<p>If you are an importer or exporter, you might have come across the acronym LCL while looking to ship goods in small quantities. LCL stands for &ldquo;less than container load&rdquo;. It is different from another widely used term in international logistics &ndash; FCL, which is short for &ldquo;full container load&rdquo; and is meant for large shipments.</p>
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<p>As you might already know, LCL is recommended as a safe way to ship cargo in moderate volumes while keeping costs low. While this is mostly true, it is important to understand the LCL shipping process in its entirety. This blog serves as a complete guide to LCL shipping. It will touch on the following elements:</p>
<ul>
<li>What is<a href="https://www.cogoport.com/en-IN/product/logistics/cross-border/ocean-lcl" target="_blank" rel="noopener"> LCL shipping</a>?</li>
<li>Its benefits and drawbacks</li>
<li>How much it costs</li>
<li>Step-By-Step Guide: How An LCL Shipment Works</li>
<li>When to ship LCL &ndash; with comparisons to air freight and FCL</li>
<li>How to pack an LCL shipment</li>
<li>Other transportation needs for LCL cargo&nbsp;&nbsp;</li>
<li>How to track an LCL shipment</li>
<li>Things to keep in mind</li>
</ul>
<h3><strong>What is LCL Shipping?</strong></h3>
<p>If your cargo does not fill an entire <a href="https://www.cogoport.com/blogs/how-to-find-the-right-container" target="_blank" rel="noopener noreferrer">20-foot or 40-foot container</a>, you can ship it in a shared container with other shipments. This is what &ldquo;less than container load&rdquo; means. It is also called groupage because it is grouped with other cargo. LCL shipping is, therefore, meant for cargo of low or moderate volume.</p>
<h3><strong>Benefits of LCL</strong></h3>
<ul>
<li>It is cost-effective. In FCL, you pay a flat rate for the container called<a href="https://www.cogoport.com/blogs/how-to-find-the-right-container" target="_blank" rel="noopener noreferrer"> commodity box rate</a>. But in LCL, you only pay for the volume you need. It also works out cheaper than air freight</li>
<li>Shipping smaller volumes frequently can help you save on inventory space. LCL is, thus, the preferred shipping mode for small businesses&nbsp;</li>
<li>During peak season, LCL is more readily available than FCL</li>
</ul>
<h3><strong>Drawbacks of LCL</strong></h3>
<ul>
<li>LCL might not be cheap for large volumes of cargo because it charges a higher cost per cubic meter (CBM) than FCL, usually two to three time more. Why? Because there is a lot of work involved in LCL shipping &ndash; the freight forwarder makes multiple LCL bookings, then books an FCL container and fills it with the LCL shipments (a process called consolidation).</li>
<li>Sometimes, LCL shipments stop at multiple ports, go through several rounds of loading and unloading. In such cases, transit time could be longer and even result in delays. Frequent handling of merchandise increases their chances of being damaged or lost.</li>
</ul>
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<h3><strong>How Much Does it Cost?</strong></h3>
<p>For LCL shipments, freight is usually charged on the basis of volume (CBM). Weight becomes a factor only when the cargo weighs more than one ton. Then, freight is charged on the basis of CBM or weight, whichever is higher.</p>
<p><strong>Note: </strong>To find out how to calculate freight volume, read our blog<a href="https://www.cogoport.com/blogs/how-to-find-the-right-container" target="_blank" rel="noopener noreferrer"> here</a>.</p>
<p>Exporters and importers must note that the shipping process covers not just the sea voyage but a longer journey. So, when a freight forwarder makes an LCL quote, it usually covers the cost of:</p>
<ul>
<li>Picking up the cargo from the shipper&rsquo;s warehouse</li>
<li>Loading it into the container with other shipments. This is called container stuffing</li>
<li>The ship journey&nbsp;</li>
<li>Destuffing and deconsolidation in the destination country&nbsp;&nbsp;</li>
<li>Transporting the cargo by truck to the destination warehouse</li>
</ul>
<p><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/60224254c078cc5918ea29d4_080221_Cogoport_Infographic_LCL%20Shipment_1.jpg" alt="60224254c078cc5918ea29d4_080221_Cogoport_Infographic_LCL%20Shipment_1.jpg"></p>
<h3><strong>Step-By-Step Guide: How An LCL Shipment Works&nbsp;</strong></h3>
<ol>
<li>Shipper chooses a service provider&nbsp;</li>
<li>Shares complete shipment details (origin, destination, cargo dimensions/weight, etc) with the service provider</li>
<li>Cargo leaves shipper&rsquo;s factory, reaches service provider&rsquo;s warehouse or CFS/ICD</li>
<li>Service provider processes shipment details, figures out what other LCL packages shipment can be consolidated with&nbsp;</li>
<li>Cargo is grouped with other LCL packages and stuffed into a container, which is then loaded on the ship&nbsp;</li>
<li>Ship arrives at destination; container is unloaded and moved to warehouse for deconsolidation</li>
<li>Once shipment is ungrouped, service provider has it delivered at customer&rsquo;s doorstep</li>
</ol>
<h3><strong>When Should You Ship LCL?</strong></h3>
<p>The general rule is to use LCL to ship low or moderate-volume cargo to keep costs low. But before taking a decision, consider these factors while also examining how LCL compares to air freight and FCL:&nbsp;&nbsp;</p>
<h3><strong>1. LCL versus air freight</strong></h3>
<p>Both are <strong>suitable for small shipments</strong> but which one is better for you? The decision hinges on the size, weight, contents and urgency of your cargo:</p>
<ul>
<li><strong>Air freight is more expensive</strong>, its <strong>prices more volatile</strong>. When cargo size and weight increase, air freight rates go up comparatively faster than LCL rates. If you are on a tight budget, you might be better off shipping LCL, especially for heavy cargo.&nbsp;&nbsp;</li>
<li><strong>Air freight is faster and safer</strong>. A shipment that takes <strong>a month by sea</strong> can be delivered <strong>within days by air</strong>. Air freight is better for <strong>time-sensitive or valuable cargo</strong>.</li>
<li>However, ships are getting faster. Some offer <strong>Expedited LCL</strong>, with a <strong>guaranteed delivery period</strong> that almost matches air delivery time while remaining <strong>cheaper than air freight</strong>. Expedited LCL is popular with those working in e-commerce, fashion, energy and manufacturing.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li>
<li>Compared to ships, <strong>airlines have more restrictions on goods</strong>, especially <strong>hazardous material</strong>. For such merchandise, LCL might be a better bet.</li>
</ul>
<h3><strong>2. LCL Versus FCL</strong></h3>
<p>While LCL seems to be the natural choice for shipments that don&rsquo;t fill up a container, it sometimes makes more sense to book FCL when your cargo reaches a certain volume. Consider these factors:</p>
<ul>
<li>With LCL charging a higher rate per CBM, industry insiders recommend <strong>LCL for shipments up to 13 cubic meters</strong> and FCL for anything above. So, if your cargo volume is 15 cubic meters, an <strong>LCL booking</strong> might <strong>cost the same or more</strong> than an <strong>FCL booking</strong>. Also, an LCL shipment might invite <strong>additional destination charges</strong>. In such a scenario, it is better to pay for a full container and enjoy its benefits.&nbsp;</li>
<li>That said, <strong>LCL rates are more stable</strong>. They stay <strong>valid for a month to three months</strong> while FCL rates are generally <strong>valid for two weeks </strong>at a time.&nbsp;&nbsp;</li>
<li>Cargo content must be factored in. FCL cuts <strong>risk of contamination</strong> from other cargo, so it is better for temperature-sensitive and hazardous merchandise. But LCL shipments are said to be more <strong>securely packed</strong>, reducing <strong>risk of damage</strong> from movement</li>
<li>Time is also a factor. <strong>FCL is suited for urgent deliveries</strong> and <strong>LCL for shipments with flexible delivery dates</strong></li>
</ul>
<p><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-3.png" alt="" width="300px"></p>
<h3><strong>How to Pack a LCL Shipment?</strong></h3>
<p>Improper packaging is said to be the single biggest cause of damage to LCL shipments. Here&rsquo;s what you can do to secure your cargo:</p>
<ol>
<li>Pack your cargo in boxes designed for exporting goods, not in any old bag or box. When the boxes are stacked in a container, it is called <strong>loose LCL</strong>. For greater security and easier handling, place the cargo on pallets, secure with straps and wraps, and load the pallets in the container. This is called <strong>palletised LCL</strong>. A pallet is a flat structure, usually made of wood and sometimes of steel and plastic. They come in standard sizes, the most common being 48 inches x 40 inches.</li>
<li>Label each piece of cargo with details including booking number, destination country, shipper (exporter) and consignee (importer) names. Number each piece of cargo. Include a fragile tag if needed. All labels must be correct and visible.&nbsp;</li>
<li>Make sure your cargo pieces are uniformly and evenly packed&nbsp;</li>
<li>If your cargo is fragile (flat-screen TVs) and should not be stacked, mention this up-front to your freight forwarder</li>
</ol>
<h3><strong>Truck Transportation for Your LCL Shipment</strong></h3>
<p>Apart from ships, there are other modes of transportation &ndash; <a href="https://www.cogoport.com/en-IN/knowledge-center/resources/shipping-terms/intermodal-freight-transport-8" target="_blank" rel="noopener">rail, road and barge</a> &ndash; involved in the shipping process. Trucks are particularly important to this logistics chain. And it is important to choose the right truck transportation for your LCL cargo. There are two options:</p>
<ul>
<li><strong>FTL (full truckload): </strong>This means a truck carries one shipment that meets its space or weight limits</li>
<li><strong>LTL (less than truckload): </strong>Here, a truck carries more than one shipment that is of a smaller volume than an FTL shipment</li>
</ul>
<p><strong>FTL pros and cons</strong>: Shorter delivery time, less cargo handling, lower risk of cargo loss or damage. But it is the more expensive option. Freight is charged on the basis of distance. <strong>Suitable for:</strong> Time-sensitive or valuable cargo.&nbsp;</p>
<p><strong>LTL pros and cons</strong>: Cheaper, because you pay only for the section of the truck your cargo occupies. Freight is charged on the basis of weight. But because of multiple shipments, there is more than one pick-up and drop-off, hence longer transit time and more cargo handling. More size and weight restrictions compared to FTL. <strong>Suitable for:</strong> Small businesses sending moderate volumes of goods, cargo with flexible timelines. By most estimates, good for individual <a href="https://www.investopedia.com/terms/l/lessthantruckload.asp#:~:text=Generally%2C%20though%2C%20LTL%20refers%20to,no%20more%20than%20six%20pallets." target="_blank" rel="noopener noreferrer">shipments weighing up to 6,800 kg</a> (15,000 pounds).</p>
<h3><strong>How to Track an LCL Shipment</strong></h3>
<p>It&rsquo;s important to know the whereabouts of your cargo while it is in transit. Yet, tracking an LCL shipment can be challenging. For FCL shipments, most carriers provide a tracking facility on their platform, which their customers can use to check their shipment status in real time. However, very few service providers offer the same facility for LCL shipments. And even if they do, the information and updates provided on such a platform might not always be complete. So, before booking your LCL shipment, you might want to check if your chosen service provider provides real time information during the entire delivery process.</p>
<h3><strong>The Final LCL Checklist</strong></h3>
<ul>
<li>Before making your LCL booking, get quotes from multiple freight forwarders. This will give you an idea of the market price and help you figure out if a quoted price is too low, which might mean there are additional charges involved</li>
<li>Look out for extra costs, including destination charges for port service, terminal handling and security, import processing, documentation and so on</li>
<li>While calculating freight volume, remember to take pallets (if used) into consideration. Pallets take up space, for which you will be charged. Excluding pallet dimensions will lead to under-reporting freight volume and might mess up your budget</li>
<li>To avoid unexpected expenses, experts recommend booking door-to-door or port-to-door services.</li>
</ul>
<h3><strong>Try Cogoport&rsquo;s New LCL Services</strong></h3>
<p>At Cogoport, we strive to put all your shipping needs on one platform. Whether you are a newly minted exporter/importer exploring LCL shipping or a veteran of the trade, you can register with us <a href="https://cogoport.com/signup" target="_blank" rel="noopener">here</a> to avail of a range of services, including:</p>
<ul>
<li><a href="https://www.cogoport.com/en-IN/product/logistics/cross-border/ocean-lcl" target="_blank" rel="noopener">Instant LCL freight rates and quotes</a> from trusted freight forwarders and consolidators</li>
<li>BestLCL shipping options and <a href="https://www.cogoport.com/en-IN/product/logistics/cross-border/ocean-lcl" target="_blank" rel="noopener">instant container bookings</a></li>
<li>Calculate costs with our <a href="https://www.cogoport.com/en-IN/product/logistics/cross-border/ocean-lcl" target="_blank" rel="noopener">CBM calculator</a></li>
<li><a href="https://www.cogoport.com/en-IN/product/logistics/cross-border/managed-supply-chain" target="_blank" rel="noopener">Customs, other clearance services</a> by experienced customs house agents</li>
<li>Booked your freight elsewhere? No problem. You can track all your shipments and have full control over them on our all-in-one <a href="https://www.cogoport.com/container-tracking-shipping" target="_blank" rel="noopener noreferrer">dashboard</a></li>
</ul>

