Many different documents are required for international transportation. The most important documents include the shipper’s export declaration, the bill of lading, the commercial invoice, and the packing list. These documents are used to track the shipment, calculate customs duties, and provide information about the contents of the shipment. A packing list is one of the terms that are used a lot in the business world. Undoubtedly, the correct understanding of these terms can be a good guide for us in commercial affairs. In this article, we are going to talk about an international document called a packing list.
Table of Contents
Types of International Transportation Documents
What is a Packing List?
How to Prepare a Packing List
Tips for Creating an Effective Packing List
Conclusion
Types of International Transportation Documents
In international trade and transportation, there are documents that specify the features and requirements of the cargo. Shipping documents are the most important documents during international sales and purchases and are considered to be the identification documents of the goods. Shipping documents are crucial at the time of a purchase since, after satisfying financial commitments and clearing accounts with the seller or bank, the buyer can only finish customs formalities and complete the goods clearance by providing international shipping paperwork. International shipping documentation and their various types are described in this article. The most common of these documents are:
Bill of Lading
Certificate of Origin
Commercial Invoice
Packing List
It is important to follow the instructions on all international shipping documents carefully. Failure to do so could result in delays, damage to the shipment, or even legal problems.
What is a Packing List?
Packing list is an international critical document in which important export or import information is mentioned. It provides important information about the shipment that can be used for customs clearance and to ensure that the shipment arrives safely. This document should be accurate and complete to avoid any delays or issues in the shipping process. If you are shipping goods, be sure to include a shipping packing list with your shipment. This document can save you time and money by ensuring that your shipment arrives safely and intact. This list typically includes the following information:
Shipper and consignee information
Details about the contents of the shipment
Packaging and labeling information
Weight and dimensions of the shipment
Shipping and handling instructions
In general, this document can be utilized in at least three situations:
It is required by officials and evaluators when inspecting the contents of boxes or cartons.
It is used by storekeepers to issue invoices and check the quality and quantity of products imported to customs.
A packing list is also used as a supporting document if there is a disagreement between the carrier and the exporter over the cargo’s measurement and weight.
How to Prepare a Packing List
As mentioned, packing lists are an essential part of the transportation process, whether you’re shipping goods domestically or internationally. A packing list is a document that itemizes all of the products being shipped in a single transaction. It is used by the carrier to verify that the products being shipped match the description on the this list. This document can be created manually or with the help of shipping software. When creating a packing list, be sure to include the following information:
A description of the products being shipped
The quantity of each product
The weight of each product
The dimensions of each product
The value of each product
The origin of the shipment
The destination of the shipment
The name and contact information of the shipper
The name and contact information of the consignee
Packing lists can be simple or complex, depending on the nature of the shipment. For example, a shipment of books might only require a description of the goods and the quantity. However, a shipment of electronic equipment would require a more detailed list that includes the weight, dimensions, and value of each item. Once the packing list is complete, it should be attached to the outside of the shipment so that the carrier can easily verify the contents. In some cases, this list may also be used as the commercial invoice.
Tips for Creating an Effective Packing List
When it comes to packing for a freight shipment, there are a few things to keep in mind in order to make sure everything arrives safely and on time. This document is important as it will be used by the freight company to determine what items are being shipped, as well as how they should be packed. Here are a few tips for creating an effective packing list document:
Include all items that are being shipped: This seems like an obvious one, but it is important to make sure that all items that are being shipped are included on the packing list. This includes any items that are being packed in boxes, as well as any loose items.
Clearly label all items: All items should be clearly labeled with your name, address, and contact information. This will help the freight company to identify the items and get them to their destination safely.
Use proper packaging: It is important to use proper packaging when shipping items via freight. This includes using boxes that are the proper size and strength for the items being shipped. Additionally, items should be properly cushioned and secured so that they do not shift during transit.
Include a packing slip: A packing slip should be included with your list. This document should include your name, address, and contact information as well as a list of all items being shipped.
Use a reputable freight company: This is perhaps the most important tip of all. Be sure to use a reputable freight company that has a good reputation for shipping items safely and on time.
By following these tips, you can be sure that your packing list document will be effective and that your items will arrive safely at their destination.
