Letters of Instruction
International Shipping Links
Shipper's Letters of Instruction
To successfully export, you should have a basic understanding of how each of the following shipping documents is completed, why it is needed, and how it is used. However, it is not necessary that you become an "export documentation expert". That is why you hire a forwarder who can process most documents at a reasonable cost.
With the exception of documents that you must sign and provide as the exporter, ask your forwarder to complete as many forms as they can on your behalf. You have more profitable things to do with your time than spend long hours filling out international shipping forms.
Purpose and Use of a Shipper's Letter of Instruction
The Shipper's Letter of Instructions is prepared by you. You send it to your forwarder and retain a copy for your records. A copy of the Shipper's Letter of Instruction becomes the Shipper's Export Declaration (SED), Form 7525-V.
The Shipper's Letter of Instructions is your written statement telling your forwarder how you want the shipment to be handled. You are granting permission to your forwarder to act as your authorized forwarding agent for U. S. export control and customs purposes.
The Shipper's Letter of Instruction is designed to avoid misunderstandings that can result in financial loss to you as the exporter - or to your freight forwarder. It is important that this document be absolutely accurate - especially when you consider the litigious society in which we live today.
Definition of the Terms in a Shipper's Letter of Instruction
|Pro Number||Trucker's Reference Number|
|Exporter EIN Number||Exporter's IRS Employer ID Number or Social Security Number|
|Point (State) of Origin or FTZ Number||Two-digit U. S. Postal Service or Free Trade Zone Code|
|Shipper's Reference Number||Shipper's invoice or purchase order number|
|ECCN||Export Classification Control Number|
|Shipper Requests Insurance||Amount of insurance requested by the exporter|
|Shipper's Instructions in Case of Inability to Deliver Consignment as Consigned||Return or not return shipment to the exporter if unable to deliver|
Sample Document - Shipper's Letter of Instruction
Warning Regarding Under-Invoicing the Value of Export Shipments
If you are asked by a foreign buyer to deliberately understate the value of the goods you are shipping to them, or to change the Harmonized Number on your commercial invoice, price quotation, or other export documents, refuse to do so! The advantage to under-invoicing is solely with the buyer who will pay lower import duties and taxes. However, if the shipment is lost, you will only be paid the artificially low insurance value on the commercial invoice.
It may appear that your cooperation with the foreign customer in under-invoicing is risk-free but it is not. If under-invoicing is discovered by local authorities, your foreign customer may face severe penalties - and your company's name may be forwarded to the U. S. Customs Authorities for "SPECIAL ATTENTION." In the United States, providing fraudulent information on a government document, including the Shipper's Export Declaration (SED), is punishable by significant fines, imprisonment, or both! Under-invoicing is simply not worth the risk!
For more detailed information on under-invoicing, refer to Rules of Customs Valuation of the World Trade Organization (WTO).