The ocean freight shipping industry is infamous for the tremendous amount of paperwork it entails. As an independent freight forwarder, you need to get familiar with all of them which can be a task in itself. The slightest error in your shipping documents can lead to delays and even cancellation of shipment thereby disrupting the entire supply chain. Typically, most documents in the transportation and logistics sector come with similar information relating to the shipment details, buyer, and seller. Nevertheless, all individual documents play a unique role which is why it is crucial to ensure that the information written on each piece of paperwork is precise and consistent across every other document.
Today we are going to talk about some of the most important freight documents that forwarders encounter while moving a shipment.
Most important paperwork in the ocean freight shipping industry
Commercial invoice
The commercial invoice is one of the primary documents in international sea freight shipping. The seller or exporter issues this legal document to the buyer or the importer in an international transaction. This document acts as a proof of sale between the exporter and the importer. They are like regular invoices but they also come with data about the financial institution, freight forwarder, shipping line, exporter and importer. Generally, a commercial invoice includes the following kinds of data- number of items, country of origin, item description, terms of sale, export reason, consignee name, and shipper name.
Bill of Lading
The Bill of Lading aka BoL or B/L is the most important shipping document that serves as a receipt of freight forwarding services. It works as a contract and a document of title between the carrier and the shipping company or freight forwarder. It includes all the details of the cargo such as volume, destination, and commodity type. You will get an air waybill, sea waybill or rail waybill depending on your mode of transportation.
The B/L which is the most important piece of document in the ocean freight shipping industry comes with a list of all parties involved in the shipping process along with information such as name and addresses of the consignee and the shipper, purchase order, shipment pickup date, cargo description and weight, packing details, details of the forwarders and special instructions. A shipment cannot be sent without this document. Additionally, they also work as proof of ownership of the cargo.
Packing List
A packing list is an important document in global trade that offers the seller, forwarder and consignee all the information about the cargo. This includes details about the weight and dimension of each package, the marks and numbers on the boxes, and the details of packing. It informs all the parties involved in the shipping process about the cargo being transported without having to verify the contents physically. If the customs decide to inspect the cargo, then this list can help quicken the process.
Certificate of Origin
The certificate of origin attests to the fact that the cargo has been processed, produced, and obtained in a particular country. The exporter or manufacturer submits this document which is certified by the Chamber of Commerce. This is a very important document required for customs clearance as it determines the taxes that have to be paid. It comes with information about the seller, the consignee, the importer, and the cargo description.
Moreover, there are two main kinds of certificate of origin- preferential and non-preferential. The non-preferential certificate of origin is the one where the cargo is shipped from a country that doesn’t allow preferential tax treatment. Some of the details in this certificate include the shipper’s name and address, number of boxes, weight, cargo description, transport details etc.
Certificates
There are certain kinds of cargo that could involve the special certificates mentioned below.
– Production certificate– This certificate is used to certify if the materials or production mode of the cargo uses approved methods. It is needed when you are sending your shipment to/from countries where production related regulations are in place.
–Phytosanitary certificate– This documentation is only used for plant and plant-based products. Obtaining the phytosanitary certification implies that the cargo is free from regulated pests. Additionally, it also implies that the shipment conforms with the phytosanitary requirements of the importing nation.
Arrival Notice
The arrival notice is the document informing that the shipment is about to reach the destination. It includes important details like cargo description, sailing details, contact of the carrier and more. The sea freight carrier’s destination agent issues this document to the consignee as well as to any other parties who need to be notified as stated in the Bill of Lading.
Letter of Credit
This is a formal contract of payment between the importer and exporter. The process of international shipping is a complex one involving a long delay from the time the exporter sends the shipment to the time it safely reaches the hands of the importer. In this long process, it is not always easy to determine when exactly a payment should be made. It becomes all the more problematic when the buyer or the importer is not able to verify the legitimacy of the purchase. In the letter of credit, the buyer draws up a set of terms and conditions that needs to be agreed upon by both parties. When both the exporter and importer finalize the terms, the exports start to prepare the shipment according to the conditions on the basis of which his bank pays him before requesting reimbursement from the importer’s bank.