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The Importance of Documentation for Freight Shipping

What's in this article?
  1. What Is Freight Shipping?
  2. The Importance Of Freight Documents
  3. Avoiding Loss
  4. Insurance Issues
  5. Getting Through Customs
  6. Protection Against Lawsuit
  7. Common Documents In Freight Shipping
  8. Packing List
  9. Certificate Of Origin
  10. Bill Of Lading
  11. Commercial Invoice
  12. Additional Documentation
  13. Wrapping Up
The Importance of Documentation for Freight Shipping

Paperwork plays a vital role in freight shipping. A shipment must be documented appropriately to ensure it arrives safely, on time, and without damage.

When you are shipping goods from one city to another or from country to country, certain documents must be completed and filed with the authorities. Without proper documentation, shipments might be delayed, damaged, or even seized.

To avoid problems during shipment, ensure your documents are complete and accurate. Keeping track of different papers is also crucial to guarantee that your freight arrives smoothly.

Read on to learn why proper documentation is crucial for shipping goods. Furthermore, find out what standard documents are used in freight shipping.

What Is Freight Shipping?

The term "freight shipping" refers to transporting goods in bulk by sea, air, or land, weighing over 150 lbs. Using a freight forwarder, you can transport the goods or commodities domestically or internationally.

Freight shipping enables businesses to ship large quantities and items quickly and efficiently. Each freight shipping method has unique benefits and drawbacks, depending on the products shipped.

When choosing freight shipping options, there are several things to consider, such as cost and schedule. But, more importantly, if your freight shipment is for sale, you may also factor in the profits when choosing a freight forwarder.

alaska-to-south-carolina-air-freight-companies-state-to-state.jpg

The Importance of Freight Documents

The paperwork for ensuring that your cargo gets from point A to point B without problems can be complicated. As a result, most people use the services of a freight forwarder to handle the proper documents.

Having the proper documents for your shipment would undoubtedly help with the process. There are many reasons why you would want a smooth shipment process. Here they are:

Avoiding loss

Most of the time, goods are lost because documents are wrong or are missing. If you don't have the correct paperwork for your cargo, the freight forwarders might lose it, or customs might seize it.

The correct paperwork will advise the people handling your goods about where they are going and give them information on how to get them there.

Loss of goods means losing the money spent on the actual object you're transporting or the profits you could make from selling those goods. The paperwork must be clear and have all the information you need to recover the lost goods.

Insurance issues

Insurance documents are part of a shipment's documentation. These papers ensure you can file a claim for your goods if they get lost, stolen, or broken on the way to their final destination.

Sometimes, even if you don't have these insurance papers, you can still file a claim for your goods. That's because there are already some documents in the shipping process for an insurance claim that serve the purpose.

However, regular documents might not cover extraordinary reasons for damages. Having insurance papers for freight shipment may help you with more extensive claims.

Getting through customs

Customs authorities in many countries play a massive part in freight shipment. Goods entering a specific country's borders are subject to taxes and duties that apply in that country. Hence, a customs agency is akin to the gatekeeper of that country in the shipping industry.

Customs clearance regularly takes a few days, if not weeks. First, officers take their time to examine that all the goods have the right paperwork. They will then decide whether or not certain goods can leave or enter the country.

Since the process may take a while, proper documentation ensures you avoid customs trouble. However, customs may not clear your freight or cargo if your paperwork is misplaced or disorganized.

customs-clearance.jpg

Protection against lawsuit

Taking precautions to minimize risk is essential in any industry, shipping included. A great technique for preventing lawsuits and complaints is documentation. In addition, documentation is an excellent way to ensure that expectations and consent are met.

In freight shipping, there are a lot of legal and regulatory requirements, and keeping up with them requires the correct paperwork.

If a loss occurs and there's a dispute over the goods, the paperwork can aid you if the parties involved cannot reach an agreement and pursue legal action.

Common Documents in Freight Shipping

There may already be terms you often hear when it comes to documentation in freight shipping. Words like "airway bill" or "bill of lading" are often mentioned when people talk about shipping documents.

However, if you're not an experienced shipper, you might not know what these papers mean. So let's find out what they are.

Packing list

This document help customs officials determine whether or not there has been any tampering or damage to the goods during transport.

The packing list generally has three sections:

  1. General information, which contains the overall information about the shipment. You can usually find the weight, the dimensions, and the shipping method listed here.
  2. Physical description, which provides detailed descriptions of the cargo. It might include the material, manufacturer, and quantity of the goods transported.
  3. Special instructions describe how the items should be packaged or shipped, such as specific packaging requirements, temperature conditions, and storage conditions.

