International trade relies on documentation that fulfills the regulations and rules set by the countries of origin and destination. The documentation process is an integral part of ensuring smooth international transactions and determines the fate of shipments. If not done correctly, shipments can be delayed or held at the customs.
When shipping goods from their starting location to their final destination, using the right documents and filling them out correctly is critical.
This article aims to provide you with information regarding common shipping documents that you should be familiar with.
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Packing list
A packing list is a mandatory document that provides detailed information regarding cargo. The list includes the volume, weight, value of the overall cargo, and each box.
The purpose of the list is to inform the freight forwarder, importer, customs office, and carrier of the goods transported without physically verifying the contents. If an official inspects the shipment, the packing list serves to facilitate the process by identifying the items enclosed in the box.
The packing list must also match the Bill of Lading because both documents are needed for customs clearance in most countries.
Certificate of origin
The certificate of origin certifies that goods in an export shipment are entirely produced, obtained, processed, or manufactured in a specific country. Also, this certificate serves as a declaration by the exporter. The usual information such as exporter, consignee, importer, and goods description must be filled out on the certificate of origin.
This certificate is prepared by the exporter and has to be certified by a government official such as the consulate or chamber of commerce for it to be valid. The certificate of origin is also necessary to clear customs since it dictates the amount of taxes and duties needed to pay.
Additionally, this certificate helps to identify if taxes are exempted, especially when the importing and exporting countries have special agreements of trade.
Form-A Certificate of Origin
A form A Certificate of Origin is a particular type of certificate of origin that allows imports from a pool of developing countries at reduced or no tariffs in some developed economies or regions—the Chambers of Commerce issues these forms in the country origin of the product.
The certificate of origin can serve as:
- The basis for deciding on tariff treatment
- The required documents for import Customs clearance
- An essential basis for trade statistics
- Evidence of goods’ inner quality or settlement of exchange.
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Commercial invoice
Any international transaction that involves the transportation of goods must come with a proof of sale known as the commercial invoice. This invoice includes details regarding the freight shipment for customs clearance purposes.
Please do not confuse the commercial invoice and packing list because they serve entirely different purposes. A packing list details the items included in the shipment and serves as proof in the event of claims and disputes sent to the receiver for the goods. In comparison, the commercial invoice is a legal document that lists the goods being sold and their sale price.
Related: Regulatory Expertise
Letter of Credit
The letter of credit is a formal, legally binding agreement of payment between buyer and seller and is taken into account as one of the secure payment methods.
At first, the importer draws up a list of conditions and terms, which both parties must agree upon. Then once both seller and buyer finalize the terms, the seller begins preparing the cargo according to the list of conditions. After the cargo is shipped, the seller travels to his bank with the proper documentation as a form of evidence that the shipment has been prepared and sent according to the legal paperwork agreed upon by both parties involved. The seller’s bank then verifies everything and pays him before requesting reimbursement from the buyer’s bank.
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Bill of Lading
A bill of lading is an official document issued by the carrier to acknowledge cargo receipt for shipment on board their vessels and acts as proof of ownership of the goods being shipped on the vessel.
Upon arrival at the destination, the bill of lading is shown to the carrier so they can release the cargo, after which it serves as a shipment receipt.
Airway Bill of Lading
An Airway bill of lading is a non-negotiable transportation document issued for air cargo. It states that the airline has loaded the goods and has an obligation to move them to the named destination airport.
The form should include the following:
- A consignee such as an importer or the buyer
- Goods description including quantity and quality
- Any text required by documentary credits
Take a look at this article from Forbes, regarding 5 Logistics and Shipping Mistakes Small Business Make.
Multimodal Bill of Lading
A Multimodal bill of lading is an international transportation document released to cover two or more means of transport, such as shipping by road and then by railway or shipment by sea and then by road. It may be negotiable when issued to the order or, in most cases, non-negotiable.
FIATA International Federation of Freight Forwarders Associations’ authorized forwarders and carriers either as shipping contract and as cargo receipt confirmation are issued Multimodal bills of lading.
Learn more about How to Understand Your Actual Shipping Costs, by Forbes.
House Bill of Lading
A house bill of lading is an outstanding bill of lading issued by a forwarder and is generally not negotiable since it doesn’t represent title for the goods.
The house bill of lading should include the following:
- The consignee should be the actual receiver of the cargo
- The shipper should be the exporter of the cargo
- The notice can be either the importer or any other party mentioned in the bill of lading
The main difference between the house bill of lading and the bill of lading is that the freight forwarder or the NVOCC releases a house bill of lading and usually lists the actual shipper and consignee. In contrast, the bill of lading is issued by the carrier.
Related: In the News
The Overall Picture
Paperwork or the shipping documents process plays a vital part in logistics and is needed to successfully deliver the goods to their final destination. Any minor error can cause problems or delays that may disrupt the whole supply chain. Therefore, it is crucial to make sure all of the t’s are crossed, and i’s are dotted properly when completing the necessary documents for shipping.
We hope that we have accomplished our goal of providing you with the necessary information for the common shipping documents you should be familiar with.
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