On this page, I will try to explain you “Road Transport Document” and its applications in letters of credit transactions.
Banks mention Road Transport Document as “CMR Road Transport Document “, “Truck Consignment Note”, “CMR Consignment Note” in letters of credit.
A road consignment note is issued by the carrier and is used for carriage by truck. The document evidences that the carrier has received the goods for transportation. (1)
Road transport document that confirms that the carrier (ie the road haulage company) has received the goods and that a contract of carriage exists between the trader and the carrier. (2)
Important Note 1 : Road transport document is not a document title to goods, which means that road transport document is a non-negotiable transport document.
As a result road carriers will be able to deliver goods to the consignee without obtaining one original copy of road transport document.
For this reason, exporters and banks (issuing bank and confirming bank) have to be very careful when working with a letter of credit demanding a road transport document as a transport document, because neither exporters nor banks could secure goods as a collateral.
Important Note 2 : CMR Convention (full title is Convention on the Contract for the International Carriage of Goods by Road) regulates various legal issues concerning transportation of cargo by road among the member states of the convention.
CMR Convention is signed by most of the EUROPEAN countries. As of April 2018, it has been ratified by 44 states. You can reach the ratifying countries from this link.
“CMR International Consignment Note” is the transport document created in standard forms according to CMR convention.
Logistics sector calls this document “CMR International Consignment Note”, CMR Note or simply CMR.
Generally, there will be four copies of a CMR note. One will be kept by the trader and another by the carrier, while the third will travel with the goods all the way to their final destination. The last copy is the administration copy.
How to Use Road Transport Document in Letters of Credit Transactions:
Road Transport Document / Road Consignment Note is covered under article 24 of UCP 600.
A road, rail or inland waterway transport document, however named, must appear to:
- indicate the name of the carrier and:
-be signed by the carrier or a named agent for or on behalf of the carrier, or
-indicate receipt of the goods by signature, stamp or notation by the carrier or a named agent for or on behalf of the carrier. - indicate the date of shipment or the date the goods have been received for shipment, dispatch or carriage at the place stated in the credit. Unless the transport document contains a dated reception stamp, an indication of the date of receipt or a date of shipment, the date of issuance of the transport document will be deemed to be the date of shipment.
- indicate the place of shipment and the place of destination stated in the credit.
A road transport document must appear to be the original for consignor or shipper or bear no marking indicating for whom the document has been prepared.
In the absence of an indication on the transport document as to the number of originals issued, the number presented will be deemed to constitute a full set.
For the purpose of this article, transhipment means unloading from one means of conveyance and reloading to another means of conveyance, within the same mode of transport, during the carriage from the place of shipment, dispatch or carriage to the place of destination stated in the credit. (3)
Special Hints Regarding the Road Transport Document From ISBP (International Standard Banking Practice):
- If a credit requires presentation of a transport document covering movement by road, rail or inland waterway, UCP 600 article 24 is applicable.
References:
- Documentary Credits, Nordea Trade Finance, Page:27
- How to move goods by road, The CMR note: the key road transport document
- UCP 600
