1. Commercial Invoice (CI)
What is a commercial invoice?
A commercial invoice is the most important document used in ocean freight shipping. It acts as a proof of sale — denoting every detail about financial interactions between the shipper and the receiver, including details about consignment, terms, taxes, etc.
A commercial invoice must have the following information:
Who is responsible to create a commercial invoice?
The seller (consignor, exporter, or shipper) issues the commercial invoice to the buyer (consignee, importer, or receiver) — on or before the dispatch of goods.
Why is a commercial invoice important?
It is a mandatory, legally required document while shipping to and from the US, i.e., you cannot ship without a commercial invoice. It is also used for customs declaration by the US Customs and Border Protection (CBP).
Any falsification or lack of information in the commercial invoice could lead to complete rejection of cargo or even severe legal ramifications. That’s why sellers (or exporters) are advised to provide accurate information in this document.
Do you need a commercial invoice to ship to USA?
Absolutely yes. You cannot begin the shipping process without a commercial invoice.
Do you need HS Code for commercial invoice?
Yes, an accurate HS code is a must in the commercial invoice. A harmonized system code or HS Code is used by the customs authorities to identify the category of goods and assess duties on the imported items.
Can I fill the commercial invoice in any language?
No, all details on the commercial invoice are filled in English only.
How many commercial invoices do I need for US shipping?
Usually, you require three copies of commercial invoices for the US import/export process:
One copy for the country you are exporting from
One copy for the country you are importing to
One copy for the recipient/consignee
The first two are put outside the consignment, and the last one is placed inside the package for the recipient.
What is the difference between customs invoice and commercial invoice?
Both of them are used for cross-border shipments. However, while a commercial invoice is issued before the delivery of goods by the exporter; a customs invoice is issued after the actual delivery of goods by the importing country's customs. A customs invoice is also called a proforma invoice and has the label “customs” or “pro forma” on the top.
2. Bill of Lading (BoL)
What is a bill of lading?
A bill of lading (BoL or B/L) is another important legal document for shipping goods to and from the US. Similar to a commercial invoice, it contains all essential details of the shipper, receiver, goods, and shipping terms.
BoL is a negotiable document, i.e., an authorizing signature can transfer ownership from one party to another. It is signed by the carrier, shipper, and receiver or their respective agents.
Why is a bill of lading important?
Bill of lading carries out three key functions:
Evidence of contract of carriage
The title of ownership to the goods
A receipt of the shipped goods
What are the different types of bills of lading?
Depending on the issuing authority and purpose, there are several types of BoLs like house bill of lading, master bill of lading, container bill of lading, straight bill of lading, and charter bill of lading. The two most common BoLs are:
House bill of lading: Issued by the Non-Vessel Owning Common Carrier (NVOCC) or ocean transport intermediaries (OTI) like freight forwarders
Master bill of lading: Issued by the Vessel Owning Common Carrier (VOCC)
Who prepares the bill of lading?
The carrier (VOCC) or ocean transport intermediary (like a freight forwarder or NVOCC) fills out the information on the bill of lading. However, it’s the shipper’s responsibility to provide accurate information about the freight.
What is the difference between bill of lading and commercial invoice?
While the shipper issues a commercial invoice, the carrier issues a bill of lading. Unlike a bill of lading, a commercial invoice does not show ownership or title of the goods sold. Lastly, a commercial invoice is issued before the shipment leaves the consignor. In contrast, a bill of lading is issued when the freight is loaded onto the vessel before transit.
Can you ship without a BoL?
No, you cannot execute your ocean shipment without a bill of lading, as it is evidence of contract of carriage.
How many bills of lading can be issued?
Besides the mandatory three BoLs for shipper, carrier, and receiver, the carrier can issue any number of bills of lading. However, they must specify the number of bills issued on it.
What if I lost my original bill of lading?
Suppose the shipper (you) loses the original bill of lading. In that case, prepare a letter about the loss to the carrier and a letter of indemnity releasing the carrier from liability if the original BoL is found. You can then request the issuer of BoL for a duplicate copy.
3. Customs Bond
What is a customs bond?
A mandatory US shipping document, a customs bond is required for clearance of commercial goods above USD 2500. It guarantees that the importer complies with the customs regulations and pays the levied duties, taxes, and penalties.
It also applies to duty-free shipments but is subject to specific payment requirements from other Partner Government Agencies (PGAs) while shipping in and out of the US.
Essentially, a customs bond is a contractual agreement between three parties:
Importer on the record
Surety bond company that issues the document
US Customs & Border Protection (CBP)
How to obtain a customs bond?
Customs and Border Protection (CBP) issues customs bonds in the US. You can obtain one through a surety company or certificate licensed by the US Department of the Treasury. Or, contact your customs broker to help you with the customs bond-related processes.
How long does it take to get a customs bond?
If the importer presents all the documents, it’ll take 2-5 business days to get a customs bond.
What is a customs bond number?
It is a unique number issued when your custom broker files for a customs bond.
What are the types of customs bonds?
There are two types of customs bonds: Single (valid for individual shipments) and Continuous (valid for a set period of time by the surety company).
