1. Lecture 10 Shipment and Ocean Bill of Lading (B/L)

2. Background:
International cargo transportation is an indispensable part of international trade because the seller cannot fulfill his obligation to deliver if the goods are not dispatched. Therefore,

3. before signing the contract, the two parties of a sales contract or a purchase contract must have a detailed discussion on the following items:
Modes of transport
Time of shipment
Place/port of loading and unloading
Shipping advice
Partial shipment and transshipment
Shipping documents, etc.

4. I. Ocean Transport
II. Terms of Shipment in the Contract and the Covering L/C
III. Types of Ocean Bills of Lading
IV. Contents of Ocean B/L and Its Making
V. Specimen Letters

5. I. Ocean Transport 1.How to choose the method of delivery or transport
2. modes of transport
3. Types of Ocean Transport

6. 1.How to choose the method of delivery or transport
the safety of the goods
freight
time of arrival
sales of the goods
development of business

7. 2. modes of transport ocean transport railway transport air transport
container
international multi-modal transport
postal transport
highway
inland waterway transport

8. 3. Types of Ocean Transport
According to its mode of operation, ocean transport can be divided into two types:
1) Liner Shipping/liner transport
2) Chartering shipping/tramp shipping.

9. 1) Liner Shipping/liner transport
Definition of Liner
characteristics of Liner shipping
liner Freight
basis of liner freight

10. Definition of Liner
A liner is a vessel that sails according to regular sailing route, regular ports of call, regular sailing schedule and has fixed freight.

11. characteristics of Liner shipping
A. the liner has regular line, ports, sailing schedule and relatively fixed freight.

12. B. it is suitable for cargoes of small quantity.
Liners are mainly used to carry textiles, garments, foodstuffs, light industrial products, artificial crafts or some valuable goods, whose quantity is usually less than a ship’s load. So many shippers book the shipping spaces they need in the same ship to fill up the whole ship. If a ship can be fully occupied, they will charter a whole ship.

13. C. Loading and unloading charges are included in the freight.
D. B/L issued by the shipping company is the evidence of the contract between the shipping company and the shipper showing the rights and obligations of two contracting parties.

14. E. Liner shipping is irrespective of demurrage and dispatch money.
F. Liner shipping provides good service and simple procedures.

15. liner Freight A. basic freight
It is charged to all cargoes, it is the main part of the liner freight.
B. surcharges
It is charged to the cargoes according to different conditions.

16. Heavy-lift additional
Over-length additional
Direct additional
Transshipment additional
Bunker surcharge
Alternation of destination additional 变更卸货港附加费
Port congestion additional 港口拥挤附加费

17. basis of liner freight
The freight charged by the shipping company is based on the weight or volume.

18. They are often expressed in the following symbols in the liner freight tariff:

19. -W means the freight is calculated according to the gross weight of the goods, (also called “weight ton”)
-M means the freight is calculated according to the volume or measurement of goods (also called “measurement ton ”)
-W/M means that freight is calculated according to weight and volume separately, then charged to the shipper according to the whichever is higher.

20. -A.V. or Ad Val or ad valorem means the freight is calculated according to a certain percentage of FOB value.
-According to the number of the goods, the number of container, etc.
-According to the temporary agreement entered into between the ship-owner and the consignor, the freight is charged to the consignor on some bulk cargoes, such as grain, beans, coal, ore, etc.

21. Chartering Shipping or Tramp Shipping
definition of tramp
characteristics
Types of Chartering Shipping

22. definition of tramp
A tramp is a freight-carrying vessel that follows no firm schedule, has no set routes or times, and sails off to where the goods are available and the “pickings” are the best. Their rates are not fixed but are determined by market.

23. Tramp ships are always charted
Tramp ships are always charted. The shipper charters the ship from the ship owner by signing a “charter party” for the carriage of the goods.

24. characteristics of chartering shipping or tramp shipping
- It has no fixed route, ports, schedule and freight. It is agreed upon by both parties and often varies with price fluctuations of world market.

25. - Transport is done according to the charter party, in which it stipulates the sailing route, the types of the goods, ports of call; it shall also stipulate the rights and obligations of the two parties. Charter party is the basis for settling disputes.
- It is suitable for cargoes of low value and large quantity that can fill up the whole ship, such as grains, ore, coal, fertilizer, cement, etc.