Simplify your less-than-container-load (LCL) shipments with Cogoport's flexible and cost-effective logistics solutions.

LCL Shipment Guide: Simplifying Less-than-Container Load Shipping

<p>Reefers (short for refrigerated containers) are large temperature-controlled containers used to transport perishable cargo such as fresh fruits and vegetables, seafood, meat, dairy, flowers, pharmaceuticals, photographic film, and several chilled and frozen goods that might spoil if not maintained at the right temperature and humidity. Reefers are the only effective way to transport perishables and other temperature-sensitive commodities in large quantities across long distances. This blog serves as a complete guide to reefers and touches on the following aspects:&nbsp;&nbsp;</p>
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<ul>
<li>How reefers work</li>
<li>Benefits of reefers</li>
<li>Types of reefers</li>
<li>What kind of cargo is shipped in reefers?</li>
<li>Components of a refrigerated container</li>
<li>Right way to handle reefer cargo</li>
<li>Dos and don&rsquo;ts</li>
</ul>
<h2><strong>How Reefers Work</strong></h2>
<p>Reefers distribute chilled air from the floor via T-shaped decking. As such, they are also called &ldquo;bottom air delivery units&rdquo;. This design ensures the container produces a steady flow of air powerful enough to maintain the required temperature for the duration of the transit, even under the harshest conditions. Reefers are also equipped to provide warmer temperatures, irrespective of the temperature outside. They have a temperature range of -35 degrees Celsius to 35 degrees Celsius.</p>
<p>The biggest difference between reefers and conventional containers is the temperature control function. Normal containers are used to ship dry goods and do not have or need such a system. The two also differ in terms of size, design, power generation and electrical distribution equipment. Reefers are smaller and contain individually powered refrigeration units. They cost around six times more than a conventional container because they come with additional insulation and a power plant.</p>
<h2><strong>Benefits of Reefers&nbsp;</strong></h2>
<ul>
<li>Because they are self-contained refrigerated units, they can bypass cold storage on arrival at the destination port</li>
<li>They are available in many dimensions, making them ideal for road, sea and air transportation</li>
<li>They are durable and can operate in inclement conditions</li>
<li>They offer a better return on investment than reefer ships</li>
<li>They help avoid wastage of perishables, extend the shelf life of goods</li>
<li>They provide easy loading and unloading, which is why container ships are now built or redesigned to carry reefers</li>
</ul>
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<h2><strong>Types of Reefers</strong></h2>
<p>Different types of reefers are available in the market today. Depending on efficiency, purpose, cargo and your requirements, one or the other can be used.</p>
<ol>
<li><strong>Closed reefer: </strong>This is a conventional reefer that comes in a single piece. It has an integral front wall and all-electric automatic cooling and heating units&nbsp;</li>
<li><strong>Modified Atmosphere/Controlled Atmosphere (MA/CA) reefers:</strong> These are insulated containers with an air exchange system that keeps the atmosphere constant by replacing the consumed oxygen. As such, the atmosphere in these containers is in equilibrium with the deterioration rate of the cargo.</li>
<li><strong>Automatic Fresh Air Management (AFAM) reefer:</strong> This container uses cutting-edge technology to automatically adjust air exchange within the container to maintain a constant temperature. Similar in its working to the MA/CA reefer, the AFAM reefer controls the composition of oxygen, carbon dioxide and other gases. Its controls can be adjusted to extend the shelf life of cargo, irrespective of outside conditions.</li>
</ol>
<p>Reefer dimensions can vary. Tabled here are the standard ones:</p>
<p><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/5f32ecd3bfcb097c29c1ef7b_Screenshot%202020-08-12%20at%2012.38.27%20AM.png" alt="5f32ecd3bfcb097c29c1ef7b_Screenshot%202020-08-12%20at%2012.38.27%20AM.png"></p>
<h2><strong>Know Your Cargo</strong></h2>
<p>While reefers transport a variety of goods, different products must be shipped under different conditions to ensure their freshness on arrival. Reefer cargo falls into three broad categories:</p>
<ol>
<li><strong>Chilled goods: </strong>These include fresh fruits and vegetables, seafood, dairy, eggs, confectionery, live plants and flowers. They require low temperatures, around freezing points, but are not to be frozen. Their freshness and shelf life depend greatly on their nature and surrounding conditions. Temperature settings for such produce must factor in the stage at which the crop is being shipped. They must be transported with utmost precision so as to retain their commercial value. For example, asparagus and broccoli have high respiration rates and so, release a lot of gases and moisture. They require optimum temperature and humidity levels so that their quality and shelf life are not impacted.&nbsp;</li>
<li><strong>Frozen goods:</strong> These are goods that need to be stored and transported at temperatures of -20&deg;C and below, which means they are frozen solid. Ice-cream, frozen meat, poultry and seafood, concentrates and prepared foods are some examples. The freezing temperatures prevent spoilage and help retain flavour, aroma, texture and quality. They stop disease-causing bacteria and microorganism growth while also slowing down enzyme activity and oxidation. For such goods, the reefer must maintain freezing temperatures without fluctuations. Repeated freezing and thawing can result in mushy products.</li>
<li><strong>Special and miscellaneous cargo:</strong> These constitute non-food products that require optimum temperature and humidity. Pharmaceuticals and drugs form the majority of such cargo. Tobacco, batteries, chemicals and photographic film also come under this category. Quite often, they have special handling instructions for packaging, stowage, temperature and humidity control.</li>
</ol>
<h2><strong>Reefer components</strong></h2>
<p>Reefers remove heat generated by the &ldquo;respiration&rdquo; of products, thus keeping temperatures stable. They also control humidity to maintain conditions favourable to the cargo. But how does a reefer do this? Let&rsquo;s look at the reefer components that fulfil these key functions:&nbsp;</p>
<ol>
<li><strong>Genset: </strong>A genset, or generator set, is the reefer&rsquo;s power source. It is usually dual-powered, which means it runs both on fuel (diesel, petrol and gas mostly) and electricity. This ensures it can tap the power unit of a ship or operate on fuel while on a truck. The genset can be clipped to the side of the container (clip-on genset) or mounted on the chassis of the container from the bottom (underslung genset).&nbsp;</li>
<li><strong>Humidity control: </strong>The relative humidity of air in a reefer is critical to the safe transportation of cargo. (Relative humidity is <a href="https://www.dictionary.com/" target="_blank" rel="noopener noreferrer">defined</a> as &ldquo;the amount of water vapour in air expressed as a percentage of the amount needed for saturation at the same temperature&rdquo;.) Dry air can cause excessive water loss in fruits and vegetables while moisture in the air can cause mold and bacteria. A reefer&rsquo;s humidity control mechanism maintains optimum humidity conditions for goods such as pharmaceuticals and electronics. It ensures dry packing and prevents fungi and rotting in the case of consumables. A reefer has a dehumidification range of 60% to 95% maximum relative humidity in the chilled temperature range.</li>
<li><strong>Temperature control: </strong>Reefers are either water-cooled or air-cooled, though water coolant systems are dwindling because they are expensive. Air cooler fans, either propeller or centrifugal type, remove dissipated heat from the refrigeration unit. A compressor, powered by a small engine, draws in refrigerant gases and compresses and liquefies them. This releases heat in the surrounding air. The air flows into a condenser and then into an evaporator, which drains the heat outside.</li>
<li><strong>GPS chip: </strong>A reefer comes equipped with a GPS chip to ensure no package is lost in transit. Typically, containers enter multiple ports and use several transportation modes before they arrive at their final destination. Cargo security is paramount. And the GPS chip provides the location and temperature status of each container.</li>
</ol>
<p>&nbsp;</p>
<h2><strong>Right way to handle reefer cargo</strong></h2>
<p>Cargo must be handled properly at every step of the transportation process, from packing to stowage to processing. Negligence can adversely impact the shelf life, quality and appearance of the cargo. It is important to factor in equipment type, product quantity and weight, transit duration, and international regulations. Here are the different cargo handling stages and the right way to do it:&nbsp;&nbsp;</p>
<ol>
<li><strong>Pre-shipment handling: </strong>The importance placed on pre-shipment handling implies that a shipper must provide accurate information of the products being shipped, their volume and weight, departure and destination ports, type of packing (boxes, drums, palettes, etc), temperature and humidity requirements, and any other handling specifics. The freight forwarder usually handles the rest, such as identifying the right vessel and container, coordinating shipment dates, ensuring cargo size and weight are within legal limits and that the conditions are right.</li>
<li><strong>Pre-cooling: </strong>Reefers do not lower the temperature of goods. Rather, they maintain the pre-cooled temperature of goods. So, the shipper must ensure his chilled or frozen goods are pre-cooled to the recommended temperature before they are stuffed into the container. Likewise, the container has to be pre-cooled to prevent surface thawing and freezer burn, which happens when the container and cargo temperatures don&rsquo;t match. For loading, a &ldquo;cold tunnel&rdquo; facility is used. This comprises a tightly insulated duct that prevents warm, humid air from entering the container.</li>
<li><strong>Packaging and stowing:</strong> This aspect of cargo handling should be designed to protect against rough handling and bad weather. The cartons used for packing must be strong enough to withstand the weight of the stacks above them and capable of protecting the products inside, especially with regard to humidity and temperature. When stowing cargo, there should be adequate ventilation and airflow. However, different cargo types require different stowage practices. Chilled fruits and vegetables need proper air supply through the packaging while frozen goods must be stacked as solid blocks without gaps.</li>
</ol>
<p><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 3.png" alt="" width="300px"></p>
<h3><strong>Best Practices in reefer shipping</strong></h3>
<p>Proper storage and stowage cut the risk of spoilage and rejection at the destination port. Here are the dos and don&rsquo;ts of reefer shipping:&nbsp;</p>
<h3><strong>Dos:</strong></h3>
<ul>
<li>Tightly pack cargo and ensure it is stable&nbsp;</li>
<li>Set the reefer at the prescribed temperature and humidity settings</li>
<li>Pre-cool the cargo when necessary</li>
<li>Ensure proper ventilation and correct settings&nbsp;</li>
<li>Insure your cargo, because a lot can go wrong with a reefer as compared to a conventional container</li>
</ul>
<h3><strong>Don'ts:</strong></h3>
<ul>
<li>Stow the cargo above the load line marked in red</li>
<li>Stow the cargo further than the end of the T-floor</li>
<li>Allow restrictions or tight stuffing that block airflow</li>
<li>Pre-cool the reefer if it is not in cold storage</li>
<li>Allow gaps between pallets and the door</li>
<li>Miss shipment deadlines and cutoffs, particularly for perishables.</li>
</ul>
<h2><strong>TABLE: Temperature and humidity settings for different commodities&nbsp;</strong></h2>
<p><img style="width: 966px; height: 467px;" src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/5f33c0293b919b3f0eb13b40_Screenshot%202020-08-12%20at%203.40.03%20PM.png" alt="5f33c0293b919b3f0eb13b40_Screenshot%202020-08-12%20at%203.40.03%20PM.png"></p>
<p><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/5f33c1dc16eb1735ba66fb2c_Screenshot%202020-08-12%20at%203.45.24%20PM.png" alt="5f33c1dc16eb1735ba66fb2c_Screenshot%202020-08-12%20at%203.45.24%20PM.png"></p>
<p><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/5f33c1f216f9a34e4d01560d_Screenshot%202020-08-12%20at%203.45.36%20PM.png" alt="5f33c1f216f9a34e4d01560d_Screenshot%202020-08-12%20at%203.45.36%20PM.png"></p>
<p><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/5f33c209bbeeb450362cb0f8_Screenshot%202020-08-12%20at%203.45.50%20PM.png" alt="5f33c209bbeeb450362cb0f8_Screenshot%202020-08-12%20at%203.45.50%20PM.png"></p>
<p><img style="width: 966px; height: 465px;" src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/5f33c21b5e7fc0b151ee63ff_Screenshot%202020-08-12%20at%203.46.24%20PM.png" alt="5f33c21b5e7fc0b151ee63ff_Screenshot%202020-08-12%20at%203.46.24%20PM.png"></p>
<p><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/5f33c22f2b48feb4fd6eb2f5_Screenshot%202020-08-12%20at%203.46.45%20PM.png" alt="5f33c22f2b48feb4fd6eb2f5_Screenshot%202020-08-12%20at%203.46.45%20PM.png"></p>
<p><img style="width: 966px; height: 430px;" src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/5f33c241807d692f7b24fddf_Screenshot%202020-08-12%20at%203.47.02%20PM.png" alt="5f33c241807d692f7b24fddf_Screenshot%202020-08-12%20at%203.47.02%20PM.png"></p>
<p><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/5f33c2521a93a651b7c3a451_Screenshot%202020-08-12%20at%203.47.16%20PM.png" alt="5f33c2521a93a651b7c3a451_Screenshot%202020-08-12%20at%203.47.16%20PM.png"></p>
<p>*MA = Modified Atmosphere. *CA = Controlled Atmosphere</p>
<h2>&zwj;<strong>Cogoport for smooth sailing</strong></h2>
<p>The process of importing and exporting goods can be intimidating, with bulky documentation requirements, lack of transparency, poor stakeholder collaboration and inefficiencies in the process. Cogoport is committed to making this process and the lives of its customers &ndash; especially small and medium enterprises &ndash; easier. We are here to help you grow your businesses and expand internationally.&nbsp;</p>
<p>With <a href="https://cogoport.com/signup/signup" target="_blank" rel="noopener noreferrer">Cogoport</a>, you can plan and manage your daily business effectively:</p>
<ul>
<li>Try our easy-to-use platform to connect with logistics providers &ndash; shipping lines, freight forwarders, transporters, customs house agents and more &ndash; and collaborate with them to conduct international trade more efficiently</li>
<li>Cogoport offers instant freight quotes, so you can compare the ones that suit your needs best</li>
<li>&nbsp;You can also book carriers and track your shipments, all from a single platform</li>
<li>In addition to our comprehensive logistics planning tool, we help you create professional quotes and collate documents, provide guided shipping with embedded data regulations and fees across ports globally.</li>
</ul>

What is a reefer? Learn about reefers, types, and techniques for shipping temperature-sensitive perishables in refrigerated containers.

