SI Unit 1

Shipping Insurance (Unit-1) III Year
Unit - I
SHIPPING AND INSURANCE PRACTICES AND
PROCEDURES
• Objectives: To make the students aware of the shipping, and
insurance practices and procedures which constitute the
essential services for the operation of foreign trade?
1. Role of Shipping, liners and tramps, bill of lading and Charter

Party.
2. Containerization= Need and Function – Types of Containers.
3. Determination of shipping freight.
4. Air Transport and procedures involved in the determination of

freight and booking of cargo space.
5. Multi-model transport and the procedures involved.
6. Packing and Marketing Exports.
7. Forwarding and clearing agents and their operations.
8. Cargo Insurance, its importance, basic principles, types of

cover, types of losses and determination of premium.
9. Obtaining a cover a filing a claim and settlement of claim.
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Unit - 1: Role of shipping, liners and tramps, bill of lading

and charter party
Shipping:-
• A shipping is the transportation of cargo. It means the order is getting

packed for transportation and dispatched means the shipped items is
sent to the next warehouse for final scrutiny before delivery to the
courier.
Shipping order: –
• A document used by a business to specify what items are to be

transferred from a storage location or warehouses to what person and
to what new location. A shipping order typically is sent along with a
shipping of goods. So that the person receiving them can verify that the
document correctly reflects the items that they actually received.
Role of shipping:–
• A shipping agency or shipping agent is the designated person or agency

held responsible for handling shipment and cargo, and the general
interests of its customers, at ports and harbors worldwide , on behalf of
ship owners, managers and charterers. In some part of the world, these
agents are referred to as port agents, liners agents and own agencies,
each rendering specific services depending on the shipping company
they represent.
• In other words, a ship agent is any person or company that carries out
the functions of an agent, irrespective of whether they are in business as
a ship agent, or they perform such functions as a adjunct to, or
conjunction with, other activities such as ship owing or operating,
providing cargo handling or similar.
• Shipping agent will usually take care of all the regular routine tasks of a
shipping company quickly and efficiently. They ensure that essential
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supplies, crew transfers customs documentation, and wastes

declarations are all arranged with the port authorities without delay.
Quite often, they also provide the shipping company with updates and
reports on activities at the destination port, so that shipping companies
have real - time information available to them while goods are in transit.
Shipping Liners
This introduction is made to offer the basic understanding of the nature and
the scope of Liner Shipping Business. It covers the origin and the history of
growth of Liner Business. The revolution in the shipping industry and its
commitment to various traders dealing worldwide sitting in their territory
entrusting their responsibilities on the shipping professional to move either
their raw material from a different country to their point of production and
their finished goods to the required point of consumption is discussed in
detail in the sessions to come.
Liner shipping has seen the dramatic changes in the last phase of the 20th
century. By the beginning of this century the changeover had completed
with Containerization supported in some areas by Roll-on/Roll-off services
accounting for almost all international movement of manufactured and
semi manufactured goods.
History Of Liners
Liner Shipping means liner services when a shipping company engages their
fleet of ships to carry cargo between predetermined ports at regular
intervals, under publicly advertised schedule.
Services provided by a steamship company or shipping line, under which

cargo vessels operate according to a fixed schedule and publicly advertised
freight rates.
Liner Shipping means liner services when Shipping Company engage their
fleet of ships to carry cargo between predetermined ports at regular
intervals, under publicly advertised schedule.
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Features of shipping lines:
The special features of this service can be highlighted as under:-
a) The service is offered at regular interval, say weekly or fortnightly

basis.
b) Obligation to accept cargo from all customers and to sail on the date
fixed by a published schedule even if ship is not fully loaded.
c) A fixed port rotation or itinerary or schedule to follow.
d) The service is comparatively cheaper and reliable.
Role Of Shipping Lines: Shipping Lines are playing an important role in

Multi-modalism by providing containers for domestic and International
trade in the form of ‘Cabotage’ movement (Cabotage: Carriage of domestic
cargo in international containers). In globalisation 1, shipping industry is
shrinking the world. It is bringing countries and population close together
and making them more independent. It is also providing easy access to
markets abroad. The most pressing issue for shipping lines are the business
demand of finding a path to sustainable profitability, satisfying customer
needs, planning for the huge capital investments necessary to keep up with
the global trade, determining the most effective use of information
technology to improve business efficiency and customer satisfaction.
Efficiency and customer satisfaction is most complicated and difficult task,
which is to be one’s priority. In international business, shipping lines have
made shipment more competitive, which enabled the importers/exporters
to enter into the global market. Shipping Lines have succeeded in quietly
becoming one of the most important foundations of global trading.
Characteristics of Liners ship
1. Liner ship is designed to carry a variety of cargo, with spaces for bales,
bundles, boxes barrels, drums etc. as well as for refrigerated cargo. The
design of holds and number of decks in cargo will be different from those
of a tramp. With the increased share of containerised cargo, specially
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designed container ships for carrying different categories of containers

operate.
2. The cargo handling equipment on a liner will be varied and sophisticated

for quick loading and unloading of cargo to ensure a quick turn around. A
quick turn around means that the ship spends the least possible time in
the port and most of its time in transit.
3. A liner ships frequently operates between fixed ports and normally loads
in several ports. It serves a number of discharging ports along a
predetermined route.
4. In order to ensure speedier carriage, liners ship is fitted with

sophisticated and expensive propelling machinery.
5. Liners shipping service provides pre - announced scheduled services on

given terms and conditions of carriage. These conditions in the receipt
mostly relate to the responsibilities and liabilities of the ship owners,
carriage and delivery cargo.
6. Liner shipping generally offers carriage on fixes and stable freight rate.
Advantages of Liner Shipping
1. Capacity: Liner ships can carry a lot of goods. This is one of their key
advantages over air shipping. Also, the shape of what you need to
transport doesn't matter. You can pick the ship to match your cargo.
Heavy machinery, cars, and plastic bottles for recycling can all be carried
on a liner ship.
2. Cost: Shipping is simply the cheapest way to transport goods, which is

why its a method used by many companies. If time isn't important, a ship
is the way to go. Also, if you don't have an entire shipload, you can share
space and cost on a cargo ship with other businesses.
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BENEFITS OF LINER SHIPPING
International liner shipping is a sophisticated network of regularly

scheduled services that transports goods from anywhere in the world to
anywhere in the world at low cost and with greater energy efficiency
than any other form of international transportation.
1. EFFICIENCY:- Liner shipping is the most efficient mode of transport

for goods. In one year, a single large containership might carry
over 200,000 container loads of cargo. While individual ships vary
in size and carrying capacity, many container ships can transport
as many as 10,000 containers of goods and products on a single
voyage. Similarly, on a single voyage, some car carrier ships can
handle 7,600 cars. It would require hundreds of freight aircraft,
many miles of rail cars, and fleets of trucks to carry the goods that
can fit on one large liner ship.
2. GLOBAL ECONOMIC ENGINE: - Liner shipping connects countries,
markets, businesses and people, allowing them to buy and sell
goods on a scale not previously possible. Today, the liner shipping
industry transports goods representing approximately one-third of
the total value of global trade. It contributes hundreds of billions
of dollars to the global economy annually thereby increasing gross
domestic product in countries throughout the world. Moreover, as
the lifeblood of global economic vitality, ocean shipping
contributes significantly to international stability and security.
3. LOW ENVIRONMENTAL IMPACT: - Ocean shipping is the most
carbon-efficient mode of transportation and produces fewer
grams of exhaust gas emissions for each ton of cargo transported
than air, rail, or road transport. The millions of containers that are
used around the world are now 98 percent recyclable.
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Disadvantages of Liner Shipping
1. Speed: It's not the fastest way to get cargo from one place to another.
That's the major downside of liner shipping. An air shipment may take
one or two days, while a liner shipment could take a month or more.
2. Reliability: Ships are unreliable in terms of time of arrival. They run on a
weekly schedule and delays can be common. They are reliable in terms
of maintaining the quality of the goods they are shipping, but if
customers are waiting on the other end, it could hurt your business if
you rely only on ships.
3. Ship technology continues to improve, and shipments made by ocean
will likely be faster one day. Today they remain a cheap source of
transport for a huge amount of cargo, but if you want something
delivered quickly, ship it by air.
Tramp Trade
A boat or ship engaged in the tramp trade is one which does not have a fixed
schedule or published ports of call. As opposed to freight liners, tramp ships
trade on the spot market with no fixed schedule or itinerary/ports-of-call(s).
A steamship engaged in the tramp trade is sometimes called a tramp steamer;
the similar terms tramp freighter and tramper are also used.
The term tramper is derived from the British meaning of "tramp" as itinerant
beggar or vagrant; in this context it is first documented in the 1880s, along with
"ocean tramp" (at the time many sailing vessels engaged in irregular trade as
well).
Types of TRAMP CHARTERS
1. Voyage charter: - The voyage charter is the most common charter

in tramp shipping. The owner of the tramp is obligated to provide
a seaworthy ship while the charterer is obligated to provide a full
load of cargo. This type of charter is the most lucrative, but can be
the riskiest due to lack of new charterers. During a voyage charter
a part or all of a vessel is leased to the charterer for a voyage to a
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port or a set of different ports. There are two types of voyage

