Can a negotiable bill of lading be telex released..??

telex release - shipping and freight resourceMaybe because it is one of the most important documents in global trade, there always seems to be a degree of uncertainty around a bill of lading and questions such as this..

Many people have doubts regarding which bill of lading to issue, how many to issue..

There are also questions such as what is a Telex Release, how it works and under what circumstances a Telex Release maybe issued..

In this particular post, I will cover the circumstances under which a Telex Release maybe issued and whether a telex release can be actioned on a negotiable bill of lading..

To start off with, let me jog your memory a bit on the functions of a bill of lading and the types..


Bill of Lading (B/L), is a transport document that has 3 basic functions or roles..

  1. Evidence of Contract of Carriage
  2. Receipt of Goods and
  3. Document of Title to the goods

roles of a bill of lading

Based on the above roles, there are a few variations of the B/L (let’s call it Types), important among which are as below :

  • Straight Bill of Lading
  • Sea Waybill of Lading
  • Negotiable Bill of Lading or Order Bill of Lading

 

Straight Bill of Lading

1) When a B/L is issued in Original(s) to a “named” consignee it is referred to as a “Straight B/L”.. A straight B/L is a NON-NEGOTIABLE & NON-TRANSFERABLE DOCUMENT and is one of the most popular and common form of bill of lading issued..

When a straight bill of lading is issued, the cargo may be released ONLY to the named consignee and upon surrender of at least 1 of the original bills issued.. This condition for surrender of original bill for a Straight Bill depends on the country and its jurisdiction as some countries do not require this..

This B/L satisfies roles 1 & 2 above fully and does not satisfy role 3 (Document of Title) as the document is not negotiable or transferable..

Because of its non-negotiable and non-transferable nature, it is possible for a TELEX RELEASE to be issued for this type of bill of lading quite easily and is one of the most common bill types for which a telex release is issued..

 

Sea Waybill of Lading

2) When a B/L is issued to a “named” consignee but without any originals it is termed as a “Sea Waybill“.. This B/L is also a NON-NEGOTIABLE & NON-TRANSFERABLE DOCUMENT..

When a Sea waybill is issued, the cargo may be released ONLY to the named consignee.. Since no originals are issued in the case of a Sea waybill no surrender is required and the release may also be termed as an Express Release and is mentioned as such on the body of the B/L and manifest..

A Sea waybill is usually issued

  1. for inter company shipments like from ACME Company Hollywood to ACME Company in the Middle of the Australian Outback or
  2. where the shipment takes place between two different companies but there are no negotiations required between the two either directly or via bank for release of the cargo and
  3. the shipper doesn’t need to submit an original B/L to anyone to secure his payment

This B/L satisfies roles 1 & 2 above and does not satisfy role 3 (Document of Title) as the document is neither negotiable nor transferable..

Because there is no original bill of lading issues for this type, there is no requirement for a Telex Release for this bill..

Negotiable or To Order Bill of Lading

3) When a B/L issued is in Original(s) and consigned “TO ORDER” or “TO ORDER OF SHIPPER” or “TO ORDER OF XYZ BANK” it is termed as “Negotiable B/L or Order Bill“..

This B/L satisfies all of the above 3 roles..

When a negotiable bill of lading is issued, the cargo may be released ONLY to the party to whom the bill of lading has been endorsed to and only after they surrender at least 1 of the issued originals with proper endorsements..

Remember that there is no real limitation on the number of original bills of lading that may be issued..

These endorsements are done on Page 1 (usually referred to as the reverse of the bill of lading).. Due care must be taken to ensure that the delivery is given to the final endorsee as it is possible for a negotiable B/L to be endorsed or transferred to another company or a chain of companies..

Below are the permutations that I have seen so far being used in negotiable bills of lading in the consignee field and the relevant endorsements required..

Bill of Lading consigned to Endorsements Required on the bill of lading
A Company When consigned to a named consignee, the bill of lading is known as a Straight Bill of Lading, and in the case of a Straight Bill of lading, the release maybe given only to the named consignee and this bill of lading is not negotiable or transferable..
Individual’s Name When consigned to a named consignee, the bill of lading is known as a Straight Bill of Lading, and in the case of a Straight Bill of lading, the release maybe given only to the named consignee and this bill of lading is not negotiable or transferable..

Since the consignee is a private individual, release may be effected only after verification of Original ID of the person presenting the OBsL for release..

To Order or To Order of ZYX
Shipper’s endorsement stating DELIVER TO THE ORDER OF “ZYX Client” and ZYX’s company stamp and sign in case he is taking the final delivery or his endorsement stating, DELIVER TO THE ORDER OF “ABC Client” (if the cargo has been further sold)….
To Order of Bank Shipper’s endorsement stating DELIVER TO THE ORDER OF “XYZ BANK” and banks’ endorsement stating, DELIVER TO THE ORDER OF “ZYX Client” and ZYX’s company stamp and sign in case he is taking the final delivery or his endorsement stating, DELIVER TO THE ORDER OF “ABC Client” (if the cargo has been further sold)..

 

Now to the question “Can a negotiable bill of lading be telex released..??

The purpose of the shipper requesting the shipping line for a negotiable bill of lading is so that the shipper can endorse the bill of lading and sell the goods further to other parties who in turn can sell it to someone else by endorsing the same bill of lading..

Remember what I mentioned above that one of the roles of the bill of lading is “Document of Title to the goods”..

So the release will be given to whoever holds this duly endorsed “Document of Title to the Goods”..

