January 22

The Import Process: A Step-by-Step Guide

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A company based in one country purchases products or services from a company in another country. This is called importation. Imports are crucial to nations, as they can supply domestic consumers with items they cannot find within their borders otherwise.

Those who read Supply Ninjas’ blog might have read our guide to exporting. Next, we’ll talk about the process of importing.

The majority of international trade is conducted by sea and air. Shipments will be added to ocean liners as either a Full Container Load (FCL) or a Less Than Container Load (LCL). If a consignment occupies a whole field, it is known as an FCL cargo, whereas if it occupies only part of a field, it is known as an LCL cargo. An FCL cargo is bigger and has a shorter transit time than an LCL cargo. Additionally, importers will have their time-sensitive and precious shipment added via air, even if it costs more to move via air than by sea.

As an example, we discuss the steps involved in uploading items into India via sea, using an FCL transaction. Here is what you need to know:

  • Import process stakeholders
  • The tactics involved in the import process

Stakeholders in FCL import

  • Exporter: The exporter produces or procures the products and ships them to other countries. Shippers, dealers, and retailers are all terms used to describe them. Different types of exporters exist: service provider exporters, producer exporters, carrier exporters, third-birthday celebration exporters, undertaking exporters, and deemed exporters.
  • Importer: The importer is the end-consumer who buys the products shipped through the exporter. Also known as the consignor, consumer, or buyer. Like exporters, there are multiple types of importers – the real user, the connected importer, and the registered importer.
  • Origin Country: The origin country from wherein the products are shipped. The port from where containers are shipped is known as the port of foundation (POO) or the port of loading (POL).
  • Destination Country: The destination country wherein the products are sent. Port of Destination (POD) is the very last port to which the containers are shipped.
  • Shipping Line: The provider, deliver or vessel that includes the shipment from foundation to vacation spot.
  • Origin Agent: It is the forwarder of the origin country that manages communication between the shipping line, exporter, and destination agent. In some cases, a customs agent at origin also works as the origin agent, depending on the country’s shipping practices.
  • Destination Agent: Freight forwarders coordinate with shipping lines, importers, and origin agents in countries of destination. Generally, the destination agent in India also acts as the customs agent at the destination.
  • Customs Authorities: While the goods are cleared for export by customs authorities at origin, they are cleared for import by customs authorities at destination.
  • Port Authorities:They are both present at the country of origin and at the country of destination, respectively, they clear the cargo to be loaded on and unloaded from the ship.
  • Intermodal Transportation Providers: Rail, truck and trailer service providers facilitate the movement of goods between the factory, the port of origin and the final destination of imported goods.

How to Import FCL in India: A Closer Look

The infographic above illustrates the steps in FCL imports. However, there are many small steps in between. Here is an in-depth tutorial on how the FCL import process works in India for a free on board (FOB) shipment.

1.Origin activities (until vessel departure)

After the exporter and importer seal the deal and make the transportation arrangements, the exporter shares the following files and information with the importer and vacation spot agent:

  • Information about the container
  • Shipment instructions (SI) filed with the carrier at origin.
  • The draft house bill of lading (B/L) from the origin agent. Importers may demand revisions to their draft bills of lading.
  • Paying of local charges by the exporter (for services utilised at the origin port/terminal).
  • Details of the courier after the house B/L has been dispatched to the importer.
  • Detailed information about surrender if the B/L was surrendered at origin.
  • Containers shipped on board (SOB) and details of planned vessel movements are provided. (The SOB confirmation on the B/L confirms that the goods have been loaded aboard the ship.)
  • A master B/L is issued to the origin agent by the carrier. The master B/L designates the origin agent as the shipper and the destination agent as the consignee, instead of the exporter and importer on the house B/L. A master B/L is then sent from the origin agent to the destination agent.

2. In-transit activities

  • The destination agent tracks the shipment in transit after the goods have been cleared for export and the ship has left the port of origin, and informs the importer if any delays occur.
  • Customs receives an Import General Manifest (IGM) from the carrier two days ahead of arrival at the port of destination. Detailed information about all import shipments carried by ship along with the corresponding B/L numbers can be found in the IGM. Documents like this are required for import customs clearance.
  • The carrier files a Sub-Manifest Transhipment Permit (SMTP) in order to send import shipments from the port to the container depot (ICD), indicating the shipment’s B/L count and the port of destination.
  • Carriers send Cargo Arrival Notices (CANs) to the importer and whoever is designated on the Bill of Lading (either the importer or destination agent). The CAN contains the description of the goods, their weight, the number of packages, and any collection charges.

