Letter of Credit Documents

Fiata FWB (Non-Negotiable Fiata Multimodal Transport Waybill)

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fiata waybill

On this post, I will explain Non-Negotiable Fiata Multimodal Transport Waybill, a transport document, only issued by freight forwarders, whom are the members of the FIATA (International Federation of Freight Forwarders Associations).

The FWB is an acronym which stands for “Forwarder’s Waybill”, “Fiata Waybill” or “Non-Negotiable FIATA Multimodal Transport Waybill”.

FWB is a standard format transport document, which is created by FIATA (International Federation of Freight Forwarders Associations) for general use of the freight forwarders in international freight transportation.

FWB has been restricted to use only by FIATA members.

Structure of a Fiata Waybill

FWB is printed on a white color paper with light blue borders. Fiata logo is positioned in the middle of the FWB transport document. The ICC logo, which signifies the ICC approval, can be seen on the right up side of the document.

FWB is a non-negotiable transport document which was created by Fiata and acknowledged by ICC. This acknowledgement has been secured by the attachment of ICC logo on the right-up side of the document.

Terms and conditions of the carriage have been printed on the reverse side of the FWB transport document under the title of “Standard Conditions (1997) governing the FIATA Multimodal Transport Waybill”.

As a result FWB is not a short form or blank back non-negotiable sea waybill.

FWB is a valid transport document when it is issued as a non-negotiable sea waybill according to letter of credit rules.

This view supported by the Fiata with the following declaration: “The non-negotiable FIATA Multimodal Transport Waybill (FWB) conforms to the requirements of the “Guide for the Uniform Customs and Practice for Documentary Credits (UCP 600)” of ICC (ICC publication No. 600) in line with article 21 when issued as a sea waybill, as an acceptable transport document.”

Why Exporters and Importers Use a FWB transport document?

The main reason to use a FWB would be working with a freight forwarder instead of a carrier.

FBL issued by the freight forwarders in the capacity of contractual carriers. They usually sign FBL transport document “as carrier”.

Additionally, importers could clear the consignment at the port of discharge without surrendering an original bill of lading, as carriers could deliver the cargo to the importers with a proof of identity.

What are the Main Characteristics of a Fiata Waybill?

  1. FWB includes a contract of carriage and it is a valid sea waybill according to current letter of credit rules.
  2. FWB is a non-negotiable transport document. If a FWB is issued, carriers could deliver the cargo to the importers by the proof of identity only without requiring the original copy of the FWB.
  3. FWB transport documents can be used not only in multimodal transportation, but also single mode port-to-port sea shipments.
  4. The copyrights of FBL documents are owned by FIATA. Only Fiata member freight forwarders could use FWB standard format multimodal non-negotiable waybill.
  5. FWB is in conformity with the UNCTAD/ICC Rules for Multimodal Transport Documents only when it is used as non-negotiable sea waybill in port-to-port sea shipments.

What are the Differences Between a FWB (Non-Negotiable FIATA Multimodal Transport Waybill) and a Shipping Line Sea Waybill (SLSWB)?

  1. A Shipping Line Sea Waybill (SLSWB) or carrier’s sea waybill is issued by the carrier or its agent on behalf of the carrier. SLSWB generally printed on the letterhead of the shipping line. On the reverse side of the SLSWB the terms and conditions of carriage of the shipping line are incorporated.
  2. A Non-Negotiable FIATA Multimodal Transport Waybill (FWB) is issued by a freight forwarder. FWB should be printed on the standard form Fiata FWB format incorporating Fiata and ICC logos. “Standard Conditions (1997) governing the FIATA Multimodal Transport Waybill” has been printed on the reverse side of the FWB. FWB signed by the freight forwarder, as carrier.

Sample Form of a Non-Negotiable FIATA Multimodal Transport Waybill

fiata waybill fwb

FIATA FBL (Negotiable FIATA Multimodal Transport Bill of Lading)

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Negotiable FIATA Multimodal Transport Bill of Lading

On this post, I will explain Negotiable FIATA Multimodal Transport Bill of Lading, a transport document, only issued by freight forwarders, whom are the members of the FIATA (International Federation of Freight Forwarders Associations).

