Not a trace – our Bill of Lading got lost

Many companies, indirectly involved in the shipping of goods, underestimate the risk of loss of the ‘Original Bill of Lading’ which forms an integral part of the Letter of Credit process. 

The Bill of Lading is a set of physical documents that have to be transported across the globe, usually by courier, to the place of delivery in order to get the goods in transit released. 

As it happens, they sometimes get lost. These documents are essential as they are documents of title, meaning that whoever owns the bill is entitled to delivery of the goods. This also means that losing this document has major repercussions, which one of our customers experienced recently when they tried to get a cargo, containing chemicals, in Africa delivered. 

The loss of the Original Bill of Lading required them to get a letter of indemnity (LoI) and a bank guarantee, both involving cumbersome processes. The result of the fact that the shipper refused to take any risk in terms of his liability in case of a potential claim of non-delivery, which could occur if he were to have delivered the cargo to the wrong party.

The LoI had to formally discharge him of any responsibility in this regard. The guarantee would then cover a potential subsequent refusal of the rightful consignee to pay, not having received the goods. To get these documents we had to produce a lot of supporting documentation, such as, a written statement of loss, the packing list, the commercial invoice, and a copy of the LC (its validity being conditional on the existence of an OBL). Lastly they needed to put in a formal request to have the goods released without OBL as the issuance of a new OBL would have taken even longer; more work for the lawyers, more costs.

Having gone through all of this, incurring significant costs and ending up with some very unhappy customers they wondered if there wasn’t a better way to manage this risk or even to avoid it altogether. We introduced then to Mercurion Trade Services, a company offering a platform through which transactions can be safely settled without the need for an OBL, and at the same time offering an alternative for an LC.

The process is simple, safe and much more efficient. It’s based on an Escrow process: buyer pays in Escrow and only when the confirmation of delivery at the agreed place of destination has been uploaded onto the platform, funds will be released. All through an entirely digital interface in real time. They are glad to have found this new way of doing business; less bureaucracy feels so much better!