Logistics Terms SLI(Shipper’s Letter of Instruction)

The Shipper’s Letter of Instruction (SLI) is a crucial document in international shipping that provides detailed instructions from the exporter (shipper) to their freight forwarder or shipping agent. The primary purpose of the SLI is to guide the freight forwarder on how to handle and process the shipment according to the exporter’s preferences, ensuring that all legal and regulatory requirements are met. This document helps to clarify responsibilities, reduce miscommunication, and ensure that the shipping documents are correctly prepared.


Definition and Explanation of the SLI
The SLI is essentially a set of written directives issued by the shipper to their freight forwarder, which includes vital information about the shipment, such as:

Shipper and Consignee Information: Details about the exporter (shipper) and the recipient (consignee) of the goods.

Description of Goods: A detailed description of the items being shipped, including their quantity, weight, and dimensions.

Shipping Instructions: Specific instructions regarding how the goods should be transported, packaged, or labeled.

Billing and Payment Information: Instructions regarding payment terms, who is responsible for freight charges, and other costs.

Regulatory Compliance Information: Data required for customs clearance, export licensing, and adherence to international trade laws.

An SLI may also include other important information, such as the mode of transportation (air, sea, land), the port of departure, destination port, Incoterms, and whether insurance has been arranged.


Why is the SLI Required in the Shipping Process?
The SLI plays a key role in ensuring that the entire shipping process runs smoothly by providing clear instructions to the freight forwarder. It is required for several reasons:

1) Facilitates Export Documentation: The SLI provides all the necessary information for the freight forwarder to complete essential export documents, such as the Bill of Lading, Commercial Invoice, and Export Declaration. Without an SLI, these documents may lack critical details, leading to errors or delays.
2) Ensures Compliance with Export Regulations: International trade is heavily regulated, and the SLI helps ensure that the shipment complies with all applicable export laws and regulations. This includes providing details required for customs clearance and ensuring that any necessary export licenses or permits are obtained.
3) Reduces Miscommunication: The SLI helps avoid misunderstandings between the shipper and the freight forwarder by clearly outlining expectations and responsibilities. It ensures that the goods are shipped according to the shipper’s instructions, avoiding issues such as incorrect destinations, packaging errors, or mishandling of sensitive cargo.
4) Protects Against Liability: By providing written instructions, the SLI protects both the shipper and the freight forwarder. If there is a dispute or issue with the shipment, the SLI serves as a reference to prove that the correct instructions were given and followed.


In summary, the SLI is a vital tool in international logistics, ensuring that the exporter’s instructions are clearly communicated, the shipment complies with all legal requirements, and potential issues are minimized throughout the shipping process.

(Source: Firefly, Adobe)

Although the Shipper’s Letter of Instruction (SLI) is not a mandatory document in international shipping, it plays a pivotal role in facilitating smooth communication between the shipper and the freight forwarder. Since there is no standardized format for the SLI, shippers have the flexibility to create their own templates tailored to their specific needs. Despite this flexibility, there are common elements that most SLIs include, as they provide critical information needed to ensure proper handling and documentation of the shipment. These elements not only streamline logistics but also help ensure compliance with international trade regulations. Here’s a more detailed breakdown of the typical information included in an SLI:


1) Parties to the Transaction

Exporter (Shipper) and Consignee: The SLI will include the full details of both the exporter (shipper) and the consignee (recipient). This information typically includes the names, addresses, and contact information (phone numbers, emails, etc.) of both parties. These details are essential for shipping documents and customs declarations.

Contact Information: In addition to the shipper and consignee’s contact details, the document may also specify the key personnel to contact in case of queries or issues during transit.

2) Forwarding Agent’s Details

The freight forwarder or agent responsible for managing the shipment on behalf of the exporter will be listed, including their contact details and any relevant reference numbers. This ensures that the forwarder knows they are responsible for the specific shipment and allows them to correctly prepare the necessary documentation for customs and transportation.

3) Ports of Origin and Destination

Port of Origin: The document will specify the location from which the goods are being shipped. This can include the city, port, or airport where the shipment will commence.

Port of Destination: Similarly, the SLI will indicate the final destination, specifying the port or airport where the goods are to be delivered to the consignee.

4) Mode of Transportation

The mode of transport is clearly indicated in the SLI, specifying whether the goods will be shipped by air, ocean (sea), rail, or road. This ensures the forwarder books the appropriate services and prepares documents aligned with the chosen mode.