Conclusion
Preparing a packing list can greatly reduce your financial cost and time. By preparing this list, there is no need to fully inspect your goods when entering different countries. A full inspection usually involves costs that are the responsibility of the sender. By making a packing list, you can avoid such problems.
You’ve heard people talk about how to do the sexy part of exporting—the research, the schmoozing, the travel and all the marketing and sales stuff that people think about when they think about the glamour of international trade.
But what I want to talk about is the not-so-sexy part of exporting: the basic export documents required for international shipping. It’s the stuff you need to do—and do correctly—to successfully deliver goods and make money. I’d argue that this not-so-sexy part of exporting is more important than the sexier side but maybe that’s just because it’s what I’ve been focusing on for more than 5 years.
With that in mind, here are 11 standard shipping documents for export that you need to understand in order to be successful.
Proforma Invoice
Commercial Invoice
Packing List
Certificates of Origin
Certificate of Free Sale
Shipper’s Letter of Instruction
Inland Bill of Lading
Ocean Bill of Lading
Air Waybill
Dangerous Goods Forms
Bank Draft
Learn more about the dozens of exporting forms you may need to complete in order to ship your goods. Download The Beginner’s Guide To Export Forms.
1.Proforma Invoice
In a typical export exchange, everything starts when you receive an inquiry about one or more of your products. That inquiry may include a request for a quotation.
If the inquiry came from a domestic prospect, you probably have a standard quotation form to use. However, in an international transaction, your quote would be provided as a proforma invoice. That’s because your international prospect may need a proforma invoice to arrange for financing, to open a letter of credit, to apply for the proper import licenses and more.
A proforma invoice looks a lot like a commercial invoice, and if you complete it correctly, they will be very similar indeed. A proforma invoice specifies the following:
The buyer and seller in the transaction.
A detailed description of the goods.
The Harmonized System classification of those goods.
The price.
The payment term of the sale, which would typically be expressed as one of the 11 current Incoterms.
The delivery details, including how and where the goods will be delivered and how much that will cost.
The currency used in the quote, whether it’s U.S. dollars or some other currency.
Be sure to date your proforma invoice and include an expiration date. There can be a lot of volatility in the export process, so minimize your risk by setting a specific time frame for your quote.
2. Commercial Invoice
Once you’ve sent a proforma invoice to your international prospect and received their order, you need to prepare your goods for shipping, including the paperwork that must accompany the goods. Of those documents, the commercial invoice is one of the most important.
The commercial invoice includes most of the details of the entire export transaction, from start to finish.
I often get questions from people who look at this sample commercial invoice and wonder why it looks so different from the invoices their company uses for domestic orders. Keep in mind that the invoices you create from your company’s accounting or ERP system are accounting invoices used to get paid, not export invoices.
The commercial invoice may look similar to the proforma invoice you initially sent your customer to serve as a quote, although it should include additional details you didn’t know before. For example, once you have the commercial invoice, you probably have an order number, purchase order number or some other customer reference number; you may also have additional banking and payment information.
Make sure to include any relevant marine insurance information and any other details that will ensure prompt delivery of the goods and full payment from your customer.
3. Packing List
An export packing list may be more detailed than a packing list or packing slip you provide for your domestic shipments. It may be used in the following ways:
Your freight forwarder may use the information on the packing list to create the bills of lading for the shipment.
A bank may require that a detailed packing list be included in the set of documents you present to get paid under a letter of credit.
Customs officials in the U.S. and the destination country may use the packing list to identify the location of certain packed items they want to examine. It’s much better that they know which box to open or pallet to unwrap rather than needing to search the entire shipment.
The packing list identifies items in the shipment and includes the net and gross weight and dimensions of the packages in both U.S. imperial and metric measurements. It identifies any markings that appear on the packages, and any special instructions for ensuring safe delivery of the goods to their final destination.
If cargo is lost or damaged, a packing list is required to file an insurance claim, and it is also used if there is a disagreement between the carrier and the exporter regarding the weight or measurement of the cargo.
4. Certificates of Origin
Some countries require a certificate of origin to identify in what country the goods originated. These certificates of origin usually need to be signed by some semi-official organization, like a chamber of commerce or a country’s consulate office. A certificate of origin may be required even if you’ve included the country of origin information on your commercial invoice.
