Session 1: The Shipping Process

Summary

The session introduces the international shipping process and explains how express shipping differs from freight forwarding. It also covers customs roles, duties and taxes, product classification, shipping terms, and basic Indian export procedures.

1. The International Shipping Process

The trainer describes seven basic stages that carriers use to move a shipment internationally:

1. Pickup: A carrier collects the package from the sender.
2. Documentation processing: Shipment paperwork is collected and processed.
3. Outbound airport handling: Packages are consolidated and prepared for export.
4. Air connection: The shipment is loaded onto an aircraft or connected through an airline.
5. Arrival at destination: The shipment reaches the destination country.
6. Customs clearance: Customs reviews the shipment and its paperwork.
7. Delivery: The shipment is transported to the receiver.

Pickup is referred to as the first mile, while delivery at the destination is the last mile.

2. Freight Forwarding and Express Shipping

The session contrasts two service models:

• Freight forwarding: A freight forwarder coordinates the shipment but typically subcontracts separate tasks—such as pickup, customs clearance, air transport, and delivery—to different providers. The forwarder acts as an intermediary or service aggregator.
• Express shipping: One provider manages the shipment end to end, from pickup through delivery. The trainer identifies InXpress’s offering as the express model, while emphasizing that customers should clearly understand and accurately describe the service being sold.

The trainer presents these as advantages of the express model over freight forwarding:

• A single bill: One provider handles the shipment, rather than separate subcontractors generating multiple charges or invoices.
• Simpler currency handling: The trainer says the customer generally deals with one provider rather than reconciling charges from providers in different countries and currencies.
• More consolidated tracking: Express shipments can be tracked across the journey in one system. Freight-forwarded shipments may involve multiple tracking or airway-bill numbers and less continuous visibility.
• More predictable pricing: The trainer describes express pricing as more stable through the year, while freight-forwarding prices may rise during peak-demand periods.
• More reliable uplift and connections: An express provider may use its own aircraft as well as commercial airline connections. The trainer says freight-forwarded cargo can be delayed or “bumped” when booked space is insufficient.
• End-to-end control: A single provider has responsibility across pickup, transport, clearance, and delivery, rather than each subcontractor handling only its own segment.
• Consistent handling procedures: The trainer describes express operations as following company procedures and facility standards.
• Clearance preparation while in transit: Shipment information may be submitted to customs before arrival, potentially speeding up clearance after landing.

3. Customs Brokers, Customs Agents, and Duties

The session distinguishes between:

• Customs broker / Customs House Agent (CHA): A licensed individual or firm that submits shipment paperwork to customs on behalf of the shipper or receiver.
• Customs agent / customs officer: A government representative who applies customs laws and regulations. The trainer stresses that the broker and the customs authority have different roles; carriers and customers must comply with the relevant customs rules.

The trainer explains customs duty as a tax applied to goods entering a country. In the session’s examples, the buyer pays the product price to the seller, while import duty is payable to the destination government. The trainer states that duties and taxes can serve to:

• Raise government revenue.
• Protect local industries from foreign competition.
• Influence what goods are imported.

The amount may depend on factors such as:

• Product value, including freight and insurance.
• Trade agreements.
• Country of manufacture or origin.
• Intended use of the product.
• The product’s Harmonized System (HS) classification.

A de minimis value is described as a country-specific threshold below which duties or taxes may not be charged. The trainer states that India does not have such a threshold for imported goods, except documents.

4. HS Codes and Product Classification

An HS code is a numerical classification system used internationally to identify products for customs purposes. Countries may add more digits after the common international portion of the code, creating country-specific classifications.

Because a product’s exact use or characteristics can affect its classification, the trainer advises staff not to guess a customer’s HS code. Instead, customers should research it—using the India Trade Portal, which the trainer demonstrates—and confirm the correct code for their product. The session also references a frozen-paratha classification dispute as an example of how product descriptions can lead to different tax treatment.

5. Who Pays Freight and Duties: DAP and DDP

The session describes the usual arrangement as follows:

• The sender pays the transportation or freight charge.
• The receiver pays import duties and taxes.

It then introduces two shipping terms:

• DAP (Delivered at Place): The seller or sender pays the freight; the receiver pays import duties and taxes.
• DDP (Delivered Duty Paid): The seller or sender pays the freight and the duties and taxes, which are billed back to the sender. The trainer notes that this can result in separate freight and duty or tax charges.

The trainer says these terms fall under international commercial trade rules and identifies DAP and DDP as common terms.

6. Indian Export Processes and Paperwork

The trainer describes two broad export routes:

• Courier/express mode: Presented as requiring comparatively less paperwork.
• Cargo mode: Presented as requiring more formal documentation and processing.

A shipping bill is described as a legal export document generated through customs based on shipment information and paperwork supplied by the customer. The trainer emphasizes that customer-facing staff do not file all the paperwork themselves, but should ensure customers provide accurate details. Errors can be difficult and time-consuming to amend.

The session discusses these shipping-bill categories:

• CSB-4: Associated in the session with gifts and sample shipments of lower value.
• CSB-5: Associated with e-commerce and B2C shipments, and described as allowing shipments up to a stated value with comparatively minimal paperwork.
• Cargo shipping bill: Used for more formal or commercially significant shipments and may involve additional details, schemes, or supporting paperwork.

The trainer cites value, shipment purpose, export benefits or schemes, and shipment weight or size as factors that can affect which process applies. Some thresholds and figures in the auto-generated subtitles are unclear, so they should be checked against current company procedures rather than treated as definitive.

7. Clearance in Transit

Clearance in air means the carrier starts processing shipment information and paperwork while the shipment is still travelling. The stated benefit is that customs can begin reviewing the shipment before it lands, potentially reducing delays.

The trainer also explains that missing or incorrect information—such as a receiver’s contact number—can cause delays. In express shipping, the carrier may be able to contact the shipper or receiver directly. In freight forwarding, updates may pass through the forwarder before reaching the end customer, which can slow the response.

8. Follow-Up Work

The trainer assigns self-study for the next class:

• Research 3PL (third-party logistics); the trainer also mentions 4PL and 5PL.
• Research ECCS (Express Cargo Clearance System).
• Read about the frozen-paratha classification case discussed during the HS-code section.

Speakers and Sources Featured

Speakers

• Gladson — Main trainer; the subtitles inconsistently render his name as “Latson” or similar.
• Rajubai — Facilitator or organizer who introduces and coordinates the session.
• Participants who contribute identifiable questions or answers: Alan, Janesh/Jennish, Vasuki, JSG, Pasi, Raj, and Dashan. The subtitles also appear to render Dashan’s name as “Dan” in one place.

Sources and Organizations Mentioned

• InXpress — The company whose service model is discussed.
• DHL Express — Used for tracking and express-shipping examples.
• FedEx, Aramex, and other carriers — Mentioned as examples of international service providers.
• Indian Customs and the Customs Act of India — Discussed as the country’s customs authority and regulatory framework.
• U.S. Customs and Border Protection (CBP) — Mentioned as an example of another country’s customs authority.
• India Trade Portal — Recommended for researching product classifications and HS codes.
• International Chamber of Commerce (ICC) — Mentioned in connection with Incoterms.