Expanding into global markets is an exciting step for any business. It takes considerable effort to reach the point where you’re ready to export goods and sell your products abroad. Research, fact-finding trips, marketing, and meeting with potential buyers can be time-consuming. But the final step in shipping goods internationally is ensuring your product complies with U.S. export regulations, as well as the import and customs requirements of the destination country.
The U.S. Department of Commerce works with our embassies around the world to prepare country commercial guides, which provide valuable market information, customs regulations, and other details to help exporters meet the requirements of the countries with which they do business. The first step is assembling your export documentation to ship your goods out of the United States.
The International Trade Administration is a good source for guidelines on the documents required for export. Below, you’ll find a list of the mandatory paperwork required. It’s vital to ensure this is in order, as mistakes can have serious consequences, ranging from delays and financial losses to fines and seizures. It’s difficult to overestimate the importance of attention to detail in putting together these export papers.
Pro Forma Invoice
The pro forma invoice is typically used as a negotiating tool between the seller and buyer to agree upon terms. The seller provides a description of the goods (quantity, weight, type, etc.) to be provided on a specified date at a stated price. It’s also wise to put in an expiration date, since currencies can be volatile.
The commercial invoice, based on the pro forma invoice, is the formal legal document billing the buyer. This invoice contains the details of the goods being sold and the price the buyer will pay. The commercial invoice is one of the principal documents that customs officials use to determine duties and is also used by the receiving party to verify the shipment is complete and intact upon arrival.
The packing list is considerably more detailed than its domestic counterpart. It lists the seller, buyer, shipper, invoice number, shipment date, mode of transport, and carrier and also itemizes the goods contained in each package. It also denotes the type of package (for example, crate or drum), the number of packages, the weight in kilograms, and dimensions. All freight forwarders require a digital copy of both the exporter’s commercial invoice and export packing list to clear shipments through U.S. customs.
This is a legally binding transport document that contains detailed information on the shipment contents, the sender, and the recipient. It’s a standardized form issued by the International Air Transportation Association (IATA) and is frequently completed electronically. Once signed by the shipper and the carrier, it is a legally binding contract and used by customs authorities and airlines to validate the dimensions and specifications of a shipment. Each waybill has an AWB number that can be used as a tracking number to determine the status and location of a shipment.
Bill of Lading
The bill of lading form (BL or BoL) is a legal contract between the goods shipper and the carrier issued by the carrier and specifies the type and quantity of goods as well as the destination. It also serves as a shipment receipt when the carrier delivers the goods. There are two types of BoLs: negotiable and non-negotiable.
A non-negotiable bill of lading specifies a consignee to receive the shipment 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 someone not listed on the document.
A negotiable bill of lading is a contract that can be transferred to a third party; the carrier can deliver the shipment to anyone in possession of the original endorsed negotiable bill, which represents ownership of the goods.
If you are exporting to a consignee on a letter of credit, you want to use the bill of lading as an exchange for payment - Stephanie Sherrod, licensed customs broker and supply chain expert
Certificate of Conformity
A certificate of conformity (CoC) is a document issued by a manufacturer to assure buyers that a product has been manufactured and tested by an authorized third party for conformity with specified international or regulatory standards. Most countries only apply this standard to certain types of goods – for example, automobiles – while countries such as Saudi Arabia, Russia, Belarus, Kuwait, Algeria, Syria, Yemen, and others demand a CoC for any type of imported goods.
Certificate of Origin
Since customs duties are often based on the origin of shipments, customs authorities around the world typically require a certificate of origin to ensure that the shipment complies with all regulations and trade agreements. For products manufactured in the United States, certificates of origin can be obtained from organizations such as the U.S. Chamber of Commerce.
A warehouse receipt, issued by the storage facility, identifies stored products, and is used to transfer accountability when a domestic carrier transfers an export shipment to an international carrier at a port of embarkation. A non-negotiable warehouse receipt permits only a specified person or firm to take possession of stored goods or commodities, but a negotiable receipt specifies that goods may be delivered to the bearer of the document. The warehouse receipt can be used to verify that cargo is labeled correctly, dimensions and weight are accurate, and dangerous goods are properly labeled.
“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.”
Electronic Export Information (EEI) Declaration
EEI data must be filed online through the Automated Export System (AES) for any export valued at more than $2,500. The EEI data includes information about the exporter and the receiving importer of the goods, the items being shipped, the value, and the related commodity code. In addition, you will need to identify the country of ultimate destination, the U.S. point of origin, and the departure date. The freight forwarder that facilitates the movement of the shipment will assist or file the EEI on behalf of the exporter. Shipments to Canada do not require an EEI except in cases where an export license is required. The U.S. Census Bureau uses this data to compile trade statistics.
Some purchasers and countries require an inspection certification to attest to the specifications of the goods shipped. A third party, often an independent testing organization, carries out the inspection.
This is one of the most important documents an exporter can have, given the risk inherent in export activities. There are many things that can go wrong when shipping goods abroad, and a certificate of insurance is an assurance that loss or damage to cargo during shipping will be covered.
When it comes to the export business, it’s vital to pay attention to detail at every point in the process. Everyone involved, from your own company employees to your shipping partners, should take meticulous care in preparing the documentation necessary for international shipments. This way, you’re much less likely to find your shipments trapped in customs limbo halfway around the world, fall victim to onerous penalties or fines, or face the ire of an unhappy international customer. For more on the topic, click to view our export readiness assessment.
A version of this article was originally published on March 29, 2017.
Photo: Getty Images