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Step-by-step guide on ocean freight to ship internationally

Ocean freight involves shipping of products via ocean across the world. This is one of the key methods used by exporters to ship internationally. In this blog, understand the step-wise process of ocean freight, its advantages and documents required.

One of the common methods of international shipping is ocean freight. Considering the ease and cost factor, many Indian exporters choose to transport their shipment by sea. Ocean freight, as the term suggests, is transportation and movement of goods or products by sea to international markets.

This is an important step in export trade, which helps exporters ship products in bulk to different countries from India. Sellers usually choose from five types of ocean transport – bulk carriers, cargo ships, container ships, tankers, and barges. Considering the relatively lower costs involved, international shipping by sea is increasing and, in turn, boosting export-import activities across the world. In this blog, we’ll help you understand the advantages of ocean freight and how you can ship your products by sea.

Documents required to export via ocean freight

1. IEC by DGFT
2. GST registration
3. Letter of Undertaking
4. AD code registration with port of export
5. Commercial invoice
6. Indemnity letter
7. Packaging list
8. Other miscellaneous documents depending on product category and destination country like:

• COA (Certificate of Analysis issued by purchaser to manufacturers, importers, and distributors of approved packaging materials)
• MSDS (Manual Safety Data Sheet containing information about the physical, chemical, explosive, and radioactive data of hazardous material in a shipment)
• For instance, shipping via ocean to Europe requires VAT and EORI registration with respective customs authorities and POA (Power of Attorney).

Key export organizations for ocean freight

GST Council

The GST Council in India provides a LUT (Letter of Undertaking), which declares that the goods will be exported once they are dispatched from the location. This is an important document in international shipping. This government authority also provides a GST certificate.

Customs Department

The Indian Customs Department regulates shipping bills – a key document in international shipping. It also handles the disbursement of export benefits like GST on IGST paid invoices and duty drawback, which is the benefit offered against a component of import.

DGFT

The Directorate General of Foreign Trade provides benefits and subsidiaries to exporters including incentives. It also is the regulatory authority for various important export licences like IEC.

What are the steps involved in ocean freight?

Export haulage

A key step in the initial process of exports, at this stage, goods are transported from a seller’s warehouse to a freight forwarder’s location. Freight forwarder is an agent or business that organizes shipment and inventory from your warehouse to the respective port¹.

Export customs clearance

This step is at the origin country. For instance, any product that needs to be shipped via ocean from India needs to go through customs clearance. In this step, a shipping bill, Certificate of Origin and AD code are required, among other documents.

Import customs clearance

Once the goods arrive at the destination port, for instance the USA, they need to be cleared by the respective country and authorities. This is referred to as import clearance, which might require fees and regulations.

Destination handling

This covers all the activities at the destination country including confirming the shipment, checking the necessary documents, transporting the container to the freight forwarders warehouse, etc.

Import haulage

This is the final step of ocean freight where goods are transported, usually by road, to the final destination depending on the customer’s shipping address. In regular terms, this is the delivery stage.

Advantages and disadvantages of ocean freight

Advantages

• Ocean freight is highly suitable for bulk shipments owing to its high shipping capacity.
• Shipping via ocean costs lesser than other methods.
• Ocean freight produces lower emissions than air freight, leading to a lower carbon footprint.

Disadvantages

• Compared to air freight, shipping via ocean is slower in terms of timelines.
• Products shipped by ocean freight are at higher risk in regard to misplacement and damage.

How can Amazon global logistics help exporters from India?

With Amazon global logistics, Indian exporters can send their shipments across the world via Fulfillment by Amazon (FBA). To assist global sellers and exporters deliver international orders in a hassle-free and seamless way, Amazon takes care of everything from packing, shipping to delivery and customer service through the FBA program. With FBA, sellers can focus on their business expansion in terms of product quality, launches, marketing and more, while Amazon handles international shipping for them. Amazon has a dedicated storage space of 150 million sq-feet and a successful shipment of more than 29 million units across the globe.

To support you for hassle-free logistics, Amazon has also launched SEND, enabling you to ship directly to international fulfillment centers at competitive prices. All you have to do is book, pay and track shipments without any hassles from India to the world.

Explore Amazon SEND

To export from India, register with Amazon Global Selling in just 15 minutes by sharing a few KYC documents (identity proof, address proof and credit card). With over 300 million customers globally, you can leverage Amazon’s global scale across 18 global marketplaces in 200+ countries and territories.

Frequently Asked Questions

Is ocean freight liable to GST?

Yes. The CGST Act requires importers to pay IGST by 5% on ocean freight under the Reverse Charge Mechanism².

When to choose to ship by sea?

If your shipment is heavy and bulky, or you have a huge volume of goods, ocean freight can be a suitable option. If you have a flexible delivery date, this is a convenient shipping method.

What are the documents needed in shipping?

To ship from India across the world, a list of documents like Commercial invoice, Packing List, and Shipper Letter of Instruction are required, among others. Amazon's Export Compliance Dashboard gives you more information on shipping documents required.

Visit Exports Compliance dashboard to view your documentation requirements

Published on March 22, 2022.

Sources:
1. https://www.cbic.gov.in/resources//htdocs-cbec/deptt_offcr/customs-manual2018.pdf
2. https://cbic-gst.gov.in/sectoral-faq.html

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*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.

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