Usually a chamber of commerce will charge you a fee to stamp and sign your certificate or require you to be a member of the chamber. You’ll need to deliver a completed form to the chamber office where they will stamp and sign it for you.
More and more companies are foregoing the time-consuming process of relying on expensive courier services or taking the time to hand-deliver a certificate of origin to a chamber of commerce for certification and are relying on electronic certificates of origin (eCO) for their shipments. An eCO is often quicker to turn around, allows you the option of delivering the certificate electronically to the importer, and can be registered with the International Chamber of Commerce to provide added credibility.
Country-Specific Certificates
In addition to the generic certificate of origin form, there are also country-specific certificates of origin. The United States currently has signed 14 free trade agreements with 20 different countries in which U.S. goods are eligible for reduced or zero duty rates when imported into those countries. Some free trade agreements, including the United States-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR), cover multiple countries, including the U.S. In our article When to Use a Certificate of Origin Form for Your Exports, you’ll find links to country-specific certificates.
On July 1, 2020, the United States-Mexico-Canada Agreement (USMCA) replaced the NAFTA agreement between the three countries. You’ll find the differences between the two free trade agreements in the article NAFTA vs. USMCA: The North American Free Trade Agreement and the U.S.-Mexico-Canada Agreement.
5. Certificate of Free Sale
Sometimes called a “Certificate for Export” or “Certificate to Foreign Governments,” a Certificate of Free Sale is evidence that goods—such as food items, cosmetics, biologics or medical devices—are legally sold or distributed in the open market, freely without restriction, and approved by the regulatory authorities in the country of origin (the United States).
A Certificate of Free Sale is used when you are registering a new product in a country. You’re essentially informing the customs authority in that country, “This is a new thing I’m going to start importing, and here are my support documents that confirm this product(s) is legal to sell in the country of manufacture.”
If your international customer requests a Certificate of Free Sale, you can easily apply for a certificate online (there’s no cost or obligation for registering).
6. Shipper’s Letter of Instruction
One of the most important people you will work with in the export process is your freight forwarder, who usually arranges the transport of your goods with a carrier and helps ensure you’ve taken care of all the details.
Depending on your agreed-upon terms of sale—remember, that’s typically the Incoterm you choose—either you hire a freight forwarder to work for you, the exporter, or, in the case of a routed export transaction, the buyer hires a freight forwarder.
Regardless of who hired the forwarder, it’s important you provide a Shipper’s Letter of Instruction (SLI) with all the information needed to successfully move your goods. (Here are several good reasons why a letter of instruction is necessary.)
I often describe the SLI as a cover memo for your other export paperwork. Depending on whether or not the forwarder works for you, the SLI may include a limited Power of Attorney, providing authority to act on your behalf for this shipment. Learn more about how to fill out an SLI here.
AES Concerns
Depending on who hired the forwarder, the SLI may also grant the forwarder permission to file the export information electronically through the Automated Export System (AES). Most exports valued at more than $2,500 per item must be submitted to customs via AES, which makes filing through AES an important consideration for many exporters.
If the freight forwarder is hired by the buyer, then the forwarder typically does the AES filing. Even if you, as the seller, hire the forwarder, you may pay the forwarder to do the AES filing on your behalf.
In either case, even if you aren’t doing the AES filing yourself, you are legally required to provide certain data elements to the forwarder for filing purposes; this is usually done via SLI. As an aside, I strongly believe that you, as the exporter, should almost always be the party that does the AES filing—even in a routed export transaction where the buyer picks a forwarder.
It’s simple to file the documents needed for shipping through AES, and doing it yourself gives you more control over the process. More and more of our clients are assuming that responsibility for every export shipment for just that reason—get a step-by-step guide to filing here.
However, I understand that many companies do rely on a freight forwarder for their AES filings, so an accurately completed SLI is very important.
7. Inland Bill of Lading
An inland bill of lading is often the first transportation document required for international shipping created for your export. It can be prepared by the inland carrier or you can create it yourself. It’s a contract of carriage between the exporter and the shipper of the goods that states where the goods are going; it also serves as your receipt that the goods have been picked up.
In an international shipment, the inland bill of lading is not typically consigned to the buyer. Instead, it is consigned to the carrier moving the goods internationally or, if not directly to the carrier, to a forwarder, warehouse or some other third party who will consign your goods to the carrier when ready.
