Why are shipping documents necessary?
All of the import-export business depends heavily upon the shipping documents that satisfy the basis and guidelines set by the sending country and the receiving country.
It is very important to make sure that all these documents are prepared in accordance with the necessary guidelines and rules required by both countries.
These shipping documents (and some special certificates if your shipment needs) are used by the customs officials to handle your shipment. It is essential to give detailed and precise information.
By reading this blog, you will learn all about shipping documents,
- Why they are so important.
- What are the top 10 most important shipping documents?
- Mistakes to avoid when making shipping documents.
Table of Content
Chapter 1: What Are Shipping Documents?
Chapter 2: 10 Most Important Shipping Documents You Need for International Trade?
Chapter 3: Mistakes to Avoid When Making Shipping Documents
Chapter 4: Special Shipping Documents for Shipments of Specific Goods
Chapter 5: FAQs About Shipping Documents
Table of Contents
Chapter 1: What Are Shipping Documents?
In the import or export business, shipping documents are the documents necessary for shipping.
So, shipping documents are the forms, certificates, and records needed to receive delivered products or these are needed to get past custom clearance.
These documents are basically needed for a shipment in order to bring a shipment in accordance with the regulations and protocols of the countries through which it travels.
Shipping documents usually include lading bills, lists of packings, invoices, insurance documents, and air waybills.
Shipping documents and declaration forms both duly signed by customs are to be submitted within 21 days from the date of exports by the exporter. Shipping documents are forms that escort an enlisted shipment on the date it is shipped.
1. Benefits of shipping documents
Benefits of shipping documents are listed as follows:
- It helps in the identification of shipment and its content.
- An exemption certificate for customs is obtained.
- To propose necessities for handling, transport, loading, storage, and distribution of the shipment to the ultimate destination.
- To collect the products from the transporter or shipper or its agent.
- To approve things received against goods shipped and goods ordered.
- To claim insurance in case loss or damage occurs to products or shipments.
- Letter of Guarantee can be received if this was issued before the shipping documents were received.
2. Why Do You Need Documents to ship Your Products?
Correct shipping documentation is one of the utmost vital and significant fundamentals in international logistics and customs clearance.
Appropriately accomplished shipping documents will assist your shipment to reach its international destination on time and with the reduction of delay that may occur at customs. Reduce the risk of it being delayed at customs.
To make sure that your exact products reach their destination without any trouble, it’s important to get your paperwork and shipping documents well managed and right.
3. When Do You Need Shipping Documents?
Shipping documents are required when you are shipping from China or shipping to China. Basically, these shipping documents are needed at customs clearances that are when a shipment crosses the border or territory of one country to another with different rules and regulations.
There will be two processes requiring shipping documents in a whole international trade process. One of them is the export process at the loading port or airport, and the other is the import process at the destination port or airport.
4. What Are the Rules for International Shipments?
When importing internationally, Many shippers do not comprehend that there are rules and regulations for what can and cannot be transported or shipped through many major carriers to different countries.
Following are the items that are not tolerable or suitable for deportment via shipping service to any international destinations unless otherwise instructed.
Supplementary limitations and numerous monitoring authorizations in accumulation to customs clearance may put on depending on destination and may be required for certain goods, thereby causing delay by extending the transition time.
–Alcoholic beverages (e.g., beer, wine, spirits).
–Collectible and/or irreplaceable items (any item worth quite its original price or that’s not commonly available), including but not limited to antiques, fine art, or collectible coins and stamps.
–Bullion.
–Collect on Delivery (C.O.D.) shipments.
–Corpses of humans, their organs or body parts, human and animal embryos, or incinerated or exposed human remains.
–Explosives and incendiary devices.
–Firearms, weaponry, and their parts or ammunition.
–Perishable foodstuffs and foods/beverages that require refrigeration or other environmental control.
–Live animals, eggs, larva, live insects, live spiders.
