot of business with China, here are some tips you can follow: &nbsp;<ul><li>Self-inform on local festivals – Whenever possible, attend their local events and festivals to understand their culture better. </li><li>Do a language course – If you can, take a short language course. </li><li>Graciously accept hospitality – Chinese are touchy about rudeness. Graciously accepting their hospitality and eating their food with a smile can do wonders for trade. </li><li>Avoid random remarks – Avoid making remark that are out of context, or a joke without thinking, as this can be considered rude and offensive in China. &nbsp;</li><li>Respect their hierarchy - The Chinese are known to follow a hierarchy system and are very courteous to those who are high in rank or elderly. So try and use more formal and graceful language when speaking to someone in a superior position. &nbsp;</li></ul>As mentioned before, trading with China is often believed to be challenging due to cultural and language barriers. However, it doesn’t have to be so. It is possible to improve upon your communication techniques by hiring an interpreter, using technology, trying to learn the language or some common phrases, and understanding the Chinese culture. Most importantly, keep things simple, no matter which mode of communication you choose. &nbsp;Also read <a href="https://www.cogoport.com/blogs/how-to-find-select-a-freight-forwarder-in-china-asian-countries" target="_blank">How to Find &amp; Select a Freight Forwarder in China &amp; Asian Countries</a>

Clear Communication with your Chinese Supplier

 Find a Freight Forwarder in Asian Countries  

The arrival of online markets like Amazon and Skyscanner for consumers and SAP Ariba and Alibaba for enterprises – have revolutionised our lives. Mobile applications and websites have extended our buying power exponentially and inspired new business models.&nbsp;&nbsp;<a href="https://api.whatsapp.com/message/N4CI7UNDFE2ZM1?autoload=1&amp;app_absent=0&amp;utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank"><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 1.png" width="auto" style="width: auto; height: auto;"></a>As yet, the logistics sector, the backbone of the economy globally, remains unorganised and, to a great extent, offline. The industry is huge – estimated by the&nbsp;<a href="https://www.worldbank.org/en/news/speech/2017/05/22/performance-and-prospects-of-global-logistics" target="_blank" style="background-color: transparent; color: rgb(74, 110, 224);">World Bank</a> to account for an average of 13% of GDP across the world – and the potential for digitisation is untapped.&nbsp;Moving logistics online would make the lives of importers, exporters, shipping lines, vehicle (such as trucks) owners and rail, and ultimately the world’s consumers easier and more efficient.&nbsp;However, digitalisation is about more than installing a faster computer or putting up a website.&nbsp;It means rethinking fundamentals about how your business works, the customers you can reach, and how they can find you.&nbsp;New technologies are turning up almost every day, and they make digitisation inevitable for every business. There will be many benefits, including:&nbsp;<ol><li>Digital technology puts data at the heart of the business, improving decision-making.&nbsp;</li><li>Sensors and Internet of Things (IoT) devices expand the sources of data and provide new business intelligence.</li><li>Data analysis shows companies how they can reduce operating costs, find efficiencies and identify unmet demand for new services.</li><li>Cross-border platforms put logistics companies in touch with a multitude of potential partners throughout the value chain. Their ecosystems expand.</li><li>Real-time information opens the door to shared capabilities such as transport and warehousing, which leads to increases asset utilisation.</li><li>Cloud computing gives even micro, small and medium-sized (MSME) companies access to unlimited computing power without capital expenditure.</li><li>Autonomous trucks and drones and robotics technology increase delivery capabilities and make shipping more efficient.&nbsp;&nbsp;</li></ol>Thinking about digitalisation is essential for businesses of every size; if you haven’t started, it’s time to begin. Cogoport’s marketplace sets out to provide simple steps anyone in the logistics chain can take to develop better ways of working by making planning, booking, managing and communications easier. We’re trying to deliver the benefits without much of the pain.

