There are several nuances to shipping internationally. For any ecommerce international transaction the most important documents are those that are required to clear customs when being imported or exported.
All ecommerce businesses moving products around the globe need to ensure they comply with international trade standards before implementing any new shipping routes. Without proper documentation, products are liable to be held at customs, or brands can get fined big amounts.
If you are new to selling on a global scale, check your brand’s international shipping readiness before launching products in new countries.
The specific documents your brand needs will vary depending on the countries involved and the nature of the shipment, but there are a few that are commonly needed.
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1. Commercial Invoice
A commercial invoice document provides a detailed description of the goods being shipped, including quantity, value, and other relevant information. It is used by customs officials to assess duties and taxes and by the buyer to arrange payment. A commercial invoice is essential because it is a one-place document that holds all the crucial information about the transaction needed for customs clearance of the goods.
Some ecommerce businesses may not know that there are often overages or shortages listed on a commercial invoice. It’s important to take the specific steps to adjust and correct your commercial invoice so as not to incur fines or delays.
2. Bill of Lading (BOL)
Bill of Lading is a legal document issued by the carrier or their agent that serves as a receipt of goods and evidence of the contract of carriage. It includes information about the shipper, consignee, the goods being transported, and the terms of shipment.
3. Packing List
This document may sound generic, but it’s a very specific list that provides details of the contents of each package or container being shipped. It includes information such as the number of packages, weight, dimensions, and a description of the goods.
4. Certificate of Origin
A Certificate of Origin document certifies the country of origin of the goods. It is often required by customs authorities to determine eligibility for preferential tariffs or to comply with trade agreements. As an ecommerce retailer, you need to provide a certificate of origin usually issued by the chamber of commerce.
5. Insurance Certificate
The Insurance Certificate provides evidence that the goods being shipped are insured against loss or damage during transit. It includes details of the coverage and the parties involved.
6. Import/Export Licenses
Depending on the nature of the goods being shipped and the countries involved, specific import or export licenses may be required. These licenses are obtained from the respective government authorities and indicate permission to trade certain goods.
7. Customs Declaration/Form
Customs Declaration/FormA Customs Declarations document provides information about the shipment to customs authorities, including details about the goods, their value, and the parties involved. It is used to assess duty rates and customs fees like taxes or tariffs and to ensure compliance with import/export regulations.
8. Phytosanitary Certificate
This document is required for shipments of plants, plant products, or other agricultural goods. It certifies that the goods comply with the phytosanitary regulations of the importing country, ensuring they are free from pests and diseases.
9. Dangerous Goods Declaration
If the shipment includes hazardous materials, a dangerous goods declaration is required. It provides information about the nature of the hazardous goods, their classification, and any special handling requirements. Be sure you understand which carriers will ship your products if they contain any hazmat or dangerous goods.
10. Air Waybill
What is a Waybill?An air waybill (abbreviated as AWB) is a document that must be sent out with the goods when an international air courier ships them. The AWB provides detailed information about the shipment. The consignment can also be tracked using this document.
11. Letter of Credit
A letter of credit is a legal, binding agreement of payment between the buyer and seller of certain products. Once the purchase is made to export goods internationally, it takes a long time for the shipment to reach its final destination. This causes certain difficulties and delays in the payment.
This is when a letter of credit comes is necessary. It is issued by a trustworthy bank that guarantees payment on behalf of the buyer, to the seller. It is an irrevocable document for the situation when the buyer is unable to make the payment that the bank must make the full or remaining payment on their behalf.
12. Pro Forma Invoice
A pro forma invoice is an important document used as a negotiating tool between the seller and the buyer prior to an export shipment. This document should be used by the seller to quote at the beginning of an export transaction, and it will eventually become the final commercial invoice used when goods are cleared through customs in the importing country.
The document contains a description of goods (e.g., quantity, price, weight, kind and other specifications) and is a declaration by the seller to provide the products and services to the buyer at the specified date and price.
What are Incoterms?
Within many of the documents listed above, shippers need to include specific terms that help define the roles, responsibilities, and costs shared between the buyer and seller of international shipments—these are known as Incoterms.
A few examples include:
- The commercial invoice – Incoterms are specified to outline the agreed-upon delivery terms and cost responsibilities.
- Purchase order – buyers include the preferred Incoterms to specify shipping and delivery responsibilities.
- Sales contract – clearly states the agreed Incoterm to define obligations, risks, and costs.
- Bill of Lading (B/L) or Air Waybill (AWB) – Incoterms might be mentioned to align with the terms outlined in the contract or invoice, although these documents are not the primary legal source for Incoterms.
- Proforma invoice – sellers include Incoterms during the negotiation phase to clarify terms of trade.
- Letter of credit (L/C) – when used as a payment mechanism, the Incoterms are noted to ensure compliance with trade conditions.
What Happens if International Documents are Wrong?
If international documentation is incorrect or incomplete when shipping ecommerce brands, it can lead to various complications and potential consequences. Here are some of the possible outcomes:
- Customs delays, extended processing time, or holds.
- Customs penalties or fines, which can vary depending on the severity of the errors and the country in question.
- Return of shipment, where the importing country refuses to accept the products which can lead to excess cost and time spent in transport.
- Customer dissatisfaction based on shipping delays
To avoid these issues, it is crucial for ecommerce brands to ensure accurate and complete documentation for international shipments. Working with experienced shipping partners, such as freight forwarders or logistics providers, can help ensure compliance with the required documentation and minimize the risk of errors.
It’s important to note that the specific requirements for shipping documents can vary depending on the country of origin, the destination country, and the type of goods being shipped. Many of the rules that determine how imports and exports are handled has to do with international trade negotiations like free trade agreements or tariffs.
It is always recommended to consult with freight forwarders, customs brokers, or trade authorities to ensure compliance with all necessary documentation for international shipments. It is also advisable to stay up to date with the customs regulations of the countries the brand is shipping to, as requirements may change over time.
If you are looking for a 3PL partner with experience in international shipping, particularly of dangerous goods regulation and compliance, we would love to hear from you. You can read DCL’s list of services to learn more about what we do, or check out the many companies we work with. Send us a note to connect about how we can help your company grow.
Tags: International
