Bill of Lading

Blank Back Bill of Lading Not Acceptable

Ozgur Eker (CDCS) Bill of Lading, Bill of Lading Discrepancies, How to Work With a Letter of Credit, Letter of Credit Basics, Letter of Credit Discrepancies, Letter of Credit Documents ,
Blank Back Bill of Lading Not Acceptable

A Blank Back Bill of Lading, also known as Short Form Bill of Lading, is a type of transport document that does not include the terms and conditions of the shipment (contract of carriage) on the back side.

Short form bills of lading are not in high demand.

Especially under the letters of credit payments, issuing banks generally demand long form bills of lading, by simply prohibiting presentation of short form bills of lading.

Some examples are:

  • Short form, blank backed bill of lading not acceptable.
  • Short form, blank backed and freight forwarder bill of lading not acceptable
  • Short form, blank backed, claused stale bill of lading / air way bill not acceptable.
  • Short form, blank backed, charter party and through bills of lading is not acceptable.

What to Do If Letter of Credit Prohibits Presentation of Blank Back Bills of Lading

As an exporter you must examine Field 46A: Documents Required and Field 47A: Additional Conditions.

If you determine that the letter of credit prohibits presentation of blank back/short form bills of lading, you must make sure that the bill of lading you will present contains the terms and conditions of the shipment (contract of carriage) on the back side of the bill of lading.

It is advisable to discuss this issue with your freight forwarder before shipment takes place.

Short Form/Blank Back Bill of Lading

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Short Form/Blank Back Bill of Lading

A bill of lading is a generic name of a transport document, which is used in sea shipments.

As a transport document a bill of lading is expected to fulfill three basic functions:

  • it evidences that the goods have been received by the carrier;
  • it evidences the terms of the contract of carriage
  • it is expected to allow transfer of ownership of the goods

There are several types of bills of lading in circulation such as multimodal bill of lading, forwarder bill of lading, charter party bill of lading, negotiable bill of lading and non-negotiable bill of lading etc.

Each type of bill of lading has unique characteristics. Different types of bills of lading may not be able cover all functions.

As an example, non-negotiable bill of lading does not allow transfer of ownership of the goods.

Bill of Lading and the Contract of Carriage

If you look at the reverse side of a bill of lading, you will probably see a contract written in small font size. This contract known as the contract of carriage.

It is ordinary that a bill of lading contains the contract of carriage on the reverse side. Especially in container shipments.

Every container liner has a standard bill of lading contains the contract of carriage on the reverse side.

But some bills of lading are issued with empty reverse sides.

These kind of bills of lading are called Blank Back Bills of Lading or Short Form Bills of Lading.

Examples:

Long Form Bill of Lading Example:

Hapag-Lloyd Bill of Lading: Hapag-Lloyd is one of the biggest container carriers in the world. Hapag-Lloyd uses a standard bill of lading contains a contract of carriage printed on the backside of its bill of lading. It is also possible to see an excerpt of carriage terms on the right bottom of the front page.

Short Form Bill of Lading Example:

BIMCO Blank Back Form of Non Negotiable Liner Waybill: BIMCO is the world’s largest international shipping association, with around 1,900 members globally. BIMCO produces ready to use shipping contracts.

BIMCO Blank Back Form of Non Negotiable Liner Waybill is a perfect example for a short form bill of lading.

What are the Risks Associated with Short Form/Blank Back Bills of Lading

The parties on a bill of lading such as consignee, notify party and shipper can not reach to  carrier’s contract of carriage with ease under Short Form/Blank Back Bills of Lading.

Hiding the contract of carriage by carrier can attract some sort of unpleasant questions to the minds of the parties on a bill of lading.

The main risk may associate with a blank back bill of lading would be a third party interference on delivery of goods to the consignee, by claiming that his interests have not been fulfilled by the carrier.

Of course there must be a secret contract had to be signed between the third party and the carrier, on which the parties of the bill of lading have no information about.

Shipper of a Bill of Lading

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Shipper of a Bill of Lading

What Does the Shipper Mean?

