Bill of Lading - Introduction

When discussing Bills of Lading, we must distinguish between a carrier B/L (B/L) and a
House B/L (HBL). Please see separate chapter for HBL.

In Scanwell Logistics, we do not issue carrier Bills of Lading. Only Ocean Carriers (also
known as VOCCs or shipping lines) can issue a carrier B/L.

In the old days, the Bill of Lading was a document issued by the captain of the vessel for
goods carried onboard his vessel. This is not practical today where instead the document
is issued by an agent acting on behalf of the captain.
Scanwell´s offices around the world have been empowered to sign Bills of Lading on
behalf of ´´the captain´´ (the principal carrier).

Bill of Lading - Issuing Party

The B/L is issued by an ocean carrier, also known as a VOCC (vessel-operating common
carrier) or shipping line.

Scanwell, being a VOCC, issues Bs/L for goods shipped onboard their vessels.

Bill of Lading - Functions

Basically, a Bill of Lading has 3 functions:
1. A receipt for the cargo
2. A document of title
3. Evidence of a contract of carriage

1. Receipt for cargo

The B/L is a receipt by the carrier that the goods are in his custody. The B/L acts as a
receipt between the shipper and the carrier until such time as title has been passed to a
third party (the consignee). Then it becomes an independent contract between the carrier
and the third party. The third party assumes the rights, responsibilities and obligations
identical to those of the shipper.

2. Evidence of contract of carriage

It is common to hear the B/L referred to as the ´contract of carriage´. However, the
contract of carriage is always the underlying agreement between the carrier and the
customer to carry his goods. The B/L is merely evidence of this.

The B/L evidences a contract of carriage between the ocean carrier and the
shipper/consignee in the B/L.

Also see: Evidence of contract of carriage in the Glossary.

3. Document of Title
A B/L is a Document of Title. This means that the legal right (the title) to the goods
covered by the B/L can pass from one party to another by means of endorsements (please
see explanation below).

The carrier will only release the goods at destination to a rightful holder of a duly
endorsed original Bill of Lading.

At the time the B/L is issued, the shipper will advise the carrier who the B/L should be
consigned to - I.e. who the Consignee on the B/L is.

The shipper can choose to consign the B/L in different ways:

a. Full name and address of an individual or company

b. ´´TO ORDER´´ (of shipper)
c. ´´TO ORDER OF [bank]´´ - example: To order of Dubai Bank
d. ´´TO ORDER OF [company]´´ - example: To order of Toy Trader Ltd.
e. ´´TO ORDER OF [individual]´´ - example: To order of Gary Jensen, Street, City

´´To order´´ means that the party can transfer their rights as consignee to another party by
endorsing the B/L.

3a. Endorsement
An endorsement is a signature (and company stamp) on the B/L (and preferably also a
clear written statement that the B/L is being endorsed to ´´Company XYZ´´). The
endorsement is written on the original B/L document by the party who is shown as the
consignee on the B/L but now wishes to transfer this right to another party.

When obtaining the endorsed B/L, the new  consignee now assumes all rights, obligations
and responsibilities that were previously vested in the first consignee. This also includes
the right to transfer the B/L to yet another party by adding a new endorsement on the B/L
document. In this way, a chain of endorsements may take place.

The Ocean Carrier will check the endorsements on the original B/L document before
releasing the goods at destination. As you can see, it is not always the first consignee (as
printed on the B/L when it was issued) that actually take delivery of the goods at
destination.

Because of this function ad Document of Title, a B/L is often referred to as a ´´negotiable

´´ document but ´´transferable´´ is actually the more correct term.

Bill of Lading - Originals and Copies

The fact that the carrier B/L functions as Document of Title places great importance on
the B/L document. All parties involved (shipper, consignee and carrier) rely on the
document to decide who can take delivery of the goods at destination.
The carrier will normally print a B/L document in 3 originals and a reasonable number of
copies. It is only an Original B/L document that can be transferred to another party. The
copies may be pre-printed ´Copy´ or ´Non-Negotiable´. Both are non-transferable.

