3. IMPORT
EXPORT
India’s Foreign Trade i.e. Exports and
Imports are regulated by Foreign Trade
Policy notified by Central government in
exercise of powers conferred by section 5
of foreign trade (Development and
Regulation) Act 1992. Presently Foreign
Trade Policy 2015-20 is effective from
1st April, 2015. As per FTD & R act, export
is defined as an act of taking out of India
any goods by land, sea or air and with
proper transaction of money. The FTP
2015-20 has been extended till 30th
September, 2021.
2022
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5. Costs for different types of
shipping
Overview
• In simple terms, shipping costs are the costs for the
movement of cargo from Point A to Point B.
Depending on the type of contract, multiple
components may be covered in the shipping costs.
Add transitions, animations, and motion.
• In its broadest form to cover a door to door
movement, shipping costs can be divided into ocean
costs and landside costs both having its own
individual components.
• Ocean costs have many components but the main
costs are Ocean Freight; Bunker Adjustment Factor
(BAF); ISPS; Emergency Risk Surcharge;
Destination Arbitrary; Low Sulphur Surcharge; Peak
Season Surcharge; Currency Adjustment Factor and
more.
• Landside costs may be further split into port, road,
rail, documentation, customs etc. each of these
categories having their own costs such as Terminal
Handling, Wharfage, Cartage, Chassis Usage, Tri-
axle, Railage, Documentation Fee, Delivery Order
Fee, Customs brokerage fee etc.
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7. Ocean Costs
Ocean Freight
• Costs cover the cost of movement
of the cargo while it is on the
water. Freight costs are charged per
container whether 20’ or 40’ and the
cost is calculated from loading at a
port till discharging at the
other. Each carrier or shipping line
charges their own freight for the
same route and these costs are
depending on the operating costs of
the carrier such as ship operation,
container costs, operating costs and
more.
Bunker Adjustment
Factor (BAF)
• Relates to the cost of the bunker or
in other words, the fuel for the ships.
Various shipping lines use various
methods of calculating the BAF
which in the past used to be a
percentage value of the freight, but
in recent times is being charged on
a per 20’ or 40’ basis. Depending on
the oil price the BAF fluctuates.
International Ship and
Port Facility Security
Code(ISPS)
• This is charged by the shipping line
for the monitoring and protection of
the ports and harbors post 9/11.
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8. Ocean Costs
Low Sulphur
Surcharge
• Relates to bunker but as part of the
green initiative and to reduce carbon
emissions, a lot of the ships use fuel
which has low Sulphur content
which is more expensive than the
normal bunker fuel and therefore
this charge is implemented.
Currency Adjustment
Factor (CAF)
• Relates to the cost charged by the
shipping line to cover against the
exchange losses they may
experience when converting costs
and revenues from various
currencies into US Dollar which is
the main trading currency globally.
For example, freight maybe quoted
in EUR but the shipping lines costs
are in USD.
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10. Landside Costs
Terminal Handling
Charge (THC)
• THC charged by both the load port
and discharge port and that is
charged by the port for loading and
discharging the cargo from the ship.
The shipping line or their agent, in
turn, will bill these charges to the
shipper/consignee.
Wharfage
• Wharfage also a port charge which
is levied by the port directly to the
cargo interest for the usage of their
facilities and space.
Cartage
• Cartage the charge for the
movement of cargo by road say from
the port to the consignee’s
warehouse or vice versa.
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11. Landside Costs
Chassis Usage
Surcharge
• Chassis Usage Surcharge the
surcharge charged by the line for
the usage of the chassis for the
above-mentioned cartage and as
part of this movement and
depending on the weight of the
cargo, a tri-axle surcharge (for
weights exceeding the road limits)
maybe charged
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13. Other Charges
Peak season
surcharge
• Peak Season Surcharges (PSS)
refer to temporary surcharges that
major shipping carriers will apply to
their base rate to cover increased
operational costs during periods of
high demand. Most surcharges take
the form of a flat fee applied per
package and can differ widely
between carriers.
Inland haulage
charges
• The term IHC - Inland Haulage
Charges means, the transportation
charges to and from inland
Container Depot/ Freight Station to
sea port of loading or vice versa. If
moved by rail, the charges of
moving goods from such location to
Port of Loading/ Discharge is known
as Inland Haulage Charges.
