The shipping process plays a vital role within the broader logistics framework as it encompasses the physical movement of goods from one location to another. Its significance lies in ensuring the efficient and secure transportation of products to their intended destinations.
🔹Important steps of cargo shipment process
Step 1) Purchases occurred
: Buyer purchases products from the Seller. Trade terms and payment terms will be decided by the parties(Incoterms). Under the agreed Incoterms terms, the buyer and seller will arrange the shipment. For example, under EXW, Buyer is responsible for arranging the shipment.
Step 2) Choose means of transportation
: For arranging the shipment, they should choose means of transportation(ocean, air, train etc). For the ocean, they would also choose FCL(20’FT , 40’FT, 40’HQ) or LCL. The responsible party(Exporter or Importer) would select a freight forwarding company as their logistic agent and start comparing the quotation.
Step 3) Prepare shipping documents
: Shipper has to prepare the documents such as C/Invoice and P/List. And if the shipment needs to get FTA benefit, then it needs a Certificate of Origin.
Step 4) Organizes the shipment
: After the quotation and transportation is confirmed, the freight forwarder(Logistic agent) will help to check the cargo ready date and whether cargo needs to be picked up. They will book air, ocean or other transportation space confirming with the ETD. Bill of lading will be issued and prepared for the shipment.
Step 5) Shipped and departures
: The cargo will be shipped on plane or ship and departure to the destination.
Step 6) Custom Clearance
: The cargo needs to undergo export customs and import customs.
Step 7) Destination local arrangement
: The destination local arrangement will be done by the destination freight forwarder agent.
Step 8) Cargo delivered
: The cargo has arrived at the designated place and shipment is completed
🔹Stakeholders involved in shipping process
It's important to note that the specific stakeholders involved may vary depending on the nature of the shipment, the mode of transportation (e.g., maritime, air, road, rail), and the geographic scope (e.g., domestic, international).
- Shippers: These are the individuals or companies that initiate the shipping process by sending goods or products from one location to another. They may be manufacturers, wholesalers, retailers, or individuals.
- Carriers: Carriers are responsible for physically transporting the goods from the point of origin to the destination. They can be shipping lines, airlines, trucking companies, or logistics providers.
- Freight Forwarders: Freight forwarders act as intermediaries between shippers and carriers. They coordinate and arrange the transportation of goods, handle documentation, and provide additional logistics services.
- Customs Authorities: Customs authorities are government agencies responsible for regulating and overseeing the movement of goods across international borders. They enforce customs laws, collect duties and taxes, and ensure compliance with import and export regulations.
- Ports and Terminals: Ports and terminals play a crucial role in the shipping process, especially for maritime shipments. They provide facilities for loading and unloading cargo, storage, and other related services.
- Insurance Providers: Insurance companies offer marine insurance or cargo insurance to protect the goods against loss, damage, or theft during transit. Shippers often opt for insurance coverage to mitigate risks associated with shipping.
- Suppliers and Manufacturers: Suppliers and manufacturers are stakeholders involved in the shipping process as they provide the goods or products that need to be shipped. They may have specific requirements or expectations regarding transportation and delivery.
- End Customers/Consignees: The end customers or consignees are the recipients of the shipped goods. They may be individuals or businesses that have ordered or are expecting the delivery of the products.