Reefer Shipping: A Guide to Shipping in Refrigerated Containers

<p>Every year, hundreds of thousands of containers loaded with cargo are abandoned at ports worldwide. The phenomenon of abandoned goods is not new. But it has become a bigger headache for the logistics industry in the current Covid-19 environment, contributing to port congestion and rising logistics costs.</p><p>In this piece, we take a look at the problem abandoned goods pose to shipping lines, freight forwarders and ports as well as to you – the exporter/importer. Read on to find out:</p><ul><li>What are abandoned goods?</li><li>Why is cargo abandoned?</li><li>What happens with abandoned goods?</li><li>Who is liable for abandoned goods?</li><li>Covid-19 and abandoned goods</li><li>How to avoid being stuck with abandoned goods</li><li>How to effectively deal with abandoned goods&nbsp;</li></ul><p>&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></p><h3><strong>What are Abandoned Goods?</strong></h3><p>The International Federation of Freight Forwarders Associations (FIATA) defines abandoned goods as those “the consignee [importer] has manifested no intention to take delivery of after a reasonable period”. This includes situations where the importer cannot be identified or contacted or has refused collection.</p><p>But what FIATA calls a “reasonable period” differs from country to country. In India, goods “not cleared, warehoused or transhipped within 30 days after unloading” are considered abandoned under Section 48 of the Customs Act, 1962. In<a href="https://indiankanoon.org/doc/428210/" target="_blank"> China</a>, this period extends to 60 days. In the<a href="http://www.asianlii.org/cn/legis/cen/laws/mcotproc360/" target="_blank"> European Union</a> and<a href="https://taxation-customs.ec.europa.eu/customs-4/customs-procedures-import-and-export-0/customs-procedures/temporary-storage_en" target="_blank"> Australia</a>, it is 90 days. And in the US, it is six months from the date of importation – though<a href="https://www.law.cornell.edu/cfr/text/19/127.11" target="_blank"> special merchandise</a> (perishables, spirits, hazardous material, etc) invites a shorter, unspecified period of time.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p><h3><strong>Why is Cargo Abandoned?&nbsp;</strong></h3><p>Common reasons why an importer might not collect the goods they ordered:&nbsp;&nbsp;</p><ul><li>They aren’t satisfied with the quality of the goods</li><li>They don’t have an import permit or license required to claim the goods</li><li>They have gone bankrupt</li><li>They cannot pay import duty, demurrage or other charges&nbsp;</li><li>The shipment was delayed and they don’t need the goods anymore</li><li>They are in dispute with the exporter</li><li>The goods are damaged</li><li>The goods are held up by customs for violations (misdeclaration of goods, wrong documentation, etc)</li><li>There has been a sudden regulation change prohibiting the import of certain goods</li></ul><h3><strong>What Happens with Abandoned Goods?</strong></h3><p>Abandoned goods are dealt with in one of the following ways:</p><ul><li>They are confiscated and sold via auction</li><li>They are destroyed (especially if they are perishable, of low value, hazardous, etc)</li><li>They are scrapped for parts</li><li>They are reclaimed by the shipper and returned to origin</li><li>They are re-routed to an alternative buyer&nbsp;&nbsp;</li></ul><h2><strong>How are Abandoned Goods Sold?</strong></h2><p>More often than not, abandoned goods take the auction route. The shipping line – or the freight forwarder, if they are named as the “principal” in the Master Bill of Lading (MBL) and, hence, liable for any expenses – can request customs to have the goods sold. The auction is organised by customs. The proceeds go towards settling the freight, storage, import duty, transportation and auction bill along with any other related charges. If the proceeds aren’t enough, the shipping line can claim the balance from the shipper and/or take legal action against them. If any money is left over from the auction, it is refunded to the shipper, failing which it might go to the state treasury.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p><p>A step-by-step guide to how abandoned goods are auctioned in India:</p><ul><li>The container freight station (CFS) custodian prepares a list of abandoned goods and sends it to the customs commissioner.</li><li>Within 10 days of receiving the list, customs informs the custodian of shipments that can be auctioned and those that must be excluded. Cargo retained for investigation/adjudication/court proceedings or those requiring licences/permits/certificates from government departments are usually excluded.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li>The custodian sends a notice to the importer asking them to clear the goods within 10 days of the date of issuance of the notice.&nbsp;</li><li>In the next 20 days, the custodian prepares a detailed inventory of goods to be auctioned. From this lot, customs performs a sample check of 10% of shipments.&nbsp;</li><li>Within seven days of completing the inventory, the custodian seeks a no objection certificate (NOC) from customs.</li><li>Within 15 days of this request, customs issues NOCs for shipments that don’t require regulatory clearances from government agencies (Drugs Controller General of India, Food Safety and Standards Authority of India, etc) or chemical analysis to test if the goods are fit to consume/use. For the rest, customs waits for the required clearances and tests reports before issuing its own NOCs.</li><li>If the goods are deemed unfit for use, they are destroyed.</li><li>If the goods are cleared for auction, the custodian has their value assessed within seven days of receiving the NOC. They then fix the auction date.</li><li>Bids equal to, more than or up to 5% less than the reserve price are considered successful. For unsold goods, a second, third or even a fourth auction might be held. At the fourth auction, the goods are sold to the highest bidder regardless of reserve price.</li><li>For every shipment sold, the custodian files a Bill of Entry with customs.</li><li>Within 15 days, customs assesses the duty due on it.</li><li>The successful bidder collects the goods on payment of duty.&nbsp;&nbsp;&nbsp;</li></ul><figure class="w-richtext-figure-type-image w-richtext-align-center" data-rt-type="image" data-rt-align="center"><a href="https://cogoport.com/signup/en-IN/?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-Portal-2.png" width="auto" style="width: auto; height: auto;"></a></figure><h3><strong>Who is liable for abandoned goods?</strong></h3><ul><li><strong>Exporter/Importer: </strong>As the shipper/consignee/cargo owner, they are liable. Generally, the freight forwarder holds the contracting party accountable while the port of import holds the importer responsible.&nbsp;&nbsp;</li><li><strong>Freight forwarder:</strong> If identified as “principal” and not “agent” on the MBL, the freight forwarder is directly liable to the shipping line and must pay for storage, transport and disposal of the goods.</li><li><strong>Shipping line: </strong>If the freight forwarder is not the principal, the shipping line is in a direct contractual relationship with the shipper. This puts the shipping line in a tight spot because any delay in paying port officials could affect its operations, resulting in losses. If the cargo is packed in a container that is not its own, the shipping line might even be liable to pay the leasing company.&nbsp;&nbsp;</li></ul><p><strong>Right of lien: </strong>Along with liability, shipping lines and freight forwarders have a right of lien over abandoned cargo. Lien is “the right to keep someone’s property until a debt is paid”. They can enforce this right “in a reasonable manner” – such as a customs-approved auction – to recover the amount owed to them and the cost of recovering that due.&nbsp;&nbsp;&nbsp;&nbsp;</p><h2><strong>Covid-19 and abandoned cargo</strong></h2><p>The coronavirus pandemic and lockdowns imposed by countries dealt a body blow to the shipping industry. As businesses and economies tanked, shipping lines faced record booking cancellations and cancelled record sailings. Abandoned cargo also piled up at ports. A significant section of containers stranded at ports and terminals due to mobility restrictions, border closures and labour shortages ended up being abandoned. Why did this happen?</p><ul><li>With markets frozen, demand down and cargo stuck in transit, buyers no longer needed the goods. For many of them, their businesses had suffered irreparable losses.&nbsp;</li><li>A good portion of abandoned goods were likely perishable commodities (food, pharmaceuticals), which require special conditions for transport and storage.</li><li>Delays in delivery also rendered a lot of cargo with short shelf lives useless.&nbsp;&nbsp;</li></ul><h3><strong>How to prevent being stuck with abandoned goods</strong></h3><p>Shipping lines and freight forwarders can save themselves a lot of trouble with these preventive steps:&nbsp;</p><ul><li>Work with reputable shippers. Confirm if the contracting party is genuine and financially viable. FIATA recommends insisting on original documents, using the company land line to communicate and verifying email addresses</li><li>Be wary of <strong>scrap, waste, low-value goods, used goods, counterfeit goods </strong>and<strong> personal effects</strong> as these have a <strong>high probability of being abandoned</strong></li><li>Be cautious while accepting goods that are difficult or expensive to dispose of (computers, phones, used tires)&nbsp;</li><li>Watch out for sanctions and embargoes, especially at the port of destination</li><li>Verify the importer’s credentials beforehand</li><li>Keep a record to <strong>identify common patterns</strong> such as <strong>unreliable shippers, risky cargo, risky trade routes, abandoned cargo hotspots</strong>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li>Shipping lines can choose to load cargo on ships only after the shipper submits an export declaration, which is proof that the cargo has a buyer</li><li>If the goods are shipped as “Freight Collect”, it’s a good idea for shipping lines to get a written confirmation from the buyer&nbsp;</li><li>During contract drafting, freight forwarders should include a provision on responsibilities in the event the goods are abandoned</li><li>They can also protect themselves with Freight Forwarders Liability Insurance, which covers abandoned cargo&nbsp;</li></ul><p>‍<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></p><h3><strong>What to do when stuck with abandoned goods</strong></h3><p>Even with these precautions, it is sometimes impossible to avoid being saddled with abandoned goods. Here’s how to effectively deal with such a troublesome situation:</p><ul><li>Notify the importer/exporter as soon as the free time is over. If they aren’t inclined to collect the cargo, demand immediate written instructions to change the buyer/destination or to abandon it. Clearly communicate their financial liability&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li>Speed is key. The longer you take to act, the higher the costs. If the associated costs exceed the value of the goods, selling them won’t solve your problem&nbsp;</li><li>Consider cheaper storage options (off-dock facilities) to save on demurrage and detention charges&nbsp;</li><li>Know the customs laws you are working with. As mentioned earlier, different jurisdictions have different rules. Exercising your right of lien might depend on both local laws and contract provisions. Your local agent can help you stay informed</li><li>FIATA believes digitisation is a solution to the abandoned goods crisis. It recommends, among others, easy-to-track smart containers and a digital contracting and communication system so that all parties can secure themselves right at the contract drafting stage</li></ul><p>With the pandemic still raging, lockdowns still a reality and economies still in the red, the abandoned cargo crisis isn’t going away any time soon. For now, preventive action seems to be the only safeguard against it. </p>

 What Happens When Cargo Goes Unclaimed?

