Ocean freight is one of the most common methods of shipping goods from one country to another in the export-import business. Keeping in mind the costs involved in the process along with the ease of the process, a large number of sellers prefer ocean freight for exporting products from India to international markets.
As the name suggests, Ocean Freight is the movement and transportation of goods from one country to another following the sea route.
Ocean Freight allows sellers to ship large quantities of products to international markets in a cost-effective manner. There are five different types of sea transport options that a seller can choose from – barges, tankers, bulk carriers, cargo ships, and container ships. As compared to the other mediums, the cost involved in the sea route is relatively lesser and as a result, it is one of the most preferred mediums for exporting goods.
Here is all about Ocean Freight and how a seller can ship products to international markets using the sea route:
What are the documents required to export via Ocean Freight?
The seller needs to submit some documents before the goods can be exported from the origin country to international markets. Here are the documents required to export via Ocean Freight:
- Letter of Undertaking
- Copy of the GST registration
- Import-Export Code issued by the Directorate General of Foreign Trade (DGFT)
- AD Code registration copy with the specific Port
- Commercial Invoice
- Packaging list
- Indemnity letter
Other miscellaneous documents depend on the product category and destination country. These documents can include the Certificate of Analysis that is issued by the seller to the buyer to confirm that the goods being shipped meet the quality and safety requirements.
It can also include a Manual Safety Data Sheet (MSDS) that includes information about the chemical, explosive, physical and radioactive data of hazardous materials being shipped.
The miscellaneous documents can also include some country-specific documents. For instance, shipping goods via ocean to Germany need VAT and EORI registration with the respective customs authorities along with the Power of Attorney (POA) document.
Key export organizations for Ocean Freight
There are several key government organizations involved in the process of Ocean freight. These organizations are as follows:
The GST Council is expected to issue a Letter of Undertaking which states that the goods, once dispatched from the location, will be exported. It is a critical document in the export-import business. The GST Council is also responsible for providing a GST certificate.
The Customs department is responsible for handling the shipping bills involved in the process. The Department also handles the disbursement of benefits involved in the export process like GST paid on goods being exported and duty drawbacks.
The DGFT is also responsible for handling various benefits involved in the export process. It is also the authorized agency to issue the IEC to Indian exporters.
What are the steps involved in Ocean Freight?
The sellers are expected to complete a few steps before the goods can be shipped using Ocean Freight. Here are the steps that are involved in the process:
This is a critical step in this process. Under this, the goods are moved from the exporter’s warehouse or manufacturing unit to the location of the freight forwarder.
In this step, the goods are cleared by the Customs Department of the Origin Country. The seller is expected to submit all the related documents like shipping bill, AD Code, Certificate of Origin etc. in this step
Import Customs Clearance
Once the goods reach the destination country, the shipment is cleared by the Customs Department of the destination country.
This is the final step in this process where the goods are moved to the final address of the shipment.
How does Amazon global logistics help manage logistical requirements?
Amazon’s global logistics can prove to be a critical element in the business strategy of Indian sellers. As an Indian exporter can send shipments to any part of the world by opting for Fulfillment by Amazon, which helps manage logistics in a seamless and hassle-free manner.
With a storage space of over 150 million sq ft. across the globe, Amazon has handled successful shipments of over 29 million units across the globe. Indian sellers can opt for Amazon global logistics to get end-to-end logistics support from Amazon.
E-commerce exports with Amazon Global Selling
Amazon has made it very easy for Indian sellers to ship products across the world with e-commerce exports after the launch of Amazon Global Selling. It is a specialized program that has been designed to help Indian sellers to build an e-commerce export business from India.
With a reach of over 200 countries and territories, Amazon Global Selling provides a unique opportunity to tap its 300 million customers across the globe.
Is Ocean Freight Liable for GST?
Yes. The GST framework requires sellers to pay 5% IGST on ocean freight on a reverse charge basis.
When should one choose to ship by sea?
Sellers that are shipping large quantities or goods that are heavy should opt for ocean freight. Also, in cases where the delivery date is flexible, ocean freight is the suggested route.
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