Although 3 originals have been issued, the carrier will release the goods at destination to
whoever presents one duly and properly endorsed original B/L

Now you may think: ´´But what if the shipper sells the goods twice and endorses two of
the original Bs/L to two different parties?´´

The carrier must exercise due care to check that the B/L is properly endorsed to the party
who submits it. If this is the case and the carrier is in good faith, he can release the goods.
The change of ownership of the cargo is a matter between the seller and the buyer only.
The carrier is not involved. If the seller has sold the goods twice, it is a matter between
the seller and the two buyers.

Bill of Lading - Carrier´s responsibility

The three main areas of responsibility of the carrier under a B/L are:
1. Responsibility for correct description of the goods
2. Responsibility to release the goods to the properly entitled party at the proper location
3. Responsibility to care for the cargo while it is in the carrier´s custody

1. Responsibility for correct description of the goods

Any third party buyer may purchase goods by relying on the description of the goods in
the B/L (quantity, condition, etc.).

The description of the goods on the B/L is usually supplied by the shipper or his agent.
(The carrier will not know what is inside a container or carton packed by the shipper). It
is however essential that if the carrier knows that the description of the goods supplied by
the shipper is not correct (for example that cartons are damaged), the carrier clearly notes
the discrepancy on the B/L or refuses to accept the cargo and issue the B/L.

If the carrier does not note the discrepancy on the B/L, the carrier ´´steps into the shoes´´
of the shipper and assumes responsibility, on behalf of the shipper to the buyer of the
goods
This means that if there was a dispute between the carrier and the buyer of the goods, the
buyer could file a claim against the carrier. The carrier would need to file claim against
the shipper but may not be able to prove that the goods were not received as stated in the
B/L.

2. Responsibility to release the goods to the properly entitled party at the proper location
Whoever presents a duly and properly endorsed B/L at the correct destination is entitled
to take delivery of the goods.
The carrier receiving a B/L and being satisfied that the proper endorsement is in place,
when releasing the goods, is relieved of any responsibility should it later appear that the
B/L holder was in fact not the proper receiver.

The carrier must of course also ensure that the person who submits the B/L and take
delivery of the goods is a representative of the consignee (e.g. an employee or an agent of
the company to whom the B/L has been consigned).

Release of the cargo without receipt of a properly endorsed B/L compromises the carrier
´s responsibility towards the true owner of the goods. This may expose the carrier to
unlimited liability inclusive of consequential damages. In other words, the carrier may be
required to compensate the rightful consignee not only for the value of the goods but
potentially also for additional costs such as loss of sales profits.

If the carrier is in doubt about who the rightful owner of the B/L is, e.g. because there has
been a chain of endorsements and the carrier is not familiar with all signatures and
stamps of the intermediate consignees, the carrier should in principle contact these parties
to check. The carrier may can also contact the shipper and/or the notify party on the B/L
to hear their views.

2a. Release at different destination

If the release of the goods is requested at a destination different from the one mentioned
on the B/L, the carrier should first receive the full set of Bs/L (all originals) for the
particular shipment.

The full set of an issued B/L has an intended destination. Since release is possible against
any one of the Bills of Lading in a set, then only by receiving all the issued originals can
the carrier assure himself that no other lawful holder of an original B/L can present the
B/L at the B/L destination and rightfully claim title to the goods.

2b. Release of goods without original B/L or issuance of a new set of Bills
It is a critical situation when the full set of original Bills are lost. By releasing the goods
without obtaining a duly endorsed original B/L, the carrier will expose themselves to
unlimited liability, incl. consequential damages, in case a rightful holder of the B/L later
turns up and expects to receive the cargo. On the other hand, the consignee may in fact be
the legal owner of the goods after having paid the shipper and the carrier will be under
pressure from the consignee to release the goods as soon as possible.