Pre carrige haulage
• Pre-Carriage – is the term given to
any inland movement that takes
place prior to the container being
delivered to the port/terminal. If the
activity is performed by the client or
their transporter, it is called
Merchant Haulage and in such
cases, the bill of lading will not show
any place of delivery.
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14. Who charges and who pays
• Generally, the ocean cost component is
charged by the carrier (including NVOCC)
and/or their agent to the BCO or the
Freight Forwarder. The landside charges
are charged by various entities such as
the port (THC, Wharfage), haulier
(cartage), customs agent (clearing
charges, duty)
• Who pays for these charges depend
entirely on the terms of the shipment
agreed between the buyer and seller.
Majority of the buyers and sellers use
the Incoterms or International Commercial
terms which are a series of pre-defined
commercial terms published by
the International Chamber of
Commerce to decide on what each other’s
responsibilities and liabilities are in terms
of this trade.
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15. Summary
Sounds complicated huh? While
there are various factors and
components that govern the
application and charging of
shipping freight costs, it needs not
be complicated if both the buyer
and seller understand these costs
and when it is applicable and who
needs to be paid.
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17. Custom House Agent (CHA)
Overview
• Customs house agent (CHA) is licensed
to act as an agent for transaction of any
business relating to the entry or departure
of conveyances or the import or export of
goods at a customs station. CHAs
maintain detailed, itemized and up-to-date
accounts. A CHA license may be
temporary or permanent.
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18. CHA charges
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Sr no Export Import
1 Documantation charges Documantation charges
2 Examination charges Examination charges
3 Agency charges Agency charges
4 Lashing / Choking charges Service charge
5 F/S self sealed Container opened for examination charge CMC
6 ICD stuffing Shipping line charges
7 Phytosanitary Certificate charges Custom duty
8 Phytosanitary Certificate challan Insuarance if required for F/D
9 Greasing & labour Charges Misc charges
10 GST extra
11 Transportation charges if any extra
12 CFS
13 Lift on charges
14 Fumigation Charges
15 Survey charges
16 ICD charges (Concor / Thar )
17 PSA Scial Truck Entry Fees
18 Clearance expense
19 Port sundries
20 Forklift Operator incidental
21 Weighmrnt
22 Codex VGM
23 Halting charges per vehicle per day
24 Liner charges
25 Duties and taxes
20. CHA charges
Lashing / Choking
charges
• Cargo choking is done using heavy
wooden blocks or logs in different
sizes and weight to give support to
the base of the goods. Both lashing
and choking are done to reduce
and nullify the damage done to
the goods in the container. It is a
crucially important step before any
transportation is performed.
Lift On/Lift Off
(LO/LO)
• Lift On/Lift Off (LO/LO)- Charge by
the carrier for lifting of an FCL
from the truck upon receipt at a
depot or container yard . Term is
also used when import FCL's are
lifted at the ocean carriers facility
onto the importers or forwarders
truck.
VGM charges
• The VGM is simply the total of the
container's tare weight plus the
weight of the cargo stuffed inside.
• Verified gross mass (VGM, for
short, sometimes referred to as
verified gross weight) .It is obvious
that when forwarders provide the
service of creating and/or sending
the VGM (VERMAS) to the carrier
they are going to charge for it.
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21. CHA charges
Halting charges per
vehicle per day
• Carrier haulage: In case of through
bill of lading, it is reminded that a
"truck halting charges" are charged
to the Merchant in case of
consignee's delay in clearance in
landlocked countries.
CMC charges
• CMC charges means charges
payable to Supplier for successfully
carrying out the comprehensive
maintenance as per the provisions
of Tripartite Agreement during the
CMC Period
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23. Freight forwarders
Overview
• A freight forwarder, forwarder, or forwarding agent, is a person or company
that organizes shipments for individuals or corporations to get goods from
the manufacturer or producer to a market, customer or final point of
distribution.[1] Forwarders contract with a carrier or often multiple carriers to
move the goods from one country to another. A forwarder does not move the
goods but acts as an expert in the logistics network. The carriers can use a
variety of shipping modes, including ships, airplanes, trucks, and railroads, and
often use multiple modes for a single shipment. For example, the freight
forwarder may arrange to have cargo moved from a plant to an airport by truck,
flown to the destination city and then moved from the airport to a customer's
building by another truck. International freight forwarders typically handle
international shipments and have additional expertise in preparing and
processing customs documentation and performing activities pertaining to
international shipments.
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24. The way to
get started
is to quit
talking and
begin doing.
Walt Disney
2022
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