Home » What is a Shipper’s Letter of Instruction?

What is a Shipper’s Letter of Instruction?

by | Apr 23, 2024 | Blog Post

You’ve just landed a significant order of 1500 handcrafted ceramic vases from a local artisan in Italy. Now comes the challenge: ensuring these delicate pieces navigate the complexities of international shipping and arrive safely at their destination. For any freight forwarder, a crucial document streamlines this process – the Shipper’s Letter of Instruction (SLI). It serves as a roadmap, detailing everything from the origin and destination to contents and special handling instructions to ensure safe delivery.

What is a Shipper’s Letter of Instruction?

Think of your SLI as the mission briefing for your freight forwarder. It provides detailed export shipment instructions for them to follow. Here’s a breakdown of key information typically included in an SLI:

Shipper and Consignee Details: This includes your company information, contact details, and the recipient’s address.

Forwarding Agent Details: If you’re partnering with a freight forwarder like Dimerco, list the contact information here.

Shipment Details: A clear description of the goods you’re shipping, including quantity, weight, dimensions and packaging type.

Export control Information (if applicable): For shipments subject to export controls, provide any necessary license or permits.

Freight Charges: Indicate who is responsible for transportation costs (you or the recipient).

Special Instructions: This section allows you to communicate any specific handling requirements, insurance needs, or additional documentation needed.

Authorized Signature: Only the shipper will need to sign the SLI.

Understanding SLI Templates

SLI templates vary in format and detail. While some focus on basic shipment information, others delve deeper to ensure compliance with export regulations. Regardless of the template you choose, providing as much detail as possible empowers your freight forwarder to handle your shipment efficiently and compliantly.

Here’s an expanded list of information you can consider including in your SLI shared by our U.S. Export Operations Manager. While some details may seem intricate at first, we’ll provide clear explanations to make the process easier to understand.

Ultimate Consignee Details: The final recipient of your exported goods located abroad. For shipments requiring an export license: The ultimate consignee should match the designated person on the license, or someone authorized under the applicable exemption following Export Administration Regulations (EAR) or International Traffic in Arms Regulations (ITAR).

Domestic or Foreign: This tells customs whether your goods originated in the US or elsewhere. It’s important to report this accurately, even if the classification number is the same.

Schedule B/HTS Number: This 10-digit code identifies your specific good according to a government classification system.

Commercial Commodity Description: A detailed description of your exported goods, acting as a fingerprint for customs officials to identify your shipment quickly and accurately.

DDTC Unit of Measure (UOM): Imagine this as the specific unit used to measure your controlled item as defined on your export license. It could be anything from square meters of fabric, pairs of shoes, watts of electrical power, and more.

DDTC Quantity: This refers to the exact number of items you’re shipping, following the unit of measure specified on your license.

ECCN, EAR99 or USML Category: This identifies the export control classification for your goods. Here’s a simplified explanation:

  • ECCN: This code applies to items on the Commerce Control List (CCL) and requires a license for certain destinations or uses.
  • EAR99: This applies to low-tech consumer goods generally not requiring a license unless specific restrictions apply (e.g., embargoed countries).
  • USML (United States Munitions List): This applies to items controlled by the Department of State for national security reasons.

Value at the Port of Export: This amount represents the total value of your goods as they reach the U.S. port of export. It includes the selling price (or cost if not sold) along with any inland freight charges, insurance costs, and other fees incurred to transport the goods to the port.

Please remember that this information is not meant to replace professional advice. Consult your freight forwarder for any questions regarding your specific shipment.

The Value and Benefits of an SLI

Shipping, whether domestic or international, can involve a multitude of details, especially for those who are new to the process. Navigating diverse regulations, customs procedures, and transportation options requires clear communication and organization. This is precisely why an SLI with complete and accurate information is a valuable tool for any shipment.

Standardization and Clarity: The SLI acts as a standardized document ensuring all parties involved (shipper, freight forwarder, customs) have access to the same critical information. This eliminates confusion and promotes a smooth flow of communication.