The FBL is an acronym which stands for “Forwarder’s Bill of Lading”, “Fiata Bill of Lading” or “Negotiable FIATA Multimodal Transport Bill of Lading”.

FBL is a one of the oldest and well-known standard transport documents created by FIATA (International Federation of Freight Forwarders Associations) for general use of the freight forwarders in international transportation.

FBL has been restricted to use only by FIATA members.

FBL is printed on a blue color paper.

Fiata logo is positioned in the middle of the FBL transport document. ICC logo, which signifies the ICC approval, can be seen on the right up side of the document.

History of FBL:

First FBL was created in year 1975.

Fiata FBL was acknowledged by ICC in 1993, which means that the Negotiable FIATA Multimodal Transport Bill of Lading is entirely in conformity with the UNCTAD/ICC Rules for Multimodal Transport. Since then FBL carries ICC logo.

Terms and conditions of the carriage have been printed on the reverse side of the FBL document under the title of “Standard Trading Conditions Governing FIATA Combined Transport Bills of Lading”. As a result FBL is not a short form or blank back bill of lading.

FBL is a valid transport document according to letter of credit rules, and has been accepted by banks without any problem, as long as it is issued not in conflict with the conditions stated in respective articles of UCP 600 such as article 19, 20 or 21.

Why Exporters and Importers Use a FBL?

The main reason to use a FBL would be working with a freight forwarder instead of a carrier.

FBL issued by the freight forwarders in the capacity of contractual carriers. They usually sign FBL transport document “as carrier”.

What are the Main Characteristics of a FBL Transport Document?

  1. FBL includes a contract of carriage and it is a valid transport document according to the letter of credit rules.
  2. FBL will be issued in a negotiable form as the consignee part of the Fiata multimodal transport bill of lading includes pre-printed “consigned to order of” phrase. Exporters must be very careful with last leg of the transportation in regards to negotiability of the FBL. If the last leg of the transportation is not ended at sea, the FBL document may not be considered as a negotiable instrument.
  3. FBL transport document can be used not only in multimodal transportation, but also single mode port-to-port sea or land shipments.
  4. The copyrights of FBL document is owned by FIATA. Only Fiata member freight forwarders could use FBL standard format multimodal bill of lading.
  5. FBL is entirely in conformity with the UNCTAD/ICC Rules for Multimodal Transport Documents and is approved by ICC.

What are the differences between a FBL (Negotiable FIATA Multimodal Transport Bill of Lading) and a Shipping Line Bill of Lading (SLBL)?

  1. A Shipping Line Bill of Lading (SLBL) or carrier’s bill of lading is issued by the carrier or its agent on behalf of the carrier. SLBL generally printed on the letterhead of the shipping line. On the reverse side of the SLBL the terms and conditions of carriage of the shipping line are incorporated. This is the best bill of lading option for the beneficiary, the applicant and the banks that enter letter of credit transaction.
  2. A Negotiable FIATA Multimodal Transport Bill of Lading (FBL) which is also known as Fiata Bill of Lading or Forwarder’s Bill of Lading, is “issued” by a freight forwarder. FBL should be printed on the standard form Fiata FBL format incorporating Fiata and ICC logos. “Standard Trading Conditions Governing FIATA Combined Transport Bills of Lading” has been printed on the reverse side of the FBL. FBL signed by the freight forwarder, as carrier.

Sample Form of a Negotiable Fiata Multimodal Transport Bill of Lading

Negotiable FIATA Multimodal Transport Bill of Lading

Fiata FWR (Warehouse Receipt)

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FWR (Fiata Warehouse Receipt)

On this post, I will explain Fiata Warehouse Receipt, an international trade document, only issued by freight forwarders, whom are the members of the FIATA (International Federation of Freight Forwarders Associations).

The FWR is an acronym which stands for “Fiata Warehouse Receipt”.

FWR is a standardized document format created by FIATA (International Federation of Freight Forwarders Associations) for general use in international and domestic trade.

FWR has restricted to be used only by FIATA members.

History and Usage of Fiata Warehouse Receipt

Just until a couple decades ago, freight forwarders had been providing very limited services to their clients; such as negotiating freight charges, booking cargo space and making freight consolidations.

After the globalization era, freight forwarders had been expanding their services to new areas such as providing warehousing, tracking and on time delivery services with the help of modern information and communication technology.

