A number of documents are used in export-import trade. The completion and submission of required documents is critical to the successful shipment, transportation, and discharge of cargo at the port of destination. The documents used depend on the requirements of both the exporting and the importing countries. Much of the documentation is routine for freight forwarders or customs brokers acting on the firm’s behalf, but the exporter is ultimately responsible for the accuracy of the documentation. Information on documentation requirements in importing countries can be obtained from overseas customers, foreign government embassies and consulates, and various export reference books, such as the Export Shipping Manual and Air Cargo Tariff Guide. In the United States and other developed countries, government departments have specialists on individual foreign countries and can advise on country conditions and documentation requirements.
1. Air Waybill
The air waybill is a contract of carriage between the shipper and air carrier. It is issued by the air carrier and serves as a receipt for the shipper. When the shipper gives the cargo to a freight consolidator or forwarder for transportation, the air waybill is obtained from the consolidator or forwarder. Air waybills are nonnegotiable and cannot be issued as a collection instrument. Air waybills are not particular to a given airline and can be from any other airline that participates in the carriage (Wood, Barone, Murphy, and Wardlow, 1995).
2. Bill of Exchange (Draft)
A bill of exchange is an unconditional written order by one party (the drawer) that orders a second party (the debtor or drawee) to pay a certain sum of money to the drawer (creditor)
or a designated third party. For example, Hernandez Export, Inc., of Lawton, Oklahoma, sends an importer in Uzbekistan a draft for $30,000 after having shipped a truckload of auto parts. The company’s draft orders the overseas buyer in Uzbekistan to pay $30,000 to its agent, Expotech, in Uzbekistan. In this scenario, Hernandez, Inc., is the drawer, the importer is the drawee, and Expotech is the payee. In many cases, the drawee is the overseas buyer and the drawer/payee is the exporter. When a draft is payable at a designated future date, it is a time draft. If it is payable on sight, it is a demand or sight draft.
3. Bill of Lading (B/L)
A bill of lading is a contract of carriage between the shipper and the steamship company (carrier). It certifies ownership and receipt of goods by the carrier for shipment. It is issued by the carrier to the shipper. A straight bill of lading is issued when the consignment is made directly to the overseas customer. Such a bill of lading is not negotiable. An order bill of lading is negotiable, that is, it can be bought, sold, or traded. In cases in which the exporter is not certain about payment, the exporter can consign the bill of lading to the order of the shipper and endorse it to the buyer on payment of the purchase price. When payment is not a problem, the bill of lading can be endorsed to the consignee (Wells and Dulat, 1996; Zodl, 1995).
3.1. Clean/Claused Bill of Lading
The bill of lading form is normally filled out in advance by the shipper. The carrier will check the goods loaded on the ship to ensure that they comply with the goods listed (e.g., quantity, condition) on the bill of lading. If all appears proper, the carrier will issue a clean bill of lading certifying that the goods have been properly loaded on board the ship. However, if there is a discrepancy between the goods loaded and the goods listed on the bill, the carrier will issue a claused bill of lading to the shipper. Such a bill of lading is normally unacceptable to third parties, including the buyer under a CIF contract or a bank that is expected to pay under documentary credit on receipt of the bill of lading and other documents.
3.2. Inland Bill of Lading
An inland bill of lading is a bill of lading issued by the railway carrier or trucking firm certifying carriage of goods from the place where the exporter is located to the point of exit for shipment overseas. This document is issued by exporters to consign goods to a freight forwarder who will transport the goods by rail to an airport, seaport, or truck for shipment.
3.3. Through Bill of Lading
A through bill of lading is used for intermodal transportation, that is, when different modes of transportation are used. The first carrier will issue a through bill of lading and is generally responsible for the delivery of the cargo to the final destination.
4. Consular Invoice
Certain nations require a consular invoice for customs, statistical, and other purposes. It must be obtained from the consulate of the country to which the goods are being shipped and usually must be prepared in the language of that country (U.S. Department of Commerce, 2008).
5. Certificate of Origin
A certificate of origin is required by certain countries to enable them to determine whether the product is eligible for preferential duty treatment. It is a statement as to the origin of the export product and usually is obtained from local chambers of commerce.
6. Inspection Certificate
Some purchasers and countries may require a certificate attesting to the specifications of the goods shipped, usually performed by a third party. Such requirements are usually stated in the contract and quotation. Inspection certificates are generally requested for certain commodities with grade designations, machinery, equipment, and so forth.
7. Insurance Certificate
When the exporter provides insurance, it is necessary to furnish an insurance certificate that states the type, terms, and amount of insurance coverage. The certificates are negotiable and must be endorsed before presentation to the bank.
8. Commercial Invoice
A commercial invoice is a bill for the merchandise from the seller to the buyer. It should include basic information about the transaction: description of the goods, delivery and payment terms, order date, and number. The overseas buyer needs the commercial invoice to clear goods from customs, prove ownership, and arrange payment. Governments in importing countries also use commercial invoices to determine the value of the merchandise for assessment of customs duties.
9. Dock Receipt
This receipt is used to transfer accountability when the export item is moved by the domestic carrier to the port of embarkation and left with the international carrier for export. The international carrier or agent issues it after delivery of the goods at the carrier’s dock or warehouse. A similar document, when issued upon receipt of cargo by a chartered vessel, is called a mate’s receipt.
10. Destination Control Statement (DCS)
This statement appears on the commercial invoice, bill of lading, air waybill, and shipper’s export declaration. It is intended to notify the carrier and other parties that the item may be exported only to certain destinations.
11. Shipper’s Export Declaration (SED)
A shipper’s export declaration (SED) is issued to control certain exports and to compile trade data. It is required for shipments valued at more than $2,500. Carriers and exporters are also required to declare dangerous cargo.
12. Pro Forma Invoice
A pro forma invoice is a provisional invoice sent to the prospective buyer, usually in response to the latter’s request for a price quotation. A quotation usually describes the product and states the price at a specific delivery point, time of shipment, and the terms of payment. A pro forma invoice is also needed by the buyer to obtain a foreign exchange or import permit. Quotations on such invoices are subject to change without notice partly because there is a lag between the time when the quotation is prepared and the time the shipment is made to the overseas customer.
13. Export Packing List
An export packing list itemizes the material in each individual package and indicates the type of package (e.g., box, carton). It shows weights and measurements for each package. It is used by customs in the exporting and importing countries to check the cargo and by the exporter to ascertain the total cargo weight, the volume, and shipment of the correct merchandise. The packing list should be either included in the package or attached to the outside of a package in a waterproof envelope marked “packing list enclosed.”
14. Manifest
A manifest is a detailed summary of the total cargo of a vessel (by each loading port) for customs purposes. It covers condition of the cargo and summarizes heavy lifts and their location.
Source: Seyoum Belay (2014), Export-import theory, practices, and procedures, Routledge; 3rd edition.
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