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Introduction to commercial shipping

Air or sea commercial shipments

Depending upon how fast you want to get cargo to your customer and how much he or she is willing to spend, you might ship by ocean or air. Accordingly, there are two types of bills of lading, the ocean bill of lading and the airway bill.

An ocean bill of lading serves both as a receipt for the cargo and as a contract for transportation between you (the exporter) and the carrier. It also symbolizes ownership; accordingly, if in negotiable form, it can be bought, sold or traded while the goods are in transit.

When you use air freight, an airway bill is issued in lieu of a bill of lading. It serves as a through bill of lading which covers domestic and international flights moving cargo to a specific destination. Your air transportation carrier will advise you of the house airway bill number and the master airway bill number assigned to your shipment. You must be sure to communicate these to your customer along with other transportation details.

Airway bills serve functions similar to those of ocean bills of lading, but they are only issued in non-negotiable form. This means that you and your bank have less protection because you lose title to the goods once shipment commences. Be sure to check with your logistics expert if you are shipping hazardous goods. Special forms are required.

We will be covering ocean bills of lading in detail because ocean freight is the most economical -- and therefore the most frequently used -- method of export shipment.

You must prepare and submit a Shipper's Letter of Instructions form to your freight forwarder so that they can issue an accurate bill of lading. This form indicates if the transaction is being made against a letter of credit, whether insurance is required and where to send documents, etc. Once you've finalized terms of payment with your customer, you will be able to furnish these facts to your freight forwarder.
Most bills of lading are issued with three originals and several copies.

There are numerous different types of ocean bill of lading, but you will find that the following are the most commonly used:

  • A "straight" (non-negotiable) bill of lading provides for delivery to the person whose name appears on it. It must be marked "non-negotiable." Only the person named can claim the goods upon arrival. This type of bill is usually used for goods shipped on an open-account payment basis when the exporter is not concerned about the importer receiving the goods without payment.
  • A "shipper's order" (negotiable) bill of lading is used when you want to impose conditions on delivery of the goods, such as acceptance of a draft. This type of bill of lading works well when payment has been secured by a letter of credit because you can make sure that the terms of the L/C are met before the goods are released.
  • A "clean bill of lading" is issued when the shipment is received in good order. If there is any damage or a shortage of product is found, a clean bill of lading will not be issued.
  • An "on-board bill of lading" is issued when the cargo has been placed aboard the named vessel. It is signed and certified by the master of the vessel. For a letter of credit transaction, this bill of lading is required in order for you (the exporter) to get paid.

Of course if the goods require packing or specialist rigging Infinity can assist with this.
In the case of personnel affects the whole procedure is simpler, how much you want to spend and how much time you have.
Very often fine art is shipped in the air due to its value and small size.

What is a commercial Packing list

A packing list accompanies an international shipment and is used to inform transportation companies about what they are moving. It also allows the customer and others involved in the transaction to check what has been shipped against the proforma invoice. It is a necessary safeguard against shipping incorrect cargo internationally. An export packing list, for example, is far more detailed than a domestic one.

To prepare your packing list, delete all the prices on the invoice and double-check to see that the number of cases, weight (net, gross, metric) and measurements appear on the invoice. Then rename the document "PACKING LIST" in big, bold letters. Never substitute a packing list for a commercial invoice.

Here are several reasons why a packing list is important:

  • It supports what is actually being shipped.
  • It can accompany an inspection certificate.
  • It can be used as further evidence to support a method of payment but (be advised) you must make sure you match your product description to that of any payment instrument.
  • It will be used by a Custom's Broker for clearance and entry into a foreign country.
  • It is used by the buyer-seller to compare what has been ordered to what has been shipped.
  • It is used to issue a bill of lading.
  • It is used for the electronic export information (EEI) and is often used by U.S. and foreign customs officials to verify goods.

Why Packing Lists are so important

If you don't complete a packing list a myriad of problems can arise that can wreck havoc with your business. These problems range from not getting your goods delivered to the desired destination to not getting paid.  
An export packing list should be securely attached to the outside of each shipping container, preferably in a waterproof packet and an envelope that is clearly marked "Packing List Enclosed."  It is the responsibility of the shippers and forwarding agents to determine the total weight and volume of the shipment, and whether or not the correct cargo (as indicated) is being shipped.

All of this information is based on the packing list.  In addition, customs officials at port of entry and port of exit may use the packing list to check the cargo. 

Advance Preparation

Several weeks in advance of shipment, your freight forwarder, customs broker, bank and customer need to indicate how many copies they need and where each copy needs to be attached and distributed. You should always make three or four extra copies for your files, just in case.

If you decide to process your shipment documentation online, select the appropriate packing list option and then contact all parties involved in the international sale to determine if your packing list needs to be signed.

Because any mistake on the packing list may cause a delay in clearance at the port of destination follow all the necessary steps to ensure you get it right the first time.