Shipping documentation flow forms a structure where information is passed on between multiple parties, a booking confirmation in shipping is no exception. Booking confirmations are buffer documents in which contracting parties can confirm shipment details and freight charges. This is an important document that can’t be overlooked.
Booking Confirmation explained
A Booking Confirmation is specifically an export document. This document is prepared by the logistics service provider to confirm shipment details with the exporter, the information confirmed are as such: –
1. Goods Description
2. Goods Dimension and Weight
3. Goods Packaging
4. Freight Charges
5. Type of Bill of lading required
6. Container Grade Requirement
7. Other Relating information
From the booking confirmation, the shipping agent has agreed to prepare freight space for the shipper and begin performing its duty as a logistics service provider.
One shipment may have multiple booking confirmations, particularly when you are contracting with a freight forwarder or NVOCC.
But do not get confused. The rule of thumb is, the party responsible to issue a Bill of Lading to you is the party responsible to offer a booking confirmation to you first. This is regardless of whether the type of bill of lading you receive is a House Bill of Lading, Sea Waybill, or Original Bill of Lading.
Goods Description, Dimension and Weight
The goods description, dimension, and weight described in the booking confirmation are based on the seller’s information. The shipping agent’s primary purpose in including that in the booking confirmation is to make sure that the information received is accurate.
To receive cargo information, the shipping agent will require the seller to provide the shipping documents: –
1. Commercial Invoice / Pro-Forma Commercial Invoice
2. Packing List / Pro-Forma Packing List.
Before the bill of lading is issued, the cargo has to acquire the necessary permit requirements. This is subject to other government-related agencies’ requirements, the packing list or invoiced items may change.
Besides that, there may also be some estimation error on the packaging details too, sellers may want to take this opportunity to amend such errors. Moreover, there are chances that buyers change their order after the shipment booking confirmation.
This is why there are instances where booking confirmation is based on the Pro-Forma Commercial Invoice and Packing List.
The common courtesy the industry practices is that shipping agents and shippers communicate with each other with a draft booking confirmation as well. This is not required as a shipping document, but this helps in the document preparation process.
Booking confirmations also inform the seller of the freight rates applicable.
The shipping agents also take this opportunity to inform shippers or exporters of other related charges as well: –
1. Detention Demurrage Free Days
2. Out of Gauges surcharges
3. Dangerous Goods Surcharges
4. Terminal Handling Charges
The seller has to pay for any of those charges before the seller can receive a Bill of Lading.
Type of Bill of Lading Required
The commercial contract between the buyer and the seller dictates the terms of the carriage contract.
For instance, a shipment may be arranged with a Letter of Credit. The contract carriage then has to follow the requirements of the Letter of Credit. Trade Financing institution often requests for the safest form of carriage contract, which is an Original Bill of Lading.
For this requirement, the shipper has to inform shipping agents of the type of bill of lading required. The booking confirmation informs that the shipping agent receives and confirms the instruction from the seller.
Normally, exporters fulfill the role of coordinating with the shipping agent to prepare a booking confirmation, unless the commercial contract requires the buyer to arrange door-to-door transportation instead.
Containers are graded based on the age of the container and the condition of the container. It is the shipping agent, NVOCC, or Freight Forwarder’s responsibility to provide a “seaworthy” container to the seller.
The standard container grading tiers are: –
1. Grade A – New and/or in good condition
2. Grade B – Seaworthy container that is relatively older but is watertight and has minimal wear and tears
3. Grade C/D – Seaworthy container that is old, not watertight, has oil stains and wear and tear throughout the exterior and interior of the container.
Which grade a seller chooses will affect the ocean freight charge.
A lower-grade container generally means a lower ocean freight rate, but this is not always the case. Cargoes such as scrap metal are heavy and do significant damage to shipping containers. Some shipping liners charge a premium for shipping scrap cargoes.
If the cargo requires a clean container, such as a pharmaceutical product, shippers inform the shipping agents for a Grade A container, and the shipping agent confirms that instruction with this booking confirmation.
Here are other commonly asked questions relating to Booking Confirmation in Logistics
Can You Amend a Booking Confirmation?
The answer is, it depends on which transportation stage the cargo is in. You generally can amend a booking confirmation provided that: –
1. The export declaration with customs has not been performed
2. Shipping manifest has not been submitted
3. The Bill of Lading is not issued yet.
Can You Cancel a Booking Confirmation?
Yes, you can, this is the primary purpose of booking confirmation. A structured way for shippers and shipping agents to communicate the transport requirements.
The reason to cancel a booking confirmation can vary, it could be that: –
1. The vessel schedule has changed
2. The commercial contract is canceled
3. The seller found a more suitable service provider
But, be mindful that most shipping agents may charge a cancellation fee.
Can Shipping Agents Increase Freight Charges after issuing Booking Confirmation?
Shipping agents reserve the right to increase freight charges before they issue a Bill of Lading. So yes, they can increase freight charges.
However, they cannot erroneously increase a freight charge without reason. Should the seller disagree with the freight rate increase, the seller may cancel the booking confirmation without charges.