International Shipping 101: Key Terms Indian Importers Should Know

If you’re importing into India—whether it’s electronics from China, raw materials from the Middle East, or industrial parts from the US—international shipping can feel like a maze of abbreviations, paperwork, and unexpected charges. Most costly mistakes don’t happen because the cargo is “hard to ship.” They happen because one key term was misunderstood: who pays the freight, when risk transfers, what “free time” really means, or why customs asked for a different HS code.

This guide breaks down the essential international shipping terms Indian importers should know, in simple language—so you can plan better, negotiate smarter, and avoid last‑minute surprises.

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1) The Basic Flow of an Import Shipment (So the Terms Make Sense)

Before diving into definitions, it helps to visualize the journey:

1. Supplier packs and hands over cargo

2. Export clearance at origin (done by seller or buyer depending on the deal)

3. Main carriage (ocean freight or air freight)

4. Arrival at Indian port/airport

5. Customs clearance in India

6. Inland movement to your location (ICD/CFS/warehouse/factory)

Most shipping terms define who is responsible for each step and when costs and risks shift.

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2) Incoterms: Who Pays, Who Does What, Who Takes Risk?

Incoterms are global trade rules that define responsibilities between buyer and seller.

EXW (Ex Works)

Seller’s job ends early. The goods are made available at the seller’s premises.

• Buyer arranges pickup, export clearance, freight, insurance, and Indian customs.

• Often looks “cheap” on paper but can become expensive once you add all logistics costs.

India example: Importing spare parts from Shenzhen on EXW means you must manage export clearance in China and everything after.

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FOB (Free on Board)

Very common in ocean shipping. Seller is responsible until the cargo is loaded on the vessel at the origin port.

• Seller handles local transport and loading at origin

• Buyer pays ocean freight onward and manages India-side processes

India example: FOB Shanghai → Nhava Sheva: supplier gets the cargo on the ship; you control the freight and typically get better visibility on charges.

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CIF (Cost, Insurance and Freight)

Seller pays freight and insurance up to the destination port (not beyond).

• Buyer handles customs clearance and inland delivery in India

• Seller chooses the shipping line/forwarder and insurance terms

Watch-out: With CIF, destination charges at Indian port can sometimes be less transparent.

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DDP (Delivered Duty Paid)

Seller takes responsibility end-to-end, including customs duties.

• Convenient, but in India it can be operationally tricky because the importer still needs compliance alignment (IEC, documentation, etc.)

• Always clarify: who is the importer of record, and how taxes/credits are handled.

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3) Freight Forwarder vs Shipping Line: Who Does What?

Freight Forwarder

A freight forwarder is your logistics coordinator. They typically arrange:

• carrier booking

• documentation support

• origin/destination handling

• consolidation (especially for LCL)

• tracking and exception management

Shipping Line (Ocean Carrier)

The shipping line owns/operates the vessel and containers. They issue the carrier document and control sailing schedules.

Practical tip: Even if you book through a forwarder, your cargo is still carried by a shipping line—delays, rollovers, and vessel schedule changes usually sit with the carrier.

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4) Bill of Lading (B/L): The Most Important Ocean Document

A Bill of Lading is used in ocean freight and acts as:

• proof of shipment (receipt)

• contract of carriage

• document that controls cargo release

Common B/L Types

• Original B/L: physical originals required for release (slower)

• Seaway Bill / Telex Release: faster release, commonly used for regular trade lanes

• House B/L vs Master B/L:

  • House B/L is issued by a forwarder

  • Master B/L is issued by the shipping line

India example: If your cargo lands in Mundra but you don’t have the correct release (or there’s a consignee mismatch), you risk demurrage while paperwork gets fixed.

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5) HS Code: Determines Duty, Compliance, and Risk

The HS Code classifies your product for customs. In India, it impacts:

• customs duties and IGST calculations

• import policy restrictions (licenses, BIS, WPC, etc.)

• likelihood of examination or queries

Importer rule of thumb: If the HS code is wrong, everything becomes harder—valuation, clearance time, compliance, and cost.

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6) IEC (Import Export Code): Your Entry Ticket to Importing

An IEC is mandatory for Indian importers. Without it:

• customs clearance cannot proceed

• banks typically cannot process import payments properly

Even if you use agents and logistics partners, IEC alignment is non‑negotiable.

