3 Bill of Lading Mistakes that Compromise Cargo Release

on August 26, 2016

checklistIt’s an unfortunate reality that cargo is sometimes released to someone other than the legitimate consignee when it reaches its destination. This is a costly headache at best and can have extremely dire consequences for both the shipper and consignee.

While the shipping line is usually blamed for this mistake, and the destination agent sometimes doesn’t follow proper protocol, the Bill of Lading (BOL) may actually be responsible.  Here are three common mistakes sellers make with their BOLs.

  1. Using a Straight Bill of Lading with the buyer as the consignee on a first-time trade before payment is received in full. Legal jurisdictions vary on their requirements. When it comes to legal identity, presentation of the original Straight BOL is not always required for the release of cargo. Remember: a Straight BOL is a non-negotiable, non-transferable document that acts as a receipt of goods and evidence of contract of carriage. Don’t use one on a first time trade with a buyer if you as the seller have not received your payment in full.
  1. Using a Seaway Bill of Lading listing the buyer as the consignee before your trust with this person or company has been established. No originals are issued with Seaway BOLs, and therefore anyone can secure the cargo without presenting an original BOL. These specific BOLs should be reserved for:
  • Intercompany shipments – XYZ Company in Boulder to XYZ Company in Fargo.
  • Shipment is between separate companies, but negotiations are not required between them either directly or through the bank.
  • When the shipper doesn’t need to submit the original BOL for payment.
  1. Issuing Telex Release without having received payment in full. According to com: “Telex Release is a message that is sent by the shipping line or agent at load port to their office or agent at discharge port advising that the shipper or exporter has surrendered one or all of the original bills of lading that have been issued to them, and that the cargo can be released to the consignee shown on the bill of lading without presentation of any original bills of lading.” It is difficult to recall or stop a telex release once it’s issued, so don’t risk using this with a buyer whom you do not yet trust.

The BOL that you should use instead, then, is a Negotiable (or Order) Bill of Lading. The destination port agent can only release cargo under this kind of BOL after at least one of the issued originals are surrendered and after checking the endorsements on the BOL. Additionally, consigning this BOL as “To Order of Shipper” will help you cover yourself, too.

If you have additional concerns about shipping, like damage, ISPM, corrosion, or other packaging issues, talk to Packnet. We’ve helped countless companies safeguard their shipments, recouping up to six-figures on waste, labor, materials, and replacements. Our experts are leaders in custom and industrial packaging solutions. Connect with us by calling 952-944-9124, or request a free assessment.