Digitalising Logistics - 7 Key Benefits

When exporters and importers send and receive large quantities of goods by sea, they might use a shipping mode called FCL or &ldquo;full container load&rdquo;. FCL is one of the most commonly used terms in ocean freight along with LCL, which is short for &ldquo;less than container load&rdquo;.
Our readers might have already familiarised themselves with LCL shipping in our previous <a href="https://www.cogoport.com/en-IN/blogs/complete-guide-to-lcl-shipping-everything-exporters-importers-need-to-know" target="_blank" rel="noopener">blog</a>. In this blog, we will tackle the intricacies of FCL shipping. Read on to find out:
<ul>
<li>What is FCL shipping?</li>
<li>Its benefits and drawbacks</li>
<li>Cost and factors influencing cost&nbsp;</li>
<li>When to pick FCL over LCL</li>
<li>Ways to stuff and deliver an FCL shipment&nbsp;</li>
<li>Truck transportation</li>
<li>Documents required</li>
<li>A final checklist</li>
<li>How to book and manage FCL shipments using Cogoport</li>
</ul>
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<h3>What is FCL Shipping?</h3>
In <a href="https://www.cogoport.com/en-IN/product/logistics/cross-border/ocean-fcl" target="_blank" rel="noopener">FCL shipping</a>, a shipper (exporter) hires an entire shipping container for his cargo. This does not mean he has to fill up the container space entirely. It is more accurate to say that he has exclusive rights to the container. However, it is usually seen that FCL shipments are large.
FCL shipping is different from LCL shipping, where multiple shippers share a container for their goods &ndash; which are usually smaller &ndash; and pay only for the volume they need.
<h3>Benefits of FCL</h3>
<ul>
<li>It is the fastest way to ship goods after air freight</li>
<li>It is cheaper than air freight</li>
<li>It <a href="https://www.cogoport.com/en-IN/blogs/complete-guide-to-lcl-shipping-everything-exporters-importers-need-to-know" target="_blank" rel="noopener">costs less than LCL</a> for shipments with volumes of 13 cubic meters and above&nbsp;</li>
<li>Cargo isusuallyloaded and unloadedjust once, which means a shorter transit time than LCL. [Note: There are exceptions to this rule though, as when cargo is rolled over (fails to get on the ship) or in the case of transshipments (container is transferred from one ship to another while in transit)]&nbsp;&nbsp;&nbsp;</li>
<li>The container stays sealed in transit, lowering risk of cargo damage</li>
<li>No risk of contamination from other cargo. Example: Cotton clothes might smell if kept in the same space as spices or chemicals. Shipping FCL ensures that doesn&rsquo;t happen&nbsp;&nbsp;</li>
<li>FCL is the best bet for shipping large, fragile (ceramics, chemicals) and expensive goods</li>
<li>FCL uses refrigerated containers (reefers) for cargo like fresh produce, ensuring temperature, humidity and ventilation control. Reefers are not commonly used in LCL</li>
</ul>
<h3>Drawbacks of FCL</h3>
<ul>
<li>Shipping large quantities means paying for more inventory space. In Mumbai,for instance, a 1,000-square-foot warehouse for your FCL cargo would cost you Rs 60,000 a month in rent while a 300-square-foot space at a monthly rent of Rs 20,000 would suffice for your LCL cargo (rents are approximate, meant for comparison)</li>
<li>Loading and delivering large shipments requires more equipment and manpower</li>
<li>Expensive choice for small shipments, though shippers choosing to send small quantities of fragile or valuable goods by FCL might put the benefits over the extra cost</li>
<li>Rates are more volatile than LCL</li>
<li>Reduced availability in peak season is a probability</li>
<li>Tight deadlines make collection of FCL shipments by importers complicated. Importers must watch out for factors such as demurrage and detention (discussed in detail in a later section). Last-mile delivery in LCL is comparatively simpler.</li>
</ul>
<h3>How Much Does FCL Cost?</h3>
In FCL shipping, you pay a flat rate for the container called a<a href="https://www.cogoport.com/en-IN/blogs/how-to-find-the-right-container" target="_blank" rel="noopener"> commodity box rate</a>. An FCL quote usually includes:
<ul>
<li>Pick-up charges from your warehouse</li>
<li>Terminal handling charges (storage, equipment) at port of origin</li>
<li>Ocean freight, which is the cost of the ship journey</li>
<li>Terminal handling charges at port of destination</li>
<li>Delivery charges for transporting the cargo by truck to the destination warehouse</li>
</ul>
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<h3>Factors that Influence FCL Rates</h3>
Availability: As with all businesses that operate on a demand-supply model, ocean freight rates rise and fall with the availability of containers and space on carriers.&nbsp;