Certificate of origin

Shippers use a certificate of origin to verify the origin of the cargo making the journey from one country to another. This document is often needed when importing products into the United States because it verifies that the shipped items comply with U.S. regulations.

The certificate itself consists of several parts. These include the name of the exporter, the date of export, the importer's name, and the description of the shipped item. In addition, there is usually a list of each individual part of the shipped product.

In some cases, the Certificate of Origin is combined with a Commercial Invoice to form a Consolidated Export Declaration.

alaska-to-south-carolina-rail-freight-transport-state-to-state.jpg

Bill of lading

The Uniform Customs and Practice for Documentary Credits (the Red Book) defines a bill of lading as "a document signed by the party entitled to receive the goods, stating that he accepts responsibility for safe carriage and delivery of the goods."

A bill of lading can also be explained as a document used to transfer ownership of goods. In international trade, it's required to bind both buyer and seller legally.

In the United States, the Uniform Commercial Code requires every carrier to issue a bill of lading (UCC 3-202). Furthermore, this document must contain certain information about the shipped goods.

For example, it must include the consignee's name, the date of delivery, the place of delivery, and the payment terms. If the goods are damaged in transit, the shipper is responsible for filing a claim against the carrier within a particular time upon receiving notice of damage.

If the goods arrive late or damaged, the shipper may file a suit against the carrier under the Carmack Amendment (49 USC §14706), which allows carriers to limit liability to $500 per package.

bill-of-lading-explained.jpg

Commercial invoice

A commercial invoice is necessary for shipping, especially when the goods are for sale. It gives customs authorities the information they need to determine whether the goods can enter or exit the country.

Furthermore, a commercial invoice helps to determine taxes and duties. Therefore, every shipment should come with a commercial invoice.

Commercial invoices for freight shipping typically must state:

  • The declared value of the goods
  • Costs
  • Quantity
  • Reasons for the shipment (for trade or personal reasons)
  • Shipment date and waybill numbers
  • Goods description
  • Country of origin
  • Weight
  • HS Codes (Harmonized Commodity Description and Coding System, a customs-based code to categorize commodities)
  • Incoterms (International Commercial Terms, a set of rules that determine the responsibility of a shipment during transportation of goods)

Additional documentation

You may need additional documents depending on where you're shipping to and from.

A freight forwarder would know which documents you need besides the main ones you already know. Therefore, the forwarder should be able to provide you with this additional paperwork.

Examples of additional documents for shipment may include a waybill (air waybill or sea waybill), inspection certificate, Letter of Credit, Shipper's Letter of Instructions, Customs Declaration, other invoices, purchase orders, export license, and insurance certificates, among others.

Wrapping Up

Now you know why documentation is essential when it comes to freight shipping. Without proper documentation, you could end up with losses, facing a lawsuit, or being unable to claim insurance.

And even though you might have done everything right, you still may find yourself with other problems. So don't let this happen to you! Make sure you choose a suitable shipping company to handle your freight shipment.

A1 Auto Transport helps you in getting the correct documents for your shipment. Get a free quote from us about freight shipping, and let us discuss your specific shipping needs.

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Joe Webster began his journey in the auto transport field by attending the University of Southern California (USC), where he graduated with a Bachelor of Business Marketing. 

After college, he started his career in the auto transport industry from the bottom up and has done virtually every job there is to do at A-1 Auto Transport, including but not limited to: Truck Driver, Dispatch, Sales, PR, Bookkeeping, Transport Planner, Transport Manager, International Transport Manager, Brokering, Customer Service, and Marketing. Working with his mentor Tony Taylor, Joe Webster has learned the ins and outs of this industry which is largely misunderstood. 

With over 30 years experience in the industry, we've been helping people ship their vehicles, motorcycles, RV's, heavy equipment, household goods and more across the country or overseas without a hitch. Ask us anything.

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A-1 Auto Transport is a disclosed agent for the following shipping companies:

Trans Global Auto Logistics, Inc.
3401 E Randol Mill Rd
Arlington, TX 76011
NO. 018191NF
CFR Rinkens
15501 Texaco Avenue
Paramount, CA 90723
NO. 013055NF
ABC Worldwide LLC
2840 NW 2nd Ave #105
Boca Raton, FL 33431
NO. 025472F
CSI Logistics
435 Division Street
Elizabeth, NJ 07201
FMC 22206
Intl Cargo
45 Campus drive
Edison, NJ 08837
NO. 17858N
ShipYourCarNow LLC
1160 South Rogers Circle Suite 1
Boca Raton, FL 33487
NO. 025646
Merco Air & Ocean Cargo, Inc.
6 Fir Way
Cooper City, FL 33026
NO. 021869F
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