5) Method of Delivery

Consolidated or Direct Shipment: The SLI will note whether the shipment is to be consolidated with other cargo (which may be more cost-effective) or if it should be shipped directly. A direct shipment often means quicker delivery but may come at a higher cost.

6) Declaration of Contents

Cargo Details: The SLI must include a precise declaration of the shipment’s contents. This typically involves listing the total number of pieces, the total weight (usually in kilograms), the volume (in cubic meters), and a description of the goods.

Value of the Goods: Declaring the cargo’s value is important for customs purposes and for determining insurance coverage.

7) Harmonized System (HS) Codes

HS codes are a standardized numerical method of classifying traded products. Including these codes in the SLI is crucial for customs clearance, as it allows customs officials to identify the goods and apply the correct duties and taxes.

8) Hazardous Goods Declaration

If the goods being shipped are classified as hazardous materials, the SLI must declare this. This is important for ensuring proper handling and compliance with international safety regulations during transit. Failure to declare hazardous materials can result in penalties or even accidents during transport.

9) Cargo Insurance Details

The SLI will specify whether the cargo has been insured and, if so, the insurance policy details. This is important for mitigating financial risks in case of damage or loss during transit.

10) Shipping Terms (Prepaid or Collect)

The SLI specifies the freight billing terms. Prepaid means that the shipper is responsible for paying the freight charges, while Collect means the consignee will pay for the transportation upon receiving the goods.

11) Special Instructions

Any special handling or packaging instructions from the shipper to the forwarder are noted here. This might include details about how the cargo should be packaged, labeling requirements, or specific care instructions for delicate goods. For instance, refrigerated goods may require special storage conditions or labeling as "Fragile" for breakable items.

12) Date and Authentication

The date when the SLI was issued is an essential element, as it serves as a timeline reference for when the instructions were provided. Additionally, the document may include an authentication method, such as the shipper’s signature or digital authorization, to confirm that the instructions have been approved.

13) Additional Fees

The SLI might also include information on any additional fees or charges related to the shipment, such as documentation fees, customs brokerage fees, or insurance premiums. This helps the forwarder properly calculate and allocate costs associated with the transportation.

While the SLI is not mandatory, it acts as a comprehensive guide for the freight forwarder, ensuring that all elements of the shipment are handled correctly and according to the shipper’s requirements. It mitigates the risk of errors, ensures compliance with trade regulations, and establishes clear communication, which is essential for smooth and efficient international logistics.

(Source: Firefly, Adobe)

The Shipper’s Letter of Instruction (SLI) plays a vital role in international shipping, serving as the communication bridge between the shipper and the freight forwarder. Although not legally required, it is a key document that ensures accurate shipping procedures and regulatory compliance. This document provides the freight forwarder with detailed instructions for handling the shipment, from organizing transportation to preparing necessary documentation. Below is a detailed look at how the SLI process flows from creation to submission and how various parties such as the shipper, freight forwarder, and customs broker interact during this process.

Process Flow: From Creation to Submission to the Freight Forwarder
1) Creation of the SLI by the Shipper

Shipper’s Responsibility: The process begins with the shipper (exporter) generating the SLI. This document includes crucial details about the shipment, such as the names and addresses of the shipper and consignee, the description of goods, mode of transport, terms of payment, and any special instructions (e.g., specific packaging or handling instructions). The SLI may also outline legal requirements like the HS code and whether the goods are hazardous.

Customization: Since the SLI isn’t standardized, the shipper has the freedom to create a customized form tailored to their specific needs. Templates can vary depending on the nature of the goods, destination, and transportation requirements. The SLI typically includes freight billing terms and often includes the cost responsibilities of the shipper or consignee.

2) Submission to the Freight Forwarder

Transfer of Information: After the SLI is completed, it is submitted to the freight forwarder. The freight forwarder serves as the shipper's logistics manager, and the SLI acts as a guideline for the forwarder to arrange the entire shipment process. Depending on the shipper’s preferences, the SLI can be submitted via email, secure online systems, or manual submission.

Verification by the Freight Forwarder: Once received, the freight forwarder reviews the document for completeness. They check for essential details such as the shipper's and consignee’s information, mode of transport, and the classification of the goods (for customs). If any information is incomplete or unclear, the forwarder contacts the shipper to clarify details or request additional documentation, ensuring everything is in order before proceeding.

3) Preparation of Shipping Documentation

Export Documentation: Based on the SLI, the freight forwarder prepares key export documents such as the Bill of Lading (BOL), Commercial Invoice, and Export Declaration (EEI for U.S. shipments). These documents must align with the information provided in the SLI, including the cargo’s value, description, weight, and dimensions.

