It’s one of the great ironies of e-commerce. The Internet has connected buyers and sellers from all corners of the globe, creating a virtual marketplace where goods are bought and sold at the speed of right clicks. Yet when it comes to shipping that merchandise things haven’t changed much since the days of the typewriter and steamboat.
Getting goods from one country to another requires sheaves of paper documents that travel with the shipment and are every bit as important as the goods themselves. These papers are more than just address labels telling cargo handlers to move the packages from A to B. They’re used by customs officials to check the shipment is legal and determine any duties; double as contracts confirming who owns the goods at each stage of their journey; act as identification papers so only the importer can pick up the package and even function as proof of an insurance policy.
Without the right documentation your consignment might be left on the docks, lost in transit or even seized by customs—and if you’re the sender any discrepancies in the paperwork could have you shredding your nails in your paperless office, wondering if you’ll get paid.
With so much riding on the outcome, it’s no surprise that many exporters employ the services of a freight forwarder, professionals who can navigate the complex waters—and air corridors—of international shipping with their eyes closed. But even if an expert is called in the exporter is ultimately responsible for the accuracy of the paperwork, so it pays to be familiar with what’s required.
Here are five key documents you should be familiar with before your shipment sets sail.
1. Air Waybills
As you can probably guess from the name, an air waybill (aka an air consignment note) is used in air transport, each coming with an 11-digit tracking number to check on the progress of the shipment. It serves as proof the goods have been received for shipment, an invoice for the freight, an insurance certificate and a guide to airline staff for the handling, dispatch and delivery of the consignment.
An air waybill usually consists of three originals and nine copies. The first original is intended for the carrier and is signed by an export agent; the second original, the consignee’s copy, is signed by an export agent and accompanies the goods; the third original is signed by the carrier and is handed to the export agent as a receipt for the goods after they have been accepted for carriage.
Unlike a bill of lading (see below) an air waybill is not a document of title and so does not confer ownership. The goods are usually consigned to the party named in a Letter of Credit. Unless that’s a third party, such as the issuing bank, the importer can pick up the goods from the carrier without paying the issuing bank or the consignor. So if you’re the exporter make sure you’ve got the cash in hand or the payment terms with the importer neatly sewn up.
2. Bill of Lading
A bill of lading (B/L) is used for sea shipment. It acts as a certificate of ownership of goods, so the importer needs to produce it at the destination port when picking up. The B/L is also a signed receipt for a specified number of packs, given to the export agent by the shipping line when it receives the consignment.
If the cargo appears to be in good order and properly packed the B/L is deemed “clean” and the owner accepts full liability for the cargo described in the bill. However, if the cargo is not deemed to be, well, shipshape, it is the ship master’s duty to reject them or insert a clause into the B/L noting the deficiency.
Unlike air waybills, which do not confer title and are therefore always non-negotiable, the B/L is usually a negotiable document and you may sell the goods by endorsing or handing them over to another authorized party— even while the goods are still at sea. Beware, however, that some countries do not allow negotiable bills of lading, or make it hard to use them. Check their status in the countries you’re shipping between before you make arrangements.
3. Commercial Invoices
A commercial invoice is a bill sent from the seller to the buyer that also provides a detailed description of the goods, their value and shipper information. Beware of fudged or downright misleading details: commercial invoices are often used by governments to determine customs duties. Nations that use commercial invoices to control imports will often specify the form, content, number of copies and language to be used in the invoice, as well as other important details.
4. Insurance Certificates
An insurance certificate is a representation of the policy taken out to cover the goods by the buyer or the seller, depending on the Incoterms agreed to. For an air shipment the air waybill does the job, but sea shipments require a separate document showing that a marine insurance policy is in place. Blank, pre-signed insurance certificates are supplied by the insurer, bearing the open policy number of the exporter.
5. Packing Lists
The packing list simply indicates the number of items in the contents of each pack, along with individual weights and dimensions. This list enables the importer to check that the correct number of units has been received and makes it easy for customs authorities to identify a specific pack should they wish to inspect it at the border.