26. Types of Chartering Shipping
It falls into three kinds:
1)voyage charter
2)time charter
3)bare boat charter

27. 1)voyage charter -Types -Freight of voyage charter
-Loading and Unloading Expenses
-lay days, demurrage and dispatch money

28. -Types
It includes: single voyage charter, return voyage charter, and consecutive voyage charter.

29. -Freight of voyage charter
The freight shall be agreed upon by both parties and written down in the voyage charter party. There are two ways:

30. First, freight is charged according to the freight ton, either weight ton or measurement ton;
Second, freight is charged to the character according to the lump sum freight.

31. -Loading and Unloading Expenses
There are four ways:
Gross terms of berth terms
- FI (free in )
FO (Free out)
FIO (free in and out)

32. gross terms of berth terms
It means that the ship-owner bears the loading and unloading expenses. It is the same as liner, so it is also called “Liner Terms”

33. FI (free in )
It means that the ship-owner does not bear the loading expenses, but bears the unloading expenses.

34. FO (Free out)
It means the ship-owner bears the loading expenses, but does not bear the unloading expenses.

35. FIO (free in and out)
It means the ship-owner does not bear the loading and unloading expenses. When this method is adopted, it should be clearly indicated in the voyage charter party that the charterer bears the stowage and trimming charges(理仓费和平仓费).

36. -lay days, demurrage and dispatch money
Lay days: a voyage charter party also stipulates the number of days allowed for loading and unloading the cargoes. That is: the time limit of loading or unloading the goods.
Demurrage: a certain amount of fine for the overrun or overdue days to the ship-owner.

37. Dispatch money: if the charterer finishes loading and unloading ahead of time, then the ship-owner shall pay a certain amount of bonus to the charterer for each day not taken up.

38. (2) Time charter
The charterer charters the ship for a definite period of time from several months up to several years, during which the ship is managed and used by the charter.
Main contents of a time charter party: description of the ship, trade limit, charter period, delivery of vessel, charter hire, etc.

39. (3)Bare boat charter
It is different from the time charter. Under time charter, during the period of chartering, the ship-owner provides the charterer with the crew, while under bare boat charter; the ship-owner only provides the charterer with a bare boat, the ship itself.

40. II. Terms of Shipment in the Contract and the Covering L/C
Besides mode of transport, terms of shipment include the following:
1. Time of shipment
2. Port of shipment
3. Port of destination
4. Shipping advice
5. Partial shipments and transshipment
6. Shipping documents

41. 1. Time of shipment
Time of shipment is the time limit or deadline by which the seller must effect shipment of the contract goods.
1)Major ways of stipulating time of shipment
2) Stipulations of UCP500
3) Points to note when traders discuss the time of shipment in the contract

42. 1)Major ways of stipulating time of shipment
shipment on or before or about April 15, 2009
shipment not later than March 20, or latest shipment date: March 20, 2004.
Shipment to be made during July 2004, or shipment during June/July, 2004.

43. 2) Stipulations of UCP500
Article 46: General Expressions as to Dates for Shipment.
Expressions such as “prompt”, “immediately”, “as soon as possible”, and the like should not be used. If they are used banks will disregard them.

44. If the expression “on or about” or similar expressions are used, banks will interpret them as a stipulation that shipment is to be made during the period from five days before to five days after the specified date, both end days included.

45. Article 47: date terminology for periods of shipment.
The words, such as “to”, “until” “till” “from”, applying to any date or period in the credit referring to shipment will be understood to include the date mentioned.
The word “after” will be understood to exclude the date mentioned.

46. The terms “first half”, “second half” of a month shall be construed as the 1st to the 15th, the 16th to the last day of such a month respectively, all dates inclusive.
The terms “beginning” “middle” or “end ” of a month shall be construed as the 1st to the 10th, the 11th to the 20th, and the 21st to the last day of such month respectively, all dates inclusive.

47. 3) Points to note when traders discuss the time of shipment in the contract
a. Availability of goods and shipping space
b. Flexibility and clarity of stipulation and absence of ambiguity
C. Nature of cargoes

48. a. Availability of goods and shipping space
The exporter should consider whether he can get the goods ready before shipment date. That is to say, the exporter needs to make sure whether the goods are ready and whether the ship to carry the goods is available. The goods and the ships deserve careful consideration when discussing time for shipment with the importer before the contract is signed.

