Unit 3: Shipping, Logistics & Insurance Documentation
Indian Logistics Infrastructure
Logistics infrastructure is the system that helps move goods efficiently from the manufacturer to the buyer, both domestically and internationally.
Inland Container Depots (ICDs)
An ICD is a dry port located inland (away from seaports) for handling containerized cargo.Purpose
- Helps exporters/importers clear customs without going to the seaport
- Reduces congestion at seaports
- Stores containers temporarily
Functions
- Customs clearance
- Container storage and consolidation
- Transport arrangement to seaports
Example: Like a mini-port in the city for exporting or importing goods.
Container Freight Stations (CFS)
A CFS is a facility near ports or airports where export and import containers are handled.Purpose
- For stuffing/unloading goods into containers
- Customs inspection
- Storage of cargo before shipment or delivery
Difference from ICD:
| Feature | ICD | CFS |
|---|---|---|
| Location | Inland (away from port) | Near seaport or airport |
| Main Function | Customs + storage + transport | Stuffing/unloading + inspection + storage |
Example: Think of it as a warehouse near the port where goods are prepared for shipment.
Special Economic Zones (SEZs)
SEZs are designated areas with special economic laws to promote exports and industrial development.Purpose
- Encourage foreign investment and exports
- Provide tax incentives and infrastructure support
Features
- Duty-free import of raw materials
- Relaxed labor laws
- Better road, rail, and port connectivity
Example: Like a special business park with extra facilities for exporters.
Role of Shipping Lines
Shipping lines are companies that operate ships for transporting goods internationally.Roles
- Transport goods across seas
- Provide schedules and booking services
- Issue Bill of Lading (BOL) – proof of shipment
Example: Maersk, Hapag-Lloyd, and CMA CGM are major shipping lines in India.
Role of Freight Forwarders
Freight forwarders are intermediaries between exporters/importers and carriers (ships, airlines, trucks).Roles
- Book cargo space on ships or planes
- Handle documentation (export/import)
- Consolidate small shipments into full containers
- Arrange insurance, customs clearance, and door-to-door delivery
Example: They are like a travel agent for cargo, making the shipping process smooth.
Summary Table
| Infrastructure / Role | Location / Function | Purpose |
|---|---|---|
| ICD (Inland Container Depot) | Inland cities | Customs clearance, storage, transport to port |
| CFS (Container Freight Station) | Near ports/airports | Container stuffing/unloading, customs inspection, storage |
| SEZ (Special Economic Zone) | Designated export zones | Promote exports, tax incentives, industrial growth |
| Shipping Lines | Sea/air carriers | Transport goods internationally, issue Bill of Lading |
| Freight Forwarders | Service intermediaries | Book cargo, handle docs, consolidate shipments, manage customs |
Types of Shipments
When exporting or importing goods, the shipment can be full or shared:
Full Container Load (FCL)
The exporter fills an entire container with goods for one consignee.Pros
- Faster shipment
- Less handling → lower risk of damage
- More cost-effective for large shipments
Cons
Higher cost if you don’t have enough goods to fill the container
Example: A company exporting 20 tons of electronics fills one 20ft container.
Less than Container Load (LCL)
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Meaning: The exporter ships less than a container load; goods from multiple exporters are consolidated in one container.
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Pros:
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Cost-effective for small shipments
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Flexible for small exporters
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Cons:
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Slower, as container is shared
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More handling → higher risk of damage
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Example: A small exporter sends 2 tons of garments; the container also carries goods from others.
Types of Transport Documents
Transport documents are proof of shipment and necessary for customs, payment, and ownership.
Bill of Lading (BOL or B/L)
A document issued by the shipping line to the exporter acknowledging goods received for shipment.- Acts as receipt of goods
- Serves as contract of carriage
- Acts as document of title for goods
Airway Bill (AWB)
Meaning: A document issued by airlines for cargo transported by air.
Functions
- Receipt of goods
- Contract for air transport
- Not a document of title (cannot transfer ownership)
Example: Shipping laptops to Dubai via air cargo → AWB issued.
Multimodal Transport Document (MTD)
Meaning: Used when goods are transported by more than one mode (road + rail + sea/air).
Purpose
- Single document covers all transport legs
- Simplifies logistics and documentation
Example: Export from Lucknow → transported by truck to Kolkata port → shipped to Singapore → single MTD used.
Marine Insurance in India
Insurance that protects goods against loss or damage during sea transport.Purpose
Protects exporter/importer from risks like storm, theft, sinking, or piracy
Types
- Open Policy: Continuous coverage for multiple shipments
- Specific Policy: Covers one shipment only
Governing Bodies:
- Private insurance companies
- General Insurance Corporation of India (GIC)
Example: Electronics exported to Europe insured for $50,000 → if ship meets accident, insurance covers the loss.
Summary Table
| Topic | Type / Example | Purpose / Key Point |
|---|---|---|
| FCL | Full Container Load | One exporter fills entire container; faster, safer for large shipments |
| LCL | Less than Container Load | Small shipments consolidated; cheaper for small exporters, slower |
| Bill of Lading (B/L) | Shipping line | Receipt, contract, and title for sea transport |
| Airway Bill (AWB) | Airline | Receipt and contract for air transport (not title) |
| Multimodal Transport Document (MTD) | Multiple transport modes | Single document covering road + sea/air + rail |
| Marine Insurance | Open/Specific Policy | Protects goods during sea transport against loss/damage |