Many of you, indirectly involved in the shipping of goods, underestimate the risk of loss of the ‘Original Bill of Lading’ affecting the ability the draw on the LC.

The Bill of Lading is a physical document that has 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 we experienced recently when we tried to get a cargo, containing chemicals, delivered in Port Elizabeth.

The cargo got stuck in the port as the original bill of lading (OBL) had been lost in transit. The courier was not able to trace its whereabouts following the usual request to find it. It meant that the cargo could not be released and had to be kept in the port, incurring the customary costs charged by the depot.

We had to go through a lot of ‘hoops’ to get out of this mess and it took us more than two weeks in total, meaning the buyer faced some serious down-time with regard to his operations.

To salvage the situation we were required to get a letter of indemnity (LoI) and a bank guarantee, both involving cumbersome processes, and a consequence of the shipper’s refusal to take any risk in terms of his own liability. In case of a potential claim of non-delivery, due to a delivery to the wrong party, for example, he would have been liable.

The LoI would 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 we needed to put in a formal request to have the goods released without OBL (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 we wondered if there wasn’t a better way to manage this risk or even to avoid it altogether.

After some browsing on the web we came across the site of Mercurion Trade Services, a company offering a platform through which transactions can be safely settled without the need for an OBL. They also provide an alternative for an LC, killing two birds with one stone. 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. We are glad to have found this new way of doing business; less bureaucracy feels so much better!