Basic Documents needed in Liner Shipping

Basic documents needed in liner shipping

Export and import shipment through liner shipping has undergone tremendous improvements over the past few decades due to introduction of fully computer based online networking system, where port, custom, shipping line, ships agent, forwarders – all are working together under the same system. This modern system has simplified shipping documentation and guaranteed services to the customer with higher efficiency at faster speed. Since the pace of technological advancement is not same between the developed and developing countries, so we still find significant differences in documentation among those countries. However, we shall concentrate discussions on basic documents necessary for liner shipping. To effect export or import of any cargo, the following parties / institutions are involved :
a)      Importers
b)      Exporters
c)       Shipping line & their Agents
d)      Customs Authority
e)      Port Authority
f)       Freight Forwarders
g)      Stevedores or Cargo handling agents
h)      C&F Agent
If a  shipper wants to export some parcel to a foreign buyer through liner vessel, then what procedure he has to follow for arranging shipment and what type of documents he is required to submit to the shipping company?
Let us assume that a Bangladeshi Garments Factory ‘A’ located in Chittagong, wants to export consignment of 100 cbm Ready made garments (RMG) to a foreign buyer of French. How the owner of garments factory will proceed? The factory owner doesn’t have any knowledge about shipment procedure or direct link with any shipping line. There is nothing to be worried. The exporter will contact a local or an international freight forwarder for arranging shipment of said consignment. The freight forwarder is the right person who knows what to do. He has experience and professional knowledge to handle the matter in the most efficient way, so that the exporter does not suffer in anyway. That means the freight forwarder takes 100 per cent responsibility to arrange shipment of cargo  through contacting all relevant agency / institution involved in the system, on behalf of exporter/shipper. First of all, forwarder sends an e-mail message to a Shipping line highlighting type/quantity of cargo, port of loading & port of discharge, tentative shipment date etc and request shipping line to confirm booking/space. The shipping line thoroughly examines the offer. If it is found suitable, they confirm the booking and send an Export cargo shipping instruction form (ECSI) to forwarder to provide detail information of the consignment viz about the goods and their route to final destination, any transport requirements, custom information, information of cargo insurance, letter of authority from exporter, type of Bill of Lading shipper needs, and allocation of costs etc. On receipt of detail information regarding consignment, the shipping line enters all these information into their computer system and the system creates a draft B/L. This draft B/L is again sent to forwarder for final checking whether everything is in order. Meantime, shipping line releases no of containers required by forwarder for stuffing the cargo. The forwarder may take the containers to factory premise for loading or cargo may be brought to ICD for stuffing. Then all formalities of custom and port are done at container freight station (CFS). At the final stage, container is sealed and carried inside the port for loading on board the vessel under the supervision and instruction of shipping line. In the present assumed case, the exporter/forwarder wants to export their consignment of garments ex-Chittagong port to Marseilles port of French. The shipping line will arrange shipment of the consignment by feeder vessel calling at Chittagong port and transport same upto Singapore or Colombo port where the Mother vessel will arrive. Then said containers will be transshipped to the Mother vessel which is scheduled to call buyer’s destination port i.e Marseilles, France. At the loading point, forwarder receives system generated original sets of Bill of Ladings from shipping line on payment of freight & other costs as per mutually agreed terms. Then Forwarder on behalf of exporter (Garments factory owner), submits the original bills of lading to the bank of exporter alongwith other necessary documents as per instructions of Letter of Credit, in order to receive payment of invoice value of goods from buyer. In this way export of any consignment through liner shipping is done.
In order to ensure that export of a cargo is effected without any hassle from buyer’s side, it is absolutely necessary for exporter to guarantee following :
·         Cargo is packed correctly so that it arrives in good condition;
·         Cargo is labeled correctly to ensure that the goods are handled properly and arrive on time at the right place;
·         Cargo is documented correctly to meet government requirements of port of loading as well as rules & regulations of foreign government where cargo to be discharged.
·         Cargo is Insured against damage, loss, pilferage and delay.
  The Freight Forwarder plays a significant role to take care of above requirements of exporter. As such exporter has no option but to take the assistance of a forwarder for smooth and hassle free shipment. As regards packing, sometimes buyer specifies packing requirements for the cargo. In general, following guidelines are observed :
  •  Pack in strong containers, adequately sealed and filled when possible.
  • To provide proper bracing in the container, regardless of size, make sure the weight is evenly distributed.
  • Goods should be palletized and when possible containerized.
  • Packages and packing filler should be made of moisture-resistant material.
  • To avoid pilferage, avoid writing contents or brand names on packages. Other safeguards include using straps, seals, and shrink wrapping.