–Ivory and endangered animals.
–Plants and plant material, including cut flowers.
–Cigarettes (including roll-your-own tobacco) and smokeless tobacco products, as defined by applicable Postal Service regulations for domestic or international mail.
–Lottery tickets and gambling devices are prohibited by local, state, provincial, or national law.
–Money (coins, cash, currency, paper currency, and negotiable instruments like cash including endorsed stocks, bonds, and cash letters).
–Pornographic and/or obscene material.
5. What Kind of Information is listed for International Shipments?
The information listed on Shipping Documents (air waybill, bill of lading, certificate of origin, insurance certificate, packing list, and sea waybill) are:
- Commercial Invoice
- Packing List
- Certificate of Origin
- Phytosanitary Certificate (for food)
- Inspection Certificate or Certificate of Analysis (if applicable)
- Insurance Certificate (if CIF)
- Gift Certificate (if applicable)
- Documents demanded by UNHCR consignee or Headquarters such as Radiation and Veterinary Certificates.
- Essential documents for all international shipments
Chapter 2: 10 Most Important Shipping Documents You Need for International Trade?
Please note that the pictures presented in this Chapter are just for reference.
Shipping Document 1: Purchase Order
- Definition
The official declaration of receiving an order is known as a purchase order. The purchase order contains all the details concerning the transaction, the date of the transaction, the type of products involved, and parties taking part in it.
- Significance
All the information regarding the vendor, what product it will deliver, and the amount the product costs are mentioned in the purchase order. Think of it as the principal understanding between the buyer and the seller about the product’s order and its delivery.
Shipping Document 2: Commercial Invoice
- Definition
All of the information and details of the business exchange and the delivery terms between the buyer and the seller are mentioned in the Commercial Invoice.
It is the official verification of sale and is different from the purchase order. The purchase order is basically the statement or position of the request and a commercial invoice is a purchase or a receipt. We offer you to effortlessly make a commercial invoice for each request.
- Significance
Every detail of the transaction that is required for the clearance of customs in freight shipping is present in this document. Thus, it is very important and an essential paper for getting through with the shipment.
Shipping Document 3: Bill of Lading
- Definition
The official contract between the transporter or the owner of the stocks and the freight carrier is known as the Bill of Lading (BOL).
This document is used to affirm the receipt of products for shipment and must be approved by an authorized delegate of the transporter upon receipt altogether for the shipment to be delivered.
- Significance
BOL is the main delivery record in global delivery and should be incorporated regardless of the type of transportation. It’s essential to completely see every piece of information is present in this document to guarantee shipments are lawfully obtained.
Shipping Document 4: Export Packing List
- Definition
A packing list is a shipping document containing a detailed list of the goods, including weight, security measures, packaging style, and measurements. The courier company uses it to make the bill of lading.
- Significance
This document is used by cargo forwarders altogether and is also used in disputes between transporter and carrier.
Shipping Document 5: Airway Bill
- Definition
Sort of Bill of Lading, an Airway Bill (AWB) is the authorized agreement between a shipper and an aircraft transporter that contains all the information of the goods being delivered.
Upon landing at the destination airport, it goes about as a receipt of products for the carrier and therefore is a non-negotiator shipping document.
- Significance
Published by an aircraft transporter for transportation, it is the main report that is essentially notable that all the information is definite and specific.
Shipping Document 6: Letter of Credit
- Definition
A Letter of Credit is given by a reliable bank ensuring cash on stocks sold from a merchant to a customer. If the purchaser can’t finish the installment, the bank pays the leftover to add up to close the exchange.
- Significance
A Letter of Credit with its financial assurance has become probably the most reliable type of financial exchange since the worldwide exchange is unpredictable because of evolving laws and guidelines by country.
Shipping Document 7: Warehouse Receipt
- Definition
A Warehouse Receipt is a delivery record that demonstrates a shipment of products that have been accepted by international transporters and incorporates all the basic information about the shipment covering measurements, qualities, weight, and size.