When there is a Letter of Credit (L/C) involved, it may require the shipper to submit all originals of the bill of lading to the bank..

Once the bank receives these originals and all the conditions of the L/C are satisfied, they will pay the shipper what is due to them.. But all the originals of the bill of lading will remain with the bank till they have been paid by the actual receiver’s bank..

Also such cases involving banks, Letter of Credits, sending and receiving original documents manually between parties may take some time and in some cases the receiver might only receive the original documents after the cargo has arrived, especially with short sea transit..

So since the shipper has no originals with him/her, he/she cannot surrender anything to the shipping line and therefore A TELEX RELEASE CANNOT BE ISSUED..

This means only the rightful consignee can take release of the goods after paying their bank..

As you may know, a telex release is simply a message advising the destination agent of the shipping line that the shipper has surrendered one or all of the original bills of lading that were issued and that release maybe given to the consignee without presentation of any original bills of lading..

So, in conclusion and in practice, when a negotiable bill is issued, at least one duly endorsed original bill of lading is required for release at destination and therefore a telex release is usually not issued for a Negotiable Bill of Lading..

However, there may be cases where once the original bill of lading has been negotiated, it may be surrendered at an alternate place and the shipping agent there sends the Telex Release to the POD for release.. I haven’t heard of this happening much.. Have you..??

Any alternate views welcome with examples..


Article republished after critical updates

*** End of Article ***

18 thoughts on “Can a negotiable bill of lading be telex released..??”

  1. Definitively, no. No telex messages shall replace the OBL transmission to the legitimated party after consignee /the LOC bank has paid the shipment.
    However, today EDI / EB/L or banking system may regulate and/or approve an alternate transfer of OB/L rights to the final purchaser/legitimated party at the end or embarkment destination.

    Reply
  2. A question: if Straight BL is issued at the origin port overseas, shall the carrier release the cargo to the consignee without presenting the original BL at the destination port of the USA?

    Reply
  3. I believe the answer to the question (“Can a negotiable bill of lading be telex released..??”) could be yes , as a normal practice we as shipping line agents at port of discharge receive telex release approval through system generated E-Mail created by the shipping line agent at port of loading who in advance collects back the original bills from shipper (if they were collected ) in addtion letter of guarantee or LOI from the shipper confirming the cargo release to specific consignee , this is applicable when the B/L is consigned to TO ORDER or TO ORDER OF THE SHIPPER and inapplicable if the B/L is consigned to a Bank in case of L/C shipments.

    Reply
  4. Hi Bob, it is strange that the shipping world has stuck to a term used in the BC (before containers) days and still like to term telex release as per the comment from our friend Hariesh. One day they may wake up, same as using the term FOB for container shipments which is still widespread.

    Reply
  5. Once the holder of the signed Bill of Land (B/L) — whether he is a consignee, or an assignee — has surrendered the document (B/L) to the carrier of the Shipping company at the loading port or in any port where the carrier has an agent, the carrier or its agent can issue a Telegraphic Delivery Order by advising his counter-part, the shipping agent, at the discharge port to release the cargo to the consignee/assignee.

    Whether it is a Strait or Negotiable Bill of Lading, it is not proper, or safe, to deliver the cargo to the consignee/assignee, without the production of the Letter of Indemnity, signed by the aforesaid receiver, and counter-signed by the banker.

    Reply
  6. Actuially telexes no longer exist so it is a misnomer to call such a process a “telex release.” The more correct term in the 21st century is “express release”. This is typically arranged by the shipper at the outset, for an open account transaction when there is no need to hold the B/L for ransom against payment. The B/L is issued simply as a pdf showing zero originals issued.

    As for endorsements, my understanding has always been that if a B/L is issued to order and blank endorsed, any subsequent endorsement has no purpose or effect. If a B/L is endorsed to order of a party then that party will need to endorse the B/L.

    Reply
  7. I see only one way where cargo can be telex/express released without surrendering NEGOTHIABLE OBL which states e. g. “to order” in consignee field. Say shipper claims that all three OBLs were lost and no bank or LC involved.

    Then carrier might ask shipper to submit the Order Letter stating who is actual and the only consignee along with the Letter of Indemnity confirming that all three OBLs are non-recoverable and no claims will be made against carrier under any circumstances.

    It’s very tricky and probably some lines wouldn’t agree with that but if cargo is idling and accumulating costs then it might be the only option.

    Reply
  8. For those who feel there is no way that goods under a negotiable bill of lading may be released if they arrive before they have access to the OBL (happens under letters of credit), all hope of obtaining delivery and avoiding demurrage is not lost. The carrier may release the goods under a bank guarantee covering them for damages which may result from releasing goods without presentation of an OBL.

    Reply
  9. HI Sir
    I have exported cargo to my customer and I am asking shipping lien to issue
    negotiable bill of loading and consignee to order and notify is my buyer
    after I receive payment I submit OBL to shipping line and ask them to issue telex release to notify and ALL going well .

    Reply
  10. …well noted, what about if shipper is ready to surrender all 3/3 OBLs with duly signed and endorsed to shipping line ? Can we accept for Telex Release ?

    Reply
  11. Generally in LC or DP, when BL is consigned “To Order” via bank , exporter can send a Swift to Importers bank and recall the original documents of B/L & can surrender or Telex release.

    It is possible when have original documents in hand.

    Reply
    • Hi Kishan, thanks for your comment.. Can you pls elaborate what you mean by ” exporter can send a Swift to Importers bank and recall the original documents of B/L & can surrender or Telex release”.. Do you mean the bank will negotiate without the presence of the original bills of lading..??

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