The International Trade Blog Export Compliance
10 Steps for Correctly Completing a Shipper’s Letter of Instruction
On: July 19, 2023 | By: David Noah | 6 min. read
Because it has some unique aspects, the Shipper’s Letter of Instruction (SLI) is one exporting form some exporters can be reluctant to use—but they shouldn’t be!
In this post we’ll cover the importance of correctly completing an SLI and outline the 10 steps required to do so.
The Importance of Correctly Completing a Shipper’s Letter of Instruction
SED vs. SLI in NCBFAA Format
Exporters used to fill out a paper Shipper’s Export Declaration (SED), which was often used as a quasi-SLI and given to the freight forwarder. This way of doing things is long gone!
If you are still using an SED, please stop using it immediately. The SED doesn’t include all the data fields required under the current Foreign Trade Regulations (FTR), and the forwarder must contact you for the additional details that are required as part of the electronic export information (EEI) filing. This means your shipment will be delayed!
The better way? The National Customs Broker and Forwarders Association of America (NCBFAA) issued an SLI form that includes the level of detail required to file through AES, including the additional data fields required by changes to the FTR that went into effect in 2014 and, more recently, in 2022. You can download a free Shipper’s Letter of Instruction form in the NCBFAA format right here.
Why You Should Complete an SLI
The purpose of the SLI is right in its name; it allows an exporter to provide instructions for the shipment to their freight forwarder. It includes the details the forwarder needs to make sure your goods arrive in the right place and at the right time. And it provides a record of the information that the exporter provided.
With an SLI in the NCBFAA format, it also provides a forwarder with all the necessary data to complete an AES filing. And it allows exporters to check a box granting the forwarder a limited Power of Attorney statement to do that filing.
Even in a routed export transaction where the buyer, referred to in the FTR as the Foreign Principal Party in Interest (FPPI), selects the freight forwarder and chooses who will do the EEI filing when required, the SLI is important because it provides the 10 data elements the exporter (also known as the U.S. Principal Party in Interest or USPPI) is required to provide.
How to Correctly Complete the Shipper’s Letter of Instruction
Here are the things you need to identify in order to correctly complete your SLI:
1. How the goods are shipping.
This includes the method of transportation, freight location, carriers, point of origin, and the ultimate destination. You should also identify whether or not the goods should be shipped directly or consolidated with other freight, which may reduce the cost of the shipping.
2. The correct contact information on your SLI.
This includes accurate information for the name and contact information of the freight forwarder, exporter/USPPI, ultimate consignee and intermediate consignee.
3. Who’s filing through AES.
Whether you or your freight forwarder files the electronic export information (EEI) through AESDirect is your decision; however, I strongly suggest you do it. Why? Because you can outsource the responsibility for your AES filings, but not the liability. If you do choose to have someone else file for you, you should always request a copy of the AES filing from your forwarder to confirm its accuracy. Regardless of who's doing the filing, your company should regularly run reports of all AES filings using your company's tax ID number.
4. Who’s selecting the freight forwarder.
In a standard export transaction, the seller of the goods arranges the transport of the merchandise out of the country. However, in a routed export transaction, the foreign buyer of the goods contracts with a freight forwarder or other agent to export the merchandise from the United States. This impacts who is required to file EEI through AES when required by the FTR, although the buyer can also grant permission to the USPPI to do the EEI filing (see #3 above).
5. The Incoterm you’re using.
The Incoterm you choose may affect some of the requirements for shipping your goods, those requirements may be identified on your SLI (see #4 above).
6. The proper classification of your product.
Your SLI will include components created using the following information:
- The appropriate Schedule B number;
- The appropriate Schedule B description of commodities;
- The appropriate quantity and unit of measure;
- The appropriate export control classification number (ECCN) or U.S. Munitions List (USML) category number if there is one.
7. Whether or not your product requires an export license.
Before exporting your goods, you must ensure compliance information is transmitted to U.S. Customs and Border Protection (CBP) on your behalf, including information about export licensing. Your SLI needs to provide that information. You can learn more about how to determine if you need an export license in our free whitepaper.
8. The pickup location of the freight.
If the location of your freight is different than the address of the U.S. Principal Party in Interest, the name and address of the pick-up location are imperative and should be indicated on your SLI.
9. The value of your goods.
At first glance, this seems rather straightforward. Most of the time, the selling price of the goods is the same as the value of the goods. However, the FTR indicates the value of the goods that is to be reported through AESDirect is the value of the goods plus the cost of moving the goods to the port of export. This may include freight, handling, insurance and any other expenses you incur.
10. Whether or not your goods are hazardous.
The answer to this question will impact how you ship your goods, and thus complete your SLI. To learn more about the basics of shipping hazardous materials and dangerous goods, check out our free webinar: An Introduction to Shipping Dangerous Goods.
The Best Method for Completing an SLI
Using the right version of the SLI isn’t helpful if you are entering the wrong information. Shipping Solutions export software guides you through the process of completing an SLI along with all the other export documents you may need. And it does it efficiently, so you never have to enter the same information over and over again as you complete the various forms.
With Shipping Solutions database, you can store the information about your customers and products so you don’t have to look it up every time you complete a form. Plus, the information fills automatically for products and pricing, helping ensure the accuracy of your documents. The less data entry you have to do, the fewer problems you’ll likely run into.
To see how it works, check out this video: How to Complete a Shipper's Letter of Instruction.
- 5 Reasons You Need a Shipper’s Letter of Instruction for Your Exports
- Providing AES Information to Your Freight Forwarder
- Understanding U.S. Principal Party in Interest (USPPI)
If you’re looking for a faster and easier way to create accurate export forms including a Shipper’s Letter of Instruction, register for a free online demo of the software so we can show you how it works and answer any questions you might have.
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This article was first published in March 2019 and has been updated to include current information, links and formatting.
About the Author: David Noah
David Noah is the founder and president of Shipping Solutions, a software company that develops and sells export documentation and compliance software targeted at U.S. companies that export. David is a frequent speaker on export documentation and compliance issues and has published several articles on the topic.