In such a situation, the carrier will typically ask both the shipper and the consignee to
confirm that they agree to the issuance of a new set of bills or release of goods without
the bills. In addition, the party who has asked for a new set of bills (the shipper or the
consignee), or has asked to have the goods released (the consignee), is asked to sign a
Letter of Indemnity (LOI) and this must be backed up by a first class bank guarantee
which is valid for a minimum of 6 years or whatever the B/L filing period is in that
country. The process must be approved and release signed off by appropriate
management.
It is a commercial decision by the carrier whether they will release the goods on this basis
or not.

[Link] to care for the cargo while in the carrier´s custody

The duty of care of the goods is both regulated in law and is based on common sense. If
the goods arrive damaged at destination and no note has been made on the B/L regarding
the condition of the cargo, it is the carrier´s responsibility.

If the carrier wants to claim against the shipper, it is the carrier´s responsibility to prove
that the goods were not damaged while in his custody.

Bill of Lading - Amendment

When a shipper requests an amendment to a B/L which has already been printed and
issued, the carrier must make a judgement of the request and decide if the B/L can be
amended accordingly.

The carrier must ensure that the full set of original Bs/L are returned (if 3 originals were
issued, 3 originals should be returned for amendment) and ensure that the description of
the goods is still correct.

If a shipper requests a completely new set of Bs/L, this is considered an amendment and
the full set of originals must be surrendered. If the shipper or consignee is not able to
produce the full set of originals, the carrier should not issue a new  set. If the customer
insists, the carrier must make a judgement of the commercial risk and may decide that a
new set can be issued. In such case, the first set of Bs/L will be considered lost.

You must ensure to check local procedures for this.

Bill of Lading - Cargo Description

Cargo description
The transport provider cannot physically verify the contents of the cartons and packages
received from the shipper. For legal reasons, the description of the goods must therefore
always include the wording ´´Said To Contain´´ or ´´S.T.C.´´ to signify that the transport
provider is relying on the description of the goods supplied by the shipper. Example:
S.T.C. 1020 cartons of CD players.

If the carrier knows that the description of the goods supplied by the shipper is not correct
(for example that cartons are damaged), the carrier should note the discrepancy on the
B/L or refuse to accept the cargo and issue the B/L.

No. of packages
If cargo is lost during transit, it is the number of units as stated in the ´´no. of pkgs´´ field
that will be used for calculation of potential compensation to the owner. For this reason,
this field should always reflect the smallest number of shipping units. Example 1 (FCL
container): ´´1 x 20´std´´ instead of ´´500 cartons´´. Example 2 (LCL shipment): ´´5
pallets´´ instead of ´´50 cartons´´.

Clauses
The transport provider should insert the clause ´´Shipper´s load, stow and count´´ if the
customer is loading the container at his premises.

´´Shipped onboard´´ must only be used when the document is issued after vessel sailing.
If the customer wants the document issued before vessel sailing, the clause ´´Received for
shipment´´ is used instead.

Most carriers will not insert the clause ´´Clean onboard´´ on the Bill. Even for LCL-
shipments where they are physically handling the cartons, they cannot check the quality
and condition of the merchandise inside the cartons.

Clean B/L without notations of damages or shortcomings

The buyer or the bank (Letter of Credit) sometimes demands a so-called ´´clean B/L´´
which means a B/L without any notes of damages or shortcomings at the time of loading.
This sometimes creates problems between the carrier and the shipper, who in spite of
damage or other discrepancy to the cargo wants the shipping line to incorrectly issue a
´´Clean B/L´´ against a letter of indemnity from the shipper or a bank guarantee. Such
indemnities are not allowed under the international conventions that governs Bs/L and if
brought to court will not be upheld. Therefore the carrier should not issue ´´Clean´´ Bs/L
if this is not the correct cargo description.

24-hour manifest rule (U.S. customs)

You may have heard about the 24-hour manifest rule established by U.S. Customs and its
requirements regarding description of goods - for example that ´´S.T.C.´´ is not allowed
and that the cargo description must be very specific (i.e. ´´general merchandise´´ and
other general cargo descriptions are not allowed).

For the purpose of transport documentation, you should be aware that the U.S. Customs
rules relate to the vessel manifest, not the printed Bill of Lading or Waybill document.
The vessel manifest is used for customs purposes. The printed Bill or Waybill is used for
legal and commercial purposes.

