Transport Documents Overview

What is Transport Documentation ?

Cross border trade involves the preparation and submission of many documents. Ensuring all required documents reach correct stakeholders on time is a big part of managing international carriage. If documents are not prepared on time, not prepared correctly, not couriered to the right party on time or not presented to the right authorities as necessary – in the worst of cases cargo can get seized by Customs authorities with penalties and fines following close behind.

Why are transport documents important?

1. If a B/L is incorrectly prepared for an L/C shipment, the seller may never get paid.
2. If an FTA form is not presented at time of import clearance, the importer may have to pay duties even though the shipment qualifies for duty exemption.
3. If an invoice is printed incorrectly, Customs may red lane the shipment and hold it until they are satisfied it was an innocent mistake.
4. If a foreign FDA or equivalent agency’s Form is not is available at the time of import, Customs or local FDA may outright reject import clearance for the shipment and require the product to be scrapped or returned to origin – with no regard for storage conditions.

For these reasons and many more, it is necessary for all traders involved in cross border transactions to know what the various transport documents are and how they are used.

… Customs or local FDA may outright reject import clearance for the shipment and require the product to be scrapped or returned to origin – with no regard for storage conditions.

Let’s look at some of these transportation related documents below:

Cargo Clearance permit, Bills of Entry, Single Administrative Document: Cargo clearance permits are documents allowing a shipment to be imported or exported. Cargo clearance permits are usually prepared by Customs brokers on behalf of traders. These are legal declarations to authorities and erroneous declarations are effectively wrongful declarations to a government authority. One of the more important data elements on an import entry is the HS code. We have a comprehensive guide to tariff classification here.

Bill of Lading: The Bill of Lading is issued by the ocean carrier to confirm receipt of cargo. Original signed copies of B/Ls enable the holder to take title of the cargo. In many ways, B/Ls are the most important transportation documents relating to carriage. These documents must often be presented for purposes of releasing payments on letters of credit.

In many ways, B/Ls are the most important transportation documents relating to carriage.

We have a more detailed article on Bills of Lading here.

Air Waybill: This document is in some ways the equivalent of a Bill of Lading for air shipments. However, the air waybill does not allow the bearer to take title to the goods.

Customs Invoice: Some companies prepare invoices that are only for use when doing Customs declarations. These invoices usually have the same information as the commercial invoice, but presented in a manner that makes preparing import entries easy.

Commercial Invoice: These are typical invoices used in transactions. A lot of information used for Customs entries come from the commercial invoice like product description, quantity, weight and value.

Proforma Invoice: A pro forma invoice is used when the actual invoice is not yet available. Some Customs authorities like Singapore Customs do not allow the use of a pro forma invoice for import clearance.

Physio- sanitary certificate: This document is issued by a qualified person in the exporting country to confirm that the shipment is free from pests and diseases. Some countries will not allow shipments to clear import if the certificate is not produced.

Dangerous Goods declaration: This declaration is made to the carrier who needs to know how to stow away DG goods according to their classes and transport requirements.

Material Safety Data Sheet: MSDS is only available for chemical products. This document contains information that allows Customs officers to determine transportation requirements and step to take if a leakage or spill is detected.

ATA Carnet: This is an international document that allows temporary import and export of cargo with duties suspended. Carnets are usually issued by a Chamber of Commerce or other authorised entities.

Preferential Certificate of Origin: The PCO allows importers doing trade between member countries of a Free Trade Agreement to import shipments with lower or no duty. These documents can sometimes be presented to Customs a few days after import clearance has been completed. However, this retroactive use of an FTA form depends on country procedures and the FTA’s legal text. We have a more detailed article on Free Trade Agreements here.

Non-Preferential Certificate of Origin: The NPCO is a validation document that a product was really manufactured in a specific country. These are usually issued by an authorised Chamber of Commerce.

Shipper’s Letters of Instruction: This document is prepared by the exporter and issued to the freight forwarder with instructions detailing how to handle and export shipment. Issuance of an SLI is not mandatory in many countries.

Letter of credit: This is a form of documentary credit that banks issue to other banks to guarantee release of funds if delivery of cargo is made to the specified person. The delivery must usually be made in good condition and banks often refuse releasing payment if the B/L is claused or not clean.

Packing list: This is prepared by the seller to show the net weight, gross weight and location of all items in a shipment. This document becomes important if cargo goes missing. It also becomes very useful when Customs wants importers to retrieve specific products from a large container shipment consisting of several shrink-wrapped pallets.

Manufacturer’s declaration: Some countries like Australia require a manufacturer’s declaration to confirm the cargo’s origin, material and end use before they can be allowed to enter the country.

There are several other documents that we have not covered such as the sales order, delivery order, warehouse receipt and insurance certificates.

Did we miss any important document? Drop us a comment below to let us know!

References

• https://www.marineinsight.com/maritime-law/what-is-bill-of-lading-in-shipping/
• https://www.flexport.com/glossary/shippers-letter-of-instruction
• https://enquiry.icegate.gov.in/enquiryatices/beTrackIces