charter – net form and gross form. Under the net form, the cargo
a tramp ship carries is loaded, discharged, and trimmed at the
charterer's expense. Under the gross form the expense of cargo
loading, discharging and trimming is on the owner. The charterer
is only responsible to provide the cargo at a specified port and to
accept it at the destination port. Time becomes an issue in the
voyage charter if the tramp ship is late in her schedule or loading
or discharging are delayed. If a tramp ship is delayed the charterer
pays demurrage, which is a penalty, to the ship owner. The
number of days a tramp ship is chartered for is called lay days.
2. Time charter: - In a time charter the owner provides a vessel that
is fully manned and equipped. The owner provides the crew, but
the crew takes orders from the charterer. The owner is also
responsible for insuring the vessel, repairs the vessel may need,
engine parts and food for the ship's personnel. The charterer is
responsible for everything else. The main advantage of the time
charter is that it diverts the costs of running a ship to the
charterer.
3. Demise charter :- The demise charter is the least used in the
tramp trade because it heavily favors the owner.[1] The ship owner
only provides a ship devoid of any crew, stores, or fuel. It is the
Charterer's responsibility to provide everything the ship will need.
The ship owner must provide a seaworthy vessel, but once the
charterer accepts the vessel, the responsibility of seaworthiness is
the charterer's. The charterer crews the vessel, but the owner can
make recommendations. There are no standardized forms in a
demise charter, contracts can vary greatly, and are written up to
meet the needs of the charterer.
4. Brokerage :- Tramp ship owners and tramp ship charterers rely on
brokers to find cargoes for their ships to carry. A broker
understands international trade conditions, the movements of
goods, market prices and the availability of the owner's ships.
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Characteristics of Tramp Shipping
The shipment of goods through tramps is known as tramp shipping. A tramp

carrier has the following characteristics:
i) Homogenous transportations: These ships are used for transportation

of huge quantity of homogeneous cargo, which is carried in bulk
quantity. Examples of such cargo are gain, coal, sugar, timber, wheat, ore
phosphate etc.,
ii) No fixed Route and Tariff: It does not have fixed route and
predetermined schedule of departure. Tramps travel a route regularly on
the rule of demand and supply in the market. They are not committed to
any discipline in respect of service schedule and freight rates. Their
freight decline and thrill are purely market, driven. They run where there
is driven. They run where there is demand. They can be compared to
private buses in a marriage season whore there are no fixed rates and
totally depend on flu season's demand.
Generally, each tramp carries cargo of few ship users. They carry on
specific voyage or consecutive voyage. In other words, for the same
route they move continuously, one voyage after another. So, loading and
discharging are confined to a few ports.
iii) Less Expensive and Less Operating Costs: As they carry

homogeneous cargo, their equipment is simple. Bulk cargoes are
normally loaded and discharged by mechanical equipment, elevators and
pumps that are less expensive. As they carry comparatively low unit
value commodities, a tramp is operated at the lowest possible operating
cost.
iv) Terms and Conditions Negotiable: As their services, terms and

conditions, freight charges are not fixed, they are not given and totally
negotiable.
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DIFFERENCE BETWEEN LINER SERVICE AND TRAMP

SERVICE
Liner Service Tramp Service

1. The liner ship is formed to 1. They are designed in such a
transport a variety of goods way that it becomes suitable
with great room for parcels, for them to carry a simple,
bales, bundles, etc. It also has identical, and uniform cargo in
the space to carry refrigerated large quantities. So, it is very
items. The number of the appropriate for transporting a
compartments and decks may specific type of cargo.
also be different in the Liner
ships than that of the
Trampers as they are designed
to take a variety of loads that
can be placed in the container
or compartment
complimenting its
characteristics.
2. The handling equipment may 2. As the ships don’t have a fixed
differ owing to the schedule, route, and
requirement of loading and destination, it cuts the cost of
unloading the cargo in a the Tramp service. Besides
shorter time. that, these less expensive
equipment are often fit in the
ships with lesser speed.
3. For speedy loading and 3. The loading and unloading in

unloading, the ships are the case of the Tramp shipping
equipped with highly are limited to a smaller
advanced moving machines. number of ports as the
tramper transports the cargo
of one or two shippers.
4. The services have a 4. There is no fixed route or

predetermined set of rules predetermined schedule.
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and conditions that define the

responsibilities of the ship-
owners and the terms related
to the carriage and delivery of
the cargo.
5. They have fixed freight rates. 5. The rates are negotiable.
DOCUMENTS USED IN EXTERNAL TRADE
Several documents are used in external trade. Some of the important

documents are as follows:
(i) Indent
(ii) Letter or Credit
(iii) Bill of Lading
(iv) Charter Party
The term 'Indent' has already been explained in the previous pages. The
term ‘letter of credit’ has been explained in the next chapter “Financing of
External Trade", while the terms 'bill of lading’ and ‘charter party’ have
already been explained in a preceding chapter ‘Transportation in the book’.
(i) Indent
An indent is an order sent to another country for the import of goods. The
name 'indent' is derived from the old practice of cutting or ‘indenting’ the
edges of duplicate or triplicate copies of the order sent to a foreign country
for the purpose of identification. This was done to prevent forgery or the
substitution of any one copy by some other document. The term indent
continues to be used through the practice of indenting the edges of the
copies of the order is no longer required.
The main contents of an indent are as follows:
1. Quantity of goods to be imported.

2. Quality, design or size of goods.
3. Mode of packing and marking.
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4. Mode of shipment and insurance

5. Period of delivery
6. Mode of payment
INDENT
Garg Enterprises
Indent No. G/10/89 21, Restogi House
Ms. Johnson & Bros Ltd. Connaught Circus
XYZ Street New Delhi-1 (India)
London, B.C. 1
January 31, 2006
Dear Sirs,
Please purchase and ship to us the following goods:
Quantity Description Mark
---------------------------------------------------------------------------------------------------
8000 100 cases of 100 each Restogi
of Parker Pens Delhi
No. 80 Garden
Please ship the above goods by the first available ship to be delivered CIF Bombay. Draw
on us through the State Bank of India, New Delhi with which we have arranged the letter
of credit on receipt of your shipping documents.
Yours faithfully,
(For Restogi Enterprises)
Sd/N. Restogi
Director
An indent may be of the following types:
1. Open Indent: In this type of indent, the importer authorises the

exporter to decide the quality and price of goods to be sent. The
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exporter is expected to exercise his best judgment in the choice of

goods.
2. Closed Indent: In a closed indent the importer gives full details

regarding the quality and price of goods to be sent. The exporter is not
allowed to exercise his discretion in the choice of goods.
3. Confirmatory Indent: An indent which is subject to confirmation by

the importer or his agent is known as confirmatory indent. In such a
case, the final indent is sent after confirmation.
(ii) Letter of Credit

A letter of credit is a document issued by a bank in the importer’s
country in favour of a foreign dealer. It contains an undertaking by the
bank that the bill of exchange drawn by the foreign dealer on the
importer will be honoured on presentation to the extent of the amount
specified in it. A letter of credit is generally issued by the bank on the
basis of a deposit by the importer. It is a proof of the importer’s
creditworthiness.
A letter of credit may be of the following types:
1. Clean Letter of Credit: In this type of letter of credit no conditions are

laid down for the acceptance and payment of the bill of exchange.
2. Documentary Letter of Credit: It lays down the condition that the

documents of title to goods must be sent along with the bill of exchange
without which the bill will not be honoured.
3. Revocable Letter of Credit: It can be cancelled or withdrawn at the

discretion of the issuing bank at any time without the prior consent of
the foreign dealer or exporter in whose favour it has been issued. It is
also known as unconfirmed letter of credit.
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4. Irrevocable Letter of Credit: It cannot be withdrawn by the issuing

bank without the prior consent of the foreign dealer concerned. It is also
known as confirmed letter of credit.
5. Revolving Letter of Credit: When the amount stated in a revolving

letter of credit is drawn by the foreign dealer, it is automatically renewed
again for the original amount. Suppose a revolving letter of credit is
issued for Rs. 5 lakh. The moment the exporter withdraws Rs. 5 lakh, the
same letter again becomes valid for a sum of Rs. 5 lakh and it continues
to operate again and again. Such a letter of credit is very useful to the
importers who import goods in bulk on a regular basis. However, only
well-established and reputed importers are allowed this facility by banks.
Advantages of letter of credit
To Exporter –
1. Certainty of payment- Letter of credit provide an absolute assurance

to the exporter that he will get payment for his goods. Thus, his risk is
completely avoided.
2. Immediate negotiation of the bill possible- The bills drawn under a

letter of credit can be very easily and immediately negotiated to any
banker. An account of the firm commitment of the banker issuing letter
of credit. The exported can thus, readily obtain funds and need not wait
till actual payment of the bill as is the case with bill of exchange meant
for collection.
3. Certainty Regarding observance of foreign exchange about

restrictions: Since the issuing banker must have varified the restrictions
applicable to remittance to export country before issueing the letter of
credit, the exporter can reasonably be sure of availability of foreign
exchange in the importers country for honouring his bill of exchange.
4. Advance may be secured - On the basis of letter of credit, the

exporter may obtain from his bankers, advance for manufacturing or
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processing of goods to be exported under the letter of credit.

