Shipper’s Letter of Instruction: Importance in Global Shipping

Have you ever wondered what would happen if a ship transporting an international shipment were to sail without a detailed set of instructions? The chances of reaching the intended destination would be slim. It would also be fraught with potential errors and delays. 

That’s why you need the Shipper’s Letter of Instruction (SLI). It acts as formal documentation between the shipper and the freight forwarder (or a logistics partner), ensuring that shipments are handled and transported correctly and efficiently. However, the SLI is more than a set of transportation instructions. What makes it so important, anyway? 

Let’s find out how this essential document works, discover its significance in the shipping process, and the steps to fill it out.

Shipper’s Letter of Instruction: Understanding the Basics

A Shipper’s Letter of Instruction (SLI) is also known as a shipper’s export declaration. Filed and issued by an exporter, SLI is issued to logistics partners who handle the movement of goods on behalf of an exporter. For example, a freight forwarder is a logistics partner. SLI is an important document that conveys transportation and other instructions to the logistics partner. The logistics partner needs the shipper’s letter of instruction to arrange transportation for goods. It also enables them to file custom-related documents. 

Since SLI lists the shipping terms, it enables the transport company to issue a bill of lading (BOL) or an airway bill (AWB). It’s done on the behalf of the exporter. The SLI also contains important information for the carrier. This information enables the carrier to effectively load, handle, store, and unload the shipment. In the end, it prevents any physical damage to the products. 

SLI also enables logistics partners to file Electronic Export Information (EEI) and send it to the Automated Export System (AES), facilitating export control. 

The Crucial Role of the Shipper’s Letter of Instruction

All exports require the shipper’s letter of instruction. However, it’s not a legally binding or mandatory requirement. Its requirements can vary from one country to another based on foreign trade regulations and other factors. It enables freight forwarders and exporter’s agents to act as authorised agents of the shipment. If there are any queries or actions required regarding customs, insurance, and post carriers, they are communicated directly to the freight forwarder. Eventually, the freight forwarder becomes responsible for the shipment when it’s in transit from the country of origin to its final destination.

Delegating authority to the exporter’s agent or the freight forwarder to act on behalf of the exporter is one of the most important roles of the shipper’s letter of instruction. Unless the logistics partner has the SLI, they will not be aware of the shipment details. It will lead to challenges during the customs process, delaying the shipment. 

Structure and Layout of Shipper’s Letter of Instruction

The original format of the SLI enabled exporters to list all transportation instructions to the freight forwarder. However, some exporters add further instructions on special delivery location (SDL) to the freight forwarder. Here’s the layout and structure of the traditional SLI:

• Name, address, and exporter identification number (EIN) of the exporter
• Validated export license number
• Details of handling and packaging requirements of the shipment
• Point of origin and the final destination of the shipment
• Detailed descriptions of the goods, including quantity, value, and weight

It also contains details of the following parties:

• Forwarding agent: They are responsible for handling and organising the shipment and related processes on the exporter’s behalf. 
• Inland carrier: It’s a transportation line that’s responsible for carrying the shipment between inland points and ports.
• Intermediate consignee: They act as an agent responsible for delivering the shipment to the importer or customer. 
• Ultimate consignee: In simple terms, they are the customer or the end-user of the product.

Filling Out the Shipper’s Letter of Instruction: Step-by-Step Process

An exporter is responsible for filing and issuing the shipper’s letter of instruction. You can do so once the logistics partner has been finalised. Let’s find out how you can fill out the shipper’s letter of instruction.

• Step 1: Before you fill out the SLI, make sure you have accurate and up-to-date information about the shipper and the receiver of the consignment; the exporter and the importer, respectively.
• Step 2: Next, if both the receiver and the shipper are working with a particular logistics partner, the complete details must be mentioned in the ‘notify’ section of the SLI. 
• Step 3: You should also include the details about the quote of the logistics partner, the port of destination, and transportation.
• Step 4: Once you have completed the above steps, you can add any special instructions. These specific instructions can mention whether the cargo is non-stackable, if it needs to be shipped in a particular way, etc.
• Step 5: Lastly, you can add your signature and the date on which the SLI was issued. This is the final part of the shipper’s letter of instruction. 

Conclusion

Understanding the use of a shipper’s letter of instruction can significantly streamline your shipping operations. By carefully detailing all necessary instructions and requirements in the SLI, you can ensure that the freight forwarders handle your shipments with precision and care.

It not only minimises the risk of errors and delays but also creates a more efficient and compliant shipping process. The global trade will continue to expand, making the role of the SLI increasingly important. It’s essential for maintaining clear communication and operational excellence in international logistics.