Shipper’s Letter of Instruction (SLI)

A Shipper’s Letter of Instruction (SLI) is a document in international freight forwarding that provides detailed guidance to freight forwarders about handling a specific shipment. This comprehensive set of instructions outlines everything from the basics of the shipment to specific handling requirements, ensuring that cargo moves smoothly through the complex logistics chain from origin to destination.

The SLI serves as a vital communication tool between the exporter and the freight forwarder, conveying essential information that helps streamline the shipping process, prevent misunderstandings, and ensure compliance with international trade regulations. By providing clear and detailed instructions, the SLI helps minimize the risk of errors, delays, and additional costs in the shipping process.

 

Frequently Asked Questions

The following are answers to some of the most frequently asked questions regarding the Shipper’s Letter of Instruction (SLI) in international shipping.

 

What Information Is Typically Included in a Shipper’s Letter of Instruction (SLI)?

The content can vary depending on the specific needs of the exporter, the requirements of the freight forwarder, and the nature of the shipment. However, most SLIs typically include several key elements. The following list represents common information found in many SLIs, but it’s not exhaustive, and not all items may be present in every SLI:

  • Exporter and consignee details
  • Forwarding agent’s details
  • Ports of origin and destination
  • Mode of transportation
  • Shipping method
  • Cargo details
  • Description of goods
  • HS codes
  • Hazardous materials information (if applicable)
  • Cargo insurance requirements
  • Incoterms
  • Special handling instructions
  • Customs clearance instructions
  • Required shipping documents
  • Authorization for Electronic Export Information (EEI) filing
  • Date and authentication

While this list covers many common elements, exporters and freight forwarders may add or remove fields based on their specific requirements and the particulars of each shipment.

 

Who Prepares the Shipper’s Letter of Instruction (SLI)?

In international freight shipping, the Shipper’s Letter of Instruction (SLI) is typically prepared by the exporter or the seller of the goods. This document serves as a detailed guide for the freight forwarder, outlining specific instructions on how to handle and transport the shipment. The exporter includes crucial information such as contact details of all parties involved (exporter, consignee, intermediate consignee, and forwarding agent), product descriptions, weight, and handling requirements. This ensures that the freight forwarder can accurately and efficiently manage the shipment according to the shipper’s specifications.

 

 

What is the Importance of the Shipper’s Letter of Instruction (SLI) for International Shipping?

The Shipper’s Letter of Instruction (SLI) plays an important role in the international shipping process for several reasons. First and foremost, it serves as a comprehensive communication tool between the exporter and the freight forwarder, ensuring that all parties involved in the shipping process have a clear understanding of the shipment’s requirements and specifications.

Many details included in the SLI are also useful during the customs clearance process. By providing accurate information about the goods, their value, and their origin, the SLI helps ensure compliance with customs regulations and can help prevent delays or penalties.

By clearly stating special handling requirements or hazardous materials information, the SLI helps mitigate risks associated with the transportation of goods. This can prevent damage to the cargo and ensure the safety of those handling the shipment.

A well-prepared SLI can significantly streamline the shipping process. It provides the freight forwarder with all the necessary information upfront, reducing the need for back-and-forth communication and potential delays. In case of disputes or issues with the shipment, the SLI serves as a legal document that outlines the agreed-upon terms and instructions.

 

How Do Digital Freight Forwarders Use the Shipper’s Letter of Instruction?

Digital freight forwarders utilize the Shipper’s Letter of Instruction to streamline the shipping process in a number of ways. They use automated data entry systems to extract data from the SLI and populate it into various systems and documents, reducing manual data entry and the potential for errors.

The detailed instructions in the SLI allow digital freight forwarders to efficiently coordinate with various parties involved in the shipping process, from carriers to customs brokers. 

With comprehensive information about the shipment, some digital freight forwarders may be able to anticipate potential issues and take proactive measures to prevent delays or complications. 

Additionally, forwarders may also use the information in the SLI to provide shippers with advanced tracking and updates throughout the shipping process.

 

What Is the Difference Between a Shipper’s Letter of Instruction (SLI) and a Commercial Invoice?

The Shipper’s Letter of Instruction (SLI) and the commercial invoice serve distinct roles in the international shipping process. The SLI is an internal document used by exporters to provide detailed instructions to freight forwarders. It includes information such as routing, handling requirements, and special instructions to ensure the shipment is managed correctly. The SLI also often grants the freight forwarder limited power of attorney to act on behalf of the exporter for customs and export control purposes, facilitating smoother handling and compliance.

In contrast, the commercial invoice is a crucial document for customs clearance and external validation of the sale transaction between the buyer and the seller. It’s important to note that there may be some overlap between the two documents, but their intentions are different. The commercial invoice lists the goods being shipped, their value, and terms of sale. This document is essential for determining duties and taxes and must accompany the shipment to facilitate customs processes. It includes detailed information about the goods, such as quantity, price, total value, HS codes, and country of origin. While the SLI is not always mandatory, the commercial invoice is legally required for international shipments, making it indispensable for compliance and smooth customs clearance.

 

What Is the Difference Between a Shipper’s Letter of Instruction (SLI) and a Packing List?

In international shipping, the Shipper’s Letter of Instruction (SLI) and the packing list each play distinct and crucial roles. The SLI is used by exporters to provide specific instructions to freight forwarders, covering details like routing, handling requirements, and special instructions.

The primary function of the SLI is to ensure that the shipment is managed correctly and adheres to the exporter’s specifications, thereby facilitating smoother operations and compliance.

Conversely, the packing list is a document that itemizes the contents of a shipment. It includes detailed descriptions of the goods, their quantities, weights, dimensions, and packaging specifics. This list is essential for customs officials, who use it to examine the contents of the shipment and ensure that everything matches the accompanying documentation. Additionally, the packing list aids in inventory management for both the buyer and the freight forwarder by providing a clear breakdown of all shipped items.

While the SLI focuses on giving instructions to the freight forwarder, the packing list serves as a detailed inventory that ensures accurate and transparent customs clearance and inventory checks. Both documents are indispensable for efficient and compliant international shipping, but they fulfill different needs within the shipping process.

 

What Are the Consequences of Errors in the Shipper’s Letter of Instruction (SLI)?

Mistakes in the Shipper’s Letter of Instruction can have significant consequences, potentially leading to delays, additional costs, and compliance issues. Inaccurate or incomplete information can lead to hold-ups at customs, potentially resulting in demurrage or detention charges.

Incorrect shipping instructions could cause the cargo to be sent to the wrong destination, leading to delays and additional transportation costs. Errors in declaring goods or their value could result in fines or penalties for non-compliance with customs regulations.

If special handling instructions are incorrect or omitted, the goods could be damaged during transit. Inaccurate valuation of goods could result in under-insurance, leaving the shipper exposed to financial risk in case of loss or damage.

To minimize these risks, shippers and exporters are advised to double-check all information on their SLI before submission. 

 

How Does the Shipper’s Letter of Instruction (SLI) Impact Supply Chain Efficiency?

A clear and concise Shipper’s Letter of Instruction (SLI) acts as a roadmap for efficient B2B shipments. By providing upfront details, the SLI helps minimize communication delays and ensures that all parties are aligned. This transparency allows freight forwarders to optimize resource allocation for transportation and warehousing based on factors like shipment size and handling needs. 

Additionally, the availability of accurate customs-related information in the SLI facilitates faster clearance, keeping the flow of goods smooth. Furthermore, referencing Incoterms within the SLI clarifies roles and responsibilities, preventing disputes and ensuring seamless handovers between supply chain stages.

It’s important to remember, however, that the SLI’s impact is primarily on individual shipments.

 

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