Road Transport Document

How to Determine Date of Shipment on a Road Transport Document?

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How to determine date of shipment on a Road Transport Document?

Date of shipment is one of the key definitions in a letter of credit transaction. It is used to determine

  • whether shipment made on time or not (in other words a late shipment has been effected or not)
  • whether documents presented within the presentation period or not (in other words a late presentation has been effected or not)
  • maturity date of the time draft
  • maturity date of a deferred payment letter of credit.

Date of shipment can be determined in two ways on a Road Transport Document.

  • In the first scenario we will face a situation where road transport document does not contain any date of receipt or a date of shipment notation.
  • In the second scenario we will be having a road transport document which contains a date of receipt or a date of shipment notation.

Option 1 => There is no notation of a date of receipt or a date of shipment on the Road Transport Document:

  • The date of issuance of the road transport document will be deemed to be the date of shipment.

Option 2=> Road transport document indicates, by notation, a date of receipt or a date of shipment:

  • Date of receipt notation/stamp => this date will be deemed to be the date of shipment.
  • Date of shipment notation/stamp => this date will be deemed to be the date of shipment.

What Does Full Set of Bills of Lading Mean?

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What does full set of bill of lading mean?

Under an ordinary letter of credit, the issuing bank demands a full set of clean shipped on board ocean bills of lading from the beneficiary.

But what is a full set of bill of lading according to the letter of credit rules? How does a beneficiary make sure that he presents a full set of bills of lading?

Most of the transport documents, that is subject to international transportation, issued in more than one originals.

For example, a CMR road consignment note is issued in 3 original copies. The first copy for the exporter, the second to accompany the goods; and the third for retention by the carrier. (1)

Understanding the Reasons Behind the Issuance of Multiple Original Transport Documents:

International transport documents can be classified under two main groups: Negotiable transport documents and non-negotiable transport documents.

 

Multiple Original Transport Documents

Negotiable transport document is a title of goods, such as an original bill of lading, which can be transferred to another party by endorsement.

At least one original negotiable transport document must be surrendered to the carrier by the consignee at the place of destination to collect the goods.

Negotiable transport documents are issued in more than one originals in order to prevent lost of documents.

Non-negotiable transport document is a not a title of property and the consignment is placed at the disposal of the stipulated consignee against a proof of identity without further need to surrendering any original transport document.(2)

Non-negotiable transport documents are issued in more than one originals mainly for operational purposes as some of the original copies of these documents are traveling with the goods.

Full Set of Ocean Bills of Lading Under a Letter of Credit

According to the letter of credit rules, a bill of lading is to indicate the number of originals that have been issued and all of the originals stated on the bill of lading have to be presented by the beneficiary to the issuing bank, unless otherwise indicated in the credit.

For example, container carriers issue bills of lading in a set of 3 original and 3 copies as an established tradition for decades.

The letter of credit rules taking into account only the original bills of lading as a transport document by disregarding the non-negotiable copies.

Example:

  • A letter of credit issued asking for a full set of clean ”shipped on board” negotiable bill of lading showing freight prepaid made out/endorsed to the issuing bank, notifying the issuing bank and the applicant with full address.
  • The bill of lading indicated that it has issued in 3 originals.
  • The beneficiary has presented all of the 3 originals as a full set of bills of lading.

Important Note: The beneficiary could have presented 3 originals and 3 copies of the bills of lading without any problem.

Letter of Credit Rules:

UCP 600 – Article 20 – Bill of Lading
iv- Be the sole original bill of lading or, if issued in more than one original, be the full set as indicated on the bill of lading.

ISBP 2007 – Full set of originals Paragraph 93
As per UCP 600 article 20 transport document must indicate the number of originals that have been issued. Transport documents marked “First Original”, “Second Original”, “Third Original”, “Original”, “Duplicate”, “Triplicate”, etc., or similar expressions are all originals. Bills of lading need not be marked “original” to be acceptable as an original bill of lading. In addition to UCP 600 article 17, the ICC Banking Commission Policy Statement, document 470/871(Rev), titled “The determination of an ‘Original’ document in the context of UCP 500 sub-Article 20(b)” is recommended for further guidance on originals and copies and remains valid under UCP 600. The content of the Policy Statement appears in the Appendix of this publication, for reference purposes. (Please keep in mind that ISBP 2007 has been updated and is not the effective version as of July 2013.)

References:

  1. The CMR Convention, The British International Freight Association (BIFA) Website, Retrieved: 21.06.2018
  2. Shipping and Incoterms, Practice Guide, UNDP Practice Series, Page:50

Road Transport Document (CMR)

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road transport document cmr

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 convention countries
44 Contracting Parties of CMR Convention: Albania, Armenia, Austria, Belarus, Belgium, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iran (Islamic Republic of), Ireland, Italy, Jordan, Kyrgyzstan, Latvia, Lebanon, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Republic of Moldova, Romania, Russian Federation, Slovakia, Slovenia, Spain, Sweden, Switzerland, the former Yugoslav Republic of Macedonia, Tunisia, Turkey, Turkmenistan, United Kingdom of Great Britain and Northern Ireland, Uzbekistan.

“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:

  1. 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.
  2. 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.
  3. 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):

  1. If a credit requires presentation of a transport document covering movement by road, rail or inland waterway, UCP 600 article 24 is applicable.

References:

  1. Documentary Credits, Nordea Trade Finance, Page:27
  2. How to move goods by road, The CMR note: the key road transport document
  3. UCP 600

Letter of Credit Documents

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letter of credit documents

After reading this post, you should understand why documentation is very important under letters of credit.

Additionally, most frequently used document links have been supplied on later parts of this article.

There are many important points in a typical letter of credit transaction that need to be taken care of professionally.

However, documentation is much more important than any other aspects of the letters of credit transactions, because the documentation forms the backbone of the letters of credit structure.

In order to understand the importance of the documentation, please assume that you are an exporter, whom has just shipped an order.

How can you prove to the issuing bank that you have make the shipment according to the letter of credit terms?

Which means that;

  • you have shipped the goods on time, not late
  • you have shipped the right goods, not wrong ones
  • you have shipped the goods in good condition, no apparent defect on the packing
  • you have delivered the goods to the carrier for transportation from port of loading to the port of discharge indicated in the credit etc.

In order to prove above points to the issuing bank, you have to supply a relevant transport document.

Furthermore, let us also consider that the delivery term was CIF Incoterms 2010, which obligates the exporter, which is you, to arrange and pay the insurance for the shipment.

Once again, you have to supply an insurance policy to fulfill your insurance responsibility.

The examples can be extended, but perhaps the main idea is very clear. Letters of credit transactions are related to the documents only, not actions.

importance of letter of credit documentation

The importance of the documentation is stated in UCP 600 article 5 as follows:

Banks deal with documents and not with goods, services or performance to which the documents may relate.

In addition, every condition stated in the letter of credit must be connected to a document. This point is also clearly indicated in UCP 600 article 14 as below.

If a credit contains a condition without stipulating the document to indicate compliance with the condition, banks will deem such condition as not stated and will disregard it.

Documents Most Frequently Used Under Letters of Credit Transactions:

Transport Documents:

Insurance Documents:

Financial Documents:

Commercial Documents:

Official Documents: