Shipper’s Letter of Instruction (SLI): Meaning, Importance, Format

Exporters in global trade have to present several documents to facilitate the smooth passage of their shipments across ports, customs, and international borders. A Shipper Letter of Instruction (SLI) is one such document that provides information on how and where to ship the products. The SLI is a very important document in directing the freight forwarders about the shipment procedure.

This blog explains about the Shippers letter of Instruction, why SLI is important in shipping, the major components of SLI, who is a freight forwarder, step by step guide for SLI, and the documents required by an exporter.

Shipper’s Letter of Instruction: What Does It Mean?

A Shipper Letter of Instruction (SLI) is a document prepared by an exporter (shipper) that provides detailed instructions to their freight forwarder or logistics provider.

The shipper letter of Instruction is issued to the forwarder and filed by an exporter to give clear instructions on how he or she (logistics partner or freight forwarder) should handle the shipment via transportation, what documents to prepare, and how the goods should be reported to customs.

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Why does the SLI matter in Global Shipping?

The reasons why the SLI is an important document in global logistics are:

1. Avoids Paperwork mistakes: Any error in the export documentation invoice, packing list, HS code, or declaration of value may postpone the clearance of the customs. The SLI is something that assures the forwarder receives the correct information supplied by the shipper.

2. Protects the Exporter: SLI is basically written evidence that the freight forwarder acted under the instructions of the exporter.

In case of a mistake, the exporter will be able to demonstrate that they gave out the right information.

3. Ensures Smooth Customs Compliance: The SLI contains correct information that can assist the forwarder in preparing the shipping bill and making the right customs declarations. This also supports smoother Export GST Refund claims later.

4. Supports Faster Execution: When all the details are well stated, there is a quicker documentation, booking, and customizing process of the shipment.

5. Reduces Communication Gaps: It offers a one-document compilation of all the information as compared to several emails, telephone calls, and text messages.

Who Is a Freight Forwarder?

A freight forwarder is a logistics expert who handles exports and acts on behalf of the shipper.

Their services include:

• Reserving cargo by airlines or shipping lines.
• Preparing export documents
• Filling in customs declarations.
• Collaborate with custom brokers.
• Dealing with packaging, warehousing, and insurance.
• Safety of goods till they arrive at the foreign destination.

As forwarders are the ones who make official export papers, the SLI guides them step-by-step, according to the expectations of the exporter.

The Major Components of a Standard SLI Format.

The format can differ slightly, but a typical SLI format will consist of:

1. Shipper (Exporter) Information.

• Exporter’s name, GSTIN, IEC
• Address and contact details

2. Consignee (Buyer) Information

• Buyer’s name
• Delivery address
• Country of destination

3. Freight Forwarder Details

Logistics provider whose name will be used to conduct the shipment.

4. Shipment Information

• Mode of transport (air, sea)
• Flight or vessel preference
• Port of loading and discharge.

5. Cargo Description

• Product details
• HS/HTS code
• Quantity, weight, dimensions

6. Document Instructions

The SLI clearly states the documentation that the freight forwarder should prepare, which includes:

• Commercial Invoice
• Packing List
• Shipping Bill
• Bill of Lading / Air Waybill
• Certificate of Origin
• Insurance documents

7. Customs Instructions

• Value declaration
• Export incentives applied
• Whether you are exporting under LUT or making IGST payments.

The right instructions also assist exporters in making future claims for Export GST Refund without discrepancies.

8. Authorisation Section

The freight forwarder receives authorization to act on behalf of the shipper and signs a contract accordingly.

Step-by-Step Guide to Completing an SLI

Step 1: Complete Shipper and Consignee information.

Give correct exporter and buyer data. Ensure that GSTIN, IEC, and address are the same as your official documents.

Step 2: Explain the Goods Descriptively.

Name of the product, HS code, number of packages, weight, and size.

Make sure they match your commercial invoice - this will ensure that there are no delays in customs.

Step 3: Choose the Method of Transport.

State the mode of shipment: air, sea, courier, or multimodal.

Step 4: Give clear Shipping Instructions.

Add preferred carriers, booking conditions, or transit (temperature control).

Step 5: Specify Required Documents.

Check all the documents that your freight forwarder needs to prepare or submit.

Sample: "Make a Bill of Lading according to the invoice.

Step 6: Customs Instructions Addition.

Mention:

• Whether exporting under LUT
• Payment of IGST (significant in future GST Refund).
• Applications that are obligatory in customs.

Step 7: Sign and Authorize

The SLI has to be signed by the shipper, giving the freight forwarder the right to represent the shipper.

Additional Export Documents that you need to prepare.

Although the forwarder is guided by the SLI, exporters still have to present several key documents:

1. Mandatory Export Documents

• Commercial Invoice
• Packing List
• Shipping Bill (forwarder filed)
• Certificate of Origin
• Bill of Lading / Air Waybill
• Insurance Certificate

2. Regulatory Documents

• Export License (in case of any)
• FSSAI, APEDA, or other board's certificate (as the product may be different)

3. GST-Related Documents

• GSTR-1
• GSTR-3B
• LUT Certificate

Accurate GST compliance assists in hassle-free claims of GST Refund or Export GST Refund claims for exporters.

Conclusion

Shipper's Letter of Instruction (SLI) is the document that plays the most significant role in international trade, and most exporters fail to appreciate its importance. A properly prepared SLI will mean that your freight forwarder understands you, there are no mistakes in the paperwork, and that you will have no trouble clearing your shipment at customs, and that you will not be confused in compliance matters or legal hassles.

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Frequently Asked Questions

1. Who prepares the SLI?
The SLI is prepared and signed by the shipper (exporter). It is utilized by the freight forwarder to produce formal export forms.

2. Does SLI hold legal validity?
Yes. SLI is a legally binding instruction sheet that provides the forwarder to act on behalf of the exporter and shields both parties against disagreements.

3. What is the significance of issuing an SLI before shipping?
The SLI will provide proper documentation, avoid mistakes in compliance, and facilitate an easy process of customs clearance and export.

4. Do all export shipments need SLI?
Yes. Although formats might vary, it is highly encouraged to issue an SLI when all international shipments are to be done to prevent misunderstanding and mistakes