Shipper means a person that enters into a contract of carriage with a carrier. Shipper also known as consignor.

In most cases shipper is the exporter.

What are the Roles and Responsibilities of the Shipper?

Shipper prepares the goods for sea carriage, makes sure that the goods are packed in seaworthy manner, loads the goods into containers if needed and send them to the carrier’s warehouse or terminals located at the port of loading.

All details regarding the shipment are given to the carrier by the shipper via Shipping Instructions.

Carriers can issue bills of lading with the data they have received from the shippers.

Under some certain incoterms shippers also arrange and pay for the sea freight (such as CFR, CPT) and cargo insurance (such as CIF, CIP).

Shipper Example:

Shipper is the Exporter:

Under a cash against documents payment a Greek olive oil exporter makes a shipment to an importer located in Australia.

The importer agrees to pay the contract amount in full against presentation of documents.

The goods have been shipped under CFR trade terms and shipment takes place between Thessaloniki Port, Greece and Melbourne Port, Australia.

As freight will be paid by the seller the freight notation that is mentioned on the bill of lading is Freight Prepaid.

The bill of lading consigned to order of the importer’s bank in Australia, which is ANZ (The Australia and New Zealand Banking Group Limited). The bill of lading is issued in negotiable form.

After production stage, shipper gets freight quotations from several container lines and freight forwarding companies in Greece, books the container and prepares the Shipping Instructions document.

Carrier states description of goods, number and kind of packages, consignee field, notify party field, shipping marks and remaining details as per shipper’s instructions.

Export formalities also are handled by the shipper.

Points of Consideration When Filling Out Shipper Field:
  1. Shipper enters into a contract of carriage with the carrier.
  2. Shipper informs almost all of the details stated on the bill of lading to the carrier. Any mistake at this stage may create painful problems.

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What are the Differences Between Consignee and Shipper Fields of Bills of Lading?

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What are the Differences Between Consignee and Shipper Fields of Bills of Lading?

Bill of lading is a transport document covering the carriage of goods by sea.

Consignee means a person entitled to take delivery of the goods under a contract of carriage indicated on a bill of lading.

Shipper means a person that enters into a contract of carriage with a carrier. Shipper also known as consignor.

On today’s post I explain the main differences between the consignee and shipper fields of bills of lading.

Differences Between Consignee and Shipper

Seller versus Buyer:

Usually consignor is the exporter and consignee is the importer in any shipping document used in international trade. Bill of lading is not an exception.

Position Against Goods:

Consignor hands out the goods to the carrier at the port of loading. Consignee takes delivery of the goods from the carrier at the port of discharge.

Title of Goods:

Consignee field determines how title of goods will be delivered from the shipper to the consignee.

  • Consignee field determines if the bill of lading issued in straight, negotiable or bearer format.

Shipper determines how consignee field is completed by giving necessary instructions to the carrier.

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What Happens if Letter of Credit is Silent in Regards to the Period of Presentation

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What Happens if Letter of Credit is Silent in Regards to the Period of Presentation

Documents must be presented to the nominated banks within allowed time frame under letters of credit payments.

Otherwise issuing banks or confirming banks raise late presentation discrepancy.

According to the letters of credit rules a presentation consists of a transport document should be presented to the nominated bank within 21 days after the date of shipment, but not later than the expiry date of the letter of credit.

Presentation Period of a Letter of Credit

If the letter of credit does not require presentation of a transport document, then the presentation period does not become effective.

Under such a scenario, the documents must be presented to the nominated bank before the expiry date.

presentation period under letter of credit

If the letter of credit is silent in regards to the period of presentation, the documents must be presented to the nominated bank before the expiry date, when the letter of credit does not ask for a transport document.

Example:

A Serbian food exporter signs a proforma invoice with in importer located in Kuwait. The letter of credit amount is 75.000 EUR and partial shipments are not allowed.

Expiry date of the letter of credit is 15.February.2019.

The letter of credit is silent in regards to the presentation period, which means that there is no Field 48 -Period for Presentation indicated in the letter of credit.