Reduced Risk of Errors and Delays: Missing or inaccurate information can lead to delays, rerouting or even penalties at various stages of the shipping process. For instance, imagine classifying high-tech drones as toy planes. This mismatch could trigger a hold by Customs Border Patrol (CBP) while they investigate the true nature of the goods. This can cause significant delays and potentially result in fines. The SLI minimizes the risk by providing a comprehensive overview of your shipment upfront.

Ensured Proper Handling: The SLI allows you to specify any special handling requirements your shipments may have. This is especially important for fragile items, hazardous materials (including dangerous goods), or temperature-sensitive goods. For example, shipping lithium batteries requires an accompanying MSDS (Material Safety Data Sheet). By clearly outlining these needs in your SLI, you can be confident that your freight forwarder will handle your shipment with the appropriate care.

Facilitated Customs Clearance: Customs authorities rely on accurate information to efficiently process incoming goods. A complete SLI provides all the details they need, such as product descriptions, value declarations and, harmonized systems (HS codes).

The Role of Power of Attorney

The SLI can act as a Power of Attorney for your freight forwarder. This means you can authorize them to handle certain tasks on your behalf, potentially including filing the Automated Export System (AES) for export control purposes.

However, it’s important to consider that not all SLI grant the same level of authorization. Always review the specific SLI with your chosen freight forwarder to understand what’s included. Most importantly, consulting your legal team is highly recommended to ensure your approach aligns with current export regulations.

While the SLI disclaimer might suffice for AES filing in some cases, using a separate POA document specifically for AES filing can offer additional clarity and organization. Here’s why a separate POA might be beneficial:

Clear Authorization: It explicitly clarifies the authorization for filing AES on your behalf. This avoids any potential ambiguity about the scope of the SLI disclaimer, ensuring everyone involved understands the specific permission granted to the freight forwarder.

Improved Organization: It separates the AES filing permissions from the broader functions outlined in the SLI form. This makes it easier to understand exactly what the freight forwarder is authorized to do on your behalf regarding the AES filing.

How to obtain a Shipper’s Letter of Instruction

Now that you understand the importance of an SLI, let’s navigate the process of completing and obtaining one.

From your freight forwarder: If you don’t have your own SLI template, most forwarders, like Dimerco can provide one. Here is an SLI template that you can immediately download and use.

Online templates: Generic SLI templates can be found online from various resources. While convenient, make sure the template is comprehensive and up-to-date.

The Pitfalls of Skipping an SLI

While a Shipper’s Letter of Instructions isn’t mandatory, it acts as a safety net for your shipments. Skipping this step can lead to a domino effect of problems, unraveling the smooth flow of your shipment. Here’s what you may potentially face without a clear and detailed SLI:

Customs Labyrinth: Customs clearance relies heavily on accurate information about your shipment. Missing details or inconsistencies in your SLI can trigger inspections and hold-up at customs. This not only delays your shipment but may also incur additional inspection fees.

Misdirected Cargo: Incorrect shipment details or missing information can lead to your cargo being routed to the wrong destination. This translates to wasted time, rectifying the error, additional transportation costs, and potentially upset customers waiting for their deliveries.

Damaged Goods: Without clear handling instructions specified in an SLI, your shipment may be left vulnerable during transport. Improper handling increases the risk of damage, and without a documented record of specific instructions, determining liability becomes a challenge.

By dedicating some time in creating a detailed SLI, you can navigate these potential pitfalls and ensure a smooth, efficient shipping experience. Again, think of your SLI as a roadmap for your shipment. It provides a documented record of key details and instructions of everyone involved, minimizing confusion and maximizing the chances of successful on-time delivery.

Ship Smarter, not Harder

Whether you’re navigating the complexities of international shipping or streamlining domestic deliveries, a clear SLI is key to your success. This important document ensures that everyone involved has a clear picture of your shipment’s details and requirements. By investing in a well-crafted SLI, you minimize delays, streamline the process, and gain peace of mind knowing your shipment is on track for a smooth journey.

Streamline your shipping with an SLI

Ready to take the guesswork out of shipping? Our team of experts is here to help. Contact Dimerco to discuss your specific shipping needs and ensure your SLI is clear, comprehensive, and sets your shipment up for success.