6 Important International Documents and How They Help You For Faster Shipping
October 26, 2020
Congratulations! Your international order is finally ready to be shipped!
This guide will direct you through the basic international shipping documents requirements needed to import/export internationally. Having the correct information ready will help keep your shipment moving smoothly until it reaches the final destination.
Sue is thrilled that her international order is ready. She confirms the payment details and instructs her manufacturer to begin the shipping process.
“It’s just a matter of days until the new T-shirts get here.” Energized by the update she starts preparing her local warehouse for the new merchandise.
What is Sue doing wrong? Sue is assuming that the shipping and delivery of international packages work just like a domestic delivery.
What makes international shipments so complicated?
Shipping internationally means that your package will change hands numerous times.
At each step in the logistics chain, the new carrier makes sure the condition of the package is as listed on the agreement. Only then, do they accept responsibility for the package.
What this means for you:
One shipping document with all the cargo details will not help! You need contracts at every step of the international shipping process. This is commonly referred to as international trade documents.
- A trucking company picks up your package from the factory and delivers it to the port. They transfer the responsibility for the cargo to the next party.
- The package is processed for export and must comply with the exporting country’s laws and requirements.
- The shipping company (or airline) accepts your package and brings it to the destination port.
- The importing country processes your package, making sure it’s compliant with the laws and that customs fees are paid.
- At the destination port, the cargo needs to be unloaded and accepted by the right party.
- A trucking company then brings the merchandise to your designated warehouse.
To transfer the liability for the cargo from one party to the next, proper shipping documentation and agreements are needed. A freight forwarder often offers the additional service of taking care of these trade documents.
What types of shipping documents do you need, and how do they help you?
These documents work as contracts.
1- It makes sure your package keeps moving – it transfers the responsibility of transporting the goods.
2- It makes sure your package is in the proper condition – it transfers liability for the goods.
3- In case of damage, loss, or theft it makes sure that you’re compensated accordingly by the insurance company.
What happens when you don’t have the correct trade documents?
The natural consequences range from cargo delays, courier fees, and/or lost or missing goods.
Since Sue certainly does not want that to happen to her T-shirts, let’s dig right in, and see which documents Sue must be prepared with.
The Most Crucial International Trade Documents:
1- Commercial Invoice:
You probably already have a proforma invoice. But you need to make sure you have an official commercial invoice as well. This is the primary shipping document. It provides information to the buyer, the freight forwarder, U.S. and foreign customs officials, the import broker, the marine insurance company, as well as the seller’s and buyer’s bank.
The commercial invoice includes:
- Contact information for the seller, and their Business ID number
- Contact information for the buyer and their business ID number
- Description of the items including the correct tax code, the number of goods, and the price
- Shipping and handling fees
- The terms of sale listed as one of the Incoterms. (For more info on incoterms see here.)
- Payment terms
2- Certificate of Origin – CO
Because import/export laws and taxes differ between countries, you are required to confirm where your items are coming from. Customs officials will use this document to verify that the goods can come into the country and to confirm which tax rate to apply. This also helps you get a tax cut if you’re eligible under the trade agreements between the import and export country.
The generic Certificate of Origin includes:
- Exporter and importer identify details
- Country or countries of origin of your goods
- Commercial invoice number
- Name, description, and weight of the goods
- Chamber of commerce certifying the certificate as well as the chamber seal.
3- Bill of Lading
Bill of lading is a document issued by the shipping company or his agent acknowledging the receipt of cargo on board.
Purpose of the BOL:
- It is a receipt.
The bill of lading is proof that the carrier has received the merchandise as described in the document.
- It is a contract.
It obligates the carrier to transport the cargo for a set fee.
- It is a document of title.
As a document of title, the bill of lading gives ownership of the goods to the bearer. It can be used to obtain payment before the goods are transferred to the next party.
There are 3 different versions depending on how you are shipping your package.
A- Inland bill of lading:
The bill of lading identifies the parties on both ends of the shipment, as well as a description of the items and routing instructions. It usually transfers responsibility of the package to a forwarding agent.
An inland bill of lading includes:
- The name and contact information for the exporter, the importer, and the consignee
- Inland carriers details
- Freight costs
- Shipping instructions for the package
- A description of the items; quantity, weight, dimensions, identify marks on the packages, and if the goods are hazardous
B- Ocean bill of lading:
There are two categories of ocean bills of lading. Which one will be used is usually determined based on the payment agreements.
- The straight bill of lading is used when the shipment is being transferred directly to the recipient. (Usually, when the payment has already been paid in full.) The recipient can collect the package on arrival by showing a signed original bill of lading to the shipping carrier.
- An ocean bill of lading consigned “to order” or “to order of shipper”: The ownership of the goods is given “to order of” the named party. This document is negotiable because the ownership can be transferred to a different party by endorsement. The purpose of an order bill of lading is to protect the interest of the shipper – in getting paid. Once the recipient has the full payment he can provide cash in exchange for the order bill of lading and to receive the ownership of the goods.
An ocean bill of lading includes:
- The name and contact information for the exporter, the importer, and any involved agents
- Ships ID, booking details, and loading instructions
- A description of the items; quantity, weight, dimensions, identifying marks on the packages, and if the goods are hazardous
- Freight rates and charges
C – Airway Bill:
This is the same as the Ocean bill of lading, but it’s for air cargo. The airway bill cannot be negotiable.
The air waybill includes:
- The name and contact information for the exporter, and the final recipient
- Carrier information, departure airport, and routing
- A description of the items; quantity, weight, and dimensions
- Freight charges
- The anti-diversion clause
4- Dangerous goods form
When shipping dangerous goods, it is crucial to conform to international law. The laws vary when shipping by air or by ocean.
A – Shipping by ocean:
This is regulated by IMO ( The International Maritime Organization). The laws are complex and change often. Research the criteria you need here for your specific items.
B – Shipping by air:
This is regulated by IATA (The International Air Transport Association). Some airlines may also have their own list of regulations. These guidelines can be very specific and should be researched here as well as with your airline.
The next two documents are usually not required but worth preparing anyway:
5 – The packing list
This document can be used by every party in the logistic chain. It will clarify all the details and make sure the carriers, the agents, and the banks all have the correct information.
Simply put, this document saves you time and headaches!
The packing list includes:
- All identifying details of the transaction
- The name and contact information of the exporter and the final recipient
- Details of the items and where they are packaged
- Weight and measurements of the packages
- Any marks and numbers on the packages
- The total quantity, weight, and measurements of the entire shipment;
- Special shipping instructions
6- Shipper’s Letter of Instruction (SLI)
The SLI gives you a written record of who has the shipping documents, who to contact for questions, who to contact for proof of export, and who issued the export control information that was used to support the decision to export the goods.
This document keeps your cargo moving smoothly!
The SLI includes:
- The name and contact information of the freight forwarder, exporter, final recipient, and any involved parties
- Description of the items; weight, dimensions, how they are packaged, special markings
- Any export control information
- Who is paying for the freight;
- Shipping instructions (FCL or LCL)
- Any insurance details
- Other included documents
- Special shipping instructions
These documents are the basic international trade documents you will need to prepare. Preparing them correctly with all the necessary information will ensure a smoother ride for your packages. Note that some of these documents are available electronically, which will save you on courier fees in case of any mixups or confusion.
Forwarding agents like WGroup make sure you have all the documents filled out according to the law so that your goods can move smoothly to your final destination. See the international freight services we can help you with.
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