Option 1: Letter of credit does not ask for a presentation of a transport document:

  • The beneficiary must present the document to the nominated bank before the expiry date of the letter of credit.

Option 2: Letter of credit asks for a presentation of a transport document:

Under the same scenario, please assume that selected transportation mode is sea shipment and transport document is a bill of lading and latest date of shipment is 10.January.2019.

  • The beneficiary must complete the shipment before 10.January.2019 and presents the document to the nominated bank within 21 days after the date of shipment, but not later than the expiry date of the letter of credit.

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Stale Bill of Lading

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Stale Bill of Lading

According to the letter of credit rules a presentation consists of a transport document should be presented to the nominated bank within 21 days after the date of shipment, but not later than the expiry date of the letter of credit.

Bill of lading is a transport document covering the carriage of goods by sea.

If a set of documents, which consists of a bill of lading as a transport document, could not be presented to the nominated bank within 21 days after the date of shipment by the beneficiary, then late presentation discrepancy is emerged.

A bill of lading that is not presented within 21 days after shipment is called a Stale Bill of Lading.

In other words, stale bill of lading is a type of bill of lading which is presented to the nominated bank after the presentation period.

Stale Bill of Lading Example:

Let us try to understand the stale bill of lading term with an example.

An exporter in Malaysia signs a sales contract with an US importer for the sale of refined palm oil. The payment term is letter of credit. The importer have issued the letter of credit in favor of the exporter.

Letter of Credit Conditions:

  1. Latest Date of Shipment: 10.March.2019
  2. Expiry Date: 31.March.2019
  3. Presentation Period: 21 days after shipment but withing expiry date

Date of Shipment and Presentation Date:

The exporter completes the production and makes the shipment. Shipped on board date indicated on the bill of lading is 01.March.2019.

The exporter presents the documents to the nominated bank on 25.March.2019.

Conclusion:

The exporter could not complete the presentation within allowed time frame after shipment. Late presentation discrepancy condition has been fulfilled.

The shipping documents and also bill of lading is stale.

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Letter of Credit Condition: Bill of Lading with Multiple Notify Party

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Letter of Credit Condition: Bill of Lading with Multiple Notify Party

Letter of credit, in a broad perspective, is one of the payment methods in international trade.

Bill of lading is a transport document covering the carriage of goods by sea.

Notify party means a person that should be notified by the carrier along with the consignee when the shipment arrives at port of discharge.

Letter of credit is a conditional payment method.

The beneficiary of a letter of credit will receive the payment as long as he presents documents in comply with the terms and conditions of the letter of credit.

Some letters of credit especially the ones issued in Bangladesh request bills of lading that contain not one but multiple notify parties.

On my previous post I have explained that multiple notify parties on a single bill of lading is possible.

Let me explain the situation with an example.

Multiple Notify Party Example:

A textile fabric paint exporter in Italy signs a trade deal with an importer in Bangladesh.

According to the national law of Bangladesh all imports must be paid by letters of credit. As a result an issuing bank in Bangladesh issues a letter of credit against the proforma invoice of the Italian exporter.

The letter of credit contains a condition as below:

Full set original clean on board ocean bills of lading, plus three non-negotiable copies issued by the carrier or its agent drawn or endorsed to the order of Bangladesh Islamic Bank showing ”Freight Prepaid” marked notify applicant and the issuing bank.

The bill of lading must show two notify parties:

  • Notify 1: Applicant (importer company)
  • Notify 2: Issuing bank

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What are the Differences Between Consignee and Notify Party Fields of Bills of Lading?

Ozgur Eker (CDCS) Bill of Lading, Letter of Credit Documents , , ,
What are the Differences Between Consignee and Notify Party Fields of Bills of Lading?

Bill of lading is a transport document covering the carriage of goods by sea.

Consignee means a person entitled to take delivery of the goods under a contract of carriage indicated on a bill of lading.

Notify party means a person that should be notified by the carrier along with the consignee when the shipment arrives at port of discharge.

On today’s post I explain the main differences between the consignee and notify party fields of bills of lading.