Freight forwarders have to issue a receipt for the merchandise they take possession when they provide warehousing services.

The FWR is a Warehouse Receipt which is a standard document for use in freight forwarders’ warehousing operations in both national and international scale.

FWR is not a contract of carriage as a result it is not a transport document unlike bill of lading, multimodal bill of lading, air waybill, road transport document or rail transport document.

Differences Between a Warrant and a Fiata Warehouse Receipt:

Warrant is a formal document that certifies or guarantees a receipt for goods that are being stored in a warehouse.

The FWR is not a “warrant” in legal means. When a warehouse keeper is requested to issue a “warrant”, the FWR cannot be utilized.

Why Exporters and Importers Use a FWR Certificate?

FWR is expected to be used in international transactions where Free Carrier (FCA) or Delivered at Terminal (DAT) trade term is chosen by exporters and importers.

According to Incoterms 2010 Rules:

  • “Free Carrier” means that the seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place.
  • “Delivered at Terminal” means that the seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal at the named port or place of destination. “Terminal” includes any place, whether covered or not, such as a quay, warehouse, container yard or road, rail or air cargo terminal.

Seller can prove to the buyer that he has already delivered goods to the buyer’s forwarder at the pre-determined warehouse by presentation of a Fiata Warehouse Receipt.

Also if the payment will be made via documentary collection or letter of credit, banks would request presentation of a FWR document.

What are the Main Characteristics of a FWR Certificate?

  1. FWR does not include a contract of carriage. For this reason it is not as a transport document in conventional means.
  2. FWR certificate is not negotiable unless otherwise indicated on the document.
  3. Stored goods can be delivered to the holder of the documents only against presentation of the original copy of the FWR certificate.
  4. Depositor should endorse the FWR document in accordance with the conditions stated under “transfer of property” heading on the back side of the certificate.
  5. If new owner of the goods would like to assign their delivery claim to another entity, then they should use the area titled with “cession of the delivery claim” which is placed on the back side of the certificate.
  6. In case of partial shipments would like to be effected, original Fiata Warehouse Receipt must be submitted to warehouse keepers in every time.

What are the Differences Between a FWR (Fiata Warehouse Receipt) and a B/L (Bill of Lading)?

Bill of Lading

  1. Bill of lading contains a contract of carriage between port of loading and port of discharge.
  2. Bill of lading can be issued in a negotiable form as shown on the below examples:
    -made out to the order of the issuing bank.
    -made out to order and blank endorsed.
  3. At least one original bill of lading must be surrendered to the carrier for delivery of the goods in case bill of lading was issued in negotiable form
  4. Bill of lading is a transport document in regards to letter of credit rules.
  5. Bill of lading should show port of loading, port of discharge and shipped on board date on its face.

Fiata Warehouse Receipt

  1. Fiata Warehouse Receipt does not include a contract of carriage.
  2. Fiata Warehouse Receipt can also be issued in negotiable form but this must be identified on the face of the document.
  3. Fiata Warehouse Receipt is not a transport document in regards to letter of credit rules.
  4. Fiata Warehouse Receipt need not to state port of loading, port of discharge and shipped on board date on its face.
  5. Original FWR certificate copy must be surrendered to the warehouse keeper during the claim for the delivery of the goods.
  6. Endorsement must be made in accordance with the terms and conditions stated on the back side of the document.

Sample Form of a Fiata Warehouse Receipt:

Fiata Warehouse Receipt

FIATA FCT (Forwarders Certificate of Transport)

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FCT (Forwarder’s Certificate of Transport)

On this post, I will explain Forwarder’s Certificate of Transport, an international trade document, only issued by freight forwarders, whom are the members of the FIATA (International Federation of Freight Forwarders Associations).

The FCT is an acronym which stands for “Forwarder’s Certificate of Transport”.

FCT is another standard document template created by FIATA (International Federation of Freight Forwarders Associations) for general use in international shipments.

FCT is only available to FIATA member freight forwarders.

FCT certificate is a signed declaration of the freight forwarder, in which he confirms to the consignor that he has taken over the goods and has assumed responsibility for delivery of the consignment as per instructions, that he has received from the consignor as indicated on the FCT document.

It must be noted that according to the FCT certificate a freight forwarder acts as a freight forwarder and not as a carrier.

A freight forwarder is responsible for the signature of the contract of carriage or carriages with the carrier or carriers. The freight forwarder is not responsible for the acts of the carriers.

Important Note: FCT is not a contract of carriage as a result it is not a transport document unlike bill of lading, multimodal bill of lading, air waybill, road transport document or rail transport document.

Why Exporters and Importers are Using a FCT Certificate?

FCT document mostly used in international transactions where Ex Works (EXW) or Free Carrier (FCA) trade terms is chosen by the exporters.

According to ICC’s Incoterms 2010 rules, “Ex Works” means that the seller delivers when it places the goods at the disposal of the buyer at the seller’s premises or at another named place (i.e., works, factory, warehouse, etc.).

The seller does not need to load the goods on any collecting vehicle, nor does it need to clear the goods for export, where such clearance is applicable.

As per Incoterms 2010 “Free Carrier” means that the seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place.

Seller can prove to the buyer that he has already places the goods at the disposal of the buyer’s forwarder with the presentation of Forwarder’s Certificate of Transport.

Also if the payment will be made via documentary collection or letter of credit, banks or buyers would request presentation of a FCT document.

What are the Main Characteristics of a FCT Certificate?

By issuing a FCT certificate, the freight forwarder certifies to the consignor that,

  1. the freight forwarder has been authorized to enter into contracts with the carriers and
  2. the freight forwarder has taken charge of the goods as indicated on the forwarder’s certificate of transport in apparent good order and condition and
  3. the freight forwarder is responsible for delivery of the goods to the holder of the certificate through the services of the carriers of their choice and
  4. the freight forwarder will be acting as a freight forwarder not as a carrier and
  5. the freight forwarder will not be held liable for the acts of the carriers.

FCT certificate does not contain a contract of carriage. As a result it is not considered as a transport document.

FCT certificate can be issued in a negotiable form. If a FCT certificate issued in a negotiable form, it is very important to state whether it is issued in one original or else how many original copies have been issued on the face of the document.

What are the Differences Between a FCR (Forwarder’s Certificate of Receipt) and a B/L (Bill of Lading)?

Bill of Lading

  1. Bill of lading contains a contract of carriage between port of loading and port of discharge.
  2. Bill of lading can be issued in a negotiable form as shown on the below examples:
    -made out to the order of the issuing bank.
    -made out to order and blank endorsed.
  3. At least one original bill of lading must be surrendered to the carrier for delivery of the goods in case bill of lading was issued in negotiable form
  4. Bill of lading is a transport document in regards to letter of credit rules.
  5. Bill of lading should show port of loading, port of discharge and shipped on board date on its face.

Forwarder’s Certificate of Transport

  1. Forwarder’s Certificate of Transport does not contain a contract of carriage as a result it is not a transport document in regards to letter of credit rules.
  2. Forwarder’s Certificate of Transport can also be issued in negotiable form as shown on the below examples:
    *made out to the order of the issuing bank.
    *made out to order and blank endorsed.
  3. At least one original Forwarder’s Certificate of Transport must be surrendered to the carrier for delivery of the goods in case Forwarder’s Certificate of Transport was issued in negotiable form
  4. Forwarder’s Certificate of Transport need not to state port of loading, port of discharge and shipped on board date on its face.

Sample Form of Forwarder’s Certificate of Transport

Sample FCT (Forwarder’s Certificate of Transport)

Fiata FCR (Forwarder’s Certificate of Receipt)

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FCR (Forwarder’s Certificate of Receipt)

On this post, I will explain Forwarder’s Certificate of Receipt, an international trade document, only issued by freight forwarders, whom are the members of FIATA (International Federation of Freight Forwarders Associations).

Freight forwarder is a person, who is expediting goods to the consignee on behalf of the shipper; may be an agent or company who performs services (such as receiving, trans-shipping or delivering) designed to assure and facilitate the passage of goods. (1)

FCR is an acronym, which stands for “Forwarder’s Certificate of Receipt”.

FCR is a standard form of a trade document, which was prepared by FIATA (International Federation of Freight Forwarders Associations) for general use in international shipments.

FCR is available to FIATA members only.

