House Bill of Lading is dangerous

House Bill of Lading is DANGEROUS..!!

OK maybe that is a very dramatic statement to make..

But judging by the number of messages that I receive, the perception that some people in the industry have is that the House Bill of Lading is dangerous..

To illustrate, you can read below, one of several questions I received with regards to the usage of House Bill of Lading..

I have run into a situation in the past where I was being offered product from an exporter using a House Bill of Lading and then found out the same goods had been sold to and paid for by another buyer who also received a set of original house bill of ladings.

This demonstrated to me the dangers of House Bill of Ladings versus Shipping Line B/L.

Can you please explain the difference between a House B/L and Shipping Line B/L and the risks for an importer to accept a House B/L versus a Shipping line B/L as a transfer of ownership.

As I have mentioned in my articles about House Bill of Lading, a HBL is issued by a NVOCC, Freight Forwarder or Groupage Operator.. But where a HBL is issued, there will also be a corresponding Master Bill of Lading (MBL) issued on a back to back basis by the shipping line/ocean carrier..

Whether it is a House bill or a Master bill, the type of bill of lading issued and the way in which it is consigned is what makes it negotiable, transferable etc.. Many banks accept house bills as part of the documentary credit (letter of credit) process and allow for the title of goods to be transferred..

Therefore many traders and buyers don’t see any issues with receiving, using and negotiating using house bills of lading..

However, there is one very important area where the master bill of lading has an advantage over the house bill of lading and that is at the time of release of the cargo..

Even if the receiver has paid the NVOCC/Forwarder, surrendered the HBL (where applicable) and has done all the documentation relating to the HBL, unless the NVOCC/Forwarder has paid the ocean carrier, surrendered the MBL (where applicable) and has done all documentation relating to the MBL, the consignee on the HBL CANNOT secure release of the cargo as the cargo may be still under the custody of the ocean carrier..

So while there is a danger that an exporter may make use of a crooked NVOCC or Forwarder to unscrupulously issue duplicate or fraudulent bills of lading (as in the case above) or a crooked NVOCC/Forwarder may extort money from the receiver, the house bill is still part of a large amount of business handled across the world by reputed NVOCCs and Freight Forwarders..

Therefore, if you are importing for the first time or exporting for the first time, and you plan to use a house bill of lading, it is very important that you do due diligence and safeguard yourself against shipping and freight fraud..

You can read several articles on this blog about the various types of fraud..

So, what do you think..?? Lets take a quick vote..