Shipping products to another country requires that your product complies with U.S. export regulations for leaving the country, as well as meets the destination requirements for entry into another country. To do that, you need to make sure all your documents are in order. Mistakes or non-compliance can slow down the process and, in some cases, be time consuming and expensive to unravel. When it comes understanding and executing on the documents you need to export your products, details are the common denominator.
1. Air Waybill
Air Waybills are issued for exports shipped by air, and once an outbound shipment arrives at the airport it is immediately processed by a customs broker or assignee for customs clearance and final delivery.
"It is the most important document issued by a carrier," explains Ken Fong, San Francisco-based senior operations manager for Flexport. "It is used by customs authorities and airlines to validate the dimensions and specifications of a commodity. It also covers transport of the cargo from each location on its route."
An exporter should confirm the accuracy of the necessary documents by carefully reviewing the air waybill and cross checking for inaccuracies or inconsistencies. Any aspects of a shipment that should be noted, such as dangerous goods, must be verified.
2. Bill of Lading
This is a contract between the owner of the goods and the carrier. "The terms and types of bills of lading differ with the mode of transportation," says Fong. "A non-negotiable bill of lading specifies a consignee to receive the goods, and does not represent ownership of the goods. The shipment must go to and from the parties listed on the bill of lading, and cannot be transferred or delivered to a recipient not named on the document."
By contrast, a negotiable bill of lading is a contract of carriage that can be transferred to a third party. In this case, explains Fong, the carrier can deliver goods to anyone in possession of the original endorsed negotiable bill, which represents the ownership and control of the goods.
"A U.S. exporter must understand the provisions of a negotiable or a non-negotiable bill of lading in order to understand who to ship the goods to for legal purposes," says Fong.
Moreover, adds Stephanie Sherrod, a licensed customs broker and supply chain expert in Chicago, "If you are exporting to a consignee on a letter of credit, you want to use bill of lading as an exchange for payment."
3. Certificate of Conformity
A certificate of conformity, mandating that products be analyzed and tested by an authorized third party, is required by some countries—usually for certain kinds of manufactured goods. It is the exporter's responsibility to ensure that its products are tested in accordance with the requirements of the country the products are being shipped to. "A freight forwarder will confirm that the documents are compliant with the shipment's certificate of origin, but will not administer the certificate," says Fong.
4. Certificate of Origin
Because the applicable rate of duty is often connected to where a product is shipped from, the customs authorities of most countries require the presentation of a certificate of origin to ensure that the shipment complies with any free trade agreements or applicable regulations or duties. Certificates of origin for products made in the United States can be obtained from a number of third party organizations, such as the U.S. Chamber of Commerce.
5. Commercial Invoice
A commercial invoice is a bill for the goods from the seller to the buyer. This document includes all the important details about the seller and the shipment so that the receiving party can readily check that the shipment is intact upon arrival.
"Commercial invoices are important in helping the seller get shipments cleared quickly and efficiently," says Fong. "As the party filing the declaration on behalf of the exporter, we need to make sure the shipper's letter of instructions matches the information reflected on the commercial invoice."
6. Dock/Warehouse Receipt
This receipt is used to transfer accountability when the domestic carrier transfers the export shipment to the shipping line at the port of embarkation. This is an important document, notes Fong, and helps to ensure that the cargo is labeled correctly; that physical characteristics, such as dimensions and weight are declared accurately; that any dangerous goods are properly labeled and packaged; and that the shipping pallets used meet the standards defined in the certificate of conformity.
—Ken Fong, senior operations manager, Flexport
"You want to make sure that all items being shipped are accounted for," adds Sherrod. "It should be signed by the carrier/driver, and any exceptions should be noted. This is your proof that the order shipped complete, and you can hold the carrier liable if there are any discrepancies."
7. Export License
An export license is a government document that authorizes the export of specific items in specific quantities to a particular destination. This document may be required for most or all exports to some countries. For other countries, it may be required only under special circumstances.
Shippers are required to provide this information to their freight forwarder. "An exporter may self-classify an item based on technical knowledge or they can request a determination from the U.S. Bureau of Industry and Security (BIS)," says Sherrod. "Software, munitions, aircraft parts and guidance systems are examples of exports that may require a license."
8. Export Packing List
An export packing list is considerably more detailed and informative than a standard domestic packing list. It itemizes the material in each package and indicates the type of package, such as a box, crate, drum or carton.
All freight forwarders require a digital copy of both the exporter's commercial invoice and export packing list in order to clear shipments through U.S. Customs. "This document is important," says Fong, "because it can be used as supporting material in the event of a disagreement between the exporter and the carrier, and is a required document in order to file an insurance claim. It is also a way for customs authorities in the receiving country to assess security and compliance of the shipment."
9. Inspection Certification
Inspection certification is required by some purchasers and countries to attest to the specifications of the goods shipped. The inspection is usually performed by a third party, often an independent testing organization.
10. Insurance Certificate
"An insurance certificate is one of the most important documents for a U.S. exporter to have because they inherently carry the most risk," says Fong. "Having a certificate of insurance assures the consignee that loss or damage to cargo during the shipment process will be covered."
The bottom line for American exporters is that it is important to ensure that both internal team members and shipping partners pay attention to the details when it comes to preparing the documentation for international shipments. Being proactive about the documentation related to your exports will help minimize the risk of everything from higher duties because your product is misclassified to finding out that your shipment is stuck at customs in a country halfway around the world.