Dangerous Goods: Ways to Ship it Safely

<p>Our previous blog, '<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>', dealt with the must-have documents for exporters and importers sending and receiving goods by sea. In this follow-up blog, we will look at some of the most common supporting documents required in the shipping process, which exporters and importers need in order to get their goods cleared by customs.</p>
<p><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" rel="noopener"><img style="width: auto; height: auto;" src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 2.png" width="auto"></a></p>
<p>The term &ldquo;supporting&rdquo; suggests these documents are secondary to the mandatory documents. It is important to understand that this does not necessarily mean they are optional. It only means the requirement for a specific supporting document depends on various factors, including but not limited to:</p>
<ul>
<li>The nature of the cargo</li>
<li>Rules and regulations of the exporting or importing country</li>
<li>Trade agreements between certain countries</li>
<li>Bans imposed on certain goods by certain countries&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li>
</ul>
<p>Take the example of a Country of Origin (COO) certificate, which we will deal with in detail later in this blog. Most countries demand a COO certificate for an export shipment to get customs clearance. This makes the document mandatory in such cases. But there are also countries that do not demand such a certificate. Hence, a COO certificate falls in the category of secondary documents.</p>
<h3><strong>Documents Required for Import Customs Clearance</strong>&nbsp;&nbsp;</h3>
<p>As it is with exports, the process of importing a particular product is completed only when the buyer receives the goods. Thus, for the imported goods to get customs clearance, the importer might have to furnish these additional documents at the port of entry:</p>
<h3><strong>1. Import Licence</strong></h3>
<p>An import licence is a permit issued by the DGFT that allows the import of goods that are subject to government regulations. It specifies the amount that can be imported, and is usually valid for 18 months to a year, depending on the goods. Most goods are freely importable in India. But in the case of regulated goods &ndash; chemicals, pharmaceuticals, precious stones, plants, animals, etc &ndash; the importer must obtain an import licence and present it at the time of customs clearance.</p>
<p><a href="https://cogoport.com/signup/en-IN/?utm_source=web&amp;utm_medium=blog&amp;utm_campaign=general" target="_blank" rel="noopener"><img style="width: auto; height: auto;" src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-1.png" width="auto"></a></p>
<h3><strong>2. Insurance Certificate</strong></h3>
<p>This document, issued by an insurance company, certifies that the goods are covered for any loss or damage during transit. It backs up the importer&rsquo;s declaration on the terms of delivery and helps customs ascertain the duties due on the goods.</p>
<h3><strong>3. Purchase Order and Letter of Credit</strong></h3>
<p>A purchase order is a contract issued by the buyer (importer) to the seller (exporter) confirming the purchase of goods. It contains details of the goods, their quantity and price, payment and delivery terms. Once the purchase order is finalised, the importer contacts a bank (called the issuing bank) to obtain a letter of credit, which is a promise by the bank to pay the exporter the agreed upon sum on behalf of the importer.</p>
<h3><strong>4. Technical Write-up/Literature</strong></h3>
<p>If the cargo is machinery, for example, customs authorities might ask for a written explanation of its functions to help them determine the product&rsquo;s market value.</p>
<h3><strong>5. Test Report</strong></h3>
<p>When customs authorities are unable to assess the quality and thereby value of certain goods, they might send a sample to an authorised government laboratory for testing. The lab tests the product and provides a test report, on the basis of which the cargo is cleared.&nbsp;&nbsp;</p>
<h3><strong>6. Industrial Licence</strong></h3>
<p>An importer can avail of import benefits under government guidelines by submitting a copy of this to customs.</p>
<h3><strong>7. Registration cum Membership Certificate</strong></h3>
<p>This is a certificate of registration with the Federation of Indian Export Organisations (the country&rsquo;s apex export promotion organisation) or the various Export Promotion Councils or Commodity Boards. It is required for importing (or exporting) restricted items and to avail of benefits under the Foreign Trade Policy or those offered by customs and excise authorities.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
<h3><strong>8. Duty Exemption Documents&nbsp;</strong></h3>
<p>For duty exemptions under government schemes such as the <a href="https://economictimes.indiatimes.com/small-biz/trade/exports/pre-exports/trading-with-the-world-export-promotion-schemes-provided-by-government-of-india/articleshow/70639514.cms?from=mdr">Duty Exemption Entitlement Certificate (DEEC) and Export Promotion Capital Goods (EPCG)</a>, the importer must present the relevant documents during clearance.</p>
<h3><strong>9. Central Excise Document</strong></h3>
<p>This is required to avail of central excise benefits, if applicable.</p>
<h3><strong>10. GATT/DGFT Declarations</strong></h3>
<p>Both the General Agreement on Tariffs and Trade (GATT), a legal document between multiple countries, and the DGFT declaration establish standards for participating in international trade. These documents may be required for import customs clearance.</p>
<h3><strong>Documents Required for Export Customs Clearance</strong></h3>
<p>To start with, these are some but not all of the supporting documents exporters in India might be asked to submit at the time of customs clearance:&nbsp;</p>
<h3><strong>1. Export Licence</strong></h3>
<p>A licence issued by the Directorate General of Foreign Trade (DGFT), it allows exporters to trade in goods that come under the restricted category of the <a href="https://www.cybex.in/hs-codes" target="_blank" rel="noopener">Indian Trade Classification-Harmonised System Codes</a>. It must be produced when the exporter is shipping his first cargo.</p>
<p><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 1.png" alt="" width="300px"></p>
<h3><strong>2. Proforma Invoice</strong></h3>
<p>A proforma invoice is a preliminary invoice issued by the exporter to the importer. It differs from a regular invoice in that it is not a demand for payment. It includes a detailed description of the goods, their price, terms of sale and delivery details.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
<h3><strong>3. Country Of Origin (COO) Certificate</strong></h3>
<p>A COO certificate vouches that the goods being shipped were produced, manufactured and processed in a particular country. It includes an exporter declaration and an inspection certificate (by a state employee or relevant agency). Most countries demand a COO certificate for customs clearance.</p>
<h3><strong>4. Letter of Credit</strong></h3>
<p>The exporter might need to acquire a letter of credit from the importer&rsquo;s bank, stating that the importer will go through with the payment. In some cases, the goods can be dispatched only after the exporter produces this document.</p>
<h3><strong>5. Warehouse Receipt</strong></h3>
<p>The Business Dictionary defines a warehouse receipt as a &ldquo;receipt for goods left for safekeeping in a warehouse&rdquo; and a &ldquo;document of title&hellip; guaranteeing existence and availability of a specified quantity and quality of a commodity, and used as an instrument of transfer in cash (spot) and futures transactions&rdquo;. It is proof that the goods authorised for sale are available and ready to be transferred to the buyer.&nbsp;&nbsp;&nbsp;</p>
<h3><strong>6. Health Certificates</strong></h3>
<p>These are mostly required for food products. They certify that the goods comply with safety standards and export regulations, and are fit for human consumption.</p>
<h3><strong>7. Dangerous Goods Forms</strong></h3>
<p>These are required for goods considered dangerous by the International Maritime Organisation, such as flammable liquids, gases, corrosives and toxic substances.&nbsp;</p>
<h3><strong>8. Consular Invoice</strong></h3>
<p>Some importing countries insist on this embassy-attested document. The exporter can get this from a consular representative of the country he is shipping to.</p>
<h3><strong>9. Insurance Certificate</strong></h3>
<p>This certifies that the exporter has insurance cover for the cargo being shipped.&nbsp;<br><br><strong>Note: </strong>These are by no means complete lists of supporting documents required in the international shipping process. Businesses and individuals exporting from India or importing into India might be required to submit even more paperwork. Therefore, exporters and importers are advised to check with their agents or shipping lines for any country-specific or product-specific documentation requirements for a hassle-free shipping experience.</p>

