The Shipper’s Letter of Instruction (SLI) is the primary set of instructions an exporter provides to their chosen freight forwarder. This document dictates how the goods must be handled, transported, and documented for successful international transit. The SLI initiates the logistics process and ensures the forwarder understands the shipper’s specific requirements before the cargo moves.
Defining the Shipper’s Letter of Instruction
The Shipper’s Letter of Instruction is a formal document created by the exporter. It authorizes the designated freight forwarder to act on the shipper’s behalf, allowing the forwarder to take possession of the cargo and begin processing the shipment.
The instructions within the SLI enable the forwarder to prepare all necessary export documentation, including the Bill of Lading. By signing the SLI, the shipper confirms the accuracy of the information and authorizes the forwarder to interface with carriers, customs agencies, and other third parties. This declaration establishes the legal relationship and delegation of responsibility between the two parties for the movement of the goods.
The Purpose of the SLI in Logistics
The main function of the SLI is to ensure accurate communication between the exporter and the logistics provider. Consolidating all shipment details into a standardized format minimizes the potential for errors that could delay or misdirect the cargo. Providing detailed instructions upfront allows the freight forwarder to proactively address regulatory or handling issues before the shipment leaves the origin facility.
The SLI serves as the source data for generating legal documents, such as the Bill of Lading or the Air Waybill. Using the SLI reduces the risk of discrepancies that could lead to customs penalties. The document also records the shipper’s specific demands regarding routing, carrier preference, and special handling requirements, ensuring the forwarder adheres to the exporter’s commercial interests and contractual obligations.
Essential Information Contained in an SLI
The SLI requires the inclusion of several distinct categories of data to ensure the smooth execution of the export process. This information provides the freight forwarder with the necessary context to book space, prepare documentation, and satisfy all governmental requirements. The quality of the SLI directly impacts the efficiency and legality of the entire logistics operation.
Shipper and Consignee Details
This section requires the full legal name, physical address, and contact information for both the shipper and the consignee. The shipper’s identification number, such as an IRS Employer Identification Number (EIN), is necessary for customs filings and regulatory compliance. Accurate consignee details are needed to generate the Bill of Lading and ensure the shipment is directed to the correct party for final delivery and customs clearance.
Cargo Details and Weight
The forwarder needs precise measurements and counts to book appropriate space and calculate freight charges. This information includes the total number of pieces, the exact dimensions of the packages, and the gross and net weight of the cargo. The SLI must also include a clear description of the goods, which is often tied to the Harmonized Tariff Schedule (HTS) number, necessary for customs classification. Providing these specifications allows the forwarder to secure the correct equipment and plan for safe loading.
Export Control and Licensing Information
This section addresses legal compliance requirements, especially for goods with potential military or dual-use applications. The shipper must specify regulatory identifiers, such as the Export Control Classification Number (ECCN), which determines governmental scrutiny. If the shipment requires a specific export license due to the product, destination, or end-user, the license number and expiration date must be provided. This declaration serves as evidence that the shipper has performed due diligence concerning national security and trade regulations.
Routing and Service Instructions
The SLI directs the forwarder on the preferred method of transport, including the specific carrier or steamship line, and the required ports of loading and discharge. It also includes time-sensitive information, such as the required departure date or the latest acceptable arrival date. Special handling notes, such as temperature control requirements, hazardous material declarations, or requirements for specialized container types, are recorded here. These instructions ensure the forwarder selects a service that meets the shipper’s commercial timeline and cargo integrity needs.
Insurance Instructions
This portion clarifies the shipper’s requirements regarding insurance coverage during transit. The shipper must indicate whether they have purchased their own coverage or if they require the freight forwarder to procure cargo insurance. If the forwarder arranges the insurance, the declared value of the goods and the specific risks to be covered must be noted. This instruction protects the shipper’s financial interest in the event of loss or damage.
Terms of Sale (Incoterms)
The Incoterm selected for the transaction must be explicitly stated in the SLI, as this term defines the allocation of costs and risks between the seller and the buyer. For example, FOB (Free On Board) dictates that the seller is responsible for costs up to the port of loading. The freight forwarder relies on the Incoterm to determine which party is responsible for paying freight charges, insurance premiums, and customs duties. This detail is fundamental for accurate billing and customs declaration.
The Role of the SLI in the Shipping Process
The SLI is typically delivered to the freight forwarder before the cargo is prepared for pickup, serving as the initial trigger for the export process. Once received, the forwarder uses the information to reserve space with the carrier and begin pre-shipment regulatory compliance. The data from the SLI is input into the forwarder’s system, which populates the necessary documents required by carriers and government agencies.
The information is directly used to generate the Bill of Lading, which is the contract between the shipper and the carrier. The forwarder also uses the SLI to file the mandatory export declaration with the government, ensuring trade statistics are correctly recorded. Because the SLI contains the shipper’s official declaration, it serves as the foundation for all subsequent export documentation.
SLI Versus Other Key Shipping Documents
The SLI must be distinguished from two other important documents: the Bill of Lading (B/L) and the Commercial Invoice. The SLI is an instruction and authorization document, acting as an internal communication tool between the shipper and their logistics agent. It is not a financial instrument or a contract of carriage, but the blueprint for the shipment’s execution. The forwarder uses the data within the SLI to create the necessary external documents.
The Bill of Lading is the legally binding contract of carriage between the shipper and the transportation company, serving as a receipt for the goods and often as a document of title. The Commercial Invoice is a document for valuation and payment, used by customs authorities to assess duties and taxes. The SLI provides the logistics details, while the Commercial Invoice provides the financial details.
Legal and Compliance Importance
The SLI holds weight in matters of legal compliance, particularly concerning export control regulations. By signing the SLI, the shipper takes responsibility for the accuracy and completeness of the information. This affirms that the shipper has exercised due diligence in verifying the end-use and end-user of the exported items. This declaration is the primary evidence that the shipper has complied with regulations designed to prevent the unauthorized transfer of sensitive technology or goods.
If a shipment contains misdeclared cargo or restricted goods shipped without necessary licenses, the SLI is used to determine liability. The shipper, having provided the initial instructions, is held accountable for fines or penalties resulting from inaccurate or false declarations. The SLI is a legally binding certification that places the burden of regulatory accuracy squarely on the exporter.