Advantages to importer
1. Letters of credit enable the importer to import goods which otherwise

would not have been possible for him on account of exporter's ignorance
about his integrity and credit worthiness.
2. Letter of credit assume the importer that the bill drawn under such
letter of credit will be honoured only when it is accompained with
proper documents of title complete in all respect.
TYPES OF CREDIT REQUIREMENTS

Credit is required by both parties - exporter and importer involved in the
foreign trade.
Credit Needs of an Exporter
Credit needs of an exporter can broadly be classified into two categories:
(1) Pre- shipment Credit - This is also termed as packing credit. This credit is
required a to enable the exporter to procure, produce as manufacture
goods meant for export. This includes credit for the purchase of raw
material or finished goods and paying expenses relating to the
manufacturing of goods. It also included credit for incurring expenses on
freight, insurance, custom duties etc. Packing credit advances loan, cash
credit or overdraft are essentially short-term in nature and are liquidated
on shipment either by negotiation of the relative shipping documents
and Letter of credit on by discounting the bill drawn on the foreign buyer
(2) Post- shipment credit - There is usually a sufficient time between the
shipment of goods and recovery of their price. Post- shipment credit is
provided to the exporter to meet his financial needs for this time lag.
The credit is usually granted against the shipping documents till the
export proceeds are realized. This may be both short term as well as
medium term.
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a) Short- term post- shipment: This finance may be granted either by

purchasing / discounting of the relative export bill of exchange (also
known as draft) or by sanctioning an overdraft limits against it
b) Medium - term post shipment finance - In order to enable the Indian

exporters to complete with their counterparts from other countries in
the matter or credit facilities, the banks in India also provided them
medium – term Credit. The credit period is of more than 6 months but
not more than 5 years. It may be 7 уеаrs in еxсерtional cases. Such
finance is particularly required when the exporter supplies capital goods
on deferred credit basis to an importer. Under deferred payment system
the price is paid to exporter in installments spread over a period ranging
for 2 to 7 years.
Credit needs of an Importer - The credit needs importers are in the form
& loans or advances against documents (bill of lading, delivery order
etc.) dispatched to him by the exporter. It may also in the form of
opening letter of credit on behalf of the importer in favour of the foreign
exporter.
Pre-Shipment finance
1. Meaning: Pre-Shipment finance refers to the credit extended to the

exporters prior to the shipment of goods for the execution of the export
order.
2. Purpose: It is granted to an exporter for financing the purchase,

processing, manufacturing or packing of goods prior to shipment as
defined by the Reserve Bank of India.
3. Amount of Finance: Generally, the amount of packing credit does not

exceed the FOB value of the goods to be exported or their domestic
value whichever is less.
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4. Beneficiary: It is extended to the Indian exporters or deemed

exporters from India.
5. Form of Finance: It is extended in the following forms:
i. Extended Packing Credit Loan;
ii. Packing Credit Loan (Hypothecation and Pledge);
iii. Secured Shipping Loan.
6. Period of Credit: It is granted for a maximum period of 180 days and

can be further extended for a period of 90 days with a prior permission
of the RBI.
7. Documentary Evidence: It is extended against the documentary
evidence of confirmed export order or letter of credit.
8. Lending Institutions: It is generally extended by commercial banks in
India.
Post-Shipment Finance
1. Meaning: Post-shipment finance refers to the credit extended to the

exporters after the shipment of goods for meeting working capital
requirement.
2. Purpose: Short-term finance is extended for meeting working capital

requirement and medium and long-term for exports on deferred
payment.
3. Amount of Finance: Post-shipment finance can be given to the extent

of 100% of the invoice value of the goods exported.
4. Beneficiary: It is extended to the Indian exporters as well as the

overseas importers.
5. Form of Finance: It is extended in the following forms:
i. Discounting of export bills,
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ii. Against undrawn balances
iii. Against retention money;
iv. Against goods on consignment.
6. Period of Credit: It can be granted for short. medium and long term
for periods ranging from 90 days to 12 years depending upon the nature
of exports.
7. Documentary Evidence: it is extended against the evidence of

shipping documents certified by the customs authorities.
8. Lending Institutions: Short-term post-shipment credit is extended by

the commercial banks while medium and long-term credits are extended
by the EXIM bank.
(iii) Bill of lading

A bill of lading (BL or Bol) is a legal document issued by a carrier to a
shipper that details the type, quantity, and destination of the goods
being carried. A bill of lading also serves as a shipment receipt when the
carrier delivers the goods at a predetermined destination. This
document must accompany the shipped products, no matter the form
of transportation, and must be signed by an authorized representative
from the carrier, shipper, and receiver.
As an example, a logistics company intends to transport, via heavy

truck, gasoline from a plant in Texas to a gas station in Arizona. A
plant representative and the driver sign the bill of lading after loading
the gas on the truck. Once the carrier delivers the fuel to the gas station
in Arizona, the truck driver requests that the station clerk also sign the
document.
According to Lord Blackburn, A Bill of Lading is “a document in writing

signed on behalf of the owner of the ship in which goods are embarked
acknowledging the receipt of the goods, and undertaking to deliver them
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at the end of the voyage subject to such conditions as may be mentioned

in the bill of lading".
A bill of lading is a receipt containing details of the goods shipped by the

exporter. It is an official acknowledgement, issued by a shipping
company, of the fact that the goods stated therein have been loaded on
the specified ship. A bill of lading is also a written contract between an
exporter and a shipping company. It is an undertaking to carry the goods
to the port of destination specified therein in return for the payment of
freight. It is also a document of title to the goods. The master of the ship
hands over the goods only to the person named in the bill of lading or to
whom the bill of lading might have been endorsed. A bill of lading can be
transferred by endorsement and delivery.
BILL OF LADING
Shipped in apparent good order and condition by ENTERPRISES at
Madras in the S.S. MAHARAJA whereof S.N. Sharma is the master for the
present voyage, the 8,000 packages of goods marked 'S.N. 888 to be
delivered in the like good order and condition subject to the terms and
conditions stated overleaf at the port of LONDON to R. SMITH & CO. or
their agents upon their paying the freight for the said goods with the
primage and average.
Stamp
for Shipping Co.
Sd/.
Dated
A bill of lading contains the following particulars:
1. Name of the ship

2. Date of shipment
3. Place of loading
4. Port of destination
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5. Name of the exporter

6. Name of the importer
7. Description of the goods
8. Number of packages
9. Marks thereon, if any
10. Amount of freight
A bill of lading is prepared in triplicate. One copy is sent to the importer.

Another copy is given to the captain of the ship. The third copy is
retained by the exporter.
FUNCTIONS OF BILL OF LADING
1. Receipt of Goods: It is a certificate of the fact that goods have been

accepted for loading on the ship.
2. Document of title: Bill of lading is the proof of ownership of goods.

Therefore, the owner of the bill is considered as the owner of the goods.
3. The agreement of carrying of goods: It is an agreement by the

shipping company to take away the goods from one dock to the other, it
also mentions the terms for such carriage of goods.
4. Acts as a Surety: the bill of lading acts as a surety and can be pledged
to take loan.
5. Import and Export Licence: Every importer has to obtain import

licence for importing goods from a foreign country and similarly ever
exporter has to obtain export licence from the government of his
country. This licence is received from Ministry of Commerce. In India,
such licences are issued by Controller of Exports and Imports, which
works under the Ministry of Commerce. This licence is issued for a fixed
period. After the expiry of the period, it is renewed.
6. Declaration of Foreign Exchange: As already stated that every country

has its own legal currency. Therefore, the importer has to arrange for
foreign currency from the Central bank of his country to pay the
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exporter. The certificate issued in connection with utilisation of foreign

exchange is called declaration of foreign exchange. This certificate is
issued by the Reserve Bank of India.
7. Letter of Hypothecation: If the exporter needs money early, he can

get it by depositing the documents of title with the bank. For this task he
signs a letter of hypothecation and submits it to the bank. By this letter
the exporter gives the right to the bank that in case of dishonuor of bill,
bank can release the money by selling the goods hypothecated.
The Agent,
State Bank of India,
London,
Dear Sir, We enclose herewith 60 days sight bill draw on M/s. Gyanada Prakashan. Govind
Mitra Road. Patna for £ 2,500 and forward the following shipping documents as security:
(i) Invoice of Goods valued at £ 2,500.
(ii) Insurance Policy
(iii) Bill of Lading (GCKM) Patna per Neelgiri from London to Patna.
The documents should be surrendered on the payment of the bill.
If the bill in question is dishonoured, we hereby authorise you to seize the said goods on
our account, at our risk and subject to the usual charges for commission and expense
incurred thereon.
Your faithfully,
Sd/
For MARTIN & CON.INC.
8. Consular's Invoice: To save himself from the difficulties of import

duty, the importer request the exporter that he should send consular's
invoice for the goods being sent through commercial courier, with the
help of this invoice the import duty can be easily assessed because it
contains certified value of goods and their weight. The invoice is
prepared in triplicate. One is sent to the custom offices on the port, the
other is sent to the importer and the third one is kept as reference.
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9. Shipping Order: This order is given to the captain of the ship to load
specified goods. This order is of two types: -
1. Ready, and 2 Forward.
In the ready shipping order the name of the ship is mentioned but in
case of forward shipping order, the name is not mentioned.
11.Certificate of Origin: The importer, in order to save tax, requests the

exporter that he should send a certificate stating that the goods are
originally manufactured in his (exporter's) country. Such certificate can
be received from Chamber of Commerce, Magistrate or Ministry of
Commerce. A specimen of the certificate of origin is presented here as
under:
Certificate of Origin
Mark No.1 Package Weight Description of Goods
B.O.6.2/82
WE hereby declare that above nationed goods were produced in
India....... in the state of.......and are shipped to ...........from the
Port of Mumbai per.........sailed on............shippers.
The undersigned Secretary of Mumbai Chamber of Commerce
hereby certifies that the above declaration was made before me.
Secretary
Chamber of commerce
Mumbai
Functions of a Bill of Lading
A bill of lading is a very important document because:
a) It is a document of title which gives the holder right of possession of

goods;
b) It is an acknowledgement of receipt of goods on board the ship:
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c) It is a contract of affreightment containing terms and conditions on

which the shipping company has agreed to carry the goods to the port
of destination; and
d) It is a collateral security for raising loans.
 Who prepares the bill of lading?
A bill of lading is a legal document issued by a carrier to a shipper

