Shipping Solutions has been helping exporters create export documents for more than two decades, and when it comes to preparing export paperwork, the Shipper’s Letter of Instruction (SLI) is one document many exporters are inexplicably reluctant to prepare. They shouldn’t be.
An SLI is one of the 12 most important export documents. It provides instructions to the freight forwarder about the shipment, and it often includes a limited Power of Attorney statement that gives the forwarder authority to sign documents—and perhaps submit the Electronic Export Information (EEI) through the Automated Export System (AES)—on behalf of the exporter.
By completing an SLI and sending it to the freight forwarder, you are establishing a best practice for your company. You create a written record of who received the shipping documents, who to contact with questions, who to contact for proof of export, and who issued the export control documentation that supports the decision to ship your products to your foreign customer.
The exporter—referred to as the U.S. Principal Party in Interest (USPPI) in the Foreign Trade Regulations (FTR)—should have a written record of the instructions provided to the freight forwarder. The SLI documents what you asked the forwarder to do and helps avoid confusion if questions come up later.
The SLI acts as your request for documents prepared by the freight forwarder, including the EEI filing confirmation or extract, export control documents, and the international bill of lading. It also helps make clear who should receive copies of those documents once they are complete.
When EEI must be filed through the Automated Export System (AES), the freight forwarder needs specific data elements from the exporter. A well-prepared SLI collects those details in one place so the forwarder—or your internal AES filer—has the information needed to complete the filing.
If you are authorized to give the freight forwarder written power of attorney or other written authorization, the SLI can include that language along with a signature line. This is especially useful when the forwarder is preparing documents or filing EEI on behalf of the USPPI.
The SLI format you use can be modified to include additional data, instructions or internal compliance steps. That flexibility allows your team to capture the information your company needs while still giving the freight forwarder clear shipment instructions.
The National Customs Brokers and Forwarders Association of America (NCBFAA) offers an SLI model exporters can use as a starting point for creating their own company-specific form. The model focuses on the export compliance data needed for EEI reporting, including export control authority, ECCN when applicable, license exception or exemption, NLR, and other line-item details.
Click on the image to the right to download a free PDF version of the NCBFAA SLI template.
If you're creating the form on your own, download this free checklist to make sure you're including all of the necessary information on your SLI.
Believe it or not, there are still some exporters who use the old Shipper's Export Declaration (SED) as their SLI. The Foreign Trade Regulations retired the SED way back in 2014 when they replaced it with the EEI filing requirement through AESDirect. At the time, the U.S. Census Bureau claimed that more than half the paper SED filings contained errors.
An old SED-style form may not collect all the information a forwarder needs today, especially export control data, routed transaction details, license authorization, and line-item information. If your forwarder has to come back to you for missing information, your shipment may be delayed—and your compliance record may be weaker than it needs to be.
In a non-routed export transaction, the USPPI either files the EEI or authorizes a U.S. agent, typically the freight forwarder, to file through AES. In that situation, the SLI can document both the shipment instructions and the authorization to file.
In a routed export transaction, the foreign buyer, or Foreign Principal Party in Interest (FPPI), authorizes a U.S agent to arrange export transportation. Unless the FPPI is physically located in the United States and has an EIN or DUN number, they must provide written authorization to someone located in the United States to do the EEI filing. Even when the USPPI does not file the EEI, the FTR requires the USPPI to supply accurate data to the authorized agent for the filing, and it's best practice to do this using an SLI that follows the NCBFAA format.
Hopefully, you’re convinced that the Shipper’s Letter of Instruction deserves a place in your export documentation process. It gives your freight forwarder clear instructions, supports accurate EEI filing, and creates a written record that can help protect your company if questions arise later.
For more detailed guidance, read our article: 10 Steps for Correctly Completing a Shipper’s Letter of Instruction.
And if you’d like to simplify the process, Shipping Solutions can help. Our export documentation software makes it easy to create an SLI along with your commercial invoice, packing list, certificate of origin and other required export documents—using the same shipment data so you don’t have to retype information or worry about inconsistent forms.
I'd love to show you how it works!
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This is an updated version of an article that was first written by Catherine J. Petersen and published in October 2014. It has been revised to include current information, links and formatting.