8. Ocean Bill of Lading
If your goods are shipping by ocean vessel, you’ll need an ocean bill of lading. An ocean bill of lading can serve as both a contract of carriage and a document of title for the cargo. There are two types:
Straight Bill of Lading
A straight bill of lading is consigned to a specific consignee and is not negotiable. The consignee takes possession of the goods by presenting a signed, original bill of lading to the carrier.
Negotiable Bill of Lading
A negotiable bill of lading is consigned “to order” or “to order of shipper” and is signed by the shipper and sent to a bank in the buyer’s country. The bank holds onto the original bill of lading until the requirements of a documentary collection or a letter of credit have been satisfied.
9. Air Waybill
Goods shipped on a plane require an air waybill. It is a contract of carriage between the shipper and the carrier that is distributed by the International Air Transport Association (IATA). Unlike an ocean bill of lading, an air waybill cannot be negotiable.
The purpose of an air waybill differs from the purpose of a bill of lading:
An air waybill is a receipt of goods; the carrier or agent sends it in order to show the place of delivery.
A bill of lading is a document of title to goods. It is a receipt by the shipping company with an agreement to deliver the goods at the destination only to the party the bill of lading is consigned to.
10. Dangerous Goods Forms
If your products are considered dangerous goods by either the International Air Transport Association (IATA) or the International Maritime Organization (IMO), you need to include the appropriate dangerous goods form with your shipment. Shipping dangerous goods or hazardous materials can be tricky. Before you do it, the appropriate people at your company need to be trained to properly package, label and document these shipments.
The IATA form—the Shipper’s Declaration for Dangerous Goods—is required for air shipments. There is a different version of the form for ocean shipments. Again, these forms need to be completed by someone who has been trained to handle dangerous goods shipping.
11. Bank Draft
A bank draft is an important part of the international sales process for transferring control of the exported goods from the seller in exchange for funds from the buyer. It is often called a documentary collection, because the seller attaches various documents to a bank draft and a cover letter.
Usually the seller’s bank will send the bank draft and related documents via the freight forwarder to the buyer’s bank or a bank with which it has a relationship in the buyer’s country. When the buyer authorizes payment for the goods, the buyer’s bank releases the documents to the buyer and transfers the funds to the seller’s bank.
The bank draft may or may not include a transmittal letter, which includes details of the bank draft transaction, including the types of additional documents that are included and payment instructions.
We now understand that container shipping involves loading goods onto standardised containers for seamless overseas and inland transportation. Let us now look at the journey of a container filled with goods from one place to another.
Different Stages in Shipping a Container
Container shipping involves a laborious process and documentation to ship freight from one destination to the other. Let us break the cycle into simple stages:
Order Placed
A client will place an order. The delivery process then involves both the manufacturer and a freight forwarder.
Goods are loaded onto warehouse, factory, or farm containers. They have to be packaged and labelled as per international standards.
The container is locked and sealed so the goods can remain secured inside the container.
Goods Loaded
Then they are loaded onto trucks or trains, which carry them to a port storage facility or a container freight station.
The containers are weighed and scanned at these facilities for contraband or illegal substances.
The rest of the journey depends on whether they must be shipped inland or overseas.
Loading on a Ship
In most cases, the freight forwarder will find the best route from point A to point B.
Depending on the buyer’s needs, this could be either the most economical or the fastest.
Either way, the next step in the journey is loading the container onto a vessel that will carry it to the destination country.
Carriage of Goods at Sea
Adhering to strict ETA or the estimated time of arrival requirements and schedules of the container shipping industry, ships carry these containers from one country to another.
The master of the ship, along with the crew, is responsible for the safe carriage of all containers. They are highly trained professionals who comply with standards the International Maritime Organisation (IMO) sets.
Arrival at Destination and Unloading
Upon receiving clearance from the Port and Customs authority, the ship docks at the port of the destination country.
With the help of advanced machines called Gantry Cranes, Dockworkers unload ship cargo containers.
They load these containers onto trucks lined alongside the ships on the jetty.
Inland Transportation
Customs officials carefully analyse the documentation of each container before forwarding it to the container freight station.
Special trailers or railways carry these containers to their final destination depending on the distance from the port.