that details the type, quantity, and destination of the goods being
carried. A bill of lading is a document of title, a receipt for shipped goods,
and a contract between a carrier and shipper.
Importance of Bills of Lading
1. The carrier need not require all originals to be submitted before

delivery. It is therefore essential that the exporter retains control
over the full set of the originals until payment is effected or a bill
of exchange is accepted or some other assurance for payment has
been made to him.
2. A bill of lading is a legal document between the shipper of goods
and the carrier, and details the type, quantity and destination of
the goods being carried. The bill of lading also serves as a receipt
of shipment when the goods are delivered at the predetermined
destination.
3. The bill of lading is the evidence of the contract entered into
between the carrier and the shipper or freight.
4. A bill of lading, therefore, is a very important issue when making
shipments to move the cargo or freight from one point to the
other. On one hand it is a contract between a carrier and shipper
for the transportation of goods and on the other hand, it serves as
a receipt issued by a carrier to the shipper.
Hence, the bill of lading is considered a legal document which provides

all the vital details to the shipper and the carrier to conveniently process
the freight shipment through different maritime countries and invoice it
correctly.
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Purpose of Bill of Lading:
The bill of lading document is meant to act as a transport document

enacting as the evidence of the contract of carriage of the goods. A
negotiable bill of lading has the following legal qualities:
1. It acts as a piece of evidence for the carriage contract containing the

terms and condition under which the goods transportation will be
carried out
2. It represents as a receipt which endorses that the carrier has received

the cargo as per the contract and the goods are received in good
condition.
3. It is a document of title, permitting the sale of goods in transit and the

raising of financial credit.
4. Most of the local and international system does not consider a bill of
lading as a document of title. It provides the right for the delivery to be
made to the possessor.
Is a Bill of Lading a Negotiable Instrument
A bill of lading contains some of the features of a negotiable instrument. It

can be transferred by endorsement and delivery. It is freely transferable and
the transferee can sue in his own name and give a valid discharge to the
person liable. However, it is not a negotiable instrument in the sense in
which a bill of exchange, a promissory note or a cheque is. In case of a
negotiable instrument, the transferee gets a better title than that of the
transferor himself provided the transferee has acquired it in good faith and
for value. In a bill of lading, the transferee does not get a better title than
that of the transferor. If the transferor's title is bad or defective, the
transferee also gets a bad or defective title even though he might have
accepted it in good faith and for valuable consideration.
Thus, a bill of lading may be called a semi-negotiable or quasi-negotiable

instrument.
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Types of Bill of Lading
A bill of lading may be of the following types:
The bill of lading can be classified on the basis of “how it is executed” and
“Method of operation”-
A. On the basis of ‘execution’:
1. Straight bill of lading- It reveals that the goods are consigned to a

specified person and it is not negotiable free from existing equities. It
means any endorsee acquires no better rights than those held by the
endorser. This type of bill is also known as a non-negotiable bill of lading,
and from the banker’s point of view, this type of bill of lading is not safe.
This type of bill is prominently used for military cargo.
2. Open bill of lading - This is a negotiable bill of lading where the name of
Consignee can be changed with consignees’ signature and thus transferred.
This can be transferred multiple times. Switch bill of lading is a type of open
bill of lading.
3. Bearer bill of lading- This is a bill states that delivery shall be made to
whosoever holds the bill. Such bill may be created explicitly or it is an order
bill that fails to nominate the consignee whether in its original form or
through an endorsement in blank. A bearer bill can be negotiated by
physical delivery. They are used for bulk cargo that is turned over in small
amounts.
4. Order bill of lading- is the bill uses express words to make the bill
negotiable. This means that delivery is to be made to the further order of
the consignee using words such as “delivery to A Ltd. or to order or assigns.
The cargo is only delivered to the bonafide holder of the bill of lading, and it
has to be verified by an agent who issues delivery order and the verified bill
of lading. The order bill of lading:
 is the most modern type bill which is widely used all over the
world
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 ensures the safety of delivery of cargo to a bonafide holder of B/L
Since the ship visits several foreign ports where the language, practice,
procedures may be different the master might be inconvenienced during
the delivery of the cargo. People might fraudulently collect the cargo.
To overcome this difficulty and avoid future cargo claims and litigations,
the consignee or the holder is required to surrender the bill of lading to the
ship’s agent at the discharge port who will verify the genuineness of the bill
of lading. When satisfied the agent will issue a delivery order and the
verified bill of lading. Now any person can collect the cargo from the ship by
surrendering the bill of lading and the delivery note to the ship.
As the bill of lading is made to “to order” of the consignee, it is a

negotiable instrument of title. This means that the ownership of the bill of
lading can be transferred from one person to another by authorising
signature and delivery of the bill of lading.
All goods which have not been paid in advance and are shipped under
“To order” of the bill of lading can be categorised into two types:
(i) To Order, Blank Endorsed: not consigned to any named party but ‘To
Order’ of the consignor, with the intended – consignee’s name given
under ‘notify party.’ The consignor must stamp and sign (endorse)
this B/L so that its title can be transferred.
(ii) To Order, Bank: consigned to a bank with the intended consignee’s
name given under ‘notify party.’ The bank endorses the B/L to the
intended consignee against payment of (or a pledge to pay) the
amount of the accompanying bill of exchange. ‘To Order’ B/Ls are
used commonly in the letter of credit transactions and may be
bought, sold, or traded, or used as security for borrowing money
from banks or other lenders.
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B. ON the basis of Method of Operation:
1. Received for shipment bill of lading–This bill is sent from agent

/charterer to shipper. The endorsement of this bill ensures that the carrier
has received goods but does not confirm it is onboard of the assigned vessel
2. Shipped B/L – This bill of lading is Issued when cargo is loaded on board.
It binds the ship owner and the shipper directly
3. A clean bill of lading- In this bill of lading no remark is made about the
packing of goods. It serves as a proof that the packing was un-spoilt at the
time of loading of the goods on the ship. It is one which states that the
cargo has been loaded onboard the ship in apparent good order and
condition. Such a bill of lading will not bear a clause or notation which
expressively declares a defective condition of goods and/or the packaging.
The opposite term is a soiled bill of lading. It reflects that the goods were
received by the carrier in anything with good condition.
4. Through B/L – When the goods are carried partly in the ship of the ship-
owner issuing the bill of lading and partly in some other ship for an inclusive
freight, the bill of lading is known as through bill of lading. This bill of lading
is a legal document that allows for direct delivery of cargo from point A to
point B. The bill allows transportation of goods both within domestic
borders and through international shipment as it serves as a receipt of the
cargo, a contract of carriage, and sometimes title for the products as well
5. Combined transport B/L – This bill gives information about cargo being
transported in large containers by sea and land, i.e. through multi-model
transport
6. Dirty bill of lading- This bill of lading mentions that the packing of goods
was damaged or defective at the time of loading. Such a bill of lading is not
favoured as a document of title or as a collateral security for raising loans. If
the ship owner raises an objection about “the condition of the cargo is in
good order”, he/she can include a clause thereby causing the bill of lading
to be “clauses or dirty” along with the remarks as per the finding of the
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cargo condition. E.g. torn packing, broken cargo, shortage in the quantity of
the goods etc.
Therefore, exporters do not prefer a dirty bill of lading. If the exporter

wants to obtain a clean bill of lading even when the packing is defective, he
has to sign a letter of indemnity agreeing to indemnify the shipping
company for any claim or liability for loss.
(iv) Charter Party
A charter party is a formal agreement in writing between the ship-owners and

the exporter under which the whole ship or a substantial part of it is hired to
carry goods for a specified voyage or for a particular time period. It is a
contract of affreightment containing all the terms and conditions of the
contract. A charter party usually contains the following particulars:
1. Name of the ship

2. Place of loading
3. Port of destination
4. Name of the exporter (consignor)
5. Name of the importer (consignee)
6. Particulars of goods
7. Amount of freight
A charter party (sometimes charter-party) is a maritime contract between a

ship owner and a "charterer" for the hire of either a ship for the carriage of
passengers or cargo, or a yacht for pleasure purposes.
Charter party is a contract of carriage of goods in the case of employment of a

tramp. It means that the charter party will clearly and unambiguously set out
the rights and responsibilities of the ship owner and the charterers and any
subsequent dispute between them will be settled in the court of law or any
agreed forum with reference to the agreed terms and conditions as embodied
in the charter party. The name "charter party" is an Anglicization of the French
charter party, or "split paper", i.e. a document written in duplicate so that each
party retains half.
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Hire or lease contract between the owner of a vessel (aircraft or ship), and
the hirer or lessee (charterer). Under a charter party, a vessel is rented (in full
or in part) for one or more voyages (voyage charter) or for a fixed period (time
charter). Normally, the vessel owner retains right of possession and control
while the charterer has the right to choose the ports of calls. Also called
charter agreement or charter contract and written also as charter party.
Types of charter party
There are three main types of charter party: demise, time, and voyage.
1. Demise Charter- In a demise (or bareboat) charter, the charterer

takes responsibility for the crewing and maintenance of the ship
during the time of the charter. He assumes the legal
responsibilities of the owner, and is known as a despondent
owner.
2. Time Charter- : In a time charter, the ship is hired for a specified
time period, e.g. from January 1, 1989 to June 30, 1989, During
this period the ship may undertake any voyage or voyages. In a
time charter, the vessel is hired for a specific amount of time. The
ship owner manages the vessel but the charterer gives orders for
the employment of the vessel, and may sub-charter the vessel on
a time charter or voyage charter basis.
3. Voyage Charter- When the ship is hired for a specified journey
(voyage), it is known as voyage charter. In a voyage charter, the
charterer hires the vessel for a single voyage, but the ship owner
provides the master, crew, bunkering and supplies. For example, a
ship may be hired to carry goods from Bombay to London. In such
a case, the time taken by the ship to complete the voyage is not
taken into consideration.
The freight of the ship is also taken in two ways.
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1. Lump-sum Payment: In this method, company charges lump sum payment

