Documents used, Commercial Invoice, Bills of Lading / Airway Bill

The commercial invoice is one of the most important documents in international trade and ocean freight shipping. It is a legal document issued by the seller (exporter) to the buyer (importer) in an international transaction and serves as a contract and a proof of sale between the buyer and seller.

Unlike the Bill of Lading, the commercial invoice does not indicate the ownership of goods nor does it carry a title to the goods being sold. It is, however, required for customs clearance purposes to calculate and assess the duties and taxes due.

When used in foreign trade, a commercial invoice is a customs document. It is used as a customs declaration provided by the person or corporation that is exporting an item across international borders. Although there is no standard format, the document must include a few specific pieces of information such as the parties involved in the shipping transaction, the goods being transported, the country of manufacture, and the Harmonized System codes for those goods. A commercial invoice must often include a statement certifying that the invoice is true, and a signature.

A commercial invoice is used to calculate tariffs, international commercial terms (like the Cost in a CIF) and is commonly used for customs purposes.

Commercial invoices in European countries are not normally for payment. The definitive invoice for payment usually has only the words “invoice”. This invoice can also be used as a commercial invoice if additional information is disclosed.

The commercial invoice details the price(s), value, and quantity of the goods being sold. It should also include the trade or sale conditions agreed upon by both buyer and seller of the transaction being carried out.

It may also be required for payment purposes (such as in the event of payment via Letter of Credit and may need to be produced by the buyer to its bank to instruct the release of funds to the seller for payment.

The commercial invoice is a legal document between the exporter and the buyer (in this case, the foreign buyer) that clearly states the goods being sold and the amount the customer is to pay. The commercial invoice is one of the main documents used by customs in determining customs duties.  A commercial invoice is a bill for the goods from the seller to the buyer. These documents 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.  

Air Waybill  

Air freight shipments require airway bills.  An air way bill accompanies goods shipped by an international air carrier. The document provides detailed information about the shipment and allows it to be tracked.  Air waybills are shipper-specific and are not negotiable documents (as opposed to “order” bills of lading used for vessel shipments).

An air waybill (AWB) or air consignment note is a receipt issued by an international airline for goods and an evidence of the contract of carriage, it is a document of title to the goods. Hence, the air waybill is non-negotiable.

An air waybill (AWB) is a legally binding transport document issued by a carrier or agent that provides details about the goods being shipped. It provides detailed information on the contents of the shipment, the sender and recipient, terms and conditions, and other information. The AWB is a standard form that is distributed by the International Air Transport Association (IATA).

Functions of the AWB

The air waybill serves many functions, including:

• Evidence of receipt of goods by an airline
• Contact information among all parties
• Contract of carriage between shipper and carrier
• Freight bill
• Customs declaration
• Description of the goods
• Guide for handling and delivering goods
• Tracking of shipment

Features and Format of the AWB

An AWB is typically a one-page document that is packed with important information. The bill is designed and distributed by the IATA and is used in domestic and international shipping. The document itself is issued in eight sets of different colors, with the first three copies being the original.

• The first original (green) is the issuing carrier’s copy.
• The second (pink) is the consignee’s copy.
• The third (blue) is the shipper’s copy.

The fourth copy is brown and functions as the receipt and proof of delivery. The other four copies are white.

The air waybill may come with an airline logo at the top right corner or it may be a neutral AWB. The two are essentially identical outside of the airline logo and prepopulated information for the airline.

Each air waybill must include the carrier’s name, office address, logo, and AWB number, which is an 11-digit number that can be used to make bookings and track the status and location of the shipment.

The top-left quadrant of an air waybill document will contain information for the shipper, consignee, agent, airport of departure, and airport of destination.

The top-right quadrant will contain the information for the airline either in the form of printed and prepopulated text and logos or manually-entered information. The top-right section will also contain information about the declared value for carriage and declared value for customs.

The middle of the page will contain information on the contents of the shipment, including the number of pieces, gross weight, chargeable weight, total charge, and the nature and quantity of goods.

The bottom portion of the air waybill will contain additional charges and taxes, an area for the signature of the shipper or agent, and an area to enter the date, time, and place of execution.

Bill of Lading  

A bill of lading is a contract between the owner of the goods and the carrier (as with domestic shipments). For ocean shipments, there are two common types: a straight bill of lading, which is non-negotiable, and a negotiable, or shipper’s order bill of lading. The latter can be used to buy, sell or trade the goods while in transit. The customer usually needs an original bill of lading as proof of ownership to take possession of the goods from the ocean carrier.

A Bill of Lading is a document that confirms the receipt of shipped cargo. Lading is the process of loading cargo or shipment into a vessel. The bill serves to document that a shipment has been loaded and has been received at its predetermined destination. The document also includes information describing the type, quantity, and destination of the cargo.

There are three main types of the Bill of Lading. A straight bill of lading is one where the transporter has received advanced payment. An order bill of lading is used when the shipment of goods happens before the payment for transportation is made. An endorsed order bill of lading will transfer ownership of goods once delivery has been made. It can also be traded as a security or even used as collateral for debt obligations.

A bill of lading is a document issued by a carrier (or their agent) to acknowledge receipt of cargo for shipment. Although the term historically related only to carriage by sea, a bill of lading may today be used for any type of carriage of goods. Bills of lading are one of three crucial documents used in international trade to ensure that exporters receive payment and importers receive the merchandise. The other two documents are a policy of insurance and an invoice. Whereas a bill of lading is negotiable, both a policy and an invoice are assignable. In international trade outside the United States, bills of lading are distinct from waybills in that the latter are not transferable and do not confer title. Nevertheless, the UK Carriage of Goods by Sea Act 1992 grants “all rights of suit under the contract of carriage” to the lawful holder of a bill of lading, or to the consignee under a sea waybill or a ship’s delivery order.

A bill of lading must be transferable, and serves three main functions:

• It is a conclusive receipt, i.e., an acknowledgement that the goods have been loaded
• It contains or evidences the terms of the contract of carriage
• It serves as a document of title to the goods, subject to the nemo dat rule.