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7) CHA: Customs House Agent (India-Specific and Critical)

A Customs House Agent (also called a customs broker) is licensed to handle customs clearance filings. A CHA typically manages:

• filing of the Bill of Entry

• duty calculations and payment workflows

• coordination for customs examination

• document handling and compliance checks

Good CHAs save time and money. Poor CHA execution can lead to avoidable holds and penalties.

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8) Bill of Entry: The Key Import Filing in India

The Bill of Entry (BoE) is filed to clear imported goods. It contains:

• importer details (IEC/GSTIN)

• invoice value, currency, freight/insurance components

• HS code, duty structure

• port/ICD/CFS location and item-level details

Once processed, customs issues clearance (commonly referred to as “out of charge”) and goods can move onward.

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9) ETA / ETD: The Dates You Should Track Daily

• ETD: Estimated Time of Departure from origin port

• ETA: Estimated Time of Arrival at destination

Why it matters in India:

• You schedule CHA clearance activities around ETA

• You plan trucking and warehouse readiness

• You avoid demurrage by pre‑preparing documents

Example lanes:

• China → India can face sailing changes around holidays or port congestion

• US → India routes may involve transshipment, which can change ETA

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10) FCL vs LCL: Container Choices That Change Everything

FCL (Full Container Load)

You book one container for your cargo (20’ or 40’).

Best when: volume is high, cargo is heavy, or you need better control of handling.

LCL (Less than Container Load)

You share container space with other shippers (consolidation).

Best when: you’re importing smaller quantities, but expect:

• longer consolidation/deconsolidation time

• more handling points

• charges based on volume/weight and destination handling

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11) Container Terms: 20GP, 40HC, TEU

• 20GP: 20-foot General Purpose container

• 40HC: 40-foot High Cube (taller; more volume)

• TEU: Twenty-foot Equivalent Unit (standard measurement)

  • 1×20’ = 1 TEU

  • 1×40’ ≈ 2 TEU

Importers often compare rates by container type because the economics can vary dramatically.

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12) Detention vs Demurrage: The Two Charges That Surprise New Importers

These are among the most painful avoidable costs.

Demurrage

Charged when the container stays too long inside the port terminal beyond free days.

Detention

Charged when the container stays too long outside the terminal (after pickup) beyond free days.

Common India scenario: Cargo arrives at Nhava Sheva, but there’s a document mismatch → clearance delays → demurrage stacks daily.

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13) Free Time

“Free time” is the number of days you get before demurrage/detention starts.

Always clarify:

• free days at terminal

• free days outside terminal

• whether weekends/holidays count

• whether free time differs by carrier or port

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14) CFS, ICD, and Port Delivery Basics (India Context)

You may see cargo routed to:

• CFS (Container Freight Station): near port; used for LCL deconsolidation and sometimes FCL handling

• ICD (Inland Container Depot): inland clearance point (often used when clearing away from the seaport)

Practical takeaway: Where your cargo is cleared impacts transit time, costs, and local handling charges.

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15) Duty Structure: BCD, IGST, and Why Landed Cost Matters

Indian imports typically involve:

• BCD (Basic Customs Duty)

• IGST on the assessable value plus applicable duties

• other possible components depending on goods and policy (varies by category)

Landed Cost

Your landed cost is the total cost to get goods into your warehouse:

• product price

• freight + insurance

• port and handling charges

• customs duties and taxes

• inland transport

Importer win: When you calculate landed cost accurately, pricing and margin decisions become predictable.

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16) Duty Drawback (Relevant If You Re-Export)

Duty drawback generally applies to exporters, but it becomes relevant if you import inputs and later export finished goods. It’s part of planning import-export flows for manufacturing or trading businesses.

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17) Common “Operational” Terms You’ll Hear Every Shipment

DO (Delivery Order)

Issued for cargo release after documentation and payments (varies by workflow).

Stuffing / De-stuffing

• Stuffing: loading cargo into a container

• De-stuffing: unloading cargo from a container (common in LCL/CFS)

Transshipment

Cargo moves through an intermediate port (common on some US–India or Europe–India routes).