One very important aspect of moving goods internationally by sea is the associated documents required by various government agencies, financial institutions and trading partners at both origin and destination. The following contains a brief overview of some of the major documents used.
Bills of lading
A bill of lading is issued by the shipping line as a receipt for the cargo being transported on its ship. It is also a contract of carriage to deliver the cargo to a named destination. In addition it lays out what has been loaded and in what condition. A bill of lading is a negotiable document unless it states otherwise. This means that the goods may be bought and sold during the sea voyage using the bill of lading as title to the goods. Therefore the legal bearer of the bill of lading is the owner. There are several different types of bills of lading to suit differing circumstances.
Letters of credit
Although these documents are not necessarily required to facilitate the actual international transport of goods by sea or to fulfill the customs authorities’ requirements they are nevertheless crucial to facilitating the exchange of goods for money across international borders. They act as a protection for both the buyer and seller. A letter of credit (LC) issued by a bank in one country (the issuing bank) on behalf of a buyer names the seller as beneficiary to the funds outlined in the LC provided certain terms are clearly met by the seller. The LC is then sent to the seller’s bank in a different country, which is known as the advising bank. This method is used to guarantee that the seller gets his payment in time and in full, and the buyer does not release funds until the goods are received in full and in good condition. This is an extremely complicated financial area and the above description is intended as a general guide only.
Certificate of origin
This is a document issued by a certifying body that establishes the origin of the goods being transported. This is often required by Customs authorities at the final destination due to trade tariffs, international trade treaties or embargoes on trade with certain countries.
Commercial invoices
The commercial invoice produced by the seller establishes among other things the weight of the goods, the number of items, a description of the goods, and the price of the goods being sold. Where LCs are also being used there should not be any discrepancy between the details contained in the two documents. The cost of the goods being imported assists the customs authorities to arrive at a customs duty tariff. However, it should be noted that they are under no obligation to accept the value on a commercial invoice if they disagree with the value stated.
Packing lists
A packing list is a detailed list of all the items to be transported. A packing list typically contains as a minimum a brief description of the items; their weight, the length, width, height of each item, and how many items are contained in each package. This allows a cubic capacity to be calculated for each item. In addition the shipping line will ask the consignor to identify which items on the packing list may be stackable and which items could be loaded on deck exposed to the elements. It is very important to understand that items loaded on the open deck will be exposed to extremes of temperature, salt and water from sea spray or rain, and the possibility of being lost overboard in the sea. Packing lists are required for customs formalities as well.
Other documents
Depending on the nature of the goods, the originating country and the final country of delivery, various documents may also be required. These may include documents such as:
- insurance certificates
- certificates stating that the goods meet a certain safety or engineering standard
- data sheets relating to the management of certain hazardous chemicals
- certificates verifying that pallets or packing materials have been fumigated to avoid the importation of biological pests.