Why Exporters and Importers are Using a FCR Certificate?

FCR certificate mainly used in international transactions where Ex Works (EXW) trade term is selected by the parties.

According to ICC’s Incoterms 2010 rules “Ex Works” means that the seller delivers when it places the goods at the disposal of the buyer at the seller’s premises or at another named place (i.e., works, factory, warehouse, etc.).

The seller does not need to load the goods on any collecting vehicle, nor does it need to clear the goods for export, where such clearance is applicable.

Under Ex Works trade term, the Seller can prove to the Buyer that he has already places the goods at the disposal of the buyer’s forwarder with the presentation of a Forwarder’s Certificate of Receipt.

Also, if the payment will be made via a letter of credit, banks would like to see the FCR document.

What are the Main Characteristics of a FCR Certificate?

FCR document does not contain a contract of carriage. For this reason it is not accepted as a transport document under letter of credit rules.

  1. By issuing a FCR document a freight forwarder certifies to the consignor that,
    1. the freight forwarder has assumed control of the goods as indicated on the forwarder’s certificate of receipt in apparent good order and condition at the disposal of the consignee or
    2. the freight forwarder has assumed control of the goods as indicated on the forwarder’s certificate of receipt in apparent good order and condition with irrevocable instructions to be forwarded to the consignee.
  2. FCR document is not negotiable. It is non-negotiable so that consignee need not to present an original copy to collect the goods from the transport company.

What are the Differences Between a FCR (Forwarder’s Certificate of Receipt) and a B/L (Bill of Lading)?

Bill of Lading

  1. Bill of lading contains a contract of carriage between port of loading and port of discharge.
  2. Bill of lading can be issued in a negotiable form as shown on the below examples:
    -made out to the order of the issuing bank.
    -made out to order and blank endorsed.
  3. At least one original bill of lading must be surrendered to the carrier for delivery of the goods in case bill of lading was issued in negotiable form
  4. Bill of lading is a transport document in regards to letter of credit rules.
  5. Bill of lading should show port of loading, port of discharge and shipped on board date on its face.

Forwarder’s Certificate of Receipt

  1. Forwarder’s Certificate of Receipt does not contain a contract of carriage.
  2. Forwarder’s Certificate of Receipt can’t be issued in negotiable form.
    Consignee can clear the goods from the carrier without surrendering the original copy of
  3. Forwarder’s Certificate of Receipt.
  4. Forwarder’s Certificate of Receipt is not a transport document in regards to letter of credit rules.
  5. Forwarder’s Certificate of Receipt need not to state port of loading, port of discharge and shipped on board date on its face.
  6. Forwarder’s Certificate of Receipt is not a transport document as defined in UCP 600 articles 19‐25. This document is to be examined only to the extent expressly stated in the credit, otherwise according to UCP 600 sub‐article 14 (f).

Sample Form of FCR (Forwarder’s Certificate of Receipt)

Sample FCR (Forwarder’s Certificate of Receipt)

References:

  1. Transportation Best Practices Manual, PF Collins International Trade Services, 2003, Page:44

Fiata Documents

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fiata documents

On this post, I will explain freight forwarders, freight forwarders association and the documents published by the freight forwarders association in a global scale.

Forwarding agents are also known as freight forwarders, freight brokers, transit agents, and they may also act as clearing agents or customs brokers.

In most instances buyers and sellers are not themselves in a position to carry out the necessary arrangements for the shipment of their cargo.

They rely on the services of specialized firms for this work and for processing customs formalities. (1)

Freight forwarders can arrange door-to-door shipments, decrease transportation costs by offering more competitive freight quotes, increase the efficiency of carriers, exporters and importers by giving professional logistics services, consolidate small orders, offer storage, handling, packing, distribution and customs breakage services to their clients. (2)

Freight forwarders around to world are gathered together and formed an association that shapes the international transportation.

FIATA stands for International Federation of Freight Forwarders Associations. FIATA was founded in Vienna/Austria on May 31, 1926.

FIATA, a non-governmental organisation, represents today an industry covering approximately 40,000 forwarding and logistics firms, also known as the “Architects of Transport”, employing around 8 – 10 million people in 150 countries. (3)

Fiata has created several documents and templates in order to reach a uniform standard for use by freight forwarders in a global scale.