Bill of Lading - Document Date

The date of the B/L must be the date on which it is actually issued, irrespective of the
date the cargo was received or loaded, however not earlier than the date the cargo was
received or loaded respectively.

For a ´´Shipped on Board´´ B/L, the date cannot be earlier than the date the cargo was
actually loaded on board the first vessel or conveyance mentioned in the document.
For a ´´Received for Shipment´´ B/L, the date cannot be earlier than the date the cargo
was actually received at the place of receipt or load port mentioned in the document.

Sometimes, a shipper will request a carrier to issue the B/L with earlier or later dates in
order to comply with time restrictions in the shipper´s Letter of Credit. The carrier is not
obliged to do so and should not do so. It would be considered an attempt to defraud the
buyer.

Bill of Lading - Freight payment

The charges payable at origin (usually by the shipper) are called ´´prepaid´´. The charges
payable at destination (usually by the consignee) are called ´´collect´´.

In order to secure payment, the carrier will usually not release the original B/L document
to the shipper before he has paid all prepaid charges.

At destination, the carrier will usually not release the goods until all freight charges are
paid (even when a duly endorsed B/L is presented).

It is a commercial decision by the carrier whether they wish to grant the shipper and/or
consignee credit. If credit has been granted, the carrier will release the goods and expect
the freight and other costs to be paid within the agreed time.

The shipper is responsible for advising the carrier which charges are prepaid and collect.
If the carrier is in doubt whether the consignee will pay for the collect charges, he may
check with the consignee before accepting the shipment.

In some areas of the world, from where there is a great risk and/or cost for the carrier to
ship cargo, the carrier may require that all charges are prepaid.  

Bill of Lading - Filing

After collecting the original B/L and releasing the goods, the carrier should stamp the
original B/L ´´accomplished´´ (or similar).

The carrier must then file the original B/L for at least 6 years according to international
and domestic regulations. Local legislation may require a longer filing period.

Bill of Lading - Why use this document?

When buying goods internationally, there is a distance between the buyer and the seller.
The exchange of goods and the payment for the goods therefore cannot take place at the
same time. The seller wants to ensure that he does not transfer ownership of the goods
without receiving payment, and the buyer wants to make sure that he does not pay
without getting ownership of the goods that he was expecting.
The seller uses the B/L as proof that he has delivered the goods for shipment at the
agreed place. The B/L also confirms the quantity and apparent condition of the goods in
the B/L.

When a B/L is issued (a document of title), the carrier will only release the goods at
destination to the party who can present an original B/L that covers the goods. The B/L
becomes the ´´key to the cargo´´.

When the buyer has paid for the goods, the seller will transfer the original Bs/L to the
buyer. If the buyer does not pay for the goods, the seller can keep the original Bs/L and in
this way control that the buyer does not receive the goods from the carrier. (In some
cases, the buyer will require to receive the originals before paying).

In cases where the payment for the goods is facilitated by a bank through a Letter of
Credit, the bank at origin may require that they obtain title to the goods in the period
between paying the seller and obtaining payment from the buyer or the buyer´s bank.
This is why the B/L is sometimes consigned ´´to order of [bank]´´. If it happened that the
buyer could not pay for the goods after all, the bank would be able to recover some of
their loss by selling the goods.

In other cases, the B/L is used because goods are sold during transit and there is a need to
have a negotiable/transferable document to cover the shipment. The original consignee
will endorse the B/L to the new consignee who can then obtain release of the goods.

It is important to note that although the B/L is used to facilitate the payment of goods
between seller and buyer, the carrier does NOT take part in the change  of ownership of
goods. This is only a matter between the seller and the buyer. The carrier follows the
rules and obligations as stated in the B/L and contract of carriage (ships and releases
goods in accordance herewith).

Bill of Lading - the role of ScanwellLogistics

In ScanwellLogistics we do not issue carrier Bills of Lading. However, we work with the
carriers either on behalf of the clients (when we are acting as agents on behalf of the
shipper or the consignee and the customer has agreed freight rates and other terms and
conditions directly with the carrier) or as customers (when we are acting as NVOCC and
have sub-contracted our shipments to the carrier).

