The Shipper’s Letter of Instruction (SLI) is a foundational document in international freight forwarding and exporting. It serves as the primary method for the shipper to communicate detailed instructions about a shipment to the logistics provider managing the transport. The SLI ensures that the cargo moves from its origin to its final destination with appropriate handling and regulatory compliance.
Defining the Shipper’s Letter of Instruction
The SLI is a document created by the exporter or shipper that provides comprehensive direction to the freight forwarder or carrier regarding the movement and documentation of goods. It is an internal, non-negotiable document that formally authorizes and instructs the forwarder on how to execute the shipment. The letter contains specific details about the cargo, required services, and the intended final destination. The SLI itself does not constitute a contract of carriage or a transport document.
The Purpose of the SLI
The function of the SLI is to facilitate clear communication between the shipper and the logistics provider. This instruction set ensures the forwarder possesses all necessary data to manage the logistics chain effectively, from booking cargo space to final delivery. The document guides the forwarder in executing the shipment exactly as the exporter intends, covering routing and handling specifications. Submitting a complete and accurate SLI minimizes the potential for errors, delays, and miscommunication, streamlining the export operation.
Essential Components of the SLI
Shipper and Consignee Information
The SLI must identify all parties involved in the transaction, including the exporter and the ultimate recipient. This section requires the full legal name, physical address, and contact details for both the shipper and the consignee. Accurate contact information is necessary for the forwarder to manage administrative queries and ensure the correct party receives notifications throughout transit.
Cargo Details and Handling Instructions
Detailed information about the physical shipment is included to ensure proper handling and appropriate booking of space. This data includes the total count of packages, the gross weight, the dimensions of the cargo, and a description of the commodity. Exporters must also note any specific requirements, such as temperature control needs, whether the cargo is hazardous, or if special stowage is necessary for fragile items.
Export Control and Compliance Data
Compliance-related details are a mandatory component, allowing the forwarder to meet governmental reporting requirements. This section must include the Harmonized Tariff Schedule (HTS) code for the goods, the country of origin, and the declared commercial value of the shipment. Providing accurate export control information is necessary for government agencies to track and regulate international trade.
Transportation and Routing Details
The shipper uses the SLI to specify preferences for the cargo’s journey. Instructions include the preferred mode of transport (e.g., ocean or air freight) and the specific carrier. The SLI covers the port of loading, the port of discharge, and the required departure or delivery dates. Details regarding freight payment terms, often codified through Incoterms, are specified to clarify who is responsible for the costs of transport.
Documentation Requirements
This component instructs the freight forwarder on the specific documents they need to prepare and distribute. The shipper specifies which documents are needed beyond the standard transport documents, such as a Certificate of Origin or a specific number of original Bills of Lading. This ensures the exporter receives the necessary paperwork for financial settlements and import customs clearance at the destination.
Legal Authority and Power of Attorney
The SLI often contains language that functions as a grant of authority from the shipper to the freight forwarder. This authorization permits the forwarder to act as the shipper’s authorized agent for specific governmental tasks. This delegated authority is frequently structured as a Power of Attorney (POA), allowing the forwarder to sign documents and make filings on the shipper’s behalf.
For US exporters, this POA is relevant for complying with Foreign Trade Regulations. It authorizes the forwarder to prepare and transmit the Electronic Export Information (EEI) to the Automated Export System (AES). This process is mandatory for exports exceeding a certain value or those requiring an export license. Without the authority conferred by the SLI, the shipper would be directly responsible for all governmental filings and compliance.
SLI vs. Bill of Lading (B/L)
While both the SLI and the Bill of Lading (B/L) are foundational to shipping, they serve different roles in the export process. The SLI is an internal set of instructions and authorizations from the shipper to the forwarder, functioning purely as a communication tool. It is created early in the logistics process and contains the raw data for the shipment.
The Bill of Lading, in contrast, is a legal contract of carriage between the shipper and the carrier, a receipt for the goods, and often serves as a document of title, allowing the holder to claim the cargo. The forwarder uses the information provided in the SLI to accurately draft the B/L. The SLI is the source document, while the B/L is the legally binding transport document.
Consequences of Inaccurate SLI Information
Errors or omissions within the SLI can result in practical and financial risks for the exporter. Providing incorrect data, such as a misclassified HTS code or an inaccurate shipment value, can directly lead to customs penalties and fines for non-compliance with export regulations. These penalties often arise when the forwarder, relying on the SLI, incorrectly files the EEI/AES information.
Inaccurate consignee details or transportation instructions can cause the cargo to be misrouted or held up at the port, leading to delays and storage fees. If the declared value is incorrect, any cargo insurance arranged based on that SLI information may be inadequate, leaving the shipper financially exposed in the event of loss or damage. The burden of accuracy rests with the party who prepares the SLI.