As an exporter engages in foreign trade business, you may have trapped into troubles that your customer take delivery of your goods without cargo releasing order, but the loss is on your own responsibility. Why?
So, here are tips to avoid such risks.
Case Description
A Chinese exporter A signed an export contract of garment with an American importer B, payment of 200,000USD shall be paid by L/C at 30 days after the B/L date. However, things didn’t go well:
At the request on the L/C issued by importer B, there would be a carrier designated by B, and the consignee would be B itself.
Exporter A submitted L/C to the bank and arranged shipment timely. Afterwards, the bank sent the L/C back to A because the bank didn’t receive payment.
A was told that their cargoes had been picked up by B already.
Why did the shipping company release cargoes with no cargo release order, while 3 original B/L were still kept in the bank?
A intended to take the shipping company to court and asked for compensation. However, according to American Customs law, consignee could take delivery of goods only with consignee’s identification document rather than the original Straight B/L. So, shipping company accepted no liability.
Eventually, exporter A had to suffer from great loss caused by missing payment and cargoes.
Why do such cases happen?
Many exporters think that they can ask carrier to send back goods or entrust an agent to resell goods if the customer (consignee) refuses to pay, or even though the consignee takes delivery of goods without showing the original B/L, the exporters can trace accountability on shipping company for such misbehavior.
But the truth is,
B/L is not that secure in some cases.
Release cargoes without B/L?
In accordance with laws of some countries, consignee can take delivery of goods with the endorsement of arrival notice and the identification proof of the consignee instead of Straight B/L.
For example
America, Brazil, Honduras, Salvador, Dominica, Venezuela, Turkey, etc.
Specifically, Blank B/L is not accepted by Brazil Customs, and only Straight B/L is allowable for cargo releasing.
Suggestion on avoiding risks
In that case, it was obvious that the importer B had “vicious attempts”, but exporter A didn’t realize, which resulted in great loss.
Therefore, in order to avoid such tragedy, it is suggested that:
Fully understand Customs requirements in different countries on cargo releasing, differences between Straight B/L and Blank B/L, don’t take blind obedience to requests made by the importer.
The carrier should not be designated by the consignee although it seems more efficient, because it is likely to be a trap.
Suitable laws should be appointed at the contract so as to make it clear that only with the original B/L can the consignee releases cargoes. For example, declaration that “Only Chinese Maritime Code of China is applicable to this B/L ” should be notified on the Straight B/L
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