Scenario 1: Acting as agent on behalf of a shipper or consignee

When acting as agent on behalf of our customers, the carrier B/L evidences a contract of
carriage between the carrier and our customer. ScanwellLogistics is not a party to the
contract under the B/L although we are performing freight forwarding services on behalf
of our client.

In this scenario, we usually book the cargo with the carrier chosen by our customer,
arrange containers to be loaded/consolidated and brought to the carrier´s terminal, co-
ordinate the issuance of documents and check the documents issued by the carrier. We
may also pay the carrier charges on behalf of our customer and invoice him accordingly.
At destination, we may co-ordinate the release and delivery of the container and arrange
customs clearance on behalf of our client.

Scenario 2: Acting as NVOCC

Wen acting as NVOCC, ScanwellLogistics is the customer of the carrier. We therefore
book our shipments with the carrier, deliver the goods in our name, provide shipper´s
instructions, pay freight charges to the carrier and obtain release of the goods at
destination based on the B/L which is issued between us and the carrier.

Bill of Lading - Difference between B/L and SWB

1. In which areas are the B/L and the SWB the same?  
- They both function as a Receipt for cargo and Evidence of contract
   of carriage
- They both contain details about the shipment such as shipper,
   consignee, vessel, place of delivery, cargo description and date
- They must not be issued with a date different than the true issuance
   date / onboard date
- They are issued by the ocean carrier (VOCC)
- They obligate the carrier to ensure correct description of the goods
- They obligate the carrier to care for the cargo while in his custody
- They obligate the carrier to ensure that he releases the goods to the
   correctly entitled party at destination

2. In which areas are the B/L and the SWB different?

- The B/L is a document of title. The Sea Waybill is NOT.
- A SWB cannot be consigned ´´to order´´, it must always state a
   consignee.
- The B/L is printed in sets of originals and copies (often 3 originals).
   A SWB is only printed as copies.
-The carrier does not require an original SWB in order to release the
   goods at destination

Bill of Lading - Difference between B/L and HBL

1. In which areas are the carrier B/L and the House B/L the same?
- They have the same functions: A receipt for cargo, A document of
  title, Evidence of contract of carriage
- They can both be endorsed to another party if the document is
  consigned ´´to order´´ or ´´to order of [name/company]´´
- They must not be issued with an onboard date different than the true
  onboard date
- They are both issued in a set of (usually) 3 originals and a
  reasonable number of copies
- They often have the same format and fields
- They obligate the issuing party to ensure correct description of the
   goods
- They obligate the issuing party to care for the cargo while in his
  custody
- They obligate the issuing party to ensure that the goods are released
  to the correctly entitled party at destination

2. In which areas are the carrier B/L and the House B/L different?
- The HBL is issued by the NVOCC who does not operate vessels.
  The B/L is issued by a VOCC.
- The HBL evidences a contract between the NVOCC and his
  customer. The B/L evidences a contract between the carrier and his
  customer.
- ScanwellLogistics can issue HBL. We cannot issue carrier B/L.

Sea Waybill - Introduction

The first thing to note about a Sea Waybill is that it is a document issued by the carrier.
The carrier will issue EITHER a Bill of Lading OR a Sea Waybill.

The SWB looks almost identical to the B/L and works much in the same way, but there
are a few fundamentally different points that we must be aware of, in particular that the
SWB is not a document of title.

Sea Waybill - Issuing Party

The SWB is issued by an ocean carrier, also known as a VOCC (vessel-operating
common carrier) or shipping line.

Scanwell, being a VOCC, issues SWBs.

Sea Waybill - Functions

Basically, a Sea Waybill has following functions:
1. A receipt for the cargo
2. Evidence of a contract of carriage

The Sea Waybill is NOT a document of title.

1. Receipt for cargo

A sea waybill is a document issued to a shipper in exchange for his cargo. It is a
confirmation by the carrier that they have taken the customer´s goods into their custody
and take on the responsibility to care for the goods.