49. b. Flexibility and clarity of stipulation and absence of ambiguity
the time of shipment should be stipulated in a clear, sometimes flexible, not ambiguous way.

50. c. Nature of cargoes
It should be considered because some goods like tobacco should be loaded in good weather and more days should be allowed if shipment is to be made in rainy season.

51. 2. Port of shipment and port of destination
1) Port of shipment is also called loading port. When choosing a port of shipment, the exporter should obey the following principles:
2) When determining the port of destination, traders should pay attention to the following:

52. 1) Port of shipment is also called loading port
1) Port of shipment is also called loading port. When choosing a port of shipment, the exporter should obey the following principles:
A. the port of shipment shall be close to the origin of the goods.
B. the exporter should also take into consideration the port facilities and standards of freight and various charges.

53. 2) When determining the port of destination, traders should pay attention to the following:
A. we should not accept the port in the country with which our government does not permit to do business.
B. the stipulation on the port of destination should be clear and specific. Ambiguous terms, such as “European main ports” “Japanese ports” shall be avoided.

54. C. if the exporter has to choose a port that has no direct liner to stop by, he should stipulate “transshipment to be permitted/allowed” in the contract.
D. Pay attention to the same name for different ports of destination. The name of the country should be added after port of destination to avoid wrong delivery of the goods.

55. 3. Shipping advice
Shipping advice is necessary after shipment is effected. If F-terms are used, the exporter shall inform the importer of the departure time immediately in order for the importer to arrange insurance and inform the importer of the arrival time so that the importer may take delivery of the goods ordered without any delay under both C-terms and F-terms. the shipping advice often includes contract number, name and quantity of the commodity, name of the carrying vessel, date and number of B/L, invoice value, ETD, and ETA, etc.

56. 4. Partial shipment and transshipment
1） Partial shipments
2) Transshipment

57. 1） Partial shipments
A. Partial shipment means shipping the commodity under one contract by more than one shipment. In this case, a large amount of export goods is involved in one transaction and are shipped in several lots by several carriers onto different means of conveyance.

58. B. Stipulation of UCP500 Article40: partial shipments/Drawings
A. Partial drawing and/or partial shipments are allowed, unless the credit stipulates otherwise.
This item means that if there is no stipulation in the contract as to whether partial drawings and/or partial shipments are allowed or not, then partial drawings and/or partial shipments are allowed.

59. b. transport documents which appear on their face to indicate that shipment has been made on the same means of conveyance and for the same journey, provided they indicate the same destination, will not be regarded as covering partial shipments, even if the transport documents indicate different dates of shipment and/or different ports of loading, places of taking in charge, or dispatch.

60. Article 41: Installment shipments/drawings
If drawings and/or shipments by installments within given periods are stipulated in the credit and any installment is not drawn and/or shipped within the period allowed for that installment, the credit ceases to be available for that and any subsequent installments, unless otherwise stipulated in the credit.

61. The above stipulation means if the exporter does not fulfill his obligations to deliver the goods within the stipulated time limit in any lot, then this lot and subsequent lots all cease to be effective.

62. 2) Transshipment Stipulation of UCP500
Article 23b: Marine/Ocean Bill of Lading
Article 23-c:

63. Article 23b: Marine/Ocean Bill of Lading
Transshipment means unloading and reloading from one vessel to another vessel during the course of ocean carriage from the port of loading to the port of discharge stipulated in the credit.

64. Article 23-c: Unless transshipment is prohibited by the terms of the credit, banks will accept a bill of lading which indicates that the goods will be transshipped, provided that the entire ocean carriage is covered by one and the same bill of lading.

65. It can be concluded from the above stipulation that if the L/C does not stipulate clearly that transshipment is prohibited, then it is deemed to be “transshipment is allowed.”

66. Types of Ocean Bill of Lading
Invoice, packing list, insurance policy, and Ocean B/L are all called shipping documents.
Ocean B/L is one of the most important shipping documents in international trade.

67. Functions of B/L
Classifications of Bill of Lading

68. It is a receipt of the goods given to the shipper by the shipping company or its agent.
It is evidence of the contract of carriage between the shipping company and the shipper.
It is a document of title to the goods, entitling the consignee or holder of the B/L to take delivery of the goods when they arrive at the destination.

