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Commodity Export and Import Documents Explained

Every bulk shipment by sea travels with a set of documents. They prove what was shipped, where it comes from and who has the right to take it at the destination.

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The sales contract

The sales contract (sale and purchase agreement) lists the product, the quantity, the quality, the price, the delivery term, the shipment period, the payment terms and the documents the seller must provide. All the other documents follow from it.

Commercial invoice and packing or weight list

The commercial invoice states the goods, the quantity and the price. For bulk cargo a weight certificate or a draft survey report replaces the packing list. Customs in both countries use the invoice to calculate duties, so the description must match the other documents.

Bill of lading

The bill of lading is issued by the ship's master or the carrier. It is the receipt for the goods, the proof of the contract of carriage and, in its original form, the document that gives the right to take the cargo at the discharge port. See the Shipfixing guide to shipping bulk cargo by sea.

Certificate of origin

Issued by a chamber of commerce or a government office, it shows in which country the goods were produced. It is often needed to claim a lower import duty and is mandatory for some trade agreements. On Comdity the origin country is shown on every listing.

Quality and quantity certificates

An independent inspection company checks the quality and the quantity at loading and issues certificates. For agricultural goods the importing country can ask for a phytosanitary certificate, a fumigation certificate or a health certificate. For minerals and metals a certificate of analysis shows the content.

Insurance certificate

Under CIF terms the seller provides an insurance certificate for the voyage. Under FOB and CFR the buyer insures the cargo. See FOB vs CFR vs CIF.

Payment documents

Many bulk trades are paid against documents through a bank, for example with a letter of credit. The bank checks that the documents match the credit before paying, so small errors can delay payment. Ask a bank or a trade adviser for help with the first letter of credit.

Who prepares which document

Under FOB the seller clears the goods for export and delivers the export documents and the bill of lading; the buyer arranges the freight, the insurance and the import clearance. Under CFR the seller also books the ship and pays the freight. Under CIF the seller adds the insurance certificate. In every case the buyer pays the import duties and taxes at the destination. See FOB vs CFR vs CIF for the full split.

Common problems with documents

A different spelling of the company name between the invoice and the bill of lading. A shipment date after the date allowed in the contract or the letter of credit. A description of the goods that does not match the contract. A missing certificate that the importing country requires. Each of these can stop payment or customs clearance, so check every document against the contract before it is sent.

Customs clearance and duties

At the destination the importer, or a customs broker, submits the customs declaration with the invoice, the bill of lading, the certificate of origin and any permits. Duties depend on the product code in the customs tariff and on the origin. Ask a customs broker or the authority of the importing country for the rules of the product before you agree the price.

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