3. Container motion at destination

The containers are unloaded from the ship, loaded onto trailers, and transported to the container freight station (CFS) named by the carrier for customs clearance. As long as the final destination of the goods is not a port of destination but rather an ICD, the containers will be shifted thereby inland transportation, of which there are two types:

  • Carrier haulage – the carrier is responsible for selecting the haulage provider, setting the haulage charges, and for the delivery of the goods.
  • Merchant s haulage – Importers appoint an independent haulage provider, negotiate their own transportation rates, and guarantee safe transport of goods.

4. Bill of Entry filing

Approximately 48 hours after the ship makes its arrival, the destination agent/customs agent files the Bill of Entry (BOE) – the most important document for clearing imports. Before goods are consumed or warehoused in a country, the BOE marks their entry.

  • A customs agent in India files the BOE by entering the required information on ICEGATE – the official website of the Central Board of Indirect Taxes and Customs – which results in an import checklist being generated. Using this checklist, importers can confirm that the customs agent has provided them with accurate information.
  • After the customs agent verifies the checklist, he files the BOE for the shipment and receives an electronically generated BOE number.

5. Customs evaluation, exam, and clearance

  • A customs officer or an electronic data interchange system determines the duty applicable based on the declared cargo value and its classification according to international Harmonized System of Commodity Classification (IHSC) after the cargo arrives at the CFS/ICD and a BOE number is generated.
  • EDI/customs officers check if the cargo can be imported or if additional permits/licences are required from the importer.
  • A customs officer will request an open examination of goods if the value of the cargo is unknown or if the EDI system reports the cargo as red-flagged.
  • As soon as a customs officer has successfully assessed and examined the BOE, he stamps it with the “Pass Out Order” stamp.
  • Import duties are paid once the BOE is received by the importer.

Note: EDI systems do most customs assessments, so no assessing officers are involved.

6. Document handover to the carrier

  • Upon clearing import customs, the importer hands over to the destination agent the commercial invoice, packing list, purchase order, house bill of lading, import licence copy, certification of origin, bank guarantee and letter of credit/bank guarantee.
  • One change is that the master bill of lading replaces the house bill of lading that the destination agent submits to the carrier. Further, the agent submits an endorsement and release letter to the carrier so that it will issue the import delivery order (DO) directly to the consignee listed on the B/L (whom the importer, their agent or their bank can be).
  • A DO is issued by the carrier to the consignee.

7. Last-mile delivery

Lastly, the shipment is delivered to its final destination. At this point, importers deliver the cargo to the carrier’s container yard, empty the shipping containers, and return them. As a result, two things happen:

Case 1:

  • The CFS and ICD de-stuff the containers.
  • Once the CFS / ICD has received the DO, importer takes delivery of destuffed cargo.
  • A truck loads the cargo and transports it to an importer’s destination.

Case 2:

  • In order to de-stuff the stuffed containers, they are collected from the CFS / ICD, loaded on trailers, and transported to the importer’s facility.

This is how imports work. However, there are a few things you should keep in mind when you are importing goods and services from another country.

Beware of these hurdles

  • Make sure that the documents/information you submit at various stages of the import process are accurate and complete as inaccuracies cause delays.
  • Check if the goods you wish to import are restricted/prohibited or if additional licences or permits are required.
  • Knowing your cargo’s classification will enable you to calculate and budget for the import duty you will incur.
  • To avoid damages, it is wise to have your agent oversee de-stuffing at a CFS or ICD in the same way you supervise the de-stuffing process at your own warehouse. The reason is that not all CFS/ICD employees are trained to recognize if a shipment requires special handling.
  • To avoid demurrage fees, pick up de-stuffed containers within the allotted free time at the port/CFS after factory de-stuffing.
  • If you want to avoid detention fees, you must return the empty containers within the allotted time.

Tags

b2b software, Export/Import, Import, Importing, Imports


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