Final Delivery
Once the containers reach the warehouse or factory designated by the freight forwarder; they are dissembled.
Individual packages are prepared for delivery to the final destination decided by the buyer.
Types of Shipping Containers
Containers are the backbone of the entire container shipping industry. Hence, they are of robust build, made using industry-grade steel, and are both weathertight and watertight. Each shipping container has its unique identity, set as per ISO standards.
So, let us look at the different types of containers:
Standard Dry Storage Containers
These shipping container sizes are 20-footers and 40-footers. To simplify the counting of containers, a 20 ft container is known as a Twenty Foot Equivalent Unit (TEU). A liner’s ship’s container carrying capacity is measured in TEU. Today some ships have carriage capacities upwards of 20,000 TEU. Both 20ft and 40ft containers have the same height and width
High Cube Containers
These can only be 40ft or 45 ft in length. The main difference between them and standard containers is their height is more.
Flat Rack Containers
These containers have collapsible sides. This makes it easier to stow non-standard-height cargo like boats, tractors, etc. They can be of Top Open type or Side open type as well.
Refrigerated containers
These are containers that can carry cargo that needs refrigeration. They are fitted with a refrigeration system that derives power from the liner ship’s generators.
They can carry anything from fruits, vegetables, juices, wines, pharmaceutical supplies, etc.
They are always white for easy identification.
Tanktainers
They carry small quantities of liquid cargo like chemicals, powders, and gases.
Their carriage has to be as per the International Maritime Dangerous Goods (IMDG) Code made by IMO.
What Are the Freight Options, INCOTERMS, and Documentation in Container Shipping?
Container freight is the amount of money charged for transporting the container. The freight depends on the amount of cargo the shipper wants inside the container for transportation. The type of freight rate also determines the shipping time of the consignment.
Let’s have a look at the two different types of container shipping freights.
Full Container Load (FCL) Container Shipping
This means that your cargo occupies a full container load.
FCL is used if your shipping load is more than 15 CBM in volume.
For FCL, cargo must not exceed the maximum allowed weight of the container.
The FCL container shipping freight rate is volatile.
FCL freight rate is a fixed price and does not depend on the volume or weight of the cargo.
Less Than Container Load (LCL) Container Shipping
This means that your cargo does not occupy the entire volume of the container.
So, the remaining space in the container will be filled with other cargoes of different origins and destinations.
LCL is used for shipments under 15 CBM in volume.
LCL freight rates are more stable in comparison to FCL. However, LCL rates can be higher than FCL rates after a break-even point.
LCL container shipping takes almost 4 days more than FCL on average. This is because it takes more time to assemble and disassemble the shipments.
INCOTERMS: Buyer and Seller Responsibilities in Container Shipping
Container shipping International Commercial Terms (INCOTERMS) is a set of rules for international transit detailing responsibilities between suppliers and buyers. There are 11 Incoterms published by the International Chambers of Commerce (ICC). A 3-letter code represents each Incoterm.
These changes came into effect on the 1st of January 2020 and are being used in 2022 as well.
They will be in use until ICC publishes the next changes sometime in the future.
Main Documents Required for Container Shipping
According to Maersk, the biggest container shipping company in the world, there are about 2000 documents involved in shipping a single container.
Let us look at the two most important documents required for container shipping.
Bill of Lading
The Bill of Lading (B/L) is a commercial contract of carriage between the shipping line and the cargo owner. One copy is provided to the master of the ship to acknowledge the receipt of your cargo for shipment on board their vessels. The cargo is released at the destination port when the master provides this B/L to the cargo receiver. Customs do not clear any shipment without a B/L
Packing List
It lists all of the details and information regarding the cargo shipment. This includes each box’s weight, volume, and value and the overall cargo being shipped in one container.
Conclusion:Now we know about the basic framework of the container shipping industry. It is important to know about it because imports and exports have become a crucial part of the growth of every nation. Thanks to Malcolm McClean, the pioneer of containerisation, Container shipping is now the cheapest way of importing and exporting. The industry forms a huge chunk of the global supply and logistics chain. It is also responsible for generating a large number of employment opportunities. Supported by a meticulous multi-modal inland transport system, container shipping keeps the global supply chain and logistics ticking.
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