Do customs bonds expire?
While single bonds expire after the completion of that particular shipment, continuous bonds don’t expire. However, the importer needs to pay an annual premium to the surety company issuing the bonds. The company issues a bond termination letter if they fail to pay the premium.
How much does a customs bond cost?
The cost of a customs bond is determined by its type.
A single-entry customs bond cost is decided based on the value of individual shipment (with a minimum value of USD 100). It is equal to the declared value of the imported goods without including applicable duties or taxes.
A continuous customs bond cost equals 10% of taxes paid by the importer in the previous year. The bond amount is rounded to the nearest $10,000 up to $100,000; and then in increments of $100,000. The minimum value of a continuous customs bond is USD 50,000.
For example, if the tax paid is USD 81,900, the continuous bond amount will be USD 90,000. If the tax is USD 275,085, the bond amount will be USD 300,000.
What happens if the importer doesn't pay the customs duties?
This is when the customs bond comes into force. Suppose the importer fails or refuses to pay the levied taxes and duties. In that case, the CBP will collect the pending amount from the surety company that had issued the customs bond. The company can then use the customs bond as a legal document to collect the amount from the importer.
4. Certificate of Origin (CO)
What is a certificate of origin?
Also known as the declaration of origin (DO), a certificate of origin certifies that the shipped goods are obtained, produced, manufactured, or processed in a particular country. It may be subject to authentication by an authorized party.
The International Chamber of Commerce issues guidelines for commercial invoices. It is not a required document. However, many business owners importing the goods demand a CO verify the authenticity of goods.
Who issues the certificate of origin?
The manufacturer or exporter of the goods issues a commercial invoice.
Why is the certificate of origin important?
Foremost, it is essential for international trade as proof of the origin of the product. Based on the origin, a CO is used to determine and regulate duty rates, preferential trade agreements, trade sanctions, and import quotas for the shipped goods.
The authorities require a certificate of origin as part of the US customs clearance process.
When is a certificate of origin issued?
It is issued for international shipments sold as a permanent export for foreign trade.
Does a certificate of origin expire?
The validity period of a certificate of origin is 12 months from the date of issue.
Who is responsible for certificate of origin?
The shipper or exporter is responsible for the certificate of origin.
How do I verify a certificate of origin?
Customs authorities and the issuing chambers can authenticate the certificate of origin by entering a unique CO number and the chamber's accreditation code.
Can companies not based in the United States get a Certificate of Origin stamped by the US Chamber of Commerce?
Yes, if the goods listed on the certificate are made in the United States, companies can get a CO stamped by the US Chamber of Commerce.
5. Packing List
What is a packing list?
As the name goes, a packing list gives a detailed overview of packed items to be shipped by the exporter or shipper. It also provides information needed to procure an international bill of lading and a certificate of origin.
A packing list also specifies details required by the Automated Export System (AES).
It contains important details about the specifications of your cargo like:
Details of consignor & consignee
Quantity of goods
Weight of goods
Description of goods
Dimensions of goods (length, width, height)
What are other names for the packing list?
Shippers can also refer to the packing list as packing slip, delivery list, delivery docket, bill of parcel, or shipping list.
Who prepares the packing list?
The packing list is prepared and issued by the seller or shipper of the goods.
Is packing list a mandatory document?
A packing list is a mandatory document and must accompany every export US shipment.
Why is packing list important?
A packing list is a confirming document of the goods in the container. It also specifies handling instructions, units, and other important details about the exported freight.
Why is a packing list required at customs?
An exact packing list ensures faster inspection at customs, thereby reducing costs and time for the consignee. The customs officials use it to check whether the freight complies with data stated in the commercial invoice, bill of lading, and other documents.
Is a packing list useful when freight contains hazardous materials?
Yes, a packing list is useful when shipping hazardous goods, acting as a safety data sheet.
Is the packing list the same as bill of lading?
No, packing list and bill of lading are different documents used for different purposes. While a BoL represents title of ownership, a packing list informs the actual specifications of the goods.
List of Other Relevant Documents Required for US Shipping
Besides the ones listed above, other important US shipping documents include, but are not limited to:
Import and export license
Letter of credit
Customs power of attorney
Notice of Arrival (for imports)
Importer security filing (for imports)
Customs declaration sheet
Any special certificates from partner government agencies (if required)
Other forms or certificates specific to the shipped goods
List of Special Forms Required For US Shipping
Along with the listed documents, these forms are also crucial while shipping to the US for specific items:
FCC 740: A Federal Communications Commission (FCC) document is required for devices that emit radio frequencies.
HS-7: A Department of Transportation document — applicable to vehicles, tires, and safety devices.
PPQ 505: A US Department of Agriculture document — applicable for a Lacey Act declaration.
EPA 3520-1: An Environmental Protection Agency document — applicable to engines.
Delivering your cargo in and out of the US becomes less taxing if you know the required shipping documents. Make sure you fill them accurately and legibly to avoid any shipping hassles.
At Twill, we take care of ocean freight shipping for you, so you can focus on growing your business rather than worrying about the documents. Sign up now to start shipping!