The shipping industry is notorious for its paperwork, especially when moving goods across international borders.
For shippers, understanding these documents is just as important as knowing how to negotiate a cargo sale or compare freight rates. Even small errors in documentation can lead to major delays in the supply chain.
While many forms include similar details—such as buyer and seller information or product descriptions—each document serves a distinct purpose. That’s why it’s critical not only to ensure accuracy within each document, but also to keep the information consistent across all of them.
In this guide, we break down the five key maritime transport documents every shipper should know, and explain how they differ from one another.
1. Bill of Lading
If there is one document that every shipper should be familiar with, it is the bill of lading.
A bill of lading, also known as a shipping document, is a contract of carriage between a shipping company and a cargo owner. It is a document issued by the shipping company confirming that it has received the goods on its vessel.
This document must accurately list the information of the importer and exporter, as well as the international trade terms used in international transactions. In other words, this mandatory document serves as proof of ownership of the transported goods.
Upon arrival at the destination, the bill of lading must be presented to the shipping company to release the goods. The bill of lading serves as proof that the goods have been received.
2. Packing List
Similar to the bill of lading, the packing list is also a crucial document for sea freight.
In short, the packing list is a detailed list of goods to be shipped, including the weight, volume, and value of the entire shipment and individual packages.
The packing list informs freight forwarders, importers, customs, and shipping companies of the goods being shipped by the shipper without the need to actually verify its contents.
If customs decides to inspect the goods, the packing list can help identify suspicious boxes or items, thereby streamlining the process. This not only saves time but also avoids the hassle of opening all the boxes containing the goods, thereby reducing the risk of damage to the goods.
All information listed on the packing list must be as accurate as possible. Considering that the packing list will be used to generate the bill of lading, another key point is that if any of the documents are subsequently changed, the information contained in both documents must remain consistent.
3. Commercial Invoice
Any international transaction involving the import or export of goods must be accompanied by a sales document, namely a commercial invoice.
It is similar to a standard invoice. However, unlike a regular invoice, it contains detailed information about the customs clearance and transportation of goods, making it one of the most important documents in any international shipment.
The information on a commercial invoice includes detailed information about the parties involved in the transportation, such as the importer, exporter, freight forwarder, shipping company, and bank. Like the packing list and bill of lading, there should be no discrepancies between the information on the commercial invoice and the packing list.
Although the information on the commercial invoice is very similar to that on the packing list, both documents are required and serve different purposes.
The commercial invoice is a legal document that lists the goods sold in the transaction and their prices. The packing list, on the other hand, provides detailed information about the goods being transported and serves as proof of these goods in the event of legal issues or claims.
4. Certificate of Origin
According to the definition of the International Chamber of Commerce, a certificate of origin is:
“An important international trade document used to prove that a batch of exported goods was obtained, produced, manufactured, or processed in a specific country. It can also serve as a declaration by the exporter.”
In other words, a certificate of origin indicates the country of origin of the goods.
Exporters must provide importers with a Certificate of Origin for each exported product, and the certificate must be certified by a government agency (such as a chamber of commerce or consulate) to be valid.
A Certificate of Origin is essential for customs clearance, as it determines the amount of taxes and duties the importer must pay. It also helps identify which goods are exempt from duties due to special trade agreements between the country of origin and the destination country.
The document contains information commonly found in other documents, such as the exporter, consignee, importer, and description of the goods.
5. Letter of Credit
A letter of credit is a formal and binding payment agreement between the buyer and seller.
The international sales process is lengthy, and it can take months from the time the exporter sells the goods to the time the importer receives them. This makes it difficult to determine when payment will be made, especially when the importer cannot verify the authenticity of the purchase.
This is where letters of credit come into play.
Once the seller and buyer have reached an agreement, the seller begins preparing the goods in accordance with the agreed terms.
After the goods are shipped, the seller must take the relevant documents to their bank to confirm that the goods have been prepared and shipped in accordance with the agreed terms. The seller’s bank will verify the relevant documents and make payment. The seller will then apply to the buyer’s bank for reimbursement.
Summary
As you have noticed, each shipment requires multiple documents from different parties involved in the transaction and logistics process.
Keeping track of all these documents is not easy, especially when you have many other things to deal with. You can work with a freight forwarder to simplify and optimize your documentation.
At Hongocean, we help you work with all parties to ensure that all documents are available, accurate, and complete.
