What is High Sea Sales ? - Logisticsstudy

High Sea Sales is a sale done by actual consignee (first buyer) to another buyer when the goods are in high sea, i.e. goods left the port of origin but not reached to the port of discharge.

High sea sale can be done any number of times, there is no restriction on this, an agreement has to be signed for each High sea sale. High Sea Sale can be done in local currency only.

Benefits of High Sea Sales:

1. The first buyer can buy the in bulk (large) quantity at a cheaper price and sell in part (small) quantities to multiple buyers in destination at higher price.

2. The first buyer is not liable to pay the duties & taxes.

3. Final buyer can get the goods within short time period as goods are already in high sea.

Documentations under High Sea Sale:

Below documents are required for a High Sea sale transaction, all documents should be endorsed by the seller under high sea sale in favor of buyer under high sea sale.

We will cover the details of these documents based on high sea sale transaction. And will not cover general definitions of these documents as there is a separate article with detailed description already available on Post shipment documents, click here to read.

     1. High Sea Sale Agreement: High Sea Sale Agreement is explained below in detail.

2. A letter from the first buyer (seller under high sea sale): Seller under high sea sale will issue one letter (on their letter head) to the Commissioner of customs mentioning that they have sold the mentioned goods to the ultimate buyer (name & address needs to be mentioned) on High Sea Sale basis, and request the customs to allow clearance to the ultimate buyer.

3. A letter from the ultimate buyer (buyer under high sea sale): Buyer under high sea sale will issue one letter (on their letter head) to the Commissioner of customs mentioning that they have purchased the mentioned goods from the first buyer (name & address needs to be mentioned) on High Sea Sale basis, and request the customs to allow them to clear the cargo.

4. Import Invoice: This is the original invoice raised by the extorter (in foreign currency) in country of origin.

5. Commercial Invoice: This is the invoice issued for High Sea Sale transaction with Hi Sea Sale value (in local currency) by the first buyer (seller under high sea sale) to the ultimate buyer (buyer under high sea sale).

6. Packing List: Packing list issued by the exporter at country of origin.

7. Bill of lading: Original Bill of Lading issued by liner, the ownership of goods shall be transferred to the ultimate buyer (buyer under high sea sale) by endorsing back side of the Bill of Lading.

8. Certificate of origin: The same Certificate of origin, which was issued in country of origin.

9. Insurance certificate: The insurance certificate which was issued originally at the time of shipment can be transferred to the ultimate buyer by endorsement.

10. Phytosanitary Certificate (if required): If the commodity is a plant product, then Phytosanitary certificate issued in country of origin will be required.  

11. Any other documents required in the country of destination.

High Sea Sale Agreement:

In order to execute a High Sea Sale, High Sea Sale agreement is needed. This agreement by signed by the First buyer (consignee) and the ultimate/final buyer, agreement is printed on a stamp paper (only first page). The agreement says the seller agrees to sell and buyer agrees to buy on High Sea Sale Basis. The agreement contains the terms and conditions, details of the goods, seller & buyer’s details etc., let us see the details mentioned in a High Sea Sale agreement.

Details available in High Sea Sale Agreement:

        1. Seller’s name and full address.

   2. Buyer’s name and full address.

   3. IEC code of Seller

   4. IEC code of Buyer

   5. Description of Goods

   6. Details of containers

   7. Quantity (Net weight)

   8. Consignment value (Sales value)

   9. Invoice number & Date

 10. Name of the vessel & voyage

 11. Bill of Lading number & Date

 12. Name of the supplier

 13. Payment terms

 14. Insurance

 15. Delivery

 16. Import duties & taxes

 17. Other charges (Detention, demurrage etc.)

 18. Sale tax

 19. Force Majeure

 20. Amendment conditions

 21. Other terms and conditions

 22. Two witness (Name and signature)

 23. Date of agreement

High Sea Sale explained:

Let’s understand High Sea sale with the help of an example, assume a commodity trader in Bangalore, India named Blue Sky Commodities decides to import cashews for local trading. They collect quotations from few Cashew exporters and finalize a deal of 1000 metric tons with a raw cashew exporter in Abidjan, Ivory Coast named West African Cashew Traders.
Contract is signed under Letter of Credit (LC) and exporter at Ivory Coast receives the booking of 40X20' containers from the shipping line and plans to dispatch 1000 metric tons in a single lot, each container will have 25 metric tons of raw cashew.
As per the schedule, exporter process and make the goods ready. Now goods are loaded into containers and presented to the customs for export clearance. After custom clearance, all 40 containers are sent inside the port, where containers are loaded onto the vessel and vessel sails as per schedule.
After vessel sailed, the exporter West African Cashew Traders and their clearing and forwarding agent approaches various offices for post shipment documents. Once they receive all the documents, they submit the documents at their bank as per LC term.
All documents are prepared as per the Letter of Credit and as per the documents, seller/shipper/exporter is West African Cashew Traders and the buyer/consignee/ importer is Blue Sky Commodities.

Meanwhile Blue Sky Commodities receives enquiries for raw cashew from India from few local distributors, after the negotiation Blue Sky Commodities close the deal for all 40 containers with a distributor in East Godavari, Andhra Pradesh named Godavari Cashew Distributor with a good margin. Vessel already sailed and crossed the territory of Ivory Coast, in other words this can be called as the goods are in high sea. In this case, the only possibility of selling the goods which are already under international water is to sell these under high sea sale. High Sea sale contract prepared and signed by both parties, seller (Blue Sky Commodities) and buyer (Godavari Cashew Distributor). Once the high sea sale contract is signed, ownership of goods will be changed to Godavari Cashew Distributor.
Shipping line/carrier will file import general manifest (IGM) in the name of Godavari Cashew Distributor (as consignee).

First buyer/consignee (Blue Sky Commodities) collects all original documents from the bank, below documents are received.
1. Commercial Invoice
2. Packing List
3. Bill of Lading
4. Certificate of Origin
5. Phytosanitary Certificate
6. Inspection Certificate
7. Insurance Certificate

Keep this in mind in all above documents West African Cashew Traders will be showing as seller/shipper and Blue Sky Commodities will be showing as buyer/consignee. But as high sea sale contract is already signed, the same documents can be used for import clearance of the cargo for the new importer/consignee/buyer Godavari Cashew Distributor. Blue Sky Commodities needs to endorse the Bill of Lading (back side) on the name of the high sea sale buyer Godavari Cashew Distributor, after that Godavari Cashew Distributor can receive Delivery order from shipping line/carrier.
Now Bill of entry will be filed on the name of new buyer/ high sea sale buyer Godavari Cashew Distributor and they needs to pay the duties and taxes. Godavari Cashew Distributor can take the delivery of the goods after import custom clearance. 

We have written various articles on Export, Import and logistics, click on below links if you want to enhance your knowledge.

Export procedures

Import procedures

Bill of Lading

Types of Bill of Lading

Detention charges

Demurrage charges

Post Shipment documents

How to book containers and bulk vessels

How to handle containerized cargo / Container operation

Export general manifest (EGM)

Import general manifest (IGM)

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