Peak season price spike: Ocean freight demand peaks in India in February-March when the annual agricultural harvest is exported. This is called the peak season or high season. Internationally, the shipping peak season is from August to November ahead of the holiday shopping season (Thanksgiving, Christmas).&nbsp;
Holiday delays: Ocean freight demand and prices tend to go up ahead ofmajor holidays such as Chinese New Year, Golden Week (in China), Eid.
GRI (General Rate Increase): Carriers periodically take up container prices in response to demand and supply. This is called GRI. It can be announced at the beginning of the month or mid-month. A GRI usually happens once a year in a stable market but there have been instances of multiple GRIs in a year or none at all.
<h3>Surcharges and Additional Costs&nbsp;</h3>
Shippers need to watch out for multiple surcharges that might inflate their FCL bills:
1. BAF (Bunker Adjustment Factor): A fee levied by carriers to negate the impact of fuel price fluctuations on their operations. It might change monthly or quarterly and differs regionally. It is charged based on the number of <a href="https://www.cogoport.com/en-IN/blogs/how-to-find-the-right-container" target="_blank" rel="noopener">TEU</a> (Twenty-Foot Equivalent Unit, which is used to measure container capacity &ndash; a 20-foot container equals a TUE and a 40-foot container 2 TEU). The formula to calculate BAF is:
Fuel Price x Trade Route* = BAF
*Trade route is average fuel consumption on a given trade, dependent on variables such as transit time, fuel efficiency, trade imbalance and so on&nbsp;&nbsp;&nbsp;
2. CAF (Currency Adjustment Factor): A surcharge imposed by carriers to compensate for exchange rate fluctuation risks. It is also charged on the basis of TEUs.
3. Port congestion surcharge at ports with high traffic
4. Canal surcharge, which is applied while crossing a canal like the<a href="https://www.reuters.com/?edition-redirect=in" target="_blank" rel="noopener noreferrer"> Panama Canal</a>
5. War risk surcharge, which carriers might charge for the potential extra cost incurred on sailing in troubled waters (under threat of war, insurrection, piracy, etc)&nbsp;&nbsp;&nbsp;&nbsp;
6. EIS (Equipment Imbalance Surcharge), which is levied on a container that returns empty. This happens at certain ports that have export traffic but little import traffic
7. Port charges for the entry and exit of goods
8. Documentation expenses charged by carriers for issuing a<a href="https://www.cogoport.com/blogs/types-and-usage-of-bill-of-lading-meaning" target="_blank" rel="noopener noreferrer"> bill of lading</a>, for example
9. Customs duties and taxes
<h3>Demurrage and Detention</h3>
When it comes to additional expenses, demurrage and detention are words that often leave first-time FCL shippers grimacing over an unexpected bill. What do they mean?
<ul>
<li>Demurrage is what the shipper pays the carrier for use of a container within a port beyond an allotted free time. This free time is known as demurrage free time. For an exporter, this means the container can be freely kept at the port terminal before loading on the vessel only till the allotted demurrage free time. Beyond the free time, a per-day demurrage is charged. For an importer, this means the container has to be collected from the port terminal before the demurrage free runs out, else a per-day demurrage fee will be charged.</li>
<li>Detention is similar to demurrage but charged for use of a container outside a port. An exporter incurs a detention fee when he picks up an empty container for packing and doesn&rsquo;t have it back at the port within the free time. Similarly, an importer who doesn&rsquo;t return an empty container to the port on time pays the fee.&nbsp;</li>
</ul>
Demurrage and detention charges as well as free time vary as per carrier and country. In some cases, shippers may request the shipping line for special free time before booking.
To avoid these charges, shippers must ensure their cargo is ready well in time, plan their loading and unloading operations meticulously, and demand demurrage and detention information in their FCL quotes.
<h3>When FCL is Better than LCL</h3>
The general rule is to transport large, heavy shipments by FCL and smaller ones by LCL. But consider these points as well:
<ul>
<li>By industry estimates, consignments with a volume of 13 cubic meters or more or comprising 12 pallets or more are better shipped by FCL. Since you pay a flat rate for an FCL container, it makes sense to fully utilise its space and weight capacities&nbsp;</li>
<li>FCL is ideal for cargo with tight delivery schedules because of its shorter transit time. An FCL shipment is usually delivered between three and six weeks, depending on the route</li>