for the, whole ship. Company does not see that how much goods have been
loaded. That is, the company does not question the loading of goods if the
loading is less than its capacity because it has received full freight for the ship.
2. Per Ton Rate: In this type of payment if the goods are loaded on this ship the
payment is calculated on the basis of rate per ton on the goods loaded.
However, if the load is less than the capacity of this ship, the company also
charges freight for the difference in capacity of the ship and goods loaded.
Such freight is called dead freight. The person who makes charter party
agreement can load the goods on any ship.
Specimen of Charter Party
CHARTER PARTY
On this day it is agreed between the ABC Shipping Co. and ... ENTERPRISES
that the ship S.S, MAHARAJA, being, tight staunch and strong and in every
way fitted for the voyage shall with all convenient speed sail and proceed to
Bombay and there load a full and complete cargo of 8000 tons and being so
loaded therewith proceed to LONDON or as near thereto as she may safely
get, and deliver the same on being paid freight of Rs. 85,000. Ten days shall
be allowed for loading and unloading the cargo as lay days, for longer time
taken, demurrage shall be at Rs. 1000 per day,
Restraint by Princes and Rulers, the King's enemies and other Dangers and
Accidents of the Seas, of whatsoever nature and kind, singular and all during
the voyage always excepted.
Sd (Shipowner) Sd/ (Exporter)
Witness thereof..... Witness thereof.....
Distinction between Bill of Lading and Charter Party
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The main difference between the two areas
Points of Distinction Bill of Lading Charter Party

1.Receipt It is a receipt of goods on It is not a receipt of goods.
board the ship
2.Document of title It is a document of title to It is not a document of title

the goods
3.Transferability It can be transferred freely

It cannot be transferred
by endorsement and
delivery
4. Lease It is not a lease of the ship It is a lease of the ship
It is used when a part of the It is used when the whole

5.Use ship is to be hired ship is to be hired
6.Stamp It requires a 25 paise stamp It requires a stamp of higher
value
Ship-owner always retains Ship-owner loses control on

7.Control
control on the ship the ship for a temporary
period
Master and crew remain Master and crew become

8.Crew
agents for the ship-owner agents of the exporter for a
temporary period
9.Loan Loan can be raised against Loan cannot be raised

its security against it
(a) Clean (a) Voyage charter
10. Types
(b) Foul (b) Time charter
Typical clauses
A charter party may contain these clauses:
1. Bunker clause
A bunker clause stipulates that the charterer shall accept and pay for all
fuel oil in the vessel's bunkers at port of delivery and conversely,
(owners) shall pay for all fuel oil in the vessel's bunkers at port of re-
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delivery at current price at the respective ports. It is customary to agree

upon a certain minimum and maximum quantity in bunkers on re-
delivery of the vessel. Since the OW Bunker test case, ship operators
need to take care to ensure that bunker supply terms are suitable.
2. Ship clause
Under this clause, the owner of the ship writes clearly that the ship
would be seaworthy at the start of the voyage in every respect, in other
words, the ship would be appropriate to travel to the country for which
it is taken.
3. Ice clause
An ice clause is inserted in a bill of lading or a charter party when a

vessel is bound for a port or ports which may be closed to shipping by ice
when the vessel arrives or after the vessel's arrival.
4. Lighterage clause
A lighter age clause is inserted into charter-parties which show as port of

discharge any safe port in a certain range, e.g. Havre/Hamburg range.
5. Negligence clause
A negligence clause tends to exclude ship owner's or carrier's liability for

loss or damage resulting from an act, default or neglect of the master,
mariner, pilot or the servants of the carrier in the navigation of
maneuvering of a ship, not resulting, however, from want of due
diligence by the owners of the ship or any of them or by the ship's
husband or manager.
6. Ready berth clause
A ready berth clause is inserted in a charter party, i.e. a stipulation to the

effect that lay days will begin to count as soon as the vessel has arrived
at the port of loading or discharge "whether in berth or not". It protects
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ship owner's interests against delays which arise from ships having to
wait for a berth.
Shipping/Export Bill
The shipping bill is an essential document issued by the Customs Service Centre
after the exporter applies to acquire this bill. This bill facilitates the exporter to
get customs clearance, load the goods, and claim duty drawbacks. Exporter
should submit the shipping bill copy or original to the bank after receiving
payments from the clients.
A Shipping Bill is an important document required by the customs authorities

for the clearance of goods.
An exporter, while sending goods from one country to another has to go

through various formalities including submitting various applications acquiring
licenses, paying duties and so on. To acquire a clearance for export, from the
customs, an exporter will have to submit an application called the ‘shipping’.
One cannot load the goods unless the exporter files the shipping bill. The
export may be by air, vehicle, or vessel.
A Shipping bill is to be submitted electronically. However, the Principal

Commissioner or the Commissioner may grant an exemption and accept a
physical application, where an electronic submission is not feasible.
Procedure of Shipping Bill

1. Application
The exporter’s IEC code should be registered with EDI. After that their
authorized representative can apply for an export shipping bill to the Customs
Service center. Exporter should provide original copy of invoice and packing list
for filing of shipping bill. Indian Customs Electronic Gateway provides online
service to apply for the shipping bill.
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2. Checklist
This is followed by the generation of a checklist to the exporter or the custom

housing agent. The CHA or the exporter verifies the checklist and informs the
service center to generate final shipping bill. Please find draft of checklist
below:
continue.
.
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..
continue…
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The form above should be accompanied with the documents enlisted below:
a. Invoice
b. Packing list
c. Export license
d. Indent
e. Acceptance of Contract
f. Letter of Credit
g. QC Certificate
h. Port Trust Document
i. Any other (as specified)
3. Shipping Bill Number
The verified details are submitted to the EDI system by the service
center. This system issues an automatic shipping bill number, endorsed
on the checklist. Click here to see a shipping bill draft.
4. Assessment
Assistant Commissioner evaluates a consignment in case the value of

exports exceeds INR 10,00,000, or contains samples worth more than
INR 20,000 or the drawback amount exceeds INR 1,00,000.
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5. Status Check
The exporter can check the status of the shipping bill with the service
center. In case of any query raised the same needs to be replied by the
exporter through the center.
6. Let Export Order (LEO)
After completion of the process, the required original documents are

submitted at the docks. ‘Let export’ order is issued and exporter receives
the hard copy of the shipping bill.
Types of Shipping Bills
1. Dutiable Shipping Bill: It is printed on yellow paper and is meant for

goods that are to be exported on payment of export duty.
2. Duty-Free Shipping Bill: It is printed on white paper and is for goods
exported without duty payment. These are not eligible for duty
drawback.
3. Drawback Shipping Bill: It is printed on green paper, but once the
drawback has been paid it is printed on white paper.
4. Shipping Bill for export of goods under Duty Entitlement Passbook
Scheme (DEPB): It is printed in blue; this is for goods exported under the
government’s DEPB export incentive scheme.
What does Shipping Bill include?
1. General details of Exporter, Buyer, and the Custom agent.

2. Transportation and port of loading and discharge details.
3. Cargo details (gross and net weight, nature).
4. Invoice Details (number of the commercial invoice, nature of
payment, the invoice value in both the currencies).
5. GST and export duty-related information.
6. Re-Export details (if any).
7. FOB price and insurance amount of the commodity.
8. Container Numbers.
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9. Exchange Rate.
10.Duty Drawback Details (Subsidy by the Government).
11.Merchandise Exports from India Scheme (MEIS) Availed or Not.
12.Export Promotion Capital Goods (EPCG) details if any.
How does the shipping bill process work?
• A shipping bill can be filed after the particular vessel/ship, etc., is granted
with entry outwards that allows it to move out of the country. Once the
bill is submitted, it is physically verified and the value of the goods
intended for export is assessed by the customs authorities. The customs
authorities verify these bills and endorse the copy with ‘LET EXPORT
ORDER’ and ‘LET SHIP ORDER.’
Procedure for generation of shipping bill
a. The exporter gets registered with the Customs with their IEC Code No.
or Customs House Agents (CHA) license No. and Authorized Dealer Code
No. of the bank through which the export proceeds will be realized.
b. A declaration in a specific format signed by the exporter or his

authorized CHA is to be submitted at the service centre along with a
copy of the invoice and the packing list.
c. After the data entry is completed, a checklist will be generated and the
same is handed over to the exporter.
d. The exporter verifies the data and intimates the service centre.
e. Once the data is verified and corrected, it automatically gets

processed.
f. It will be assessed by the Assistant Commissioner (export) when the

value of such goods is more than Rs.10 lakhs, or it contains free samples
worth more than Rs.20, 000 or if the drawback amount exceeds 1 lakh.
g. After the processing is done, the exporter can check the status of the
bill with the service centre.
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h. Sometimes, queries might be raised to an exporter, who will have to

file his reply through the service centre.
i. At the docks, all the original documents such as invoice, packing list
etc. are to be submitted by the exporter/CHA along with a checklist.
j. If everything is in order, ‘Let Export Order’ will be issued by the proper

officer.
k. Once the ‘Let Export Order’ is issued, the print out of the shipping bill
gets generated.
How to correct or ammend a Shipping Bill?
Corrections or amendments in the declaration can be made at the

service center, provided the documents have not yet been submitted in
the system and the Shipping Bill has not yet been generated.
However, if any changes are deemed necessary after the Shipping Bill
number is generated or the arrival of the goods at the Export Dock but
before the granting of ‘Let Export’ of the goods, it can be done by the
Assistant Commissioner of Exports.
If the ‘Let Export’ has also been issued, any changes can be made only by
the Additional/Joint Commissioner, Custom House, in charge of the
export section.
Importance of Shipping Bill
(A) It is an important document, required by the customs authorities for

clearance of goods. The customs authorities endorse the duplicate copy
of the shipping bill with "Let Export Order" and "Let Ship Order".
(B) After the clearance or customs, exporter can load the goods on ship.
(C) Shipping bill endorsed by the customs authorities facilitates the

exporter to claim incentives such as excise duty refund and duty
drawback.
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Particulars to be given in Shipping Bill:

