The shipping documentation process in international trade is necessary to make the trade valid and legal. As a result, there are more requirements to be fulfilled by exporters and importers than for domestic traders.
For the latter, there are only the requirements of the taxation department of their own country and a handful of documents. For exporters and importers, there are far more. Depending on the type of goods being traded, as many as 13 documents must be submitted to different institutions.
To complicate things further, the prerequisites of authorities and institutions related to international trade between two countries may differ slightly, all of which must be fulfilled for the trade to be completed successfully.
In this article, we attempt to cover as many of the international shipping documents as possible.
What is freight documentation?
Also called ‘cargo’ and ‘shipment’, ‘freight’ refers to goods which are being transported from one place to another, often in large quantities or weightage. Freight documentation is required for both domestic and international trade.
For a domestic transaction to be completed, the most basic documents are the Quotation, Purchase Order, Delivery Note and Invoice. Freight documentation for international shipping has to fulfill a far longer list, which is dependent on the nature of the freight and criteria set by the local authorities of the country receiving the cargo.
The transportation of freight from supplier to buyer must be accompanied by documents for many reasons, which are discussed in another section.
What documents are required for international shipping?
Whether the movement of cargo occurs via land, air or water, as long as it crosses the border of another country, it is considered an international shipment. The documents required for all these types of freight transport are similar with a few key differences, which will be mentioned briefly in Shipping Documents List.
Both exporters and importers handle the same types of freight documentation. The difference is in the switch of perspective from buyer to seller and seller to buyer.
The other difference is in the receiving country’s regulations which may incur additional paperwork for certain types of cargo.
What are the types of shipping documents?
International shipping documents can be classified into four types. Let us take the exporter’s perspective for the example below.
1. Regulatory Documents
These are pre-shipment documents as required by the regulations of the exporting country. Thus, these documents are mandatory for an export contract:
- Shipping bill
- Export application prescribed by port authorities
- Insurance payment certificate
- Excise gate pass for the clearance of cargo
2. Export Assistance Documents
These are documents for getting government assistance, if there is any, such as subsidies. They include documents such as the export-import agreement and certificate of quality control.
3. Documents Prescribed by the Importer’s Country
These may include documents on pre-inspection, quality approval and child labour norms related documents. The types of documents depend on the laws and regulations of the importer’s country.
4. Commercial Documents
These are necessary documents to transfer ownership of cargo from an exporter to an importer, and they must fulfil the rules of the trade. Commercial documents include:
- Bills of exchange
- Bills of lading
- Letter of credit
- Marine insurance policy
- Shipping instructions
- Shipping order
- Inspection documents
- Certificate of Origin of Goods
Shipping documents list
This is a non-exhaustive list of documents which may be needed for import and export. The names of each document can vary from one country to another. Therefore, we have included a brief description of each for easier understanding.
Quotation
The seller must give it the buyer to indicate details of a sale such as price, quantity, type of product, quality and so on.
Purchase Order
The buyer sends this to the seller to confirm the agreed upon details of a sale. A Purchase Order must list the same details of a Quotation for the said sale.
Proforma Invoice
It is an invoice prepared by the seller before shipping the goods, and sent to the seller. It must contain all relevant details of the goods to be sent. Sometimes it is used in place of a Quotation.
Commercial Invoice
It is a bill for the goods from the seller to the buyer. Governments often use this invoice to determine the true value of cargo when assessing customs duties.
Export Licence
This is a government document which authorizes the export of specific goods in specific quantities to a particular destination.
Import licence
Also a document issued by a government, a copy of it may need to be submitted with the rest of the documentation in some cases to help avoid problems with customs in the destination country.
Certificate of Origin (CO)
It is a requirement by some countries for all, or only certain products. It is up to the seller to verify whether a CO is needed for a shipment.
Shipper’s Letter of Instruction (SLI)
An SLI is issued by the exporter to the forwarding agent. It contains shipping instructions for air or ocean freight.
Further reading: Shipper’s Letter of Instruction – Why It Is Good To Have
Packing List
A Packing List for export and import is far more detailed and informative than a standard domestic packing list. It contains information on a number of items related to a trade such as seller and buyer details, shipper details, invoice number, date of shipment, mode of transport, carrier, and very detailed information on the cargo.
Bill of Lading (B/L or BOL)
An extremely important document, it is a contract between the owner of the goods and the carrier (as with domestic shipments). B/Ls are applicable to land and ocean freight. There are a few types of B/Ls which importers and exporters must know about.
Further reading: A Comprehensive Guide on Bill of Lading
Airway Bill (AWB)
It serves the same purpose as a B/L but it is used for air freight only.
Dangerous Goods Certificate or Form
Any cargo classified as dangerous goods must be accompanied by a Shipper’s Declaration for Dangerous Goods required by the International Air Transport Association (IATA).
Material Safety Data Sheet (MSDS)
It contains information on the potential hazards of a cargo, in terms of health, fire, reactivity and environmental risks. It also outlines data on the use, storage, handling and emergency procedures related to the hazards of the material.
Bank Draft
Unless a buyer has paid a seller in cash, a bank draft is often one of the financial instruments used for payment. It is attached with other documents for a buyer to submit to a bank for the payment to be released.
Forwarders Cargo Receipt (FCR) or Forwarder’s Certificate of Receipt
It is issued by a freight forwarder to the shipper. This document serves as certification for the receipt of a cargo.
Booking Note
It is a contract for booking or reserving a space for cargo on a vessel. Without this, a cargo cannot be moved onto the vessel.
Delivery Note or Delivery Order
This document accompanies the cargo and details a complete list of items in the shipment.
Why are shipping documents important?
International shipping documents must be submitted to several institutions of both countries involved in an import-export trade.
1. Importing organisation
Where there is an exporter, there must be an importer, and vice versa. A seller needs to inform its buyer about the status of a transaction by sharing or giving certain documents to the buyer.
Communication between buyer and seller is essential for the delivery of goods and payment for goods to materialise. The documents exchanged also function as a form of binding contract.
2. Taxation, custom control and exchange control authorities
For any goods to pass through the borders of another country, these institutions must check that all the local rules and regulations are adhered to before they can authorise the entry and dissemination of imported goods.
3. Port authorities
Whether at airports or shipping ports, port authorities are the gatekeepers of all freight forwarded there for loading or unloading.
4. Shipping and warehousing authorities
These parties are sometimes separate entities that monitor the transporting and storing of cargo.
5. Inspection agencies
They carry out the necessary inspection and verification of cargo details. An example of an inspection agency is the SGS (Society of Global Standards).
6. Banks
A copy of the relevant shipping documents must be given to banks associated with the import and export before payment can be released.
How do I prepare a shipping document?
Some shipping documents are prepared by your company and some are issued by freight forwarders, inspection agencies, banks and other authorities. All documents must have all the expected details. Any missing documents may cause an import-export contract to be canceled.
Conclusion
The most important shipping document is the Bill of Lading or B/L. Without it, buyers cannot collect their cargo from a port or warehouse. Similarly, if their shipping documentation is incomplete or contains any incorrect data, their freight will not be accepted or released at any point of the freight forwarding process.
That is why it is critical to engage a logistics service provider or freight forwarder which gives special attention to documentary support of transportation aside from having good service for customs clearance.
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