Shipper's letter of instruction against shipping instruction
The names are so similar that the documents get mixed up. But they go to different people and do different jobs. One appoints an agent. The other says what the transport document should say.
Send a shipper's letter of instruction to your freight forwarder. It covers the whole job and authorises them to complete customs formalities in your name. Send a shipping instruction to the carrier, or let your forwarder produce one, to say exactly how the bill of lading should read.
| Shipper's Letter of Instruction | Shipping Instruction | |
|---|---|---|
| Addressed to | Your freight forwarder. | The carrier or its agent. |
| Covers | The whole movement. | The transport document only. |
| Authority | Authorises the forwarder to act as your agent. | Confers no authority. |
| Produces | A booking, and a customs declaration. | The bill of lading. |
| Signed by | Someone able to appoint an agent. | Shipping desk. |
The authority clause is the real difference
A letter of instruction lets your forwarder sign customs declarations in your name. That is why the details have to be right. A wrong classification or value filed by your agent is treated as filed by you, and penalties go to the exporter, not the forwarder. Read what you are authorising before you sign it.
Unclear instructions get copied forward
The forwarder usually writes the shipping instruction from your letter of instruction. Anything vague in the first ends up in the second, and then on the bill of lading. Amending a bill of lading costs money before the vessel sails and much more afterwards. If the consignee box should read “to order of” rather than a named company, put that in the letter of instruction, not in a follow-up email.
The exporter's instructions to their freight forwarder, including the authority to act as agent for customs purposes.
Tells the carrier exactly how the bill of lading should read: parties, routing, cargo description and freight terms.
+Do I need both?
If you use a forwarder, you send the letter of instruction and they handle the shipping instruction. If you book directly with a carrier, you send the shipping instruction yourself, and there is no agent to appoint.
+Is a new one needed for every shipment?
The shipment details, yes. The authority to act is often given separately, as a standing power of attorney. In that case the document for each shipment is only instructions, not an appointment.
Try it with a real shipment.
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