Different countries have different requirements when it comes to shipping documents. The two main world organizations that set rules and guide business organizations on this issue are the World Trade Organization (WTO) and the International Chamber of Commerce (ICC).
Most shipping documents are based on rules and regulations established by these world bodies and the respective country's governing bodies, such as chambers of commerce, customs, trade commissions, etc.
Here are the top 5 shipping documents that all shippers should be familiar with, and the differences between them.
1. Bill of Lading
If there is only one shipping document you need to know that is in the palm of your hand, it is the bill of lading.
A bill of lading, also known as a bill of lading, is a contract of carriage between a shipping company and a cargo owner. This is a document issued by the carrier to confirm receipt of your cargo for shipment on their ship.
Importer and exporter information needs to be listed clearly as the bill of lading is proof of ownership of the goods being carried on board. The information on the bill of lading should also correctly reflect the Incoterms conditions under which the transaction is conducted.
Once the goods arrive at their destination, the bill of lading needs to be presented to the carrier to release the goods, which then serve as a shipping receipt.
2. Packing list
As the name suggests, it is a document that provides details of the packaging of the shipment. The packing slip will show a description of the goods, their individual and collective packaging, dimensions, weight and markings. It may look very similar to an invoice, but it is not a substitute for a pro forma or commercial invoice.
Packing slips help customs, carriers and consignees easily identify individual shipments during inspection or receipt.
3. Commercial Invoice
Any international transaction involving import/export of goods must be accompanied by a proof of sale called a commercial invoice. To a large extent, it is similar to a standard invoice. But unlike a standard invoice, it contains details about the purpose of customs clearance of the goods and is one of the most important documents in ocean shipping. Details of all parties involved, including importers, exporters, freight forwarders, banks, shipping lines, etc., must be listed correctly on the commercial invoice.
Even though the information listed on the commercial invoice may be very similar to the information on the packing list, you still need to submit both documents and the information must match. Don't confuse the two as they serve different purposes.
A commercial invoice is a legal document that lists the goods sold and their selling price—that is, what the importer agrees to pay for those goods, and is sent to the party paying for the goods. As mentioned earlier, the packing list details the items in the shipment and serves as evidence in the event of disputes and claims, and is sent to the consignee of the shipment.
4. Letter of Credit
A letter of credit or "letter of credit" is a letter from a bank guaranteeing that payments made by the buyer to the seller will be received on time and in the correct amount. If the buyer is unable to pay for the purchase, the bank will be required to pay the full or remaining amount of the purchase. It is available as a facility.
Due to the nature of international transactions, including factors such as distance, different laws in various countries, and difficulty in personally understanding the parties, the use of letters of credit has become a very important aspect of international trade.
5. Certificate of Origin
According to the International Chamber of Commerce, Certificates of Origin (COO) are "important international trade documents that certify that the goods in a particular export are obtained, produced, manufactured or processed entirely in a particular country. They also serve as an exporter's declaration.
In other words, the COO identifies the country of production of the goods. This document is prepared by the exporter/manufacturer and must be certified to be valid by a government agency such as a chamber of commerce or a consulate.
A Certificate of Origin is required for customs clearance, which determines the amount of duties and taxes to be paid. It also helps determine whether there is a tax exemption in the case of special trade agreements between exporting and importing countries.
The certificate of origin needs to fill in typical information such as exporter, consignee, importer, and description of goods. For each export commodity, a COO must be created.