  • Observe any product-specific hazardous materials packing requirements.
Like packing, some specific labeling marks is also used in cartons & container to :
  • Meet shipping regulations;
  • Ensure proper handling;
  • Conceal the identity of the contents;
  • Help receivers identify shipments; and
  • Insure compliance with environmental and safety standards.
Basic Shipping Documents required
The following documents are commonly used in exporting; but which of them are necessary in a particular transaction depends on the requirements of concerned countries and it varies from country to country.
a)      Bill of Lading : It is a very important document in shipping transaction. A bill of lading is a contract between owner of goods and the carrier. This original shipper’s order bill of lading can be bought, sold or traded while the goods are in transit. B/L is signed by the Master of the vessel or his agent on behalf of shipping line. It has undernoted attributes :
·         It is a contract of affreightment  between the carrier and the shipper/consignee.
·         It’s a receipt of cargo by the carrier.
·         It is a legitimate title of goods for the holder.
There are different kinds of B/L – Carrier B/L, House B/L, Charter party B/L, Ocean B/L or Combined Transport B/L etc.

a)      Commercial Invoice :  A commercial invoice is a bill for the goods from the seller to the buyer. These invoices are often used by governments to determine the true value of goods when assessing customs duties. Governments that use the commercial invoice to control imports will often specify its form, content, number of copies, language to be used, and other characteristics.
b)    Consular Invoice : It is a document that is required in some countries. It describes the shipment of goods and shows information such as the consignor, consignee, and value of the shipment. Certified by the consular official of the foreign country stationed here, it is used by the country's customs officials to verify the value, quantity, and nature of the shipment.
c)    Certificate of Origin : It is a document that is required in certain nations. It is a signed statement as to the origin of the export item. Certificate of origin are usually signed through a semiofficial organization, such as a local chamber of commerce. A certificate may still be required even if the commercial invoice contains the information.
d)    Inspection certificate : It is required by some purchasers and countries in order to attest to the specifications of the goods shipped. This is usually performed by a third party and often obtained from independent testing organizations.
e)      Dock receipt and Warehouse receipt : These receipts are used to transfer accountability when the export item is moved by the domestic carrier to the port of embarkation and left with the ship line for export.
f)     Destination control statement : It appears on the commercial invoice, and ocean or air waybill of lading to notify the carrier and all foreign parties that the item can be exported only to certain destinations.
g)      Shipper’s Export Declaration(SED) : This document is used by the custom authority of the exporting country in order to exercise control over exports. SEDs are prepared by the exporter or the exporter's agent and delivered to the exporting carrier. The exporting carrier will present the required number of copies to the customs at the port of export. Often, the SED is prepared as a substitute document of the Shipper's Letter of Instructions.
h)      Export incense : It is government document that authorizes the export of specific goods in specific quantities to a particular destination. This document is generally required for all countries to export any commodity.
i)        Export packing list : This packing list shows the type of package, such as a box, crate, drum, or carton. It also shows the individual net, legal, tare, and gross weights and measurements for each package. In addition, Package markings are shown along with the shipper's and buyer's references. The list is used by the shipper or forwarding agent to determine the total shipment weight and volume of cargo being shipped. Custom officials use the list to check the cargo.
j)     Insurance certificate : This is a very important document in export shipment. This is used to assure the consignee that insurance will cover the loss of or damage to the cargo during transit. Insurance protects exporter’s interest, as there are risk factors like bad weather,  rough handling of cargo by carriers, and other common hazards which may cause damage to cargo. If the terms of sale make the exporter responsible for insurance, the exporter  is to take a policy to insure the cargo. If the terms of sale make the foreign buyer responsible, then the buyer has to obtain an insurance policy. Shipments by sea are covered by marine cargo insurance.
k)      Letter of Credit / Sales contract : This is a basic commercial document through which an international deal of sale is established between a Seller(exporter) and a buyer(importer). Detail terms & conditions highlighting value of goods, cost of freight and insurance, time limit for shipment, specifications of goods etc will be incorporated in the Letter of credit.
l)        Pre-shipment inspection survey : A thorough inspection of goods is to be carried out by renown surveyor before shipment in order to satisfy the buyer that the goods are fit to export in all respect. In case of import, similar documents will be required to ensure any transaction.
Apart from above shipping documents, Shipping line has to submit/declare following documents to various agencies, whenever vessel calls a port for loading / discharging operations.
1.       Inward Entry Application : Application addressed to Custom authority with a request to permit entry of the vessel in the port.
2.       Berthing Application to Port Health Office :  Application addressed to Port Health Officer, with a request to come on board after berthing  in order to complete inward formalities.
