A typical export shipment from the United States involves approximately 40 steps that are carried out by 11 separate entities. The following is an outline of an export shipment going by sea using a confirmed irrevocable letter of credit as the method of payment. This is followed by a list of the entities involved and their individual responsibilities.
1. The buyer requests a quotation from the supplier/seller.
2. The seller responds by sending a pro forma invoice. The buyer uses the pro forma invoice to apply to its bank for a letter of credit.
3. The buyer/consignee's bank issues the letter of credit.
4. A purchase order and the letter of credit are sent to the shipper.
5. Shipper issues instructions to the freight forwarder for shipping the goods.
6. The freight forwarder books space with an ocean carrier (and inland carrier if requested by the shipper). When the booking is made, the carrier assigns a booking number which is used to identify the shipment.
7. The freight forwarder prepares and submits a bill of lading master and a shippers export declaration which are sent to the ocean carrier.
8. The shipper's freight forwarder transmits the inland bill of lading and delivery instructions to the selected inland carrier, a truck, rail, or barge line.
9. The inland carrier picks up the cargo at the specified location and issues a cargo receipt to the shipper.
10. The cargo is delivered, along with a set of prepared dock receipts, to the out-bound pier terminal.
11. After taking delivery of the cargo, the outbound terminal gives a signed copy of the dock receipt to the inland carrier.
12. A copy of the dock receipt is also sent to the ocean carrier's office.
13. The ocean carrier's office matches the dock receipt with the booking number; it prepares a loading stowage plan.
14. The cargo is lifted aboard and stowed on the vessel, according to the stowage plan.
15. After the cargo has been loaded, the terminal sends the bills for stevedoring and wharfage to the outbound carrier's office.
16. Outbound carrier's office issues an ocean bill of lading with on-board certification, when required, to the shipper's freight forwarder. This bill of lading is a negotiable instrument and acts as title to the goods.
17. Upon receipt of the due bills from the outbound carrier's office, the shipper's freight forwarder pays the amounts due (if prepaid).
18. If the terms of sale indicate that the shipper is responsible for all transportation costs, and the shipper has not already prepaid, then the freight forwarder collects payment from the shipper in exchange for the transportation documents.
19. Shipper submits a commercial set--the documents required for collection of payment as stated in the letter of credit--typically a negotiable bill of lading, an invoice and insurance certificate, and a customs invoice, if necessary--to the bank.
20. The bank carefully reviews the documents in the commercial set to guarantee that there are no discrepancies. After acceptance of the commercial set, the bank pays the shipper in accordance with the letter of credit issued by the buyer's bank.
21. The shipper's bank transmits the commercial set and a debit invoice to the consignee's bank.
22. A non-negotiable copy of the bill of lading is sent to the consignee as notification that the cargo has been shipped.
23. After the vessel has sailed, the manifest, freight bills (if sent freight due), delivery receipts, container list, and arrival notice are sent to the carrier's overseas office.
24. Within 4 working days of the vessel's clearance, U.S. Customs receives a non-negotiable bill of lading copy with the shipper's export declaration.
25. Copies of the manifest are provided to the inbound pier terminal.
26. The consignee's bank releases the commercial set to the consignee against payment of the invoice amount.
27. Before the ship's arrival, the carrier's overseas office issues an arrival notice and invoice covering the ocean freight and other charges due if freight charges are for the buyer's account.
28. The buyer sends the commercial set, arrival notice and invoice, and forwarding instructions to its customs broker.
29. The customs broker presents the endorsed negotiable bill of lading to the inbound carrier's office as proof of title to the goods, and pays the ocean freight (if freight charges are for the buyer's account).
30. Upon receipt of freight due (if a collect shipment) and the negotiable bill of lading, the carrier releases the cargo to the customs broker.
31. At the same time, the carrier's office notifies the inbound pier terminal that the consignee's cargo may be released.
32. The consignee's customs broker submits to the local customs office the proper documents and duties due for clearance in accord with local regulations.
33. The customs office reviews the documents and may elect to inspect the shipment. Once it is satisfied that the shipment is in compliance with the laws, the customs office authorizes the release of the cargo to the customs broker.
34. In the case when the release is not effected at the berth, the customs office notifies its inspector at the inbound pier terminal that the cargo may be released.
35. Customs broker issues a delivery order to the inbound pier terminal authorizing delivery of the cargo to the designated inland carrier.
36. Consignee's customs broker issues an inland bill of lading to the selected inland carrier.
37. The inland carrier picks up the cargo at the inbound pier terminal.
38. Cargo is delivered to the buyer.
39. The inland carrier issues a freight bill to the consignee's customs broker.
40. With the shipment having been completed, the consignee's customs broker issues a bill to the consignee covering ocean freight, terminal charges (if these bills are charged to the buyer's account), inland freight, and fees for the customs broker's services.
USDA's Transportation and Marketing has produced a video, A Business of Details--Exporting High Value U.S. Agricultural Products, which follows an agricultural shipment from the farm to an overseas market. This video demonstrates the information covered in this section. (You can order a free copy of the video from T&M by calling (202) 690-1304.)
* Denotes tasks that can also be handled by the freight forwarder.
** Denotes tasks that the shipper can also perform.
*** This information can be supplied by either the shipper or the freight forwarder, whoever made the arrangements for inland transportation.
2. Source: Sea-Land Service, Inc.
3. Source: Sea-land Service, Inc., and the Port Authority of New York and New Jersey