In commercial shipping, documents are an unavoidable evil. A single missing or improperly produced document, whether for a sale, purchase, or shipment, can cause untold problems for all parties concerned. In shipping, goods cannot enter or leave a country unless accompanied by the necessary documents. Exporters and importers cannot give over or receive their shipment if their documentation is incomplete. They may even face a penalty and, worse, a blow to their reputation.
All international commerce activities revolve around export paperwork. It gives exporters and importers an accounting record, shipping and logistics businesses guidelines on handling freight information, and banks instructions on collecting payments and accounting tools.
Because of the unique characteristics of international commerce, such as geographical distance, various customs rules, different modes of transportation, more dangers, and so on, export paperwork are more complicated than those used for domestic sales. The paperwork necessary for each shipment will be determined by the seller and buyer’s agreed-upon terms of sale (Incoterms).
The essential document required by the Customs Authority for approving shipping is the Shipping Bill/Bill of Export. The shipping agent issues a shipping bill, which serves as a certificate for all parties involved, including the shipowner, vendor, buyer, and others.
INTERNATIONAL PURCHASE ORDER:
International purchases are usually conducted via the buyer’s Purchase Order. An exchange of information between the exporter and the importer on the price, quality, and quantity of items, among other things, usually precedes the issuance of an international purchase order.
The vendor may send an informal price quotation or a more detailed proforma invoice when the transaction specifics agree. A purchase order is issued when the buyer accepts the seller’s price and other terms.
INTERNATIONAL COMMERCIAL INVOICE:
Because it covers all information about an overseas sale, the International Commercial Invoice is the most crucial document in export documentation. An International Commercial Invoice specifies the item, quantity, price of the products/services supplied, delivery and payment terms, as well as any applicable taxes and other fees.
With the original of the International Commercial Invoice, the importer states to his country’s tax office the amount that must be paid, to whom, and the agreed method of payment. This document serves as proof of the exporter’s sales in overseas markets.
In operations with third countries, the International Commercial Invoice is part of the customs declaration, upon which the taxes and tariff rights are applied. They must be paid at the moment at which the products enter the country. This document is used as a statement of the transaction and tax exemption in operations with EC nations. It is to comply with the fundamental tax settlement criteria.
The exporter prepares this document, addressed to the importer and the import customs clearance.
The packing list is a more extensive version of the commercial invoice. However, it does not include any pricing information. It must include the invoice number, the amount and description of the items, the weight of the goods, the number of packages, and the shipping markings and numbers, among other things.
A copy of the Packing List is frequently attached to the shipment, and another copy is delivered directly to the consignee to aid in the package’s inspection when it arrives.
Although not required for all transactions, certain governments and purchasers insist on it.
The exporter creates this document; for the importer, carrier, and customs clearance for the import.
IRREVOCABLE LETTER OF CREDIT L/C:
In an irrevocable Letter of Credit L/C, the importer’s bank promises to pay the exporter (referred to as “the beneficiary”) provided the exporter can verify it sent the correct items by producing the Letter of Credit’s requisite paperwork. Letters of Credit are common among exporters because they guarantee that the seller will not lose time preparing or delivering an order to a buyer who will later refuse to accept or pay for the products.
Without the permission of all parties, an irrevocable letter of credit cannot be changed or terminated.
“Letters of Credit” and “Documentary Credit” are interchangeable words. In some regions of the globe (the United States, Asia), exporters, importers, and bankers prefer to use the phrase “Letter of Credit” or the abbreviation “L/C,” in others (Europe); “Documentary Credit” or “D/C” is preferred.
The CMR transport document is an international consignment note that governs the obligations and liabilities of the parties to a contract for the international transportation of goods by road. It is used by drivers, operators, and forwarders equally.
The sender – that is, the exporter – is responsible for the accuracy of the information and must sign the form when the items are collected. On delivery, the consignee will also sign up for the document. The document is necessary for the carrier to acknowledge the delivery of the products and justify payment for its services.
Because the CMR transport document is not a title document, it is non-negotiable.
The exporter and the freight forwarder prepare this document. It is then addressed to the importer and the carrier.
BILL OF LADING B/L:
A Bill of Lading (B/L) is a document; issued by a carrier’s agent to a shipper. It is signed by the captain, agent, or owner of a vessel that provides written evidence of receipt of goods (cargo), transportation conditions (contract of carriage), and the obligation to deliver goods to the lawful holder of the bill of lading at the prescribed port of destination.
As a result, a Bill of Lading serves as a receipt for goods and a contract for freight delivery. Bills of lading come in various forms, each with its own rules.
The Bill of Lading can be endorsed and transferred to a third party while the goods are in transit since it is a negotiable instrument.
The shipping firm prepares this document, addressed to the exporter, the shipping company via the agent, and the importer.
AIR WAYBILL (AWB):
An Air Waybill, or AWB, is a non-negotiable transportation document, covering cargo transportation from one airport to another.
Because the Air Waybill is not a title of property of the cargo, it should not need to be provided “to order” and “to be endorsed.” Because it is not negotiable and does not demonstrate title to the goods, sellers frequently consign air shipments to their sales agents or freight forwarders’ agents in the buyer’s country to keep some control over items not paid for in cash in advance.
The Air Waybill is a non-negotiable piece of paper. It just means that the items have been accepted for carriage.
This document addressed to the exporter, the airline, and the importer is created by the IATA Transport Agent or the airline itself.
MULTIMODAL BILL OF LADING FBL:
A Multimodal Bill of Lading (MBL) is an international transportation document. It covers two or more modes of transportation, such as land and sea shipment.
It can also be used as a transportation contract and a receipt for items received.
The Multimodal Bill of Lading becomes the title of ownership of the goods. When it is issued to the order, and may therefore be bargained.
Multimodal Bills of Lading are typically non-negotiable papers.
This document can be supplied to approved forwarders that are members of FIATA. It is addressed to the exporter, the destination country’s Multimodal Transport Operator, and the importer.
CERTIFICATE OF ORIGIN:
The country of origin, or the predominance of manufacturing or value addition, is verified by the Certificate of Origin. It also serves as the exporter’s declaration. Almost every government analyses the origin of imported products when deciding how much duty to charge. The exporter’s certification on firm letterhead will, however, be sufficient.
The origin of a product does not refer to the country where the goods are exported. The manufacturing place of the product is its origin. If the items were made in more than one nation, the country of origin is where the most recent economically justifiable working or processing occurred. An often-used practice is that if more than 50% of the cost of producing the goods originates from one country, the “national content” is more than 50%, then that country is acceptable as the country of origin.
Chambers of Commerce are the primary agents in delivering the certificates of origin in most nations. This privilege, however, may be granted to other institutions in some countries, such as ministries or customs officials.
The Inspection Certificate for pre-shipment examination is a document issued by a government agency that certifies that products have been examined before shipping (usually by a set of industry, customer, government, or carrier standards) and the inspection results.
In most cases, inspection certifications are obtained from independent testing agencies (e.g., a government entity or independent service company such as SGS o Bureau Veritas). The manufacturer or shipper may issue the Inspection Certificate in some situations, but not the forwarder or logistics company. The manufacturer or shipper may issue the Inspection Certificate in some cases, but not the forwarder or logistics company.
Additional export documentation may be necessary depending on the kind of goods, nature of the transaction (standard or temporary shipping), and destination country. A generic or FTA certificate of origin, an ATA Carnet, a letter of credit, or other paperwork might be used.