Lost paper bill of lading results in $2 million in costs – not for sensitive readers

A Bill of Lading is a transport document acting as evidence of the contract of carriage, a document of title, and a receipt for the goods.. Currently, the majority of global transactions are done using paper bills of lading as has been done for centuries..

The below article shared by Grant Hunter is a cautionary tale of the disadvantages of using paper bills of lading in this day and age when safe and secure electronic bills of lading options are available..

In a recent incident, the loss of paper bills of lading led to significant complications, costs and delays that could easily have been avoided if electronic bills of lading had been used.

Typically, when paper bills are lost, parties accept a Letter of Indemnity (LOI) to reissue new bills. However, in this case, the ship owners insisted on a more stringent process. They required the bill of lading title holder to file an application in court at the port of destination to officially declare the original bills void and remove the title from the lost set.

The cargo interests found themselves in a prolonged debate over who held the title and who was responsible for filing the court application.

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Furthermore, the legal process to void the original bills and issue new ones was expected to take up to two months. Given the high value of the cargo, they were understandably hesitant to land it without proper title documents.

Although deemed “unreasonably cautious” by some, the owners’ stance was guided by their P&I club and was legally defensible to avoid a mis-delivery claim. However, their action resulted in the vessel being anchored off the port of destination for over two months, accruing a staggering $2 million in demurrage costs. There is currently no resolution in sight.

This complex and costly scenario highlights the critical importance of safeguarding shipping documents and points to a more efficient solution: electronic bills of lading (eBL). Unlike paper bills, eBLs cannot be lost, damaged, or stolen, offering a secure and efficient alternative. By adopting eBLs, the shipping industry can reduce the risk of lengthy legal disputes, decrease the risk of fraud, and ensure the seamless transfer of cargo ownership.

The lesson from this incident is clear: transitioning to electronic bills of lading can prevent similar logistical nightmares like a lost bill of lading, in the future, protecting both time and financial resources.