Legal Compliance: In addition to export documentation, the freight forwarder ensures that the shipment complies with legal and regulatory requirements. This includes ensuring that the necessary licenses are in place (e.g., if the goods require an export license) and verifying that HS codes are accurately stated. The SLI often plays a critical role in ensuring that goods comply with both origin and destination country regulations.

4) Coordination of Transportation

Booking of Transport: Once documentation is in order, the freight forwarder books the transportation based on the mode of transport specified in the SLI (air, sea, road, or rail). They coordinate with carriers to ensure that space is reserved for the shipment and that it adheres to any specific scheduling needs provided by the shipper.

Logistics Management: The forwarder is responsible for arranging the pickup, loading, and delivery of goods to the port of departure. They ensure that the goods are handled properly and in compliance with the instructions provided by the shipper. If the SLI indicates any special handling requirements (e.g., refrigeration or fragile goods), the forwarder ensures that the shipment is properly equipped to meet those needs.

5) Handover to Carrier and Customs Filing

Submission to Customs: The freight forwarder submits the prepared shipping documents, including the SLI, to the customs broker and relevant authorities for export clearance. Customs authorities use the information provided in the SLI to classify the goods, apply the appropriate duties and taxes, and verify that all regulatory requirements are met.

Export Clearance: The customs broker files the export declaration with the local customs office, ensuring that the shipment complies with export laws and trade restrictions. At this stage, the freight forwarder may also coordinate with the customs broker to resolve any potential issues such as documentation discrepancies or misclassification of goods.

6) Ongoing Shipment Monitoring

Once the shipment has been cleared and is in transit, the freight forwarder continues to monitor the shipment’s progress. They track the shipment to ensure it reaches its final destination as per the schedule laid out in the SLI. If there are any delays, the forwarder informs the shipper and works to resolve any issues that arise during transport.

Interaction Between Shipper, Freight Forwarder, and Customs Broker
The shipper initiates the process by creating the SLI, which is then handed over to the freight forwarder. The forwarder ensures that all required documentation is prepared and that the shipment complies with the regulations outlined by customs authorities. The customs broker uses the information from the SLI to clear the goods through customs, ensuring the proper classification, documentation, and compliance with both domestic and international regulations. All three parties interact continuously throughout the process to ensure the shipment moves smoothly from origin to destination.


1) Shipper’s Role

Providing Complete and Accurate Information: The shipper is responsible for supplying accurate, detailed information in the SLI. This includes everything from the classification of the goods to the specific terms of shipping (e.g., prepaid or collect). Accurate HS codes, value declarations, and special handling instructions (if applicable) must be provided to avoid delays or fines.

Regulatory Compliance: The shipper must also ensure that all regulatory requirements for exporting the goods are met. For example, if the goods are controlled by export licenses or trade restrictions, the shipper needs to provide documentation proving that they have the necessary approvals to export the goods.

Coordination with Forwarder: The shipper may work closely with the freight forwarder to resolve any questions about the shipment. If any clarification is needed regarding the SLI, the forwarder may reach out to the shipper directly.

2) Freight Forwarder’s Role

Managing the Logistics Process: The freight forwarder acts as the logistics coordinator, executing the shipper’s instructions as outlined in the SLI. They handle the documentation preparation, customs filings, and transportation arrangements based on the information provided.

Customs Filings and Documentation: The forwarder ensures that the goods are properly documented for export and submits these documents to the customs broker and authorities for clearance. If issues arise, such as a discrepancy in the customs declaration, the forwarder collaborates with the shipper and broker to resolve them.

Communication and Problem-Solving: The forwarder maintains open lines of communication with the shipper and customs broker to ensure the shipment moves forward smoothly. If any issues arise with transportation or customs clearance, the forwarder informs the shipper immediately and helps address the problem.

3) Customs Broker’s Role

Ensuring Compliance with Trade Laws: The customs broker works on behalf of the shipper to ensure that the goods meet all import and export regulations. They use the information provided in the SLI to prepare accurate customs filings and calculate the duties and taxes owed. The broker also helps ensure that the shipment complies with any country-specific trade restrictions or licensing requirements.

Customs Clearance: The customs broker files the necessary documents with customs authorities, ensuring that all requirements are met for the goods to leave or enter the country. They also resolve any customs-related issues that may arise, such as incorrect HS codes or undervaluation of goods.