Custom Clearance Documents: Mastering International Trade Success

<p>In 2016, India introduced Direct Port Delivery (DPD), a system that allows a select group of importers to clear cargo directly from the port within 48 hours of arrival. It is an alternative to the CFS (container freight station) model, where import cargo is routed to an off-site CFS and delivery takes roughly three times longer. The objective behind DPD is to reduce time and cost for importers, decongest ports and, in the process, facilitate trade and improve India’s<a href="https://www.worldbank.org/en/businessready" target="_blank"> Ease of Doing Business</a> ranking.</p><p>The DPD model was first introduced at the Jawaharlal Nehru Port Trust (JNPT) – India’s busiest container gateway – and has since been extended to ports across India. This piece takes an in-depth look at this key government initiative and how it has performed in the last four years. Read on to know:</p><ul><li>What is Direct Port Delivery?</li><li>What are the benefits of DPD?</li><li>Who is eligible for DPD and who isn’t?&nbsp;</li><li>How do you apply for DPD?</li><li>What is your role as an importer/customs agent?</li><li>What are the problem areas?</li></ul><p>‍<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></p><h2><strong>What is Direct Port Delivery (DPD)?</strong>‍</h2><p>Under the DPD model, importers can complete customs clearance of their shipment and take delivery of it at the port within a stipulated time frame (usually 48 hours) of the shipment being offloaded. If the importer fails to take delivery within this time, the shipment is transferred en-bloc (as a whole) to a pre-designated CFS. The importer then has to follow the CFS model, under which cargo delivery takes roughly seven to nine days.&nbsp;&nbsp;&nbsp;&nbsp;</p><p>These flow charts show the stages in both models and how DPD eliminates three stages in the CFS model:</p><figure class="w-richtext-figure-type-image w-richtext-align-fullwidth" style="max-width:5001px" data-rt-type="image" data-rt-align="fullwidth" data-rt-max-width="5001px"><div><img src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/5fe479f70636434404f6ab74_231220_Cogoport_DPD%20infographic_Facebook%20rev_v1%20(1).jpg" loading="lazy" width="auto" height="auto" alt="CFS Model V/S DPD Model"></div></figure><p>Under the DPD model, there are<a href="https://www.dpdchennaicustoms.in/assets/circulars/dpd-user-guide.pdf" target="_blank"> two modes of delivery</a>:</p><ul><li><strong>DPD/DPD: </strong>Here,the importer arranges for their own transport and takes delivery at the terminal.</li><li><strong>DPD/CFS: </strong>The importer arranges CFS transport and takes delivery at the terminal.‍</li></ul><h3><strong>What are the Benefits of Direct Port Delivery (DPD)?</strong></h3><ul><li>It cuts the delivery time of import cargo by five to seven days.</li><li>Importers save on storage, ground rent, CFS handling and terminal-to-CFS transport charges as well as <a href="https://www.dpdchennaicustoms.in/assets/circulars/dpd-user-guide.pdf" target="_blank">detention fees</a> payable to the carrier. The JNPT estimates<a href="https://www.cogoport.com/blogs/understanding-demurrage-and-detention-charges-and-how-to-avoid-them" target="_blank"> savings of Rs 10,000-20,000 per container</a>.</li><li>The DPD clearance and delivery facility is open 24x7.&nbsp;</li><li>Quicker delivery means faster turnaround of containers for shipping lines.</li></ul><p>‍<a href="https://cogoport.com/signup/en-IN/?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-Portal-2.png" width="auto" style="width: auto; height: auto;"></a></p><h3><strong>Who is Eligible for DPD?</strong></h3><p>Only importers who fulfil these government-prescribed guidelines can avail of this facility:</p><ol><li>Importers with Authorised Economic Operator (AEO) status. The World Customs Organisation (WCO) defines an AEO as “a party involved in the international movement of goods in whatever function that has been approved by or on behalf of a national customs administration as complying with WCO or equivalent supply chain security standards”. They include “manufacturers, importers, exporters, brokers, carriers, consolidators, intermediaries, ports, airports, terminal operators, integrated operators, warehouses and distributors”. India’s AEO programme is implemented by the Central Board of Indirect Taxes and Customs (CBIC).&nbsp;</li><li>Importers with a clear track record of compliance and import volume of 25 Full Container Load (FCL) TEUs through a particular port or otherwise in the preceding financial year.</li><li>Importers who don’t fulfil the first two conditions can still be eligible for DPD if their “imports have enjoyed a consistent pattern of customs risk facilitation” and/or if they “provide an assurance that they would be in a position to pick up containers directly from the terminal”. This relaxation is aimed at micro, small and medium enterprises (MSMEs). The discretion of accepting such an application lies with the chief customs commissioner.&nbsp;</li></ol><p>Additionally, DPD is open to shipments only if they fulfil these conditions:</p><ol><li>If the consignment is <a href="https://www.cogoport.com/blogs/complete-guide-to-fcl-shipping-everything-exporters-importers-need-to-know" target="_blank">FCL</a>.&nbsp;</li><li>If it is covered by an RMS-facilitated Bill of Entry on a “<a href="https://www.cogoport.com/blogs/complete-guide-to-fcl-shipping-everything-exporters-importers-need-to-know" target="_blank">no assessment no examination</a>” or “<a href="https://www.joc.com/sites/default/files/u1390826/DPD-FAQ.pdf" target="_blank">assessment but no examination</a>” basis (RMS being Indian Customs’ Risk Management System).&nbsp;&nbsp;&nbsp;&nbsp;</li><li>If the importer has a pre-deposit account (PDA) with the terminal. The account should hold sufficient funds to pay terminal handling charges.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li>If the importer has made their own transport arrangement to take delivery of cargo.&nbsp;</li><li>If the importer has fulfilled any other procedural formality prescribed by the relevant customs zone.&nbsp;</li></ol><h3><strong>Who isn’t eligible?</strong></h3><ol><li>Importers against whom a case of misdeclaration of description of goods or of concealment/diversion of imported goods/evasion of duty has been made in the preceding five years.</li><li>Importers facing prosecution proceedings under the Customs Act, 1962.</li><li>Those importing goods subjected to 100% examination.</li><li>Those importing <a href="https://www.cogoport.com/blogs/complete-guide-to-lcl-shipping-everything-exporters-importers-need-to-know" target="_blank">Less-than Container Load</a> (LCL) consignments.</li></ol><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><strong>How do you Apply for Direct Port Delivery (DPD)?</strong></h3><p><strong>Step 1:</strong> Submit a<a href="http://mundracustoms.gov.in/wp-content/uploads/2017/10/PN-52-2017-18-.pdf" target="_blank"> request letter</a> – in the form of an application called Annexure-A (see copy below) – to the deputy commissioner, port customs house. This application must be on the importer’s letterhead and accompanied by these<a href="http://mundracustoms.gov.in/wp-content/uploads/2017/10/PN-52-2017-18-.pdf" target="_blank"> documents</a>:</p><ul><li>List of authorised signatories of the importer</li><li>Self-attested copies of PAN (permanent account number)</li><li>Letter of authorisation for customs broker acting on the importer’s behalf</li><li>Details of company official with photograph and signature in case &nbsp;self-clearance</li></ul><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/5e57ba59552cf400c593fd16/5fe4796379f7fb6b85be0580_Annexure%20A%20Sample%20(1).jpg" loading="lazy" width="auto" height="auto" alt="Application for DPD (Direct Port Delivery)"></div></figure><p>Sample image, Credit: cbic.gov.in&nbsp;&nbsp;</p><p><strong>Step 2:</strong> The customs house will respond either with a permission letter or a rejection.</p><p><strong>Step 3:</strong> If you receive a permission letter, this and your documents will then be forwarded to the terminal.</p><p><strong>Step 4:</strong> Your registration is complete once you receive a unique DPD code from the terminal.</p><p><strong>Step 5:</strong> Using this DPD code, you will need to open a PDA with the terminal.</p><h3><strong>What are your Responsibilities as an Importer/Customs Broker?</strong></h3><ol><li><strong>Advance intimation: </strong>You must submit the Bill of Lading (BL) number, consignment details, a copy of the letter of permission and your preferred CFS to the shipping line 72 hours before vessel arrival. Specify the DPD mode as well. If not, the carrier will by default mark the consignment as DPD/DPD.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li><li><strong>Advance BL submission: </strong>Once the shipping line/customs agent receives advance intimation, they will generate an advance invoice. You must pay the shipping line/customs agent as per the invoice and submit the BL, both in advance. The shipping line/customs agent will then issue an advance electronic Delivery Order (e-DO).&nbsp;</li><li><strong>Advance Bill of Entry: </strong>Your next step is to file an advance Bill of Entry and approach the terminal’s DPD-RMS Facilitation Centre for an out of charge (OOC) order.&nbsp;&nbsp;&nbsp;&nbsp;</li><li><strong>Clearance and delivery: </strong>You must pay the customs duty, submit the e-DO and take delivery of the consignment within 48 hours of vessel berthing.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li></ol><h2><strong>Some Problem Areas&nbsp;</strong></h2><p>The DPD model has had its share of teething troubles, many of which have smoothened out while some persist: &nbsp; <strong>&nbsp;</strong></p><ul><li><strong>Lack of space/infrastructure:</strong> Industry insiders point to the fact that ports like JNPT were built on the CFS model in restricted spaces. Also, in an indication of the lack of infrastructure, Adani Hazira Port suspended DPD operations in April due to a pile-up of DPD cargo during the Covid-19 lockdown period. The reason,<a href="https://www.hellenicshippingnews.com/adani-ports-suspends-direct-port-delivery-of-containers/?__cf_chl_jschl_tk__=20f54a6e6f7940361fd82770c5a19752770be118-1608463076-0-Afmlw9S5ZU9tD6-YybF6M_1PX733WPnEu_Cqrp9qeRV89yL9OiD-0rN1TYtroFhtpMjH8bRdEEZVB7fYEG0E06k-CV0nknZ5aLn_gvgHXEa7lbSX8FZGaB619eIY9cZSiWDmoBYLGS2YxZ4dqKzvrZW5X6U1rhutO6lsNu0KxHY2D8T2LoJ60v15zfetvSUPxpRIQRvZ8xpIZV1fGlZWJPOd27HTtYfCcioLZnjVc72K0R7eK6IMkDHuqdvEb_Raby-l74GOfWpaOrknd2Hc1pNKGqEQq08aMbnWzA4OkeGQYPzhl8cy0mdFHbccl7s4j6v72-kSPs_dvqnDxT9YQCymJAvvV7R2LjCvZBEjF1SjzAF0q6bBAhIx9iOdFFY2cg" target="_blank"> this report</a> says, was because Hazira isn’t connected by rail. So, the containers couldn’t be moved en-bloc by train to CFSs, as had been done to decongest JNPT and the Chennai port.&nbsp;</li><li><strong>Lack of uniformity: </strong>Traders have often complained of a lack of uniformity on prices and free times across Indian ports. For example, importers have<a href="https://www.briefindia.com/wp-content/uploads/2017/05/DPD-report.pdf" target="_blank"> 48 hours</a> to take delivery at JNPT and<a href="https://www.hellenicshippingnews.com/adani-ports-suspends-direct-port-delivery-of-containers/?__cf_chl_jschl_tk__=20f54a6e6f7940361fd82770c5a19752770be118-1608463076-0-Afmlw9S5ZU9tD6-YybF6M_1PX733WPnEu_Cqrp9qeRV89yL9OiD-0rN1TYtroFhtpMjH8bRdEEZVB7fYEG0E06k-CV0nknZ5aLn_gvgHXEa7lbSX8FZGaB619eIY9cZSiWDmoBYLGS2YxZ4dqKzvrZW5X6U1rhutO6lsNu0KxHY2D8T2LoJ60v15zfetvSUPxpRIQRvZ8xpIZV1fGlZWJPOd27HTtYfCcioLZnjVc72K0R7eK6IMkDHuqdvEb_Raby-l74GOfWpaOrknd2Hc1pNKGqEQq08aMbnWzA4OkeGQYPzhl8cy0mdFHbccl7s4j6v72-kSPs_dvqnDxT9YQCymJAvvV7R2LjCvZBEjF1SjzAF0q6bBAhIx9iOdFFY2cg" target="_blank"> 72 hours</a> at the Chennai port. Also, the private terminals at JNPT levy a<a href="https://www.briefindia.com/wp-content/uploads/2017/05/DPD-report.pdf" target="_blank"> shifting charge</a> on DND containers, which varies from terminal to terminal. The Chennai and Haldia ports don’t have such a charge.&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;&nbsp;&nbsp;&nbsp;&nbsp;</li><li><strong>Lack of choices: </strong>In 2017, home appliances company<a href="https://economictimes.indiatimes.com/small-biz/startups/direct-port-delivery-failing-to-deliver-cos/articleshow/57723260.cms?from=mdr" target="_blank"> Voltas</a> asked to be removed from the DPD list, saying its Uttarakhand factory could handle only 15 containers a day whereas the model required it to take delivery of all 50 containers arriving by ship. Similarly, luggage maker<a href="https://economictimes.indiatimes.com/small-biz/startups/direct-port-delivery-failing-to-deliver-cos/articleshow/57723260.cms?from=mdr" target="_blank"> VIP Industries</a> complained that if it failed to take timely delivery of its consignment, it would be sent to a CFS not of its choice but one designated by the port.</li><li><strong>Threat to CFS? </strong>When DPD was introduced in 2016, the 33 CFSs at JNPT feared loss of business and employment. Some cut down staff strength. However, this problem seems to have worked out as CFSs remain a critical component of India’s global trade. According to<a href="https://economictimes.indiatimes.com/small-biz/startups/direct-port-delivery-failing-to-deliver-cos/articleshow/57723260.cms?from=mdr" target="_blank"> JNPT</a>, increasing cargo volumes at ports will ensure a fair share of business for CFSs. Also, a good volume of DPD cargo is still shifted post-delivery to CFSs for storage due to limited warehouse space near the cargo owners’ factories.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li></ul><p>‍<a href="https://cogoport.com/signup/en-IN/?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-Portal-1.png" width="auto" style="width: auto; height: auto;"></a></p><h2><strong>Four years on, how is DPD model faring?</strong></h2><p>Despite its shortcomings, Direct Port Delivery is gaining in popularity and has made improvements: <strong>&nbsp;</strong></p><ul><li>India’s DPD percentage stands at<a href="https://www.thehindubusinessline.com/economy/logistics/payment-of-thc-directly-to-terminals-will-be-extended-to-export-customers-by-next-week-cbic-chairman-joseph/article30640973.ece" target="_blank"> 56%</a>. At JNPT, this has steadily risen from 30% in August 2017 to 40.67% in July 2018 to 57.9% in October 2020.</li><li>In January, a <a href="https://www.facebook.com/816002985108757/posts/direct-port-delivery-system-is-a-boon-for-importers-as-it-reduces-the-import-dwe/4741641985878151/" target="_blank">CBIC directive</a> allowed DPD importers to pay handling charges directly to terminals instead of through shipping lines. It was acting on <a href="https://www.joc.com/article/jnpt-customs-joins-indian-crackdown-carrier-terminal-pricing_20200121.html" target="_blank">complaints by shippers</a> that shipping lines overcharge customers. The CBIC estimates this would save importers at least Rs 5,000 per container.</li><li>As of September 15, DPD customers at PSA Mumbai, one of the terminals at JNPT, can pay terminal handling charges digitally through the online shipping documentation platform ODeX.</li></ul><p>At a time when <a href="https://www.joc.com/article/jnpt-customs-joins-indian-crackdown-carrier-terminal-pricing_20200121.html" target="_blank">port congestion and high logistics costs</a> continue to challenge importers and exporters, the DPD model holds out hope for more reforms in India’s international trade and shipping industry.<br></p>

Impact of India's Direct Port Delivery ?

