When answering my last post Question regarding cargo under Letter of Credit, I mentioned that part bills could be a solution for two shipments in a same container where part of the cargo is covered by L/C and the other part is not..
However, there are some criteria/requirement in order for the carrier to be able to issue Part Bills of Lading and for the customer to accept Part Bills of Lading for this particular scenario..
We will examine these criteria/requirements in this post..
But first, let’s refresh What is a part bill of lading and how will it assist in this case..??
Part Bills of Lading are multiple Bills of Lading issued for the same container in order to accommodate the request of the client for purposes of documentation, trade or delivery..
In this particular case, part of the cargo in a container is shipped under L/C and other part is not..
So 2 part bills of lading has to be issued – 1 for the cargo under L/C which will invariably be a Negotiable (To Order) bill of lading and another 1 for the cargo not under L/C which will invariably be a Straight Bill of Lading..
It may well be possible that at the destination, the customer who has been issued a Straight Bill of Lading is ready to receive cargo before the customer who has been issued a negotiable bill of lading, because he might still be waiting for the documentary credit process to be completed..
Therefore the concerns regarding the delivery of the cargo, needs to be addressed..
1) Ideally there should be a common forwarder at destination for both shipments so that he can collate the documents and take delivery from shipping line and release cargo to the individual clients..
However, for this, there has to be a Master Bill of Lading in the name of the forwarder and the forwarder should be the one issuing two House Bills of Lading in the name of both the consignees..
2) If the forwarders are different
Scenario 1 : The line will have to issue two of their bills of lading directly.. In this case, the shipping line will have to arrange both the cargoes in the container to be unpacked at the same time at a bonded warehouse under their custody..
Upon unpacking, the line will have to wait for the documents authorised by customs and port and payments due, after which the cargoes maybe released..
Scenario 2 : If the line is unable to do the above unpacking/storing option, the two forwarders should come to an agreement as to who will be the lead forwarder (this is generally decided by who has the maximum cargo in the container) and full container maybe released to that lead forwarder provided that all the customs/port documents and monies are recovered for both cargoes..
That lead forwarder would then unpack the cargo at his warehouse and release the other part to the other forwarder..
As you can see from above, it is not such an easy process to accomplish above and requires a lot of co-ordination..
General examples of when, where and under what circumstances a Part Bill of Lading maybe issued..
1) A forwarder handles the shipments of one shipper/multiple consignees and packs all the cargo in the same container to optimize the utilization of the container and also to achieve economies of scale.. Similar to Groupage, but here the forwarder doesn’t want to issue his House bills of lading..
2) Same shipper ships different cargoes covered under different order numbers, say 4 orders in one container, to 1 consignee.. This is done sometimes to differentiate the pricing of each cargo..
In these cases, the shipper/booking party may request the shipping line to issue the number of bills of lading as required..
Example, if there are three bills of lading covering the cargo packed in a container number BIMU1234567, three bills of lading SAFRES1234567, SAFRES1234567, SAFRES1234567B maybe issued whereby
- BL 1 = SAFRES1234567
- BL 1 = SAFRES1234567
- BL 1 = SAFRES1234567B
In order to ensure that each of the bills of lading are individual, yet linked to each other, it is very important that the body of the bill of lading denotes clearly that there are part bills issued.. It is usually done by endorsing the body of the bill as
- SAFRES1234567 should be endorsed as Part 1/3 (indicating that this is the 1st part of 3 part bills)
- SAFRES1234567A should be endorsed as Part 2/3 of bill of lading SAFRES1234567 (linking it to the first bill)
- SAFRES1234567B should be endorsed as Part 3/3 of bill of lading SAFRES1234567 (linking it to the first bill)
SAFRES1234567 being the primary bill will normally carry all the freight charges and the freight charges for all 3 bills has to be paid by one entity (either shipper or consignee)..
in my case, recently the bank charged the customer over 400 Euros of discrepancies, in the container there was 2 merchandise, each one with LC, both LC to the order of the bank, notify the customer, but the shipping company wrote on the BL: “goods only to be released against joint presentation of all originals Bs/L”, and the bank considered this as a discrepancy.
Even though the customer accepted the discrepancy and waived them, but the bank still charged over 400 euros.
Is this normal?
the shipping company says they will always write that clause on their BL when there is more than one BL in the container.
Any help or advice please?
Hi Karim, shipping line can write that because they cannot release part of a container when there are 2 bills involved.. In terms of banks considering it as a discrepancy, in my opinion, they should not as it is not a discrepancy or deviation UNLESS the LC has the clause or notation “Part Bills not allowed”..
Great Article. Thanks for the info. Does anyone know where I can find a blank UPS Bill of Lading?
Hello Annmarie, you mean as in a bill of lading issued by UPS, the freight forwarder..??
Just a quick introduction: I have a background as a freight forwarder – but the last 20+ years I have worked with LCs; and was part of the ICC group that drafted the ISBP 745 (International Standard Banking Practice for the Examination of Documents under UCP 600).
It is correct as Nafi SEREZ indicates that part bills of lading may be the source of problems when an LC is involved.
ISBP 745 paragraph E28 (Release of goods with more than one bill of lading to be surrendered) reads:
A bill of lading is not to expressly state that goods covered by that bill of lading will only be released upon its surrender together with one or more other bills of lading, unless all of the referenced bills of lading form part of the same presentation under the same credit.
For example, “Container XXXX is covered by B/L No. YYY and ZZZ and can only be released to a single merchant upon presentation of all bills of lading of that merchant” is considered to be an express statement that one or more other bills of lading, related to the referenced container or packing unit, must be surrendered prior to the goods being released.
The reason for this is that the banks want to safeguard the buyer against the situation where, payment must be made under the LC (because the documents comply with the LC terms and conditions), but the buyer is unable to obtain release of the goods because another bill of lading is required – but not presented.
In that respect it is important to note the following:
1: The LC banks do not have any problem with consolidated goods (e.g. being shipped as LCL/LCL).
2: The LC banks examine the documents (including the bill of lading) as they “appear on their face” – i.e. banks do not contact the shipping line / freight forwarder in order to investigate how the goods are being released to the consignee; rather they base their document examination on the data on the bill of lading; and would deem a text like the one in the example above as a discrepancy.
3: The fact that the bill of lading is “discrepant” means that the banks may refuse to pay. However in far the most cases the discrepancies are “waived” by the buyer – and payment under the LC is made accordingly.
In my book “UCP 600 Transport Documents” (http://www.remburs.com/UCP%20600.htm) I have dedicated a full chapter to the issue of “Movements” and Goods covered by more than one transport document.
Good day to all,
I would like to say something about this topic from shipping line and banks’ point of view as well. As you’ve already mentioned in the article shipping lines clause their bills with a part BL indicator while issuing Part Bill of Lading,”PART LOAD WITH BL XXXXX. CARGO TO BE DELIVERED AGAINST JOINT PRESENTATION OF Bs/L XXXXX & YYYYY. NO SEPERATE DELIVERY” for instance.
If such claused BL surrendered to the banks, they claim reservations on LC according to ICC ISBP 745 art. 114 and UCP 600 ph e28 and not willing to pay the price of goods. the banks are right on their claim unless all part load bills covered by same credit.
After this conflict between banks and shippers we are usually requested by the shippers to delete such clauses from our Bs/L in order to comply with banks’ criteria. since we want all our containers to be released at once, we are not willing to delete this clause from Bs/L.
greetings from Turkiye