What is a Surrendered Bill of Lading?

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Surrendering a Bill of Lading sounds like you are defeated and you have given yourself up to the police and admit defeat.

No, that is not what it meant, surrendering a bill of lading simply means returning the document in exchange for the goods transported. Nevertheless, “Surrendering a Bill of Lading” simply sounds way cooler than “Exchanging Bill of Lading for My Cargo”. So, I guess the industry went along with calling it a Surrendered Bill of Lading.

Technically, for a containerized shipment, you can’t just waltz into a ship, handover the document over to the vessel captain and ask for the goods there and then, though it may look cool if you do so.

There are procedures to surrender a bill of lading, some carriers are more particular and have more steps while others may be more lenient. The carrier’s responsibility stops when the bill of lading is surrendered so they put in place a checklist of requirements before handing over the cargo to you.

After all, handing over the cargo to a person that is not the importer is a serious matter, one that the carrier will do their best to avoid.

Here are a few frequently asked questions our customers generally ask about a surrendered bill of lading.

What type of bill of lading requires surrendering?

First and foremost, we need to establish that not all types of bills of lading require an official surrender of the document.

By now, we all know that a Bill of Lading serves three purposes.

  1. Proof of Contract of Carriage
  2. A Document of Title
  3. Receipt of Goods

All types of bill of lading are proof of a contract of carriage and a receipt of goods. But not all types of bill of lading is a document of title.

We only need to surrender the bill of lading if the bill of lading: –

  1. Applies as a “Negotiable” document of title; Or
  2. Issued as an original document

A Negotiable Bill of Lading is synonymous with a Transferrable Bill of Lading, which means that the ownership of the goods may not be concrete before and during the cargo transportation.

One rule of thumb to ascertain if the bill of lading is a negotiable bill of lading is to spot the consignee section of the bill of lading is issued with “To the Order of …” statement. In the instance where the trade is financed by the bank, the consignee on the bill will be labeled “To the Order of Bank ABC”.

Let’s reexamine several types of bill of lading and see what function the Bill of Lading applies

Telex Release Bill of Lading

Does the Telex Release Bill of Lading require the display of an original bill at the port of discharge? No.

Does the Telex Release bill apply as a “Negotiable” document of title? No.

Therefore, the Telex Release Bill of Lading does not require a surrender of the bill of lading.

Seaway Bill of Lading

Does the Seaway Bill of Lading require the display of an original bill at the port of discharge? No.

Does the Seaway Bill of lading apply as a “Negotiable” document of title? No.

Therefore, an Express Seaway Bill of Lading does not require a surrender of the bill of lading.

Original “Negotiable” Bill of Lading

Does the Original Bill of lading require a display of the original bill at the port of discharge? Yes.

Does the original bill of lading serve as a “Negotiable” document of title? Yes.

Therefore, the Original “Negotiable” Bill of Lading requires the final cargo owner to surrender an endorsed original bill of lading.

Original “Non-Negotiable” Bill of Lading

Is the bill of lading issued by the carrier an original copy? Yes.

Does the original bill of lading serve as a “Negotiable” document of title? No.

In this case, the original bill of lading has to be surrendered to the carrier before the cargo is transferred to the cargo owner.

We hope we did not lose you here; the seller may decide to do business the traditional way, which is the “document against delivery”, the seller will then only expressly require the original bill of ladings be issued and not copies.

Note: Original Bill of Lading is usually issued in 3 copies. The 2nd or 3rd copy of the Original Bill of Lading is STILL an original bill of lading despite having the word “Copy” on it.

Who is allowed to surrender a bill of lading?

We established that only the Bill of Ladings that are issued original and/or applies as a negotiable document of title requires needs to be surrendered. But can any tom, dick or harry do so?

Well, a hard no.

When a transfer of cargo is performed, the carrier is responsible too to ensure that the cargo is transferred to the rightful owner of the cargo.

After the dust settled, and the owner of the goods is ascertained, only the named cargo owner or it’s representative is allowed to surrender the Bill of Lading.

In practice, on the other hand, this procedure is undertaken by freight forwarders on behalf of the cargo owner.

How to surrender a bill of lading?

We surrender the Original Bill of Lading to the appointed shipping agent at the destination port. And the shipping agent will have the requirements outlined below be met.

1.     The rightful cargo owner is negotiated and ascertained

Let’s say that the import purchase is financed by a Letter of Credit from Bank ABC, the Bill of Lading will state the consignee as “To Order of Bank ABC”.

Once the Letter of Credit terms are met, the Bill of Lading will be endorsed by the bank and instructions given by the bank to release the cargo to the beneficiary cargo owner.

This process has to take place first before surrendering the Bill of Lading to the shipping agent.  

2.     Local Terminal Handling Charges and shipping fees are paid

The shipping agent will issue an invoice with local charges such as Terminal Handling Charges, documentation fees, Bunker Adjustment Fees or even container deposits to an appointed party. It all depends on the INCOTERM arranged to determine who is liable to pay the shipping agent those fees.  

3.     Letter of Indemnity (Optional) is issued.

As we mentioned, in practice a freight forwarder might be the appointed person to handle the last-mile delivery to the consignee.

The shipping agents will require a letter of indemnity that indemnifies the carrier from any wrongful release of cargo to the wrong person.

4.     Original Bill of Lading is endorsed by the cargo owner

The back of the Bill of Lading has to be endorsed by the cargo owner and/or the appointed service provider. To ensure the terms and conditions of the Bill of Lading are understood by the cargo owner.

Voila, the process of surrendering the Bill of Lading is complete.

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