(a) It is the responsibility of the exporter or his Clearing Agent to declare
correct particulars, such as number of packages, shipping mark,
weight, description and value of the goods to be attested by them
(Customs).
(b) As the clearing Agent's Staff has to sign the Shipping Bill on behalf of
the exporter, he must ensure that these particular are given in the
documents supplied by Exporter viz., invoice, packing list etc., and
these are duly signed by him.
(c) In case of Drawback Shipping Bill, rate and amount of drawback,
serial and schedule number of item should be declared in shipping
bill.
(d) New Drawback Procedure - Section 74/75: Under the new procedure,
drawback details are scrutinised in the Custom House at the time of
processing the papers before shipment. A drawback scrutiny unit
(DSU) has been accommodated in Export Department. Once the
documents are passed by the Appraiser/Examiner of the Export
Department, the same are forwarded to the DSU for scrutiny. The
DSU officer signs the papers after verifying the drawback claimed.
The Shipping Bill is finally passed only after the DSU officer signs the
drawback claim copy of the Shipping Bill after satisfying himself that
the drawback claimed is in order.
Under the new drawback procedure every exporter has to open an account
with the designated bank. This account number has to be shown on the
drawback claim copy of the Shipping bill. The Customs have assured that the
amount of drawback will be immediately credited to this account after
shipment.
During physical verification of cargo in the Port, the examination report has to
be obtained in duplicate so that the report appears on the reverse of the
drawback claim copy also.
Documents required for processing of Shipping Bill:
40
a) GR forms in duplicate for shipments to all countries.

b) Four copies of packing list giving contents, quantity, gross and net
weight of each package.
c) Four copies of invoices indicating all relevant particulars such as
No. of packages, quantity, Unit Rate, total f.o.b./c.i.f. value,
correct and full description of goods etc. (One copy of this invoice
is to be pasted to the duplicate copy of the Shipping Bill.
d) Contract, Letter of Credit, Purchase Order.
e) Inspection/Examination Certificate.
Types of Shipping Bills
Different types of shipping bills are as follows:
1. White shipping bill for export of duty free goods prepared in

triplicate in the standardised format given at Appendix 38.1.
2. Green Shipping Bill for export of goods under claim for duty
drawback prepared in quarduplicate in the form given at Appendix
38.11.
3. Yellow Shipping Bill for export of dutiable goods prepared in
triplicate in the form obtainable from M/s Jaina Book Agency
(Sales), C-5, Connaught Place, New Delhi-110 001, Phone: 3326728,
3715092, Fax:011-3731117.
4. Pink Shipping Bill for export of duty free goods ex-bond prepared in
triplicate in the form obtainable from M/s Jaina Book Agency
(Sales), C-5, Connaught Place, New Delhi-110 001. Phone: 3326728,
3715092, Fax: 011-373117
5. Blue Shipping Bill for export under Duty Entitlement Pass Book
Scheme in seven copies in the form given at Appendix 38.111.
Where the goods are to be cleared by the Land Customs, Bill of Export is
prepared instead of Shipping Bill. Bill of Exports are also of four types i.e.
White, Green, Yellow & Pink for the purposes stated above. Standardised
formats of the Bill of Export are obtainable from M's Jaina Book Agency (Sales),
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C-5, Connaught Place, New Delhi-110001, Phone: 3326728,3715092, Fax:011-

3731117.
Examination of Documents and Cargo
The Customs Appraiser/Examiner examines these documents and appraises

the value having regard to the following considerations :
1. That the value and the quantity declared in the shipping bill is the
same as in the export order/letter of credit.
2. That the formalities regarding exchange control, pre-shipment quality

control inspection etc. have been duly completed. After examination of
documents and appraisement of value, the Customs Examiner/Appraiser
makes an endorsement on duplicate copy of the Shipping Bill giving directions
to the Dock Appraiser about the extent of physical examination of the cargo to
be conducted at the Docks. All the Documents, except GR (Original) Form, the
original Shipping Bill and a copy of the Commercial Invoices are returned to the
Forwarding Agent to be presented to the Dock Appraiser.
After taking delivery of documents from the Export Department, Forwarding

Agent presents the Port Trust Documents (Standardised Format given at
Appendix 38.IV) to the Shed Superintendent of the Port and obtains carting
order for bringing the export cargo to the transit shed for physical examination
by the Dock Appraiser and for their shipment. After bringing the cargo into the
shed he presents the following documents to the Dock Appraiser for
conducting physical examination of the Cargo.
1) Duplicate, triplicate and export promotion copies of the Shipping

Bill
2) Commercial Invoice
3) Packing List
4) AR-4 (original and duplicate) *
5) Inspection Certificate (Original)
6) GR Form (Duplicate)
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The Dock Appraiser after conducting physical examination records examination

report and makes "Let Export” endorsement on the duplicate copy of the
Shipping Bill and hands it over to the Forwarding Agent alongwith all other
documents to be presented to the Preventive Officer of the Customs
Department who supervises the loading of cargo on board the vessels.
The preventive Officer makes an endorsement “Let Ship" on the duplicate copy
of the Shipping Bill. The duplicate copy of the Shipping Bill is then handed over
to the agent of the Shipping Company. This constitutes and authorisation by
the customs to the Shipping Company to accept the cargo on board the vessel.
After the goods are loaded on board the vessel the Captain of the ship issued a
receipt called “Mate's Receipt" to the shed Superintendent of the port.
The Forwarding Agent then makes a payment of the port charges and takes
delivery of the Mate Receipt. He presents the Mate Receipt first to the
Preventive Officer who records the Certificate of Shipment on all the copies of
Shipping Bill, original and duplicate copies of AR-4A form and returns the
Export Promotion copy, a copy of Drawback Shipping Bill and duplicate AR-4A
to the Forwarding Agent. The later then presents the Mate Receipt to the
Shipping Company and requests it to issue the Bill of Landing (2/3 negotiable
and a few non-negotiable copies as required).
CUSTOMS CLEARANCE OF EXPORTS BY SHIP
Exporter or his agent drops inside the box kept outside the Export Deptt. the
following documents:
1. Shipping Bill (in duplicate, triplicate or quadruplicate) duly filled in and

signed,
2. Declaration regarding truth of statement made in the Shipping Bill, in
prescribed language of declaration,
3. Invoice copy,
4. GR Form.
5. Export Licence (wherever required)
6. Quality control inspection certificate (wherever required),
43
7. Original contract, wherever available or correspondence leading to

contract,
8. Contract registration certificate (wherever applicable),
9. Letter of Credit (wherever applicable),
10. Packing List.
11. AR-4 Form (original and duplicate copies).
12. Any other documents.
Collection of Shipping Bills and Ministerial Action thereon:
1. Shipping Bills along with other documents are collected at fixed

intervals - every 15 minutes or half an hour.
2. They are then stamped with date and time and numbered according
to their category i.e. free, dutiable, air-shipping bills, coasting
shipping bills.
3. In this process it is also ensured that the Shipping Bills are in proper
form, duly prepared and signed and all the relevant documents are
attached.
Disposal of Shipping Bills relating to baggage re-exports of non-dutiable items

where no foreign exchange is involved:
1) These shipping bills along with the related documents are sent to
the Index Clerk who check the GR Waiver formalities.
2) He endorses on the Shipping Bills "Let export after examination"
order.
3) Head Clerk checks them and countersigns.
4) Shipping Bills are then sent to the Window Delivery Clerk who
detaches the original copy of the Shipping Bills for being sent to the
Statistical Deptt.
5) Other copies are given to the party to arrange for movement of
goods to the dock for examination and shipment.
44
Action in Appraisement Section regarding Dutiable Shipping Bills, Drawback

Shipping Bills, all other Shipping Bills involving Foreign Exchange.
i. Sorting of Shipping Bills among different groups for appraisement

purposes,
ii. Verification of the facts specified in the Shipping Bill regarding
quantity, weight, value, etc. with reference to invoice and contract.
Value is to be verified also with reference to price information
available with the appraiser,
iii. In the case of items subject to export license, it is verified whether
the export is in keeping with licensing formalities and within limits
allowed.
iv. Revised Indian Trade Classification number for the item and the rate
of duty applicable to it, if any are then verified,
v. Endorsement of examination order is made on the Shipping Bill
indicating the extent of physical examination at the dock with initial
of the Appraiser/Examiner concerned,
vi. Final checking of the Shipping Bills by Appraisers and Principal
Appraiser and their counter signature on the examination order,
vii. Shipping Bills are then sent to the GR Clerk.
Action by GR Clerk:
(1) Checking GR form number given in the shipping bills,