Fiata documents are known as FCR, FCT, FWR, FBL, FWB, SDT, SIC and FFI. These documents have been printed in different colors so that they can be distinguished from each other.

Fiata Documents

fiata documents

Main Features of Fiata Documents

Here are some important features of Fiata documents:

  • Fiata documents are highly standardized.
  • Only national freight forwarders associations (general members of FIATA) can issue FIATA documents.
  • Fiata documents can only be used by Fiata members.
  • Every Fiata document must bear the Fiata logo at the right head section of the documents.
  • Only negotiable FIATA Multimodal Transport Bill of Lading and non-negotiable FIATA Multimodal Transport Waybill are accepted as a transport document in terms of letter of credit rules. Other Fiata documents are not considered as a transport document in UCP 600 latest L/C rules.
  • Some major countries that are using Fiata documents are: Australia, Austria, Belgium, Canada, Colombia, Croatia, Cyprus, the Czech republic, Estonia, Finland, France, Germany, Hong Kong, Hungary, Indonesia, Iran, Ireland, Israel, South Korea, Italy, Japan, Kenya, Latvia, Lithuania, Malaysia, the Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russia, Singapore, Slovenia, Sweden, Switzerland, Spain, Sri Lanka, China, Taiwan, Tunisia, Turkey, Ukraine, United Arab Emirates, United Kingdom, the United States, Vietnam.

References:

  1. Shipping and Incoterms, Practice Guide, UNDP Practice Series, Page.10
  2. What are the functions of freight forwarders in international transportation?
  3. Who is FIATA

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

Air Waybill

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Air Waybill

On this page I will try to explain you air waybill and its applications in letters of credit transactions.

Issuing banks mention air transport document as “Air Waybill” (AWB), or “Air Consignment Note” in letters of credit.

An air waybill is a document covering the carriage of goods by plane from one airport to another. The original for shipper, usually original No. 3 of the air waybill remains with the seller for submission to the bank. (1)

Air waybill is “the shipping document used for the transportation of air freight. It includes conditions, limitations of liability, shipping instructions, description of commodity, and applicable transportation charges.”

It is generally similar to a straight non-negotiable bill of lading and is used for similar purposes. (2)

Important Note: Air transport document is not a document of title to goods, which means that air waybill is a non-negotiable transport document.

As a result, air carriers will be able to deliver goods to the consignee without obtaining one original copy of air waybill.

For this reason, exporters and banks (issuing bank and confirming bank) have to be very careful when working with a letter of credit demanding an air waybill as a transport document, because neither exporters nor banks could secure goods as a collateral.

What are the Functions of an Air Waybill?

An air waybill serves the following functions:

  • to document the contract of carriage
  • to prove receipt of goods for shipment
  • certificate of insurance (if goods insured under carrier policy)
  • it serves as a customs declaration
  • it is a waybill (i.e. it guides carrier personnel in the handling and delivery of the
    goods) (3)

How to Use Air Waybill in Letters of Credit Transactions:

An air 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.
  2. indicate that the goods have been accepted for carriage.
  3. indicate the date of issuance. This date will be deemed to be the date of shipment unless the air transport document contains a specific notation of the actual date of shipment, in which case the date stated in the notation will be deemed to be the date of shipment. Any other information appearing on the air transport document relative to the flight number and date will not be considered in determining the date of shipment.
  4. indicate the airport of departure and the airport of destination stated in the credit.
  5. be the original for consignor or shipper, even if the credit stipulates a full set of originals.
  6. contain terms and conditions of carriage or make reference to another source containing the terms and conditions of carriage. Contents of terms and conditions of carriage will not be examined.

For the purpose of this article, transhipment means unloading from one aircraft and reloading to another aircraft during the carriage from the airport of departure to the airport of destination stated in the credit.

An air transport document may indicate that the goods will or may be transshipped, provided that the entire carriage is covered by one and the same air transport document.

