International Freight Documentation (1): Overview
The documentation used in international trade and freight is extensive and complicated. Inexperienced firms can find the process troublesome and costly. Incorrectly completed or missing documentation can result in fines, compensation claims, and transportation costs for good returned. To make the entire shipping process easier, firms often use the services of international freight forwarders. It is normal for firms to use different freight forwarders for different jobs, and to obtain three quotes from different freight forwarders, then select the freight forwarder who offers the best quote for services that best fit requirement.
Firms that are shipping goods intensively may establish a shipping department, even if they use the services of a freight forwarder. Regular patronage of a forwarder should result in discounted rates and/or good customer service. Firms shipping goods routinely will require a robust documentation management system. With such a system in place, important documents will not be lost and copies will always be available. If an important document is misplaced, the goods will not leave port and administrative and compensatory charges will be levied. An effective document management system provides visibility, traceability, and an archive of transactions.
Insurance is the forwarding firm’s responsibility. Exporters routinely insure on behalf of their customers. This is an international business standard, albeit rarely formally stipulated. A written contract will exist between the buyer and seller. This will include details of delivery, the source of the goods, the nature and quantity of the goods, and a statement of the payment mechanism, which could be letter of credit, for example. Customs forms will be required so that goods shipped can pass through customs controls at the port of destination. Customs documents can consist of a customs declaration, which in the UK is the C88/SAD (single administrative document). A further class of documents covers transportation. Transportation documentation is also known as the “journey documents”. Thus, the documentation involved in international shipping divides neatly into three categories: 1. Legislative; 2. Sales; 3. Transportation/journey documents.