69. Classification of Bill of Lading
1). on board bill of lading and received-for-shipment B/L
2)clean bill of lading and unclean bill of lading.
3)straight B/L, Order B/L and Blank B/L

70. 4) B/L, transshipment B/L, combined transport B/L (Through B/L) and Multi-modal transport Document (MTD)
5)long form B/L and short form B/L
6) a Liner B/L and a Charter Party B/L.
7) “ante-dated B/L” and advanced B/L

71. on board bill of lading and received-for-shipment B/L
according to whether the goods have been shipped on board the ship or not, it can be classified into two kinds:

72. on board bill of lading
When the goods are shipped on board, the mate issues the mate’s receipt to the shipper after receiving and checking the goods on board. Then the carrier, its authorized agent, the captain, or the captain’s agent, issues bills of lading by adding their signature and the shipment date against the mate’s receipt. According to the banking practice, the bills of lading the exporter presents to the bank must be “shipped/on board bills of lading ”.

73. received-for-shipment B/L
It only acknowledges that the shipping company has received the goods for shipment. It does not show when and by what vehicles they will be shipped and by what steamer. Such a bill of lading is usually unacceptable to the bank or the importer. However, it can be converted into a shipped bill of lading by stamping “shipped on board” on it together with the name of the vessel, the date of shipment and the signature of the carrier when the goods have been loaded onto the ship.

74. clean bill of lading and unclean bill of lading
According to whether there is a notation of poor condition of the goods on the bill of lading, it can be classified into clean bill of lading and unclean bill of lading.

75. clean B/L
It means when the shipping company receives the goods, they are in apparent good order and there is no notation of poor condition on the bill of lading.

76. unclean B/L
When the shipping company receives the goods that are damaged or in poor condition, this is so noted on the mate’s receipt. If it is so noted on the bill of lading, then it becomes an unclean bill of lading.

77. straight B/L, Order B/L and Blank B/L
According to the ways of stipulating the consignee, it can be classified into three kinds: straight B/L, Order B/L and Blank B/L

78. straight B/L
The straight B/L is one with the name of the consignee clearly given on the B/L.

79. Order B/L
The order B/L is made out by writing “to order” or “to order of …”, instead of the name of the consignee, in the appropriate area in the B/L. it is negotiable by endorsement.

80. blank B/L
this is the kind of bill of lading where the place of consignee is left blank or “bearer”, with neither the name of the consignee, nor the wording ’to order, or to order of···’.
It is negotiable with no endorsement required at all. Anyone who holds the B/L can own the title to the goods.

81. According to different modes of transport, it can be divided into four kinds.
Direct B/L, transshipment B/L, combined transport B/L (Through B/L) and Multi-modal transport Document (MTD)

82. Direct B/L
It is issued by the carrier and the goods are not allowed to be transshipped but carried direct from the port of shipment to the port of destination.

83. Transshipment B/L
This type of B/L is issued by shipping companies when there is no direct services between port of shipment and port of destination, the goods have to be transshipped at an intermediate port to another vessel.

84. Combined transport B/L Through B/L
It is also called through B/L and restricted to the combination of ocean transport with other modes of transportation.

85. Multi-modal Transport Document (MTD)
It is also called “combined transport document” (CTD). It is a document that evidences the combined transport contract and indicates that the multi-modal transport operator shall take over the goods and shall be responsible for delivering the goods according to the clauses in the contract.

86. long form B/L and short form B/L
According to the contents of the B/L, it can be divided into two forms:

87. long form B/L
Long form B/L refers to the B/L on the back of which all the detailed terms and conditions about rights and obligations of the carrier and the consignor are listed as an integral part of the B/L. it is more widely used in real practice.

88. short form B/L
It refers to the B/L that omits the terms and conditions on the back of the B/L. the wording “short form B/L” is printed on the B/L. It is also noted on it that “this B/L is subject to the terms and conditions of our long form B/L”. this kind of B/L is seldom used.

89. According to the types of the carrying vessels, it can be divided into a Liner B/L and a Charter Party B/L.

90. “ante-dated B/L” and advanced B/L
According to the time of issuing the B/L, it can be divided into “ante-dated B/L” and advanced B/L, both of which are illegal. But in practice, they are often used.