The shipper will nominate the consignee and the carrier will only release the cargo to the
named consignee at destination.
The shipper can amend his release instructions up until such time as the cargo has been
physically released to the consignee.

2. Evidence of contract of carriage

Just as the B/L, the SWB is evidence of a contract of carriage, but the actual contract of
carriage is always the underlying agreement between the carrier and the customer to carry
his goods. The SWB is merely evidence of this.

The SWB evidences a contract of carriage between the ocean carrier and the
shipper/consignee in the SWB.

Also see: Evidence of contract of carriage in the Glossary.

3. The SWB is not a document of title

The SWB is not a Document of Title. It cannot be consigned ´´to order´´ and it cannot be
endorsed and transferred to another consignee.

The carrier will only release the goods to the party named as consignee on the Sea
Waybill. The consignee does not have to present an original SWB at destination to obtain
release of the goods. He just needs to be able to identify himself as a representative of the
consignee in the WB.

The shipper can amend his release instructions up until such time as the cargo has been
physically released to the consignee.

Sea Waybills - Originals and copies

Because the SWB is not a document of title and is not required to effect release of the
goods at destination, Sea Waybills are not issued in ´´originals´´ and ´´copies´´.

Whether the SWB form says ´´copy´´ or ´´non-negotiable´´ or does not have a notation at
all, does not matter. It is always a copy document which is not transferable.

The shipper or consignee may ask to obtain printed copies of the SWB and the carrier
will issue a reasonable number of copies. Copies of the SWB may be used for purposes
such as proof of shipment, customs, payment, bank or Letter of Credit requirement and so
on.

Sea Waybill - Carrier´s responsibility

The three main areas of responsibility of the carrier under a SWB are more or less the
same as for the B/L:
1. Responsibility for correct description of the goods
2. Responsibility to care for the goods while they are in the carrier´s custody
3. Responsibility to ensure that the party to whom goods are released is in fact a
representative of the consignee

1. Responsibility for correct description of the goods

Any third party buyer may purchase goods by relying on the description of the goods in
the SWB (quantity, condition, etc.).

The description of the goods on the SWB is usually supplied by the shipper or his agent.
(The carrier will not know what is inside a container or carton packed by the shipper). It
is however essential that if the carrier knows that the description of the goods supplied by
the shipper is not correct (for example that cartons are damaged), the carrier clearly notes
the discrepancy on the SWB or refuses to accept the cargo and issue the SWB.

If the carrier does not note the discrepancy on the SWB, the carrier ´´steps into the shoes
´´ of the shipper and assumes responsibility, on behalf of the shipper, to the buyer of the
goods. This means that if there was a dispute between the carrier and the buyer of the
goods, the buyer could file a claim against the carrier. The carrier would need to file
claim against the shipper but may not be able to prove that the goods were not received as
stated in the SWB.

2. Responsibility to care for the cargo while in the carrier´s custody

The duty of care of the goods is both regulated in law and is based on common sense. If
the goods arrive damaged at destination and no note has been made on the SWB
regarding the condition of the cargo, it is the carrier´s responsibility.

If the carrier wants to claim against the shipper, it is the carrier´s responsibility to prove
that the goods were not damaged while in his custody.

3. Responsibility to ensure that the party to whom goods are released is in fact a
representative of the consignee

Although a SWB document is not needed to effect release of the goods, the carrier is
nonetheless obliged to assure himself of the identify of the party to whom cargo is
released.

If he is in doubt, he should contact the shipper.

Sea Waybill - Amendment

A shipper can amend his release instructions (consignee name) until such time as the
cargo has been physically released to the consignee.

Amendments should be made in writing and are always subject to acceptance by the
carrier.
The carrier must ensure that no changes to the description of the goods are made that can
affect his position towards the consignee.

There is no need for the carrier to have the SWBs returned in order to make an
amendment (as they are not issued as originals but only copies). But to ensure that no
unnecessary disputes arise because of the amendment, the carrier may  confirm the
amendment with both the shipper and the consignee.

