If your business includes shipping goods internationally, you will somehow suddenly find yourself under an avalanche of paperwork. Freight shipping means documents. All kinds of them, from invoices and letters of credit to a bill of lading and a certificate of origin. So, what are they all for? Why do you need them? And what happens if you don’t have them or don’t have them filled out properly? 

Paperwork is no fun, but it doesn’t mean it isn’t necessary. If you have to do freight shipping to conduct your business, then you need to understand the documents involved. Your business depends on it.

International trade comes with inherent risks, such as political and commercial risks, customs and foreign laws, credit and cargo risks, and foreign exchange fluctuations. 

One way to help minimize these risks is to make sure you have a shipping documentation process in place to ensure that your shipping documents are completed, signed, returned, and filed properly.

The first step in this process is to understand the basics of freight shipping forms. It may not be fun and certainly not all that glamorous, but it does help some of the fundamental parts of your business function, not least of which is getting paid.

Types of Shipping Documents

Whether you are importing or exporting goods, certain forms are necessary to conduct business. Where you are shipping and what you are shipping may also determine the necessary documents. But, overall, there are some principal documents that all international shipping transactions must-have.

Principal Freight Shipping Documents

Bill of Lading

The bill of lading (BOL) or sometimes named the waybill, is the mainstay of shipping documents. It is necessary for both exports and imports. It contains all the principal information about your shipment, including:

• The shipper’s address and contact information
• The receiver’s address and contact information
• The cargo information
• The carrier’s information

It is basically what is being shipped, who is shipping it, who is receiving it, and who is responsible for getting it from the shipper to the receiver. The BOL is also signed by both the shipper and the carrier at the time of pick up, so it also serves as the proof of pick up and states the condition of the cargo at the time of pick up.

In addition, the shipping label must accompany the BOL for pallet shipping, so the carrier can confirm which one belongs to which pallet. 

Air Waybill Cargo Tracking

If you are transporting by air, you will need an Air Waybill Cargo Tracking (AWB) form. It is issued by the air carrier to acknowledge that they have the shipment. An AWB is a type of BOL but with less protection because it is non-negotiable. Like the BOL, it serves as a shipping receipt and shows both the shipper and receiver’s destination address and contact information. 

Proforma Invoice

An exporter uses a proforma invoice to provide a quote for an international transaction. It is similar to a commercial invoice and includes:

• Names and addresses of the buyer and seller in the transaction
• A detailed description of the goods
• Price of the goods
• Delivery details, including how the goods will be delivered, where the goods will be delivered, and the cost of the delivery
• Term of payment for the sale
• The currency used in the quote

To guard against market instability, set a time frame for the quote by dating the invoice and setting an expiration date. 

Commercial Invoice or Customs Invoice

Once a quote is accepted via the proforma invoice and an order is placed, a commercial invoice is required to prepare the goods for shipping. This document includes all the essential information for shipping goods from start to finish. It basically shows the shipment’s origin and along with added transaction details, including:

• The country of origin
• Company name and address of both shipper and receiver
• List of items being shipped with the value of each
• The total value of the entire shipment
• Customer reference numbers (such as an order number or purchase order number)
• Banking and/or payment information
• Marine insurance information
• Other details about delivery and payment

Do not get this document confused with a domestic invoice, which is primarily an accounting form. A commercial invoice is an exporter document used for international transactions.

Letter of Credit

When dealing with an international trade transaction, the letter of credit is a means of payment and is used by both the exporter and importer. It’s an irrevocable promise from a bank on behalf of the buyer to the seller stating a specific sum in an agreed-upon currency. It states the submission deadline for the seller to file the required documents. It also includes the description and quantity of goods being paid for as well as document requirements. There is no payment in international trading without this form.

Packing List

A packing list for international shipping is more detailed than a domestic packing slip. It includes:

• The dimensions and the net and gross weight of each package in both US and metric measurements
• Any identification markings on the packages
• Special instructions for safe delivery

The packing list is used along with other documents in several different ways and by several different personnel throughout the transaction:

1. By the freight forwarder to create the bill of lading
2. By the bank to get paid through the letter of credit
3. By customs in the country of origin and the destination country to know where certain items they want to inspect are located in the shipment.

Certificate of Origin

This certificate specifies the country or the manufacturer where the goods being shipped originated. It is used on the importation of goods to determine if any duties are owed or if the goods are eligible to be imported. Not every country requires this document, so it is something that needs to be researched depending on where you are shipping. If required, it usually needs to be signed by either the chamber of commerce or consulate from the country of origin. The signature usually requires a fee as well. It may be possible to use an electronic certificate of origin, which can be faster and less expensive. Again, this will vary depending on the country, but worth the research.

Vessel Trading Certificates

Vessel trading certificates are carried on board a vessel and are required for the vessel to trade legally and freely internationally. The vessel is governed by the laws of the flag that it sails under. Required documents are a combination of statutory requirements and mandatory requirements. 

They may include:

• Certificate of classification
• Certificate of registry
• SOLAS certificates
• MARPOL certificates
• International Load Line certificate
• International Tonnage certificate 

Vessel Certificate of Inspection

This certificate is used to certify who owns and operates the vessel that is being used to ship the cargo and that the vessel is in good repair. It includes the age of the vessel as well as the maintenance. It may also include the route the vessel may travel and the minimum manning and safety requirements. The bank usually requires this document before releasing a letter of credit, which in turn makes this document a requirement for payment. 

Situational Shipping Documents 

Some documents may not be needed for every shipment. It depends on the rules and regulations of the country being shipped to or from, the vessel being used, and the cargo itself.

Some of these documents include:

Importer Security Filing

Used by US customs and border protection to regulate ocean cargo imports. It is required to be filed 24 hours before a ship sails from its last port. The document includes buyer and seller information as well as goods information such as country of origin and manufacturer’s name and address.

Dangerous Goods Declaration

A self-explanatory name for a form used when shipping goods deemed dangerous. The document shows that the goods have been labeled and packaged according to regulations. 

Consular Invoice

Official certification by some countries includes details on the value of the shipment as well as the buyer and shipper.

Production Certificate

Used to import goods into a country where the production of goods is regulated. Certifies that the goods were produced using sustainable methods and materials. 

Phytosanitary Certificate

Used specifically when shipping plants or plant products. It proves that your shipment is pest-free and complies with the regulations of the importing country. 

Organize the Avalanche, Ship with Confidence

There is no doubt that overseas shipping is more complicated than domestic shipping. Whether it is the proforma invoice, the bill of lading, the packing list, or the letter of credit, documents and forms abound when shipping freight internationally. The rules, regulations, and documents required for the free movement of goods through international transactions can make for an avalanche of paperwork. Taking the time to understand the purpose behind each document, how to fill it out, and where and when to file it goes a long way to organize the avalanche, so you can ship with confidence.