An air transport document indicating that transshipment will or may take place is acceptable, even if the credit prohibits transshipment. (4)

Special Hints Regarding the Air Waybill From ISBP (International Standard Banking Practice):

  1. If a credit requires presentation of an air transport document covering an airport-to-airport shipment, UCP 600 article 23 is applicable.
  2. If a credit requires presentation of an “air waybill”, “air consignment note” or similar, UCP 600 article 23 applies. To comply with UCP 600 article 23, an air transport document must appear to cover an airport-to-airport shipment but need not be titled “air waybill”, “air consignment note” or similar..
  3. The air transport document must appear to be the original for consignor or shipper. A requirement for a full set of originals is satisfied by the presentation of a document indicating that it is the original for consignor or shipper.

Air Waybill Sample:

Air waybill sample

References:

  1. http://definitions.uslegal.com/a/air-waybill/
  2. Documentary Credits, Collections and Bank Guarantees, Swedbank, Page: 32
  3. Transportation Best Practices Manual, PF Collins International Trade Services, Page:30
  4. UCP 600

Charter Party Bill of Lading

Ozgur Eker (CDCS) Charter Party Bill of Lading, Letter of Credit Documents , ,
charter party bill of lading

On this page I will try to explain you “Charter Party Bill of Lading” and its applications in letters of credit transactions.

Charter Party Bill of Lading is one of the transport documents that is specifically governed by the letter of credit rules.

The international shipping industry is responsible for the carriage of around 90% of world trade.

Shipping is the life blood of the global economy. Without shipping, intercontinental trade, the bulk transport of raw materials, and the import/export of affordable food and manufactured goods would simply not be possible.(1)

International sea transportation can be divided into 3 main cargo groups:

  • containers,
  • liquid bulk cargo (or “wet” trades such as crude oil, petroleum products and gas) and
  • solid bulk cargo (or “dry” trades such as coal, iron ore and grain).(2)

sea transportation sub-groupes

Maritime container transportation is carried out by container ship operators, who produce negotiable bill of loading or non-negotiable sea waybill as transport documents.

Unlike container transportation, bulk cargo shipment requires special types of vessels and is not suitable for liner services.

As a result, bulk cargo transportation is carried out via hired vessels. In maritime glossary, hiring a vessel is called “Charter Party”.

Definition of Charter Party and Charter Party Bill of Lading

Charter Party Bill of Lading is the transport document of the shipments, which made via vessels subject to charter party contracts.

How to Use Charter Party Bill of Lading in Letters of Credit Transactions:

Charter party bill of lading is covered under article 22 of UCP 600.

A bill of lading, however named, containing an indication that it is subject to a charter party (charter party bill of lading), must appear to:

  1. be signed by:
    – the master or a named agent for or on behalf of the master, or
    – the owner or a named agent for or on behalf of the owner, or
    – the charterer or a named agent for or on behalf of the charterer.

Any signature by the master, owner, charterer or agent must be identified as that of the master, owner, charterer or agent.

Any signature by an agent must indicate whether the agent has signed for or on behalf of the master, owner or charterer.

An agent signing for or on behalf of the owner or charterer must indicate the name of the owner or charterer.

2. indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit

3. indicate shipment from the port of loading to the port of discharge stated in the credit. The port of discharge may also be shown as a range of ports or a geographical area, as stated in the credit.

4. be the sole original charter party bill of lading or, if issued in more than one original, be the full set as indicated on the charter party bill of lading.

A bank will not examine charter party contracts, even if they are required to be presented by the terms of the credit. (source : UCP 600)

Special Hints Regarding the Charter Party Bill of Lading From ISBP (International Standard Banking Practice):

  1. If a credit requires presentation of a charter party bill of lading or if a credit allows presentation of a charter party bill of lading and a charter party bill of lading is presented UCP 600 article 22 is applicable.
  2. A transport document containing any indication that it is subject to a charter party is a charter party bill of lading under UCP 600 article 22.
  3. If a credit does not state a notify party, the respective field on the charter party bill of lading may be left blank or completed in any manner.

References:

  1. International Chamber of Shipping, http://www.ics-shipping.org/shipping-facts/shipping-and-world-trade (Retrived: 06.April.2018)
  2. Dry bulk cargo shipping — An overlooked threat to the marine environment? Matthias Grotea, Nicole Mazureka, Carolin Gräbscha, Jana Zeilingerb, Stéphane Le Flochc, Dierk-Steffen Wahrendorfd, Thomas Höfera, https://www.sciencedirect.com/science/article/pii/S0025326X16303861 (Retrived: 06.April.2018)

Sea Waybill (Non-Negotiable Bill of Lading)

Ozgur Eker (CDCS) Letter of Credit Documents, Sea Waybill , , ,
sea waybill

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

Bill of lading has always been a negotiable transport document for centuries.

