TRANSPORT DOCUMENTS The transport document is issued by the Carrier whether a shipping line, airline, trucking company or railroad.

They come in various forms and each serves several, but not necessarily all of the following functions: 1) Receipt for the goods, evidencing loading, dispatch, or taking in charge and indicating the general condition of the goods received. 2) A contract for carriage between the shipper and the carrier 3) An invoice from the carrier for charges. 4) A negotiable document exchangeable for money, allowing goods to be sold in transit. 5) A document of title representing ownership of the goods, which will only be released by the shipping company against presentation of a signed original document. Only one transport document, the negotiable bill of lading serves all five functions. For the exporter, selling on a letter of credit or documentary collection basis, the last two functions are the most important. A negotiable title document means that the buyer can only obtain the merchandise if he surrenders an original bill of lading to the carrier. On L/C or D/P collection sales, where documents move through the banks, the buyer must first pay the bank for the bill of lading or signs a promissory note in the case of a D/A collection. Only then will the bank provide the bill of lading. Negotiable bills of lading come in two forms: 1) Marine bills of lading convey title to the goods and are negotiable title documents when issued TO ORDER. This would be expressed in the Consignee block on the B/L as TO ORDER OF SHIPPER, TO ORDER OF ABC BANK or TO ORDER OF 123 COMPANY. When shipment is made with an order B/L, the buyer only gets the merchandise after he surrenders an original B/L to the carrier. All other copies marked Original then become void. Note: If an export L/C calls for the B/L to be consigned to the

buyer or for 1/3 original B/L to be sent directly to the buyer. The buyer will obtain the merchandise and if the L/C documents contain discrepancies the buyer may refuse payment to the beneficiary even though he already has the goods. Less common is the straight consigned marine bill of lading which does not convey title and is not negotiable. As such, the buyer does not need an original to obtain the merchandise from the carrier. This negates the utility of the letter of credit and documentary collection. 2) Multimodal bills of lading are used when two or more forms of transport are involved from place of receipt to place of delivery. In all other respects they are the same as marine bills of lading and may be issued either in negotiable or straight form. Non-negotiable transport documents are described below: Charter Party bills of lading are contracts between the ship owner and the chartering party under which the vessel is put at the disposal of the charterer. They are not acceptable under the UCP 500 unless specifically authorized in the letter of credit. Sea Waybills are not negotiable. They simply evidence that goods are on the way and should only be used when title and payment/financing are not issues. Their function is contract, receipt, and invoice as discussed earlier. Air Waybills are never negotiable. They are always straight consignments even if TO ORDER is typed in the Consignee block. Not being a title document, but merely a receipt for shipment, the importing buyer can pick up the merchandise at the airport simply by providing proper identification to the carrier. When a letter of credit or documentary collection is used, how does the exporter prevent the buyer from getting the merchandise without paying for it? Answer: The Air Waybill consignee should be listed as the buyers bank. The bank will transfer the goods to the buyer through an Air Release, but only after the buyer has paid or obligated himself to pay for the merchandise. Air Waybills should only be consigned to the order of the buyers bank with that banks permission. Truck and Rail Waybills are both receipts for goods, contracts for carriage and invoices. They are always straight consignments, never negotiable, and should only be used when the exporter is prepared to allow the buyer to take possession of the merchandise irrespective of payment being made.

Courier & Postal receipts are always addressed to a specific consignee, are not negotiable, and should only be used if getting paid is not a consideration. They are basically delivery instructions for a specific consignee at a specific address. Almost all banks will refuse to accept a parcel consigned to them. Shipments by courier or post should only be consigned to a bank if that banks L/C so instructs or if the bank has specifically authorized delivery to them under a documentary collection. Forwarding Agents Certificates of Receipt or Transportation (FCR/FCT) are not transport documents. They do not evidence shipment of the goods; they only show their receipt by the forwarder. Summary When the payment method is letter of credit or documentary collection, make sure the appropriate transport document and consignment are used. Otherwise, the unfortunate situation may arise where the buyer obtains the merchandise and never pays the seller. Remember, under a waybill all a consignee has to do to secure delivery is to identify himself to the carrier as the manifested consignee and claim delivery. Documentation (other than proof of identity) is not required. Always consult with your freight forwarder about the nuances of transport documents and the relationship of payment versus control of goods in international shipments.