In conclusion, the SLI is not just a document but a detailed set of instructions that guides the entire shipping process. It ensures proper communication between the shipper, freight forwarder, and customs broker, minimizing the risk of errors and delays in international trade.

(Source: Firefly, Adobe)

The Shipper’s Letter of Instruction (SLI) offers several important benefits to both shippers and freight forwarders, especially in the context of international trade. Its use facilitates smoother operations, reduces the risk of costly errors, and ensures compliance with legal regulations. Here’s how:


How It Streamlines Communication and Ensures Accurate Shipments

Clear Instructions: The SLI serves as a communication bridge between the shipper and the freight forwarder. By providing detailed information on how the goods should be handled, transported, and documented, the SLI minimizes the risk of miscommunication. The freight forwarder follows the shipper's specific instructions, ensuring that the goods are packaged, labeled, and transported correctly.

Minimized Errors: Since all critical shipment details, such as cargo description, weight, value, and handling instructions, are explicitly laid out in the SLI, it reduces the chance of documentation errors, wrong shipments, or incorrect transportation methods being used. These errors can otherwise lead to costly mistakes such as shipments being returned or delayed.

Role in Avoiding Delays and Penalties

Regulatory Compliance: The SLI plays a crucial role in ensuring that the shipment complies with international trade regulations. It provides customs with accurate information such as HS codes, cargo values, and licenses required for export. Non-compliance can result in shipment delays, fines, or even confiscation of goods, so having the SLI properly filled out helps avoid these issues.

Accurate Documentation: The SLI assists in the preparation of key export documents like the Bill of Lading, Commercial Invoice, and export declarations. Accurate documentation reduces the risk of delays at customs, as improperly documented goods can be held up during inspections or incur penalties.

Avoiding Financial Penalties: By clarifying terms like whether the shipment is prepaid or collect, or whether insurance is in place, the SLI helps avoid disputes and penalties associated with payment terms or missing insurance coverage.

(Source: Firefly, Adobe)

While the SLI is a helpful document, it comes with its own set of challenges. Addressing these issues with best practices can help ensure the document is properly utilized.


Potential Issues in Filling Out an SLI

Incomplete or Incorrect Information: One of the most common challenges when filling out an SLI is providing incomplete or incorrect information. Missing details such as the consignee's address, incorrect HS codes, or an inaccurate cargo description can result in shipment delays, customs rejections, or even fines.

Lack of Standardization: Since there is no standard format for an SLI, different companies may use different templates. This can sometimes lead to confusion, especially if the freight forwarder is unfamiliar with the format being used.

Overlooking Special Instructions: Special handling requirements, such as temperature control or hazardous material declarations, can sometimes be overlooked. Failing to declare such needs can lead to goods being damaged or handled improperly during transit.

Tips for Ensuring Accuracy and Compliance

Double-Check All Information: To avoid potential issues, it is critical to double-check every section of the SLI for accuracy. Ensure that the shipper and consignee details are correct, that the cargo description is accurate, and that all required information for customs (HS codes, cargo value, etc.) is included.

Use Clear and Comprehensive Templates: Although there is no standard SLI format, using a clear and well-structured template can minimize confusion. Ensure that your template covers all necessary sections, such as shipper details, transportation mode, and cargo description. Providing this template to your freight forwarder in advance can streamline communication and reduce delays.

Collaborate with the Freight Forwarder: Work closely with your freight forwarder to make sure they understand any special instructions, such as handling hazardous materials or specific delivery requirements. Open communication ensures that your shipment will be handled correctly from start to finish.

Stay Updated on Regulatory Requirements: Ensure your team is up to date with the latest international trade regulations, especially those related to customs declarations, dangerous goods, and export licenses. This will help prevent customs-related issues from arising due to outdated or incorrect information.

The Shipper’s Letter of Instruction (SLI) is a vital document in international logistics that enhances the efficiency of the shipping process. By streamlining communication between shippers and freight forwarders, it ensures that shipments are accurately prepared, correctly documented, and handled according to the shipper's instructions. The SLI also plays a key role in ensuring regulatory compliance, which helps avoid costly delays and penalties.


In conclusion, while the SLI may not be a legally required document, its importance in international trade cannot be understated. It acts as a safeguard, ensuring that all parties involved in the shipping process are aligned, that shipments comply with both domestic and international regulations, and that goods are delivered to their destination efficiently. By paying careful attention to the accuracy and completeness of the SLI, businesses can ensure smooth, trouble-free shipments across borders, ultimately supporting their success in global trade.