4 important documents in international shipping
Posted on 5 October 2018 by Richadelo
Whether you are an importing pro or a newcomer to the industry, there are four documents that will be required in order to get any business done: Bill of Lading, Certificate of Origins, Commercial Invoice, and Packing List. Without the four documents listed above, it is impossible to move goods and receive payment.
Bill of Lading
The bill of lading is a document issued by the carrier, it is considered as an evidence of the carriage contract between the carrier and the shipper for the transportation of the goods. You may have seen the abbreviation for this document as BoL. Air carriers issue only one BoL, while ocean carriers issue three copies, one of which is the master copy that can be used to obtain the release of the goods. The exporter obtains the BoL from the carrier; and forwards it to the buyer via mail or banking channels once the payment is made by the buyer.
The BoL contains important information such as:
- Who is the shipper and who is the consignee
- Which carrier issued the BoL
- The freight forwarders who have had and will have the shipment
- The ports of origin and destination
- Which party will be paying for the journey (based on the already made agreement between buyer and seller)
- What is in the shipment
- How the shipment is packaged
- How much the shipment weighs, and the dimensions of the shipment
- The name of the ship/vessel that the cargo is traveling on
- Any other instructions needed for a successful journey
It also outlines who can actually take the cargo at the end of its journey, or at another discharge point in case of dispute. In other words, the BoL is the evidence of title to the goods. If there is an issue with the shipment, for example if some of it is missing or damaged, the BoL shows who (the carrier) can be held responsible.
The bill of lading also acts as a receipt which proves that the shipment has been taken by the carrier, for insurance purposes as well as customs purposes, and can be used as proof that the contract has been fulfilled by the carrier. Remember: only with a BoL can you retrieve the goods from the carrier. Usually the seller will mail you this all-important document only after they have their money. There are many types of BoL, which issued by different parties.
Certificate of Origin
Along with a BoL, shipments will usually (but not always) have a certificate of origin (CoO) that shows where the goods were actually made. Determining the country of origin is important because tariffs and duties differ depending on this information, and some countries are under the effect of an embargo or other types of trade policies. The CoO is written by the exporter but must be verified by a certified issuing body such as a local chamber of commerce. Many products are a combined effort by more than one country – in this case, the origin country could be where the last significant part of the process took place or where the most amount of work (equal to more than 50% of the total cost) took place.
Commercial Invoice
The commercial invoice is a request for payment (kind of like a bill) sent by the manufacturer or seller of goods to the buyer or exporter. The CI should have the entire history of business communications regarding that shipment, however it is important for the buyer to check the terms and conditions of the CI once it is received. On the CI, the shipment will be fully explained in order to easily identify the shipment. This document will also explain how the shipment is prepared correctly in order to gain entry into whichever country it is destined for. It is very important that the CI be correct, since it will be used by customs to determine duties and fees, and will also be used to write all other documents connected with the shipment.
Packing List
Although submitting a packing list is optional, very often your factory attaches it with the CI and BoL. A packing list comes in handy when the buyer needs to claim insurance for any damage or defect. It specifies how the shipment is packed and labeled. When packaging and labeling are done appropriately, it will facilitate customs’ inspection and examination and minimize delays in the shipment’s release from customs.
A packing list can also come in handy for both buyer and seller in many ways such as:
- It offers an accurate count of items being shipped from factory to the buyer’s warehouse
- It has details needed to create a CoO
- With hazardous materials, it makes creating a Material Safety Data Sheet easier
- Can be used by customs broker to facilitate passing the shipment through customs
- Can be used in insurance claims if something happens to the shipment in transit
If you want a packing list, ask your supplier to prepare one.
When you work with a freight forwarder, they will need all four documents to start moving your shipment. Managing all the paper work is not easy, and the industry has long sought a solution to the difficulties, costs, and inefficiencies associated with paper forms.