<p>In India, the Make in India movement launched by the Modi government has seen favourable changes in imports and as well as exports. &nbsp;In FY 2017-18, Indian exports increased by <a href="https://indianretailsector.com/news/indias-export-increases-9-98-year-2017-18/" target="_blank">9.98 per cent</a>. The total value of goods exported in the year 2016-17 was $ 275,852 million, while in the FY 2017-18, the exports increased to $ 303,376 million.</p><p><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></p><p>In consideration of the current economic scenario of the country, starting an export business can be extremely profitable. Discussed below is a step-by-step guide to starting an export business in India-</p><ul><li><strong>Establishing an Organization</strong> – The first step is to set up a company, proprietary concern or a partnership firm so that there is a business setup to work with. Choose a suitable name and logo, that is comprehensible in the international market. </li><li><strong>Opening a Bank Account</strong> – &nbsp;Open a current account with a bank that is authorized in Foreign Exchange.</li><li><strong>Obtaining Permanent Account Number</strong> – It is mandatory for all businesses participating in international trade to obtain a Permanent Account Number (PAN) from the Income Tax Department.</li><li><strong>Obtaining IEC Number</strong> – An Importer-Exporter Code (IEC) is a 10-digit number which is issued against the PAN from the Regional Authority of the Directorate General of Foreign Trade (DGFT). IEC number is mandatory for businesses to operate with the import and export of goods.</li><li><strong>Obtaining the RCMC</strong> – A Registration cum Membership Certificate (RCMC) &nbsp;is essential for availing benefit or concession under the Foreign Trade Policy 2015-2020. In addition to this, an RCMC also gives the exporters the access to services and guidance by the concerned Export Promotion Councils, Community Boards, and other respective authorities.</li></ul><p><img src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-3.png" alt="" width="300px"></p><ul><li><strong>Product and the Market</strong> – Before deciding products and their destination countries, make sure that it is not listed under the prohibited or restricted list of the concerned authorities. Decisions should only be made after understanding current export trends, market size, competition, and other factors.</li><li><strong>Finding Buyers</strong> – &nbsp;Explore prospective buyers through trade fairs, buyer-seller meets, exhibitions and B2B portals. Seeking help from Indian Mission Abroad and Indian Chamber of Commerce are other ways of finding buyers. </li><li><strong>Sampling</strong> – Establish brand authenticity by providing customized samples in accordance with the demands. </li><li><strong>Pricing/Costing </strong>– &nbsp;Take into account all expenses incurred from production to marketing, Offer the best quality products at competitive prices, with a maximum profit margin. To ensure successful deals, be open to negotiations.</li><li><strong>Covering risks through ECGC</strong> – The Export Credit Guarantee Corporation Limited (ECGC) covers the risks associated with international trade. The ECGC policies cover exporters against non-payment by the buyers.</li></ul><p>The current economic scenario is conducive to export businesses in India. Make the most of it by intelligently participating in International Trade. This will not only open up new avenues for business but also for the country.</p>

How to Start an Export Business in India?