Road transport document, air transport document and rail transport document are relatively new transport document types and all of them are non-negotiable by their nature.

Non-negotiable transport documents generally called as waybills; such as air waybill, road waybill and rail waybill etc.

Non-negotiable transport documents share two out of three basic functions of a negotiable bill of lading:

  • Non-negotiable transport documents are receipts for the goods as negotiable bills of lading;
  • Non-negotiable transport documents evidence the terms of the contract of carriage (by way of clauses usually printed on one side of the document) as negotiable bills of lading;
  • But non-negotiable transport documents are not said to be “negotiable documents of title” unlike negotiable bills of lading.

What Are The Main Differences Between a Negotiable Bill of Lading and Non-Negotiable Transport Documents?

The main difference between a negotiable bill of lading and non-negotiable transport documents is how the goods are delivered to the consignee.

Under negotiable bill of lading, the goods can only be handed over to the consignee, if and only if, at least one negotiable bill of lading copy is surrendered to the carrier’s agent at the port of discharge.

Under non-negotiable transport documents, however, the carrier delivers the goods to the consignee without demanding any original copies of the transport documents, by having authentication of the consignee’s company information.

negotiable bill of lading and non-negotiable transport documents

Sea waybill is a non-negotiable bill of lading, invented by the transportation industry very recently, to respond the market, that demands a more flexible marine transport document than a conventional bill of lading.

What Are The Advantages and Disadvantages of a Sea Waybill?

The main advantages of a sea waybill over a traditional negotiable bill of lading is its flexibility and ease of use.

Advantages of a Sea Waybill

Importers can clear the goods from the customs without needing to present at least one original copy of the bill of lading, when sea waybill is selected as a transport document.

This will reduce procedures and increase efficiency, and may help to eliminate or at least limit demurrage and detention charges at the port of discharge.

advantages and disadvantages of a sea waybill

International trade has been increased in volume for the last couple of decades significantly; furthermore vessels are becoming faster and ports are getting quicker.

For example, one container vessel can travel around all major European Ports within a week.

It would not be possible for exporters to dispatch export documents, especially the bills of lading, within a such short period of time.

Consequently, importers may face to pay high amounts of demurrage and detention charges.

Actually, sea waybill has been invented to prevent such inefficient processes.

Disadvantages of a Sea Waybill

Main disadvantage of a sea waybill against a negotiable bill of lading is that it reduces exporter’s control over the goods, because of the fact that importer can clear the goods from customs without surrendering an original bill of lading.

This makes sea waybill not suitable for cash against documents and letter of credit payments and increases fraud risk.

How to Use Sea Waybill in Letters of Credit Transactions:

Non-negotiable Sea Waybill is covered under article 21 of UCP 600.

A non-negotiable sea waybill, 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
    • the master or a named agent for or on behalf of the master.
  2. indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit.
  3. indicate shipment from the port of loading to the port of discharge stated in the credit.
  4. be the sole original non-negotiable sea waybill or, if issued in more than one original, be the full set as indicated on the non-negotiable sea waybill.
  5. contain terms and conditions of carriage or make reference to another source containing the terms and conditions of carriage (short form or blank back non-negotiable sea waybill).
  6. contain no indication that it is subject to a charter party. (source : UCP 600)

Special Hints Regarding the Sea Waybill From ISBP (International Standard Banking Practice):

  1. To comply with UCP 600 article 21, a non-negotiable sea waybill must appear to cover a port-to-port shipment but need not be titled “Non-negotiable Sea Waybill” or similar.
  2. If a credit requires presentation of a non-negotiable sea waybill (“Sea Waybill”, Non-negotiable Port-to-Port transport Document” or similar) covering sea shipment only, UCP 600 article 21 is applicable.

Sea Waybill Example:

You can find a sample sea waybill below in blank format.

Please keep in mind that this sea waybill format is not suitable for letter of credit, because it does not contain any reference to contract of carriage.sea waybill example