<li>FCL is a better option for cargo that is expensive, fragile and sensitive to changes (in temperature, for example) because there is little risk of contamination from other cargo. It also offers more cargo security because there is less handling</li>
</ul>
<h3>Ways to Stuff and Deliver an FCL Container</h3>
<ul>
<li>CFS Stuffing: A popular choice among Indian shippers, cargo is transported to a container freight station (CFS) near the port and stuffed into empty containers. Stuffing is preceded by the customs house agent finalising customs examination and clearance of the cargo.&nbsp;&nbsp;&nbsp;</li>
<li>Live Load: The shipper has a trucking company drop off an empty container at his warehouse, where he loads and seals it while the driver waits to drive it back to a container yard. Live loads are free if completed within a stipulated time &ndash; usually a couple of hours &ndash; after which an hourly surcharge kicks in.</li>
<li>Drop and Pack: An empty container is dropped off at the shipper&rsquo;s premises for a few days, after which the driver returns to take it back to the container yard. It costs more than live loading.</li>
<li>Similarly, when the container reaches the destination warehouse, it can be live unloaded while the driver waits on site or the driver can drop off the containerfor a couple of days and return for it thereafter.</li>
<li>For FCL shipments, you can choose between door-to-door, door-to-port, port-to-door and port-to-port services.</li>
</ul>
Cogoport offers door-to-door services for imports into India, door-to-port services for exports out of India and Europe, and port-to-door services for imports in Europe.
<h3>Truck Transportation for FCL</h3>
<ul>
<li>FTL (full truckload): FTL means the cargo is loaded directly on trucks that carry it to the warehouse or container freight station where stuffing would take place. Freight is charged on the basis of distance. FTL is the fastest and safest way to move your FCL shipment on land.</li>
<li>Trailer pick-up service: FCL shippers use this service to pick up the empty containers to be dropped off at their premises for stuffing and then to take the stuffed containers back to port.</li>
</ul>
<h3>Documents Required for FCL Shipments</h3>
There&rsquo;s plenty of paperwork involved in the shipping process and FCL shipping is no different. The bill of lading, commercial invoice cum packing list, bill of export (shipping bill) and bill of entry are all mandatory documents. But there are additional papers you might need to submit based on your cargo type and place of export/import. To know all about your documentation requirements, read:
<ul>
<li><a href="https://www.cogoport.com/en-IN/blogs/mandatory-documents-for-import-export" target="_blank" rel="noopener">3 Mandatory Documents Exporters and Importers Need for Hassle-free Shipping</a></li>
<li><a href="https://www.cogoport.com/en-IN/blogs/mandatory-documents-for-import-export" target="_blank" rel="noopener">Supporting Documents in Shipping: What Exporters and Importers Might Need for Customs Clearance</a></li>
</ul>
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<h3>Final FCL Checklist</h3>
You&rsquo;re now ready to book your full container. But before that, a few last tips:
<ul>
<li>Book in advance to get the best rates&nbsp;</li>
<li>Weigh your cargo accurately so you know what container, equipment you need both for sea and inland transport</li>
<li>Factor in the chance of your cargo gettingrolled over. This can happen due to the negligence of the carrier (overbooking, skipping ports) or shipper (paperwork, non-compliance issues). You can&rsquo;t control the former but can avoid errors on your part by booking in advance, skipping peak season when possible, working with trusted freight forwarders, avoiding transshipments and, most importantly, handing over your cargo on time. A rollover could lead to additional expense.</li>
<li>Pack your cargo securely. Think of all the jostling it will endure in transit. Understand the correct way of stuffing your commodity in the container.&nbsp;</li>
</ul>
<h3>Try Cogoport&rsquo;s FCL Services</h3>
Cogoport offers door-to-door FCL shipments on a user-friendly interface. Click<a href="https://www.cogoport.com/en-IN/product/logistics/cross-border/ocean-fcl" target="_blank" rel="noopener"> here</a> for:
<ul>
<li>Instant FCL freight rates and quotes</li>
<li>FCL container bookings within minutes</li>
<li>Verified and trusted freight forwarders</li>
<li>Round-the-clock dedicated support</li>
<li><a href="https://www.cogoport.com/container-tracking-shipping" target="_blank" rel="noopener noreferrer">All-in-one dashboard</a> to track all your shipments</li>
</ul>

FCL Shipping: Streamlining Large-Scale Shipments for Businesses

Discover the benefits of air freight and streamline your supply chain. Learn about custom clearance documents and optimize logistics

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