35 Digital Resources you Need For I/E Business

<p>In a previous <a href="https://www.cogoport.com/blogs/complete-guide-to-lcl-shipping-everything-exporters-importers-need-to-know" target="_blank" rel="noopener noreferrer">blog</a>, we discussed less-than-container load (LCL) shipping or the mode of shipping moderate quantities of goods in shared containers. In India, closely linked to LCL shipping is a facility called container freight station (CFS).</p>
<p>A CFS is a space, usually a large warehouse, that specialises in the consolidation and de-consolidation of LCL cargo. Consolidation is the process of combining multiple LCL shipments to form a <a href="https://www.cogoport.com/blogs/complete-guide-to-lcl-shipping-everything-exporters-importers-need-to-know" target="_blank" rel="noopener noreferrer">full container load (FCL)</a> while de-consolidation is its reverse. This does not mean a CFS deals only with LCL cargo. It handles CFS-stuffed FCL cargo too (FCL being the mode of shipping one large consignment that takes up an entire container and belongs to a single shipper).</p>
<p><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" rel="noopener"><img style="width: auto; height: auto;" src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog Banner WA 1.png" width="auto"></a></p>
<p>A CFS is also a place where goods for import and export are stored temporarily. It is an extension of a port or terminal and was conceived with the objective of clearing congestion at India&rsquo;s ports and terminals. While CFS might have started off as an Indian concept, it is now part of the international shipping vocabulary.&nbsp;&nbsp;</p>
<p>This blog throws light on the importance of container freight stations in the shipping logistics supply chain and will touch on the following subjects:</p>
<ul>
<li>Meaning of CFS</li>
<li>Functions and importance of CFS</li>
<li>Role in export and import</li>
<li>CFS charges</li>
<li>Difference between CFS, container yard (CY), inland container depot (ICD) and bonded warehouse</li>
<li>CFS/CFS shipping and more</li>
</ul>
<p style="text-align: center;"><img title="A storage area for shipping containers in Singapore. (Photo by chuttersnap on Unsplash)" src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/5f64560e879c886ecdd77c82_lXLn1g0c-7M6GQy8X0gTJYoaH1TGWa7b4PYGlazUkGN-isoFc_ObTRxvcu-gpV-P6erlp722kwOlVpAvM2LIqpw-HZB60XjZlpBIRxU3FN9_v9M4HowwZkI7mpIO8HFO9HW7HmNK.jpeg" alt="5f64560e879c886ecdd77c82_lXLn1g0c-7M6GQy8X0gTJYoaH1TGWa7b4PYGlazUkGN-isoFc_ObTRxvcu-gpV-P6erlp722kwOlVpAvM2LIqpw-HZB60XjZlpBIRxU3FN9_v9M4HowwZkI7mpIO8HFO9HW7HmNK.jpeg"></p>
<p>A storage area for shipping containers in Singapore. (Photo by<a href="https://unsplash.com/@chuttersnap?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText" target="_blank" rel="noopener noreferrer"> chuttersnap</a> on<a href="https://unsplash.com/@chuttersnap?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText" target="_blank" rel="noopener noreferrer"> Unsplash</a>)</p>
<h3><strong>What is a CFS and Why is it Important?</strong></h3>
<p>To expand on the description above, a CFS is located close to a port, terminal or inland container depot (more on this later). It might sometimes be found near a major railway hub as well. Container freight stations are owned by shipping lines and terminals or are privately owned. A CFS is involved in the import-export business at the points of origin and destination. Container freight stations are, thus, categorised as &ldquo;origin CFS&rdquo; and &ldquo;destination CFS&rdquo;.</p>
<p>In recent years, container freight stations have become a sought-after facility in import-export, thanks in part to an <a href="https://www.joc.com/article/changing-nature-trade-increasing-demand-lcl-shipping_20180526.html" target="_blank" rel="noopener">increasing demand for LCL shipments</a>. This is because they provide a centralised location where exporters and importers can have their LCL shipments sent, secure in the knowledge that their goods will be securely stored, handled and sent on the next leg of their journey.</p>
<p>India had <a href="https://www.joc.com/article/changing-nature-trade-increasing-demand-lcl-shipping_20180526.html" target="_blank" rel="noopener">168 container freight stations </a>as of March 2017, according to the latest available government data. This report by the Comptroller and Auditor General of India says container freight stations were the preferred destination for Indian exports, handling a greater value of exports than their attached ports between 2012-2013 and 2016-2017. However, ports were the preferred choice for imports in the same period.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
<p>To clearly understand what a CFS is and its part in India&rsquo;s import-export industry, it is important to know about its functions.</p>
<p><img style="width: auto; height: auto;" src="https://cdn.cogoport.io/cms-prod/cogo_public/vault/original/Blog-Banner-Portal-2.png" width="auto"></p>
<h3><strong>Functions and Responsibilities of CFS</strong></h3>
<ul>
<li>Receives and consolidates LCL shipments for export</li>
<li>De-consolidates container at destination and dispatches shipment for final delivery</li>
<li>Prepares container load plan&nbsp;</li>
<li>Stuffs and de-stuffs containers (for both LCL and FCL cargo)</li>
<li>Marks and seals containers for identification</li>
<li>Serves as temporary storage space for cargo, empty and laden containers</li>
<li>Moves empty containers from container yards (CY) and laden containers to port/terminal&nbsp;</li>
<li>Stacks, sorts, tracks and tallies containers before and after shipping</li>
<li>Maintenance and repair of containers</li>
<li>Transit operations by road/rail to and from port/terminal</li>
<li>Organises <a href="https://www.hugedomains.com/domain_profile.cfm?d=msmementor.com" target="_blank" rel="noopener noreferrer">customs clearance procedures</a> such as classification, examination and assessment of goods</li>
<li>Keeps goods safe till they are shipped or picked up</li>
<li>Deals with <a href="https://www.hugedomains.com/domain_profile.cfm?d=msmementor.com" target="_blank" rel="noopener noreferrer">break bulk</a> (loose, non-containerised) cargo originating or terminating in the immediate hinterland of the port or terminal and with rail-borne traffic to and from inland locations&nbsp;&nbsp;</li>
</ul>
<h3><strong>Export Process at CFS</strong></h3>
<ul>
<li>Exporter loads goods on truck, delivers it at CFS with <a href="https://www.cogoport.com/blogs/mandatory-documents-for-import-export" target="_blank" rel="noopener noreferrer">shipping bill</a></li>
<li>Goods are unloaded and received by CFS custodian</li>
<li>Goods undergo customs clearance procedures</li>
<li>After customs authorities endorse shipping bill with &ldquo;let export order&rdquo;, CFS stuffs goods into the container</li>
<li>CFS seals container hands it over to port/terminal for export</li>
</ul>
<h3><strong>Import process at CFS</strong></h3>
<ul>
<li>Importer/carrier/steamer agent files import general manifest (IGM) &ndash; with details of cargo, exporter, importer, ship/aircraft &ndash; at port/terminal to move cargo to CFS&nbsp;&nbsp;</li>
<li>Container received at port/terminal is forwarded to CFS&nbsp;</li>
<li>Cargo is offloaded, stacked and de-stuffed at CFS</li>
<li>Cargo owner or their clearing agent files bill of entry, proceeds with cargo clearance and duty payment&nbsp;</li>
<li>Customs endorses bill of entry with &ldquo;<a href="https://www.cogoport.com/blogs/mandatory-documents-for-import-export" target="_blank" rel="noopener noreferrer">out of charge</a>&rdquo; order</li>
<li>CFS custodian issues gate pass to release cargo to the importer&nbsp;&nbsp;</li>
</ul>
<h3><strong>Why CFS is Important</strong></h3>
<ul>
<li>It decongests ports and terminals</li>
<li>Frees them of several customs clearance procedures</li>
<li>Assigns unique identification number to vessels, facilitating easy tracking of cargo and containers&nbsp;&nbsp;</li>
<li>Maintains records of shipments, including names of exporter, importer and customs agent, cargo details, origin and destination ports, carrier name, truck number and so on</li>
