Bills of Lading and Variation
Clients often ask about the different variations of bills of lading and the purposes of each one. Unfortunately though, this question usually comes up when it is too late because goods might have been released to the consignee without the original documents, and shipper is claiming liabilities. Hopefully, our elaboration below is useful to the logistic service providers, as well as clients in the import and export sector.
Original Bills of Lading
Original Bills of Lading are defined as the standard for international shipping and represent the basic process for which other variations are built on. When the freight is laden on board at origin, the original bill of lading is produced and provided to the shipper. The shipment cannot be released to the consignee at destination as long as the shipper holds that original bill of lading. At some point, the shipper will release their hold on the cargo, usually once the shipper has been paid, and the original is sent to the importer by courier, so it can be presented to the shipping company at destination to secure the release of the freight. It’s a mouthful, but this simple document flow is in place to protect various parties involved in the transaction of the shipment by controlling when and to whom the freight can be released. However, it can be a slow process in a time when instant communication is the norm.
Telex Release Bills of Lading
In the case of Telex Release Bills of Lading, the original bills of lading are still issued to the shipper when the freight is laden on board. Once the shipper has decided to release their hold on the cargo, they will surrender the original bill of lading directly back to the office of the shipping company that issued them, rather than sending them to the consignee via courier. The origin office for the shipping company will then electronically send a message to their destination office to inform them that the original bill of lading has been surrendered. This event eliminates the need for the importer to provide an original bill of lading at destination to secure freight and can speed up the release of freight at destination and reduce courier fees.
Express Release Bill of Lading
The Express Release Bill of Lading, also known as a seaway bill, is the quickest variation of a bill of lading and is used in cases where the shipper has decided in advance to release their hold on the cargo immediately. In this case, an original is never issued. When the freight is laden on board the shipper will just receive a copy of the bill of lading for their reference. The shipper is not required to surrender anything back to the shipping company and neither is the importer, so freight is released as soon as it is available. It also eliminates the need for any courier fees, since document copies can be sent electronically by fax or email.
Now that you know the differences, it bears the question of which variation to use. For the importer, quicker is generally better, but as the originating party, the shipper dictates how they want the bill of lading to be issued. Each variation of the bill of lading provides a different level of protection for the shipper, and shippers will pick the one that they are most comfortable with. In addition, the specific nature of some shipments, like those moving on a letter of credit, may require that you use original bills of lading. However, as the importer, it does not hurt to ask your shippers if it is possible to use one of the quicker variations. On numerous occasions, I have noticed shippers will use original bills of lading because that is just how they have always done it, but a simple question from the importer was enough to get them to reevaluate the process.
As the importer, the more you can streamline the process and get away from using original documents the better. You will experience less time and frustration in the end.
Chak & Associates Corporate Commercial Team in Hong Kong welcomes any questions from businesses in Hong Kong about the impact of the new law, or the content of the linked publications.
Email： carrie.hui＠chakandassociates.com (Ms. Hui)
Telephone：＋852 5920 0007 (Mr. Yan)