Differences Between Consignee and Notify Party

Delivery of Goods:

Carriers hand over goods to the entity stated on the consignee field. Notify party can not claim goods from the carrier under sea shipments.

Optional versus Mandatory Field:

Notify party can also be used as an optional field and need not to be completed. On the other hand consignee field is mandatory and needs to be completed in all occasions.

Title of Goods:

Consignee field determines how title of goods will be delivered from the shipper to the consignee. Notify party has no connection with the title of goods.

  • Consignee field determines if the bill of lading issued in straight, negotiable or bearer format.

Single versus Multiple Entries:

It is possible to enter multiple company names under the notify party field. On the other hand consignee field always completed with single entities.

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Notify Party of a Bill of Lading

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Notify Party of a Bill of Lading

What Does Notify Party Mean?

Notify party means a person that should be notified by the carrier along with the consignee when the shipment arrives at port of discharge.

Notify party has no effect on the title of goods, which determines delivery of the goods to the consignee.

Notify party is mostly importer, importer’s forwarder or importer’s customs broker.

Notify Party Examples:

Notify Party is the Importer:

Under an advance payment terms a Belgium dessert exporter makes a shipment to an importer located in Saudi Arabia.

The importer pays the contract amount full in advance before shipment takes place.

The goods have been shipped under FOB trade terms and shipment takes place between Antwerp Port, Belgium and Dammam Port, Saudi Arabia.

As freight will be paid by the buyer the freight notation that is mentioned on the bill of lading is Freight Collect.

The bill of lading consigned to the importer company. The bill of lading is not issued in negotiable form, but in straight form.

Notify Party is the Importer’s Forwarder:

Under a letter of credit payment a German machinery exporter makes a shipment to an importer located in Hong Kong.

The letter of credit is payable at sight.

The goods have been shipped under CFR trade terms and shipment takes place between Hamburg Port, Germany and Hong Kong Port, Hong Kong.

As freight will be paid by the seller the freight notation that is mentioned on the bill of lading is Freight Prepaid.

The bill of lading consigned to order of the issuing bank. The bill of lading is issued in negotiable form.

Points of Consideration When Filling Out Notify Party Field:
  1. Notify party has no connection with the title of goods.
  2. Selected payment method may affect notify party field completion.
  3. Under open account, cash in advance and cash against documents payment methods notify party field is usually filled out by the shippers without any restrictions.
  4. Under letters of credit payment methods notify party field must be completed according to the letter of credit terms and conditions.

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Consignee of a Bill of Lading

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Consignee of a Bill of Lading

What Does Consignee Mean?

Consignee means a person entitled to delivery of the goods under a contract of carriage indicated on a bill of lading.

Consignee is one of the most important parties on a bill of lading.

The way that consignee field is completed can affect how the goods are to be transferred from shipper to consignee.

There are three possible consignee field instructions available on a bill of lading.

Straight Bill of Lading: Bill of lading states the consignee’s actual name. Depending on the commercial law of the destination country, consignee may clear the goods with or without needing to present an original bill of lading.

Straight bills of lading may create a risk factor for the shippers if they have not received the payment in advance of the shipment.

Especially under letters of credit and cash against goods payment methods, this option should be used with caution.

Negotiable Bill of Lading: Negotiable bills of lading are the ones that are consigned to order of a named party such as to order of the shipper, to order of the issuing bank or to order of the importer etc.

Title of the goods can be transferred through endorsement by stamp and signature.

Negotiable bills of lading generally used under letters of credit and cash against documents payment methods.

Bearer Bill of Lading: This option states that the goods must be delivered by the carrier to the party,whose in possession of the original bills of lading.

Points of Consideration When Filling Out Consignee Field:
  1. Consignee field determines how the title of goods are to be transferred from shipper to consignee.
  2. Completing consignee field may have direct effect on delivery of goods in which may have negative effect on shippers financial interests.
  3. Selected payment method is also affecting consignee field completion.
  4. Under open account and cash in advance payment methods consignee field is usually filled out in straight form.
  5. Under letters of credit and cash against payment methods consignee field is usually filled out in negotiable form.

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