<li>Provides all the benefits of containerised shipping such as greater cargo security, timely and efficient loading, unloading, stuffing and de-stuffing, and a variety of containers to suit your needs.</li>
</ul>
<h3><strong>CFS Charges</strong>&zwj;</h3>
<p>A CFS charges a fee for each activity it performs. Exporters and importers must pay attention to these charges. Failure to do so can result in:</p>
<p>a) increased logistics costs, b) shipment delays, and c) poor relations with customs authorities, which is never good for business.&nbsp;&nbsp;</p>
<h3><strong>Export activities that attract a fee</strong></h3>
<ul>
<li>Container stuffing. A composite fee is charged, which includes the cost of cargo carting, placing of the empty container, moving of laden container and the labour involved in these activities&nbsp;&nbsp;</li>
<li>Cargo storage</li>
<li>Per-day ground rent for empty and laden containers</li>
</ul>
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<h3><strong>Import activities that attract a fee</strong></h3>
<ul>
<li>De-stuffing and delivery: This fee includes the cost of transporting laden containers to CFS and grounding for customs examination&nbsp;&nbsp;</li>
<li>Cargo handling for customs examination</li>
<li>Cargo storage</li>
<li>Per-day ground rent for laden containers</li>
<li>Container scanning: This cost is incurred when customs authorities select a consignment for image scanning for any number of reasons &ndash; for example, to detect radiation or to check if the goods are as declared</li>
</ul>
<h3><strong>General and additional charges</strong></h3>
<ul>
<li>Port entry</li>
<li>Transportation to and from CFS/port</li>
<li><a href="https://www.cogoport.com/en-IN/knowledge-center/resources/shipping-terms/lift-on-lift-off-lo-lo-15" target="_blank" rel="noopener">Lift on/ lift off (LoLo)</a>. This charge is incurred when LoLo ships &ndash; vessels equipped with cranes for loading/unloading containers &ndash; are involved or when containers have to be lifted on and off truck-trailers&nbsp;&nbsp;</li>
<li>Weighment, or <a href="https://www.cogoport.com/en-IN/knowledge-center/resources/shipping-terms/lift-on-lift-off-lo-lo-15" target="_blank" rel="noopener">weight verification</a> of a packed container before it is loaded on a vessel&nbsp;&nbsp;</li>
<li>Reworking, which is the shifting of cargo from damaged containers to other empty containers</li>
<li>Shifting of cargo within CFS</li>
<li>Container sweeping</li>
<li>Container repairs</li>
<li>Provision of labour for cargo segregation, unpacking and repacking packages for customs examination, restacking and other activities</li>
<li>Chocking, lashing and dunnage to secure cargo</li>
<li>Reefer handling, such as plugging and monitoring of reefers</li>
<li>Amendments in documents</li>
</ul>
<p><strong>Note:</strong> Charges vary for 20-foot, 40-foot and 45-foot containers. In addition, charges for reefer, hazardous and <a href="https://www.cogoport.com/en-IN/knowledge-center/resources/shipping-terms/over-dimensional-cargo-odc-23" target="_blank" rel="noopener">over-dimensional cargo (ODC)</a> are higher.</p>
<p style="text-align: center;"><img title="Stacked containers in Antwerp, Belgium. (Photo by 2427999 from Pixabay)" src="https://uploads-ssl.webflow.com/5e57ba59552cf400c593fd16/5f64560e7bb66b4bc057e5cc_7gCQM50v9ncUgiw2lwCOz2g0X_D8wZaWiI0uidtsQjYbGGWM1NO6taZ46f2oYTIEyK4gxTtJ-pdBMePFb5YPCcyFLFP8P0DG9sQX8jo0w4H_yf-XZydr89_Dvry1MLAZ-L-KCOvI.jpeg" alt="5f64560e7bb66b4bc057e5cc_7gCQM50v9ncUgiw2lwCOz2g0X_D8wZaWiI0uidtsQjYbGGWM1NO6taZ46f2oYTIEyK4gxTtJ-pdBMePFb5YPCcyFLFP8P0DG9sQX8jo0w4H_yf-XZydr89_Dvry1MLAZ-L-KCOvI.jpeg"></p>
<h3><strong>CFS, CY, ICD and Bonded Warehouse &ndash; Differences and similarities&nbsp;&nbsp;</strong></h3>
<p>Like a CFS, a container yard (CY), inland container depot (ICD) and bonded warehouse are container handling and storage facilities that facilitate the import and export of goods. However, there are marked differences between them.</p>
<h3><strong>Container Yard (CY)</strong></h3>
<ul>
<li>A container yard is a dedicated area for <a href="https://www.cogoport.com/blogs/complete-guide-to-fcl-shipping-everything-exporters-importers-need-to-know" target="_blank" rel="noopener noreferrer">full container load (FCL) containers</a> whereas a CFS caters to both LCL and FCL shipments.</li>
<li>A CY is located within the port, unlike a CFS, which is located close to a port or terminal. A CFS picks up empty containers from a CY for FCL and LCL export shipments.&nbsp;</li>
<li>A <a href="https://www.cogoport.com/blogs/complete-guide-to-fcl-shipping-everything-exporters-importers-need-to-know" target="_blank" rel="noopener noreferrer">CY&rsquo;s functions</a> include aligning containers for loading on ships and storing off-loaded containers until they are transferred to a CFS or rail yard or handed over to the importer.</li>
<li>Both CY and CFS have cut-off dates by which the container must be delivered in order to make the scheduled sailing.&nbsp;&nbsp;</li>
</ul>
<h3><strong>Inland Container Depot (ICD)</strong></h3>
<ul>
<li>Like a CFS, an inland container depot (ICD) is an Indian concept. But unlike a CFS, which is located close to ports and terminals, an ICD is found further inland. The idea behind an ICD is to help exporters/importers handle their shipments closer to their factories and warehouses, especially if these are quite far from ports and terminals. It is for this reason that they are also called dry ports.&nbsp;</li>
<li>An ICD is an independent customs station like those at ports, airports and on land. It has its own automated system that allows it to examine goods and assess and process documents. On the other hand, the customs infrastructure at a CFS is an extension of the parent customs station at the port/terminal. A CFS examines goods but the processing and assessing of documents takes place at the customs house or customs station to which the CFS is attached.</li>
</ul>
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<h3><strong>Bonded Warehouse</strong></h3>
<ul>
<li>A bonded warehouse is the most different of all these facilities. It is a space authorised by customs (under a customs bond) to store import and export goods (local and foreign) on which duty payment has been deferred.</li>
<li>Bonded warehouses were conceived with the idea of insulating traders from cash flow problems. They give importers time to come up with the money for duty payment or find buyers for the goods. By transferring the title of goods to the buyer, the importer can push the duty payment on to the buyer.</li>
<li>If the importer is unable to find a buyer, they can export the imported goods without paying duty on it.&nbsp;</li>
<li>Goods can be stored at a bonded warehouse indefinitely. Doing the same at ports/terminals would result in huge demurrage fees. (Demurrage is the per-day fee a shipper pays the carrier for use of a container within a port beyond an allotted free time).</li>
<li>Another area in which a bonded warehouse is different from a CFS, CY or ICD is that the goods stored in it have already undergone customs clearance procedures.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</li>
</ul>
<h3><strong>What is CFS/CFS&nbsp;Shipping?</strong></h3>
<p>This is a term you might find on 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>. It stands for container freight station to the container freight station. In a CFS/CFS shipment, the goods are received and consolidated at the origin CFS and delivered and de-consolidated at the destination CFS. This is also called CFS/CFS (Pier to Pier). There are other CFS-related shipping terms you might want to familiarise yourself with:</p>
<ul>
<li><strong>CFS/CY (Pier to House):</strong> Here, cargo is consolidated at the origin CFS but at the destination, delivery takes place from a container yard. Such a shipment is also called an LCL/FCL shipment as it is characterised by multiple exporters and a single importer.</li>
<li><strong>CY/CFS (House to Pier): </strong>Reversely, this kind of shipment is collected from the container yard of the port of origin and delivered at the destination CFS for de-consolidation. It is also called an FCL/LCL shipment as it has a single exporter and multiple importers.&nbsp;&nbsp;</li>
</ul>

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