- Significance
This is the receipt of the archive that affirms that the shipment has been taken in perfect condition.
Shipping Document 8: Certificate of Origin
- Definition
A Certificate of Origin (C/O) proclaiming the country of origin for finished products, typically ensured by the consulate and/or chamber of commerce which is demanded by numerous treaty agreements for the global exchange to guarantee that products are qualified for sending out.
- Significance
The transporters incorporate this report to promise that goods meet all international cooperation, due to the import requirements which are controlled by the country where the products actually originate from.
Shipping Document 9: Insurance Certificate
- Definition
An insurance firm issues this Insurance Certificate to guarantee that the exporter has an insurance policy for the shipment of the products. It covers the responsibility and in case of a loss of the delivered merchandise.
- Significance
Having an insurance policy is the basic way to stay away from money-related setbacks and the risk that comes in international shipments to the exporters.
Shipping Document 10: Export License
- Definition
The official and legal document issued by the government is known as Export License. Exporters need this license to export the products in specific quantities.
- Significance
This document is required to send out specific products, so it is pivotal to confirm whether it’s wanted for a shipment or not.
Chapter 3: Mistakes to Avoid When Making Shipping Documents
Some of the common mistakes that should be avoided when dealing with the shipment documents are mentioned below. These mistakes often lead to terrible consequences – which are mentioned as well alongside the mistakes.
1. Always Provide Complete Information on Shipping Documents
If you put the wrong contact information or if you leave your contact’s name and phone number empty for your shipments and there comes problems en route, there are high changes your shipment may not reach its destination or reach late – If you’re lucky.
If you have the wrong address on a waybill, your goods may deliver to the wrong location. And lastly, if the wrong information is filled on the bank draft, there may be a delay in your payment.
2. Double Check Each and Every Information on Shipping Documents
It is recommended and highly encouraged to check your shipment twice to avoid any further hindrance in the procedure.
3. Provide Accurate and True Information in Shipping Documents
Always and always make sure to provide the precise and exact information in your documents so your shipments reach their desired place on time.
4. Creating Inaccurate Packing Lists
If the goods are incorrectly labeled and the customs checks or reviews your goods, officials will rip apart your complete package to find and examine what they are exporting.
5. Wrong Classification of Goods in Shipping Documents
It is vital to get your item arrangement right since there are costly ramifications for misclassifying your merchandise. It is best; you classify your items by utilizing either the Schedule B or Harmonized System (HS) codes.
6. Declaring Lower Value of Goods on Shipping Documents to Save Custom Duty
Sometimes you may have a customer who asks you to change its value to allow them to save money on import duties after you have created on your commercial invoice. You are highly recommended not to do it. This is illegal and you will have to pay for the adjustment you made.
Chapter 4: Special Shipping Documents for Shipments of Specific Goods
Documents that do not fall under the class of “commonly used goods” like bills of lading, commercial invoice, packing list, etc. are mentioned here. The country that is importing will require some of these special documents for an assortment of reasons.
1. Special Shipping Documents for Food, Drugs, Cosmetics, and Medical Devices
The (FDA) U.S. Food & Drug Administration issues special certificates on certain products:
- Free Sale Certificate
For food, dietary supplements, and cosmetic products.
- Foreign Government Certificate
For trading human and animal drugs, biologics, and other legal stuff in that nation.
- Exportability Certificate
For food additives, conventional foods, infant formula products, and food contact substances that are not legally traded in the USA but meet certain FDA standards.
- Cosmetics Certificate
Products that are certified as legal and authentic cosmetics and harm free.
- Health Certificate for Collagen and Gelatin Products
For the export to the European Union (EU) and required risk materials certificates for collagen and gelatin products when exporting to non-EU nations.
- Exporting of Medical Devices
This certificate requires submission of an export certificate often required by the foreign government or buyer for products regulated by the FDA.