3.       Application to Immigration Officer: To provide landing permission for the officers and crew of the vessel.
4.       Store list book : Store list to be prepared in prescribed form & submit same to custom who will scrutiny the list with ship’s pantry.
5.       Ship’s Arrival Report : The arrival report is prepared by the Master of the vessel with details of vessel, cargo on board, ship’s stores which is submitted to Customs & Mercantile Marine Department.
6.       Load Line Distance Declaration : This is signed by Master of the vessel and same is submitted to Custom authority.
7.       Dangerous Drug Declaration : Declaration is given by the Master to Custom, stating that the vessel has not carried any dangerous drug.
8.       Deck Cargo Declaration : The certificate is issued by the Master regarding deck cargo carried on deck for submission to Custom.
9.       Final Entry Declaration : Agents of the vessel is  to submit this application to the Custom, after entrance of the vessel to the port enclosing all necessary papers regarding export cargo to be discharged.
10.   NOC from Mercantile marine & Shipping Master Office : NOC to be obtained from these two governments offices to sail from the port for outward voyage.
11.   NOC from Income Tax Authority : Before sailing from the port, vessel to obtain NOC from Tax authority regarding payment of duty on the freight earned or expected to be earned from exports carried and projected imports.
12.   Custom & Port Clearance : Port clearance is an important document which must be on board the vessel before sailing and this clearance has to be shown to the next port of call.
13.   Statement of facts : This document is prepared by shipping agent showing details of performances of vessel with regard to  discharging and loading of containers on daily basis. This SOF is important for Trump/Chartered vessel to count actual working days/hours so as to compare same with Charter party terms for calculating demurrage / dispatch.
Above documents are all related to ship. There are some important documents, which are related to cargo. Some of them are shown below :
1.       Wavier Certificate : As per existing flag protection law applicable in some countries, foreign vessel is required to obtain wavier certificate from Shipping Department to load cargo, in order to safeguard the legitimate share of exporting country. As per internationally accepted UNCTAD Code of Conduct, the National line is entitled to carry 40% of the total sea borne Export/Import cargo originating from their country, through it’s own flag carriers. If national flag carrier of exporting country fail to provide ship to carry some consignment, then the Third country operator can lift the cargo through obtaining wavier certificate.
2.       Mate Receipt: This is an acknowledgement receipt issued by the Master of the vessel, whenever loading of cargo or container is completed on board the vessel.
3.       Cargo Manifest or Freight Menifest : This is a summary statement of detail description of all the cargo loaded in the vessel. A manifest containing both cargo and financial details is known as Freight Manifest.
4.       Export General Manifest (EGM) : The Export General Manifest is prepared with the details of cargo and other relevant cargo related information on the basis of Bill of Lading and no freight information is incorporated. The EGM is prepared in the prescribed form and submitted to custom & port authority.
5.       Import General Manifest(IGM) : IGM includes details of import cargo to be discharged from the ship and the information are taken from Bill of lading IGM shows B/L number, description of cargo / container, cubic measurement /weight, whether freight pre-paid or payable at destination, the names / addresses of the consignee, details of Dangerous or Hazardous cargo etc. The IGM is submitted to the port and custom authority.
6.       Heavy Cargo / Long length Cargo List : A heavy cargo or heavy lift cargo means a cargo whose weight exceeds more than 35 tons. A heavy cargo is always odd size both in height as well as length and needs special arrangement at port for discharging. For this reason, the Master or the Agent has to maintain the list of such heavy or long length cargo, so that the cargo can be handled both on board the ship and at port under special arrangement at the time of discharging.
7.       Dangerous Cargo Declaration : Shipper has to declare with proper documentation regarding dangerous cargo before shipment of export of such cargo and also import of such cargo while on board before discharging at port.
8.       Delivery Order : Delivery order is issued in exchange of an original Bill of Lading ,usually at the port  of destination. On the basis of delivery order issued by the shipping line/agent, port authority deliver the goods to its holder or to a named party written on the bill of lading under the title ’Consignee’. The concerned agent before issuing delivery order also check whether custom has out passed Bill of Entry.
9.       Landing Tally : At the time of discharging container, tally is jointly maintained by port and shipping agent. When a container is discharged, the tally clerk records the information like container prefix, container number, seal number, container size/type/height in code, tare weight etc. This tally sheet is an important supporting document for shipper, if any damage is caused to the cargo at the time of unloading operation.
10.   Out Turn Report :  OTR is the final report on the total quantity of cargo (piece wise) landed under a Bill of Lading.
Article gives an idea about the various types of documentation required in liner shipping business for exports and imports. Please share this knowledge with me and offer your valuable comments if any.

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