Once a shipment arrives at the destination it needs to be cleared at customs and subsequently delivered. However, before the import activities are started, the cargo needs to be officially handed over to the importing agent. That’s where a delivery order (D/O) comes into play.
A delivery order is a document issued by the shipper, carrier or freight forwarder instructing the shipping line and the port operator to turn over the cargo to the party responsible to carry out the import activities.
This article will guide you through the definition and importance of a delivery order. We’ll also be distinguishing a D/O from other shipping documents. Special importance and focus will be placed on the issuance of a delivery order and how it plays a part in the import process.
Who Issues a Delivery Order (D/O) and Why Is It Important?
Shipping and logistics have a lot of moving parts. It’s a back and forth communication of order and fulfillment, as well as the actual physical movement of cargo.
Therefore, it’s important to establish the right documentation for cargo handover, as it clearly asserts liability and responsibility. Let’s explore this in a little more detail.
Towards the date of a shipment arriving at the destination port the carrier must inform the notify party (typically the consignee or their agent) of the arrival of the cargo. This is done by sending an arrival notice, freight invoice, and requirements for the release of the cargo.
Once the Bill of Lading is presented and surrendered at the destination, the carrier may now issue the delivery order. This indicates that the carriage is completed and allows the consignee or agent to arrange delivery, which is initiated once import customs clearance is done.
It would also indicate container free time or number of days detention before return to the designated container yard. For airfreight cargo, a similar concept applies. The delivery order is issued to officially hand over the cargo to the import agent of the consignee.
Delivery Order (D/O) vs Bill of Lading
The bill of lading (B/L) is often confused with a delivery order, as both of these documents are handed over to the consignee or their agent at some point in the supply chain process. However, they are inherently different and shouldn’t be confused.
A bill of lading is a document of title, a contract for the receipt of goods, and a negotiable instrument. On the other hand, the delivery order only facilitates the release of cargo by formally advising the carrier that all obligations have been settled and the appointed agent or consignee can now secure the cargo.
Delivery Order (D/O) vs Purchase Order
The delivery order and the purchase order are often confused. However, they are very different from each other. The only similarity they have is that both of these documents are part of an ordering and fulfillment process of export and import shipments.
A purchase order is a document that is issued by the buyer, which is requesting a service or product from a supplier. Inside a purchase order one can typically find information about the purchase, such as product/service type, quantity, price, payment terms, delivery dates, and other terms and conditions.
As can be seen, a delivery order on the other hand is a document for the handover of cargo at destination from one party to another, whereby a purchase order is a document that initiates the order process.
Delivery Order (D/O) vs Sales Order
Sales orders have a direct relationship with purchase orders. A sales order is issued by the supplier after receiving the purchase order from the buyer (usually after the payment has been made).
Therefore, a sales order can also be considered as a formal confirmation to fulfill its responsibilities to the buyer. In this case, it’s to fulfill the order and ship this to the buyer in full and on time.
As a sales order is a document that is issued from the supplier to the buyer, confirming a purchase order, it has nothing in common with a delivery order.
Delivery Order (D/O) vs Task Order
There is also no direct relation between a delivery order and a task order. If we go back to the concept of purchase orders and sales order, a task order can be regarded as part of the fulfillment component of the supply chain process.
This means once a purchase has been initiated, tasks orders are assigned to particular parties in order to carry out specific activities. For example, arranging for pickup of cargo at a production plant or scheduling a courier to deliver the shipment.
Example of Delivery Order
Let’s go through an example where a delivery order is created for a shipment from Japan to Los Angeles. This example wll illustrate in which part of the process the delivery order is created and what part it plays.
A 40’ reefer container of frozen tuna from Japan has arrived in Los Angeles by sea freight. The consignee in Los Angeles has tasked its customs broker to perform the import clearance and to subsequently deliver the goods to a designated warehouse.
Once the carrier has submitted its manifest and has sent the arrival notice, as well as the freight invoice to the consignee, the customs broker must do the following to secure the delivery order.
- Present the original bill of lading and surrender it to the forwarder/carrier
- If the bill of lading is already marked as surrendered, telex released, or is a sea waybill, this can be presented instead.
- The assigned broker can present an authorization letter from the consignee to transact on their behalf. Proper identification must also be established to ensure the carrier is talking to the rightful representatives.
- Pay all destination charges billed by the forwarder/carrier, as stated in the freight invoice.
A delivery order is then generated and issued, so that the handover of cargo from the carrier to the consignee can take place. This allows the consignee or their appointed agent to proceed with all import related activities, such as import customs clearance and final delivery.