This shows that the exported devices like radiation-emitting electronic products and likewise all the medical devices meet the specified U.S. requirements.
2. Special Shipping Documents for Other Food – Related
- Ingredients Certificate
This is mentioned for food items with signatures that are lacking or inadequate. The manufacturers issue this certificated that contains a proper description for the item, along with the percentage value of every ingredient the product contains, the chemical data, expiration date, manufacturing date, storage instructions, and microbiological standards.
- Certificate of Analysis
Helps to verify that the products have gone through a specific sort of testing with determining outcomes. A certificate of analysis might be required by the groups in the exchange or is highly needed by the country of importation.
This article is generally wanted for food items, wines, and spirits, synthetic compounds, and even drugs. A certification authority or the exporter gives this authentication only if the shopper agrees. Certificates of analysis can be acquired from a licensed research center.
- Halal Certificate
This certificate ensures the items/services focused on the Muslim community meeting the prerequisites of Islamic law and therefore is suitable for the consumption of Muslims.
This testament expresses that the new or frozen meat or poultry items were butchered as per the Islamic law, and affirmation by a suitable chamber.
3. Special Shipping Documents for Dangerous and Hazardous Goods
- 1. Dangerous Goods Certificate
Shipping out the hazardous merchandise, submitted for taking care of, via air transporters and airship cargo forwarders or by sea shipment, should be joined by a Shipper’s Declaration for Dangerous Goods; demand of the International Air Transport Association (IATA).
- 2. Safety Data Sheet
The MSDS documents or the Safety Data Sheet contains the health and safety information about products, substances, or chemicals classified as hazardous substances or dangerous goods.
SDS is required to follow various country/region regulations, including European Union REACH (Regulation on Registration, Evaluation, Authorization, and Restriction of Chemicals – Regulation) and CLP (Classification, Labeling, and Packing – Regulation).
- 3. Radiation Certificate
This certificate proclaims that the goods are not contaminated by any sort of radioactivity and are free from any harm. It is demanded in certain countries only, like Saudi Arabia because of few plants and animal imports.
- 4. Chemicals
The transporters are required to notify the U.S. Environmental Protection Agency (EPA) before delivering important chemical substances or compounds subjected to the 12(b) of the Toxic Substances Control Act (TSCA).
In return, the EPA will provide ideal information on exporting chemicals and their related actions to the importing regime.
Chapter 5: FAQs About Shipping Documents
1. Who must keep records of the shipping document?
Both the export and import must keep all the records of the shipping documents in original and copy because any issues arising in the future will be handled according to the information on these shipping documents.
2. Who is responsible for preparing the shipping document?
The exporter and the transporter and/or shipper are solely responsible for the shipping documents.
3. Must a shipping document be on a specific form?
Yes, every shipping document has its specific format to be filled in.
4. What are Hazmat shipments?
They are the hazardous materials (HAZMAT) that are the most complicated, regulation-heavy, and expensive products to ship since they are dangerous in their nature for the people and the environment.
5. What happens if the goods are stopped in customs clearance?
They go through your shipment once and if everything seems clear to them, the customs let it pass easily. If not, then they ask you to clear some dues or taxes that were unpaid due to which your product had been stopped
. There can be some other reasons too for goods to be stopped by customs. Each case is different and the solution depends on the case.
Conclusion
Shipping documents are significant and imperative for protecting all of the entities and parties involved in the international trade, logistics, shipping processes, and clearance at custom checks.
Appropriately filled shipping documents will help your shipment reach its international destination on time and reduce the risk of it being delayed at customs clearance.
When you are shipping from China, one of the things you should always spend time doing is to conduct a comprehensive consultation with a China freight forwarder.
They are logistics experts, and their expertise can help you avoid ditches and pitfalls. Shipping consultants can guide you through the steps to fill and provide all shipping documents and help you reduce shipping delay, quality assurance, and costs.