91. ante-dated B/L
If the actual loading date is slightly later than the shipment date stipulated in the L/C, the carrier, sometimes, at the request of the shipper, will issue an anti-dated B/L so as to meet the requirments of the L/C. if the date shown on the B/L is later than the L/C stipulations, the bank will not accept such a bill of lading for negotiation, payment or acceptance. If the buyer finds this, he may refuse the goods or lodge a claim against the carrier or the seller.

92. Advanced B/L
Sometimes, the expiry date draws near but the goods have not been loaded on board the vessel. In order to present the documents for negotiation to the bank within the expiry date, the shipper will borrow the bill of lading from the shipping company by submitting a letter of indemnity to the shipping company, who then may issue advanced B/L to the shipper.
To sum up, in international trade, the most frequently used bills of lading are clean, shipped on board, order bill of lading, endorsed in bland.

93. Section 4 Contents of Ocean B/L and Its Making
The main contents of an ocean B/L are as follows:
1.Carrier: it includes the name of the carrier and the major place of business, which are usually printed on the B/L.

94. 2)Shipper: it is often the seller, the exporter
2)Shipper: it is often the seller, the exporter. If it is otherwise stipulated in the L/C, do accordingly. If the applicant in the L/C is a middleman, he often requires the exporter to show applicant as shipper, then the exporter may do accordingly.

95. 3)Consignee: it should be filled up in exact accordance with the L/C stipulations because it relates to whether the B/L can be transferred and the title to the goods. The consignee should be “to order”, “to order of shipper”, then blank endorsed by the shipper; or “to the order of the issuing bank”

96. 4) Notify party/ notifying party: when the goods arrive at the destination, usually the carrier should notify one party of the arrival of the goods, most often, the importer.

97. 5)Name of the ocean vessel and its voyage No
5)Name of the ocean vessel and its voyage No. :they should be filled in according to the actual vessel name and voyage number from the carrier.

98. 6) port of loading
It is the starting point of the carrier’s liability, so it should be filled as it is.

99. if the L/C stipulates “shipment from china port to…”, you need also fill in the actual name of the loading port.
If the L/C stipulates “port of loading: your port”, then you should ship the goods at the port where the beneficiary lies.

100. 7)port of discharge
if it is a direct steamer without any transshipment, then port of destination should be filled in here.
If the port of destination has the same name with ports in other countries, then the name of the country should be added after the port of destination to avoid the goods being shipped to the wrong destination. If there is no direct steamer and the goods are to be transshipped, then you should type “the port of transshipment” after the port of destination.

101. 8) descriptions of the goods: it includes marks, packages, name of commodities, gross weight and measurement, etc.

102. 1)Marks and packages should correspond with those in the invoice.
2)Name of the commodity can be described in its general terms.
3)The gross weight and measurement should be filled in with the actual gross weight and measurements and should also be in consistency with that in the other documents.

103. 9)freight and charges
in this space, we do not need to fill in the actual freight and charges, but “freight prepaid, freight paid” under C-terms, or “freight collect, freight to collect” under F-terms. In practice, it is often typed in the blank space under description of the goods.

104. 10 Number of original B/L:
fill in this space according to the L/C stipulations. If the L/C stipulates “full set of Marine B/L”, it can be one original B/L according to UCP500. Quite often, it is issued in two or three originals.

105. 11.place and date of issuance
Place of issuance is the port of loading and the date depends on different types of B/L.

106. According to article 23 of UCP500, “if a credit calls for a bill of lading covering port to port shipment, banks will, unless otherwise stipulated in the credit, accept a document, however named, which…” it indicates that the goods have been loaded on board, or shipped on a named vessel.

107. However, in practice, many kinds of B/L adopt the form of Received B/L
However, in practice, many kinds of B/L adopt the form of Received B/L. its usual practice is that after the goods are shipped on board, the carrier adds a “shipped on board” notation in the blank space plus name of the vessel and its voyage No., in which case the received-for-shipment B/L is changed into on board B/L, and can be accepted by the bank.

108. 12.B/L No.
It is often typed at the top right corner. It is a reference number given by the carrier.

109. The above-mentioned clauses listed on the face of the B/L are mainly about the goods, the vessel and its voyage number, etc., while the terms and conditions listed on the back of the B/L are mainly about the details of the contract of carriage, such as the liabilities of carrier and the shipper, definition of the relevant parties, the applicable law of the B/L, methods and routes of carriage, validity, the carrier’s rights and limitations of liability, etc.