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Shipping Documents

Shipping documents meaning:

Documents required for international trade and which are related to shipment of goods from one country to another are known as shipping documents. These documents describe the details of consignment, their quantity, quality and other required specifications. The documents required for clearing the customs process at both ends i.e. at exporters as well as at importer’s end are considered as shipping documents. Various documents such as bill of lading, packing list for export, commercial invoice, sea waybill, inspection certificate are termed as international shipping documents.

Importance of shipping documents

There are two main reasons which justify the importance of international shipping documents:

  • Global trade involves bill of lading which acts as a document of "control". The person holding physical bill of lading can take possession of the consignment.
  • In most international transactions, the importer is supposed to pay for consignment in cash, or have to provide a bank guarantee for the future payment, before actually holding of the bill of lading. This is the key reason because of which other shipping documents are involved.

Let’s see why are shipping documents important:

  1. for identifying the shipment and its actual contents.
  2. In order to obtain the customs exemption certificate.
  3. So that requirements can be planned for handling the transport, storage as well as the delivery of the consignment towards the final destination.
  4. for receiving the consignment from the carrier.
  5. To confirm consignment received against product shipped and product ordered.
  6. To get insurance claims if loss or damage occurs.

What are the main shipping documents?

International trade involves a complex structure of importer, exporter, freight forwarder, export documentation, and their coordination. As a trader it becomes important to understand the importance of shipping documents along with most commonly used shipping documents. The below mentioned documents acts as both i.e. shipping documents for export as well as shipping documents for import. Most commonly used shipping documents are:

  • Bill of lading
  • Air waybill
  • Sea waybill
  • Commercial invoice
  • Certificate of origin
  • Insurance with certificate of liability
  • Packing list
  • Inspection certificate

After knowing various shipping documents as a trader one must know about what actually these documents are.

Bill of lading

Bill of lading can be considered as a contract between the owner of the goods and the carrier. It is the document to provide proof or evidence of shipment. Serves as a shipment receipt and contains details such as type, quality and destination of goods. Various types of bill of lading are straight bill of lading (non-negotiable) and a negotiable or shippers order bill of lading.

Air waybill

An air waybill abbreviated as AWB is a shipping document which accompanies products shipped via international air courier for providing detailed information regarding the shipment and makes it tracking possible. Multiple copies of air waybill are made such that each involved party can document it.

Sea waybill

A Sea Waybill is generally used in place of a Bill of Lading for straight consignments when a letter of credit or other banking arrangements are not involved in the shipment of commodities. The Sea Waybill is considerably suitable where regular shipments occur between the related companies which do not need settlements via banks or third parties.

Commercial invoice

A commercial invoice for export is also known as seller’s bill for commodities sold by him. It contains details in terms of name and address of the seller, description of goods, price per unit, quantity, total value etc. It is termed as the most basic and important export document. Sometimes these invoices are also used by governments to determine the true value of goods when assessing customs duties.

Inspection certificate

It provides proof for what you are shipping, what customer ordered and quality of commodity. It ensures that commodities were in good condition at the time of inspection and this is done immediate prior to shipment or we can say pre shipment inspection is done. It includes Applicant-The name of buyer company which has opened the LC, Consigned to the Order of -The name of the LC opened bank or buyer banks, Beneficiary: (The name of the seller), LC No. and LC Date, Custom Tariff Code No., Pro-forma Invoice No. and Date, Purchase Order No. and Date, Insurance Policy No., Country of Origin, Place of Inspection, Date of Inspection, Port of Discharge, Type of Packing, Bill of Lading No. and Date, Gross weight, Name and Signature of authorized Person, Place and Date of Issue.

Packing list

A packing list for export can be explained as a detailed document that states all of the product and packaging details contained in each shipment. It includes name of shipper/exporter with its contact details, name of consignee/importer with its contact details, the gross and net weights of the cargo, nature quality and specifications of goods, type of package and measurement of each package, invoice number and date, reference to bill of lading, method of dispatch, type of shipment and other specified documents.

Certificate of origin

It is the document that certifies where the export commodity are manufactured originally. It is widely used in International trade transactions. It is required for import customs may be for all or may be for certain products. It is further classified as Non- preferable and preferable certificate of origin. It can be provided within two formats i.e. paper based certificate of origin or electronic certificate of origin. It is also used for claiming benefits under free trade agreements.

Insurance with certificate of liability

Insurance certificates are the modes to assure the consignee that insurance will cover the loss of or damage to the cargo during transit. These can be easily obtained from your freight forwarder or publishing house. It falls under insurance documents which are classified as Insurance policy, certificate of insurance and insurance broker’s note. While securing your goods few things must be considered in advance i.e. get enough coverage, decide who will secure the insurance, decide who pays for it or just leave a paper trail.