(2) Pulling shipping bill number on the GR form.
(3) Comparing value given in GR form with the value in the Shipping Bill,
(4) Detaching GR form from the Shipping Bills for being sent to the
Reserve Bank of India.
Delivery of Shipping Bills to the Parties for Further Action:
1. Free shipping bills under claim for drawback are sent to the clerk for
necessary record.
45
2. All non-dutiable shipping bills are then sent to the Window Delivery
Clerk for being handed to the parties to arrange for shipment of
goods.
3. The original copy of the shipping bill is detached at this stage for
being sent to the Statistical Department
4. The dutiable shipping bills are given to the party for payment of
export duty in the cash and accounts department.
Payment of Export Duty
1. Dropping shipping bills in the box kept in the Cash & Accounts
Department.
2. Collection and stamping of Shipping Bills.
3. Checking of calculations of duty and intimating the stamp and duty
amount
4. Comparing the original and duplicate shipping bills to ensure that
duty amount is correctly entered.
5. Shipping Bills are then given to Window Delivery Clerk to be handed
over to the party concerned for making payment of export duty by
cash/cheque to the shroff.
6. The party presents the shipping bills with cash/cheque to the shroff
who enters the amount in the shroff Rough sheet.
7. Putting the oval stamp on the shipping bill and export duty receipt
which is attached with the Shipping Bill.
8. The shroff enters the amount in the oval stamp and initials.
9. The Shipping Bills are then sent to the Cash Sheet writer who enters
the amount in the Register of Export Duty and endorses the Register
number on the Shipping Bill.
10.Then the shipping bills are presented to the “Out of Charge Clerk”
who checks the amount in the Register and the Shipping Bills and
initials on the shipping bills and the register.
11.The original shipping bill is then detached to be sent to Statistical
Department for compilation.
46
12.The duplicate Shipping Bill and the Export Duty Receipt are sent to
Window Delivery Clerk to be given-to party.
13.The party after receiving the duplicate shipping bill on having made
Export Duty payment arranges for the movement of goods to the
dock for shipment.
Examination by Shed Appraiser/Examiner at the Dock:
i. Clearing and Forwarding Agent presents the Shipping Bill to the Shed
Appraiser after the export cargo has been brought to the shed by
fulfilling various formalities required in connection with movement of
export cargo with the Port Trust Authorities. Alongwith Shipping Bill the
following documents are also to be presented :
a. Invoice
b. Packing List
c. AR-4 Form or AR-5 Form' as the case may
d. Agmark Certificate, whichever is applicable. Invoice is usually
pasted on the duplicate copy of the shipping bill,
ii. The Appraiser assigns the shipping bill to examiner who specified the
packages to be examined.
iii. Examiner examines the packages as decided by him in accordance with
the examination order given by Customs House Appraiser and records
report on Customs copy of shipping bill.
iv. The shipping bills with Examiner's Report and the sample of goods if
necessary are brought to the Shed Appraiser who checks with samples
when put up and signs the "Let Export" order on the Shipping Bill.
Shipment of Export Cargo under the Supervision of Preventive Officer of

Customs Deptt.
1. The export cargo is loaded on the vessel under overall supervision of the
P.O.
2. He checks up the loading operation with reference to shipping bills
(duplicate copy) and tallies being prepared by the ship staff and the Port
Trust Staff.
47
Endorsement on Triplicate copy of Shipping Bill/AR-4' Form etc.:
1. After loading is over P.O. verifies shipment with reference to Mate and
Receipt given by the steamer agent or presented by the Shipper Agent.
2. Signature of the Master of vessel is obtained on the duplicate and
triplicate copies of shipping bill to intimate receipt of the content.
3. Then full or part shipment stamp is put by the P.O. with the signature on
the duplicate and triplicate copies of the shipping bills.
4. Certificate regarding shipment of export cargo in specified quantum is
put by P.O. on the duplicate and triplicate copies of AR-4 Form or AR-5'
Form.
5. The triplicate copy of the shipping bill sent to the Statistics Deptt.
6. The duplicate copy of the shipping bill along with the Export General
Manifest Part-I (in case of Drawback, shipping bills) and Part-II (in the
case of other shipping bills) is submitted to the Export Deptt. by the
Steamer Agent.
7. Immediately after the Mate's Receipt is available to the shipper, he
comes to the P.O. with the Export Promotion copy of shipping bill and
the Mate Receipt. P.O. on duty puts stamp of shipment and his signature
on the shipping bill.
8. P.O. makes endorsement regarding shipment also on the export
certificate, Coffee Permit, etc.
9. One copy of such documents is sent to the issuing authority and the
other is given to the party.
Procedure of Export Contract
The export contract passes through the following procedure:
1. Receipt of Indent: First of all, the exporter receives indent from the importer
through correspondence. The indent has instructions about the quantity of
goods, trade mark, insurance and payment etc. Indent is of two types.
48
(i) Open Indent: The importer mentions the quantum of goods. Other
things, for example, the price of the goods, selection of production etc.
are left to the exporting agent.
(ii) Closed Indent: In the closed indent the importer mentions complete
description of the goods to the exporter.
2. Export Permit: After the receipt of the indent, the exporter gets export
permit by submitting an application to the Chief Export Controller. After the
fulfillment of necessary conditions, the letter issues export permit.
3. Collection of Goods: After it, the exporting agent collects goods from
different producers or traders. The goods are collected as per the indent
carefully. Besides, efforts are made to purchase the goods at the lowest price.
4. Packing and Marking: After collecting the goods the agent carefully packs
and marks the goods as per the indent. If the indent does not contain
conditions for packing, the packing should be made properly so that the goods
are not damaged in transit. After packing the goods, the marking is done. The
marking helps in sorting out the goods.
5. Appointment of Forwarding Agent: When an exporter appoints a

forwarding agent, he assigns him all functions to despatch the goods to the
ship.
6. Despatch of Goods to the Port: The exporter sends all the goods by rail to
the export agent. The necessary information to the agent about the railway
receipt and forwarding of goods are sent by post.
7. Obtaining of Customs permit: First of all the agent gets customs permit by
submitting an application to the customs department. If there is no restriction
on exporting that material or product, the permit is granted.
8. Obtaining of Shipping Order: After obtaining the permit, the agent enters
into an agreement with a shipping company to carry the goods. The shipping
company which accepts to take away the goods to importing company grants
Shipping Order. This shipping order is handed over to the captain of the ship by
49
the agent, who loads the goods as per the order. The Shipping order is of two
types:
(i) Ready Shipping: Given in this order the name of the shipping
mentioned. According to the ship is present in the port for loading of
goods.
(ii) Forward Shipping Order: In this type of order, name of the ship is not
mentioned. Rather a fixed time is allotted within which the goods be
sent from the port. Accordingly the ship is loaded.
9. Shipping Bill: Later, the customs department fills in three copies of the bill.
All these three copies are of different colours. They contain complete
description of the goods. On the basis of it export duty is determined. After the
payment of export duty, the custom; officer keeps a copy of the bill with him
and the other two copies are handed over to the agent after his signatures.
10. Dock Challan. After the payment of dock charges, the agent fills in two
copies of the dock challan in which he will mention complete description of the
goods. He will also handover a copy each for shipping-bill and shipping order.
After receiving the dock dues the dock incharge will return a copy of the dock
challan to the agent after his signatures and will keep a copy with him.
11. Loading the Goods: After getting a copy of the dock challan, the agent gets
an authority to load the goods in the ship. Before loading the goods, the
officers examine the goods so that no goods without payment of export duty
are loaded.
12. Mate's Receipt: When the goods have been loaded on the ship, the captain
of the ship issues a receipt, which is called mate's receipt. It is of two types:
(i) Clean: When the packing of the goods is satisfactory, he issues a clean
receipt.
(ii)Foul: When the packing of the goods is non-satisfactory, he issues a

foul receipt.
50
13. Bill of Lading: After receiving the mate's receipt, the agent submits it in the
office of the shipping company and gets bill of lading in place of mate's receipt.
If the carriage has to be paid to the exporter, the agent pays it. The bill of
lading has 3 copies. It gives complete description for the goods and the place of
destination. It is a contract for the freight and a certificate for the ownership of
the goods.
14. Marine Insurance: Now the agent gets the insurance for the goods by
approaching a good insurance policy. He receives Marine Insurance Policy after
paying the premium. Insurance should be made as per the orders of the
importers. In the insurable amount the actual cost of the goods and export
expenses are also included.
15. Forwarding Agent's Advice: After making all these actions, the agent
prepares a bill of actual expenses and his commission. He sends the bill
alongwith the bill of lading and insurance policy to the exporter.
16. Preparation of Export Invoice: Now the exporter prepares the export
invoice. He makes its three copies in which he mentions complete description
of goods and details of expenses.
17. Payment: In order to get the payment, the exporter draws a bill on the
importer or his firm. The bill may be written as Document against Payment
(D/P) or Document against Acceptance (D/A). Besides, he attaches other
documents with the bill including shipping bill, bill of lading, marine insurance
policy and hands over to the exchange bank. After receiving the payment or on
acceptance of bill the bank hands over the documents to the importer and
sends the payment to the exporter.
18. Advice to Importer: The exporter informs the importer through a letter
about sending the goods and writing of bill. He also sends a copy of the invoice
with the letter.
IMPORT PROCEDURE
The following is the procedure of import contract:
51
1. Obtaining of Import Permit and Foreign Exchange: First of all, the importer
gets import permit by submitting an application to the controller of Imports.
Later, he gets foreign exchange from Reserve Bank by writing an application.
With this application import permit has to be submitted.
2. Placing an Indent: After it, the importer places an indent with the exporter
who will collect it from different producers. The indent contains the particulars
about name of producer of goods, the quantum of main package, marking, the
procedure of sending goods, procedure of payment and other tasks. Indent
should always be clear.
3. Shipment by Exporting Agent: After receiving the indent the exporting agent
collects goods from different producers, packs the goods and puts marks on
them as per indent. Later the exporter sends goods by ship through the
forwarding agent and obtains bill of lading and marine insurance policy. Then
he prepare three copies of invoice. Thereafter, he sends document of title to
the importer through banks. The importer informed through a letter to which
bank the documents a letter to which bank the documents of title have been
sent.
4. Procurement of Shipping Documents: As soon as the importer gets the

information about the about the documents of title he procures them either by
making payment of bill (if the bill is D/P) or by accepting the bill (if the bill is
D/A) from the bank.
5. Appointment of Clearing Agent: After obtaining the Shipping Documents,

