As a Freight Forwarder, we have processed many permutations of how a bill of lading is arranged. In our experience, the most popular form of Bill of Lading arrangement is a Telex Released Bill of Lading. So, understanding how telex release works are important to ensure a smooth transport operation.
How does Telex Release Work? Telex Release Bill of Lading can be arranged with only the original bill of ladings, instead of seaway bills. The shipper has to give an expressed instruction to the shipping agent for a telex release arrangement. When all of the original bills of lading have been surrendered at the Port of Loading, and the Original Bill has been endorsed, the Shipping Agent will inform the Destination Port that the Bill of Lading has been released.
In this brief article post, we will examine how a telex release bill of lading is arranged from top to bottom, plus any scenario where a telex release bill of lading will not work. In addition to that, we also will look into the additional costs freight forwarders and ocean carriers charge for a telex release arrangement.
The Process of Telex Release
We briefly mentioned that telex release can only be arranged with an original bill of lading. To elaborate further, a telex release is most likely arranged with a Straight Original Bill of Lading.
A Straight Original Bill of Lading essentially makes a bill of lading non-negotiable. The consignee in a straight bill of lading is therefore determined and the sale of the cargo in-transit cannot be made other than the named consignee on the Bill.
Step 1 – Prepare Shipping Instructions with Telex Release
Shippers or freight forwarders acting on behalf of shippers normally prepare a shipping instruction. The shipping instruction format is variable according to each ocean carrier’s format.
The shipping instruction will include how the shipper wants the bill of lading to be arranged. Therefore, the instruction for a Telex Release Original Bill of Lading has to be included in the shipping instruction.
Step 2 – Shipping Agents prepare 3 Original Copies of Bill of Lading
We do get a chance to amend the bill of lading at the drafting stage of the bill. So, any changes in the shipment arrangement are best done at this stage in time.
Normally, the shipping agent will prepare 3 copies of the original bill of lading, but under a shipper or freight forwarder’s request, they can have more than 3 original Bill of Ladings issued.
This is a huge implication on the shipment process and we will examine that closely later.
Step 3 – Shipper holds the original bill of ladings until payments received
In standard practice, the shipper will hold custody of the original copies of bills of ladings, in exchange for the outstanding payments from the consignee. Usually, in global logistics, the full amount of the cargo invoice payment is not common, unless there is a high level of trust between the shipper and consignee.
The cargo payment will be broken down into part-of payments, sometimes 50% upfront, 50% upon shipment arrival.
Step 4 – Shipper endorses and surrenders the Bill of Lading to Shipping Agents
Once the consignee has settled all outstanding payments to the shipper’s satisfaction. The shipper will then give an instruction to the shipping agent for the telex release of the Bill of ladings. In this process, all original copies of the bill of lading have to be surrendered and endorsed by the shipper prior to a telex release arrangement.
How the shipper or the freight forwarder endorses the original bill of lading? By stamping its company stamp on the back of the Bill of Lading.
Additional Reading: What is a Surrender Bill of Lading
Step 5 – Shipping Agents instructs the Destination Agents that Bills have been Telex Released
All there is left to do for the consignee is to prove to the shipping agents at the destination of the identity of the consignee. In practice, the Shipper will provide a photostat copy of the Original Bill of Lading as a reference for the consignee.
In addition, the shipping agent may request for further documents of proof such as a letter of indemnity before the release of the cargo with a delivery order or Electronic Delivery Order (EDO)
Other Important Facts about Telex Release Bill of Lading
Telex Release of Negotiable Bill of Lading?
Telex Release Bill of Lading is almost exclusively arranged with a Straight Original Bill of Lading, where the named consignee is predetermined and cannot be changed via high sea sales.
Why shipping agents generally do not allow is because the shipping agents that represent the ocean carriers do not want to expose themselves to more liabilities from releasing the cargo to the wrong consignee, or more likely, releasing the cargo without the instructions of the shipper.
The consequences of wrongfully releasing the cargo are big, they will be liable for damage claims.
In the instance where a blatant attempt to defraud the shipper and the ocean carrier, if the release of cargo is not done diligently, the ocean carrier will be held accountable too.
Can House Bill of Lading be arranged with Telex Release?
Yes, the House Bill of Lading carries the same purpose as the Master Bill of Lading, if a shipment is arranged with a House Bill of Lading, the freight forwarder or the NVOCC will have their own releasing agents in the port of discharge.
The process of Telex Releasing a House Bill of Lading is similar to the process with Master Bill of Lading
How much does a Telex Release Bill of Lading Cost?
There are additional costs for a Telex Release Bill of Lading.
In an FCL shipment (Full Container Load), additional Telex Release fee costs around USD 35 to USD 65, depending on the country and the ocean carrier.
In an LCL shipment (Lesser Container Load), additional Telex Release Fee costs around USD 15 to USD 30. Again, the costs depend on the country and the ocean carrier.
Who bears the Telex Release Fees?
In order to determine who is responsible for the cost of Telex Release, we need to refer to the INCOTERM the shipment is arranged with.
For example, if a shipment is arranged via DAP/DDU, the shipper will bear the telex release fee; If a shipment is arranged via Ex-Work, the consignee has to bear the telex release fee.
But commonly speaking, the telex release fees are usually paid to the shipping agent at the cargo port of loading instead of the port of destination
When Shipping Agents do not accept Telex Release Instructions?
Once the shipping instruction has been received, and the original bill of lading has been issued. The shipper can still opt to change the status of the Bill of Lading as a Telex Release Bill.
Nevertheless, the condition is that the original bill of lading has to be surrendered to the shipping agent first.
Can I Telex Release a Bill of Lading without Surrendering all the Original Bill of Lading?
Whether the shipping agent agrees to receive one copy or all three copies of the original bill of lading before arranging a telex release is up to the approval of the ocean carrier and its shipping agent.
Can a Telex Release be arranged with a Seaway Bill?
There is no need for a telex released Seaway Bill.
We should really point out that Telex Release Bill of Lading is not a type of Bill of Lading, but rather a form of surrendering a bill of lading.
A Seaway Bill does not require an original bill of lading to be surrendered to the shipping agent. Because a seaway bill is prepared to facilitate faster logistic documentation by circumventing the need to prepare an original document.
If there is no need for an original bill of lading, there is no need for a surrender of the original bill of lading. Therefore, there is no need for a Telex Release arrangement.
The most important fact to know to understand how a telex release works are that a telex release bill of lading is not a type of BL, but a form or surrendering an original bill of lading. This method of surrendering a bill of lading just negates the necessity of sending an original document over to the destination port to speed up the documentation process.
Other than that, there is really no need for a Telex Release Bill of Lading.