The importer appoints clearing agent and sends them to the agent after
endorsement so that he can get the delivery of the goods.
6. Endorsement for Delivery: As soon as the ship arrives at the port, the
clearing agent gets endorsement on the bill of lading from the office of the
company. This endorsement is an order for the captain of the ship to deliver
the goods to the agent. Sometimes instead of making endorsement the
company gives delivery order to the agent.
52
7. Payment of Import Duty: Later on the clearing agent enters three copies of
the admission form the payment of import duty. These forms are of different
colours. In the form complete descriptions of the goods have to be submitted.
On the basis of it the custom officers determine the amount of import duty.
After payment of import duty, the custom department keeps a copy of it with
them and the other two are submitted to the agent one of which is a receipt
for the payment of import duty.
8. Payment of-Dock Dues: After the payment of import duty, the agent fills in
two copies of the dock challan and submits them to the dock authorities. After
getting the dock dues, the officials return a copy to the agent which is a receipt
of the payment of the dock dues.
9. Taking Delivery of Goods: After it the agent gets the delivery of goods of
submitting bill of entry, dock challan, and endorsed bill of lading.
10.Despatch of Goods by Clearing Agent: The clearing agent then despatches

the goods to his principal importer.
11. Advice Letter: After despatching the goods, the agent informs the importer
that goods have been received from the shipping company and have been, sent
to him by rail. He also sends the railway receipt (R/R) and bill for payment of
his remuneration and other expenses.
12. Taking Delivery of the Goods from the Railways Station: As soon as the
goods reach the railway station, the importer takes their delivery and arranges
to send them to his godown.
DOCUMENTS USED IN FOREIGN TRADE
The following documents are used in foreign trade:
1. Charter Party: When the goods are to be sent to foreign countries in larger
quantity the whole ship is hired. The agreement entered into with the shipping
company to hire the whole ship is called charter party. It includes the following
terms:
53
1) From which port the ship is going?

2) The name of the port to which it has to reach?
3) Which route the ship will follow?
4) The description of the goods to be sent by ship?
5) How much freight will be paid to the shipping company?
6) The complete address of the receiver of the goods?
7) The timings for loading and unloading of the ship.
8) Delaying penalty.
9) The mode of payment of freight
The charter party agreement can be any of the following two types:
(a) Voyage Charter: When a ship is hired for some specific and definite
journey, then the agreement entered into with the shipping company is called
voyage charter.
(b) Time Charter: When the exporter takes the ship on hire for a fixed, time,
the agreement entered into with the shipping company is called Time Charter.
The freight of the ship is also taken in two ways.
1. Lump-sum Payment: In this method, company charges lump-sum payment

for the whole ship. Company does not see that how much goods have been
loaded. That is, the company does not question the loading of goods if the
loading is less than its capacity because it has received full freight for the ship.
2. Per Ton Rate: In this type of payment if the goods are loaded on this ship the
payment is calculated on the basis of rate per ton on the goods loaded.
However, if the load is less than the capacity of this ship, the company also
charges freight for the difference in capacity of the ship and goods loaded.
Such freight is called dead freight. The person who makes charter party
agreement can load the goods on any ship.
Bill of Lading
As the railway issues railway receipt for the goods loaded by it, similarly the
shipping company issues a bill of lading for the goods accepted by it for
54
loading. It is an agreement between the shipping company and the exporter on

the basis of which the company accepts the carriage of goods.
It mentions following items:
1. Name of the sender of goods.

2. Name of the receiver of goods.
3. Date of loading of goods.
4. Name of the ship.
5. Complete description of the goods
6. Weight and measurement of goods.
7. The dock through which goods are being sent,
8. The deck to which goods are being deported.
9. Freight of the goods.
10.Freight has been paid or it will be paid by the importer.
11. Name of the captain of the ship.
12. Packing and marking of goods.
55
OBJECTIVE TYPE QUESTIONS
1) When goods movements for stock transport orders involve Shipping, note
the following:
a) When a goods issue is posted for a delivery, the serial numbers are taken
from the delivery.
b) When a goods receipt is posted for a delivery, the serial numbers are
also taken from the delivery
2) To create a delivery via Shipping, the following data has to be maintained in

the R/3 System:
a) The plant data, sales organization, distribution channel, shipping point,

and division.
b) The sales and distribution data in the material master.
c) The customer field in the central vendor master record, as the vendor for
shipping is also the customer.
3) You can manage the following goods movements via Shipping:
a) Goods issues for a delivery

b) Stock transfers using stock transport orders
c) Returns from the customer
d) Return deliveries to vendors
e) Returns for stock transport orders
4) When you create deliveries via Shipping, you can plan the following activities
using the functions of shipment scheduling (refer to Transportation and
Delivery Scheduling):
a) Material availability date

b) Transportation planning date
c) Loading date
d) Goods issue date
56
5) The shipping notification permits more precise planning of the delivery

advised by the vendor. In the shipping notification, Purchasing can record the
following data relevant for goods receipt:
a. Delivery date for each of the notified quantities

b. Means of transport
c. Bill of lading
d. EAN/UPC code
e. Material number used by vendor
6) In the material master record, the following indicators are relevant to the
expiration date check:
a) Minimum remaining shelf life in days

b) Total shelf life in days
7) The following functions are supported when a material is not handled in

batches:
a) Entry and Check Upon Goods Receipt

b) Printout on Goods Receipt/Issue Slip
8) If a material is handled in batches, the following functions are supported

when the expiration date is checked:
a) Entry and Check at Goods Receipt

b) Printout on Goods Receipt/Issue Slip
c) Analysis of Batches According to Shelf Life Expiration Date
d) Batch Determination by Expiration Date upon Goods Issues
9) You can post a return delivery via Shipping from the following stock types:
a) Unrestricted-use stock
b) Quality inspection stock
57
c) Blocked stock
d) Goods receipt blocked stock
10) The following data is required for determining of the Availability Check in
Sales and Distribution Processing date:
a) Route from the shipping point to the ship-to party location

b) Shipping point from which the goods are issued
c) Loading group from the material master record
d) Weight group determined from the order using the order quantity
---
Correct Answers
1) A, B
2) A, B, C
3) A, B, C, D
4) A, B, C, D
5) A, B, C, D
6) A, B
7) A, B
8) A, B, C, D
9) A, B, C, D
10) A, B, C, D
58
59

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Shipping Insurance (Unit-1) III Year

1. Role of Shipping, liners and tramps, bill of lading and Charter

2. Containerization= Need and Function – Types of Containers.

3. Determination of shipping freight.

4. Air Transport and procedures involved in the determination of

5. Multi-model transport and the procedures involved.

6. Packing and Marketing Exports.

7. Forwarding and clearing agents and their operations.

8. Cargo Insurance, its importance, basic principles, types of

9. Obtaining a cover a filing a claim and settlement of claim.

Unit - 1: Role of shipping, liners and tramps, bill of lading

• A shipping is the transportation of cargo. It means the order is getting

• A document used by a business to specify what items are to be

• A shipping agency or shipping agent is the designated person or agency

supplies, crew transfers customs documentation, and wastes

Services provided by a steamship company or shipping line, under which

Features of shipping lines:

The special features of this service can be highlighted as under:-

a) The service is offered at regular interval, say weekly or fortnightly

c) A fixed port rotation or itinerary or schedule to follow.

d) The service is comparatively cheaper and reliable.

Role Of Shipping Lines: Shipping Lines are playing an important role in

Characteristics of Liners ship

designed container ships for carrying different categories of containers

2. The cargo handling equipment on a liner will be varied and sophisticated

4. In order to ensure speedier carriage, liners ship is fitted with

5. Liners shipping service provides pre - announced scheduled services on

Advantages of Liner Shipping

2. Cost: Shipping is simply the cheapest way to transport goods, which is

BENEFITS OF LINER SHIPPING

International liner shipping is a sophisticated network of regularly

1. EFFICIENCY:- Liner shipping is the most efficient mode of transport

Disadvantages of Liner Shipping

Types of TRAMP CHARTERS

1. Voyage charter: - The voyage charter is the most common charter

port or a set of different ports. There are two types of voyage

Characteristics of Tramp Shipping

The shipment of goods through tramps is known as tramp shipping. A tramp

i) Homogenous transportations: These ships are used for transportation

iii) Less Expensive and Less Operating Costs: As they carry

iv) Terms and Conditions Negotiable: As their services, terms and

DIFFERENCE BETWEEN LINER SERVICE AND TRAMP

Liner Service Tramp Service

3. For speedy loading and 3. The loading and unloading in

4. The services have a 4. There is no fixed route or

and conditions that define the

DOCUMENTS USED IN EXTERNAL TRADE

Several documents are used in external trade. Some of the important

The main contents of an indent are as follows:

1. Quantity of goods to be imported.

4. Mode of shipment and insurance

An indent may be of the following types:

1. Open Indent: In this type of indent, the importer authorises the

exporter is expected to exercise his best judgment in the choice of

2. Closed Indent: In a closed indent the importer gives full details

3. Confirmatory Indent: An indent which is subject to confirmation by

(ii) Letter of Credit

A letter of credit may be of the following types:

1. Clean Letter of Credit: In this type of letter of credit no conditions are