Sea Waybill - Cargo Description

The procedures for SWBs are identical to those of the B/L.

Cargo description
The transport provider cannot physically verify the contents of the cartons and packages
received from the shipper. For legal reasons, the description of the goods must therefore
always include the wording ´´Said To Contain´´ or ´´S.T.C.´´ to signify that the transport
provider is relying on the description of the goods supplied by the shipper. Example:
S.T.C. 1020 cartons of CD players.

If the carrier knows that the description of the goods supplied by the shipper is not correct
(for example that cartons are damaged), the carrier should note the discrepancy on the
SWB or refuse to accept the cargo and issue the SWB.

No. of packages
If cargo is lost during transit, it is the number of units as stated in the ´´no. of pkgs´´ field
that will be used for calculation of potential compensation to the owner. For this reason,
this field should always reflect the smallest number of shipping units. Example 1 (FCL
container): ´´1 x 20´std´´ instead of ´´500 cartons´´. Example 2 (LCL shipment): ´´5
pallets´´ instead of ´´50 cartons´´.

Clauses
The transport provider should insert the clause ´´Shipper´s load, stow and count´´ if the
customer is loading the container at his premises.

´´Shipped onboard´´ must only be used when the document is issued after vessel sailing.
If the customer wants the document issued before vessel sailing, the clause ´´Received for
shipment´´ is used instead.

Most carriers will not insert the clause ´´Clean onboard´´ on the SWB. Even for LCL-
shipments where they are physically handling the cartons, they cannot check the quality
and condition of the merchandise inside the cartons.

Clean Bill without notations of damages or shortcomings

The buyer or the bank (Letter of Credit) sometimes demands a so-called ´´clean Bill´´
which means a SWB without any notes of damages or shortcomings at the time of
loading. This sometimes creates problems between the carrier and the shipper, who in
spite of damage or other discrepancy to the cargo wants the shipping line to incorrectly
issue a ´´Clean Bill´´ against a letter of indemnity from the shipper or a bank guarantee.
Such indemnities are not allowed under the international conventions that governs Bs/L
and SWBs and if brought to court will not be upheld. Therefore the carrier should not
issue ´´Clean´´ Bills if this is not the correct cargo description.

24-hour manifest rule (U.S. customs)

You may have heard about the 24-hour manifest rule established by U.S. Customs and its
requirements regarding description of goods - for example that ´´S.T.C.´´ is not allowed
and that the cargo description must be very specific (i.e. ´´general merchandise´´ and
other general cargo descriptions are not allowed).

For the purpose of transport documentation, you should be aware that the U.S. Customs
rules relate to the vessel manifest, not the printed Bill of Lading or Waybill document.
The vessel manifest is used for customs purposes. The printed Bill or Waybill is used for
legal and commercial purposes.

Sea Waybill - Document Date

The date of the SWB must be the date on which it is actually issued, irrespective of the
date the cargo was received or loaded, however not earlier than the date the cargo was
received or loaded respectively.

For a ´´Shipped on Board´´ SWB, the date cannot be earlier than the date the cargo was
actually loaded on board the first vessel or conveyance mentioned in the document.

For a ´´Received for Shipment´´ SWB, the date cannot be earlier than the date the cargo
was actually received at the place of receipt or load port mentioned in the document.

Sometimes, a shipper will request a carrier to issue the SWB with earlier or later dates in
order to comply with time restrictions in the shipper´s Letter of Credit. The carrier is not
obliged to do so and should not do so. It would be considered an attempt to defraud the
buyer.

Sea Waybill - Freight payment

The charges payable at origin (usually by the shipper)are called ´´prepaid´´. The charges
payable at destination (usually by the consignee) are called ´´collect´´.

It is a commercial decision by the carrier whether they wish to grant the shipper and/or
consignee credit. If credit has been granted, the carrier will release the goods and expect
the freight and other costs to be paid within the agreed time.

The shipper is responsible for advising the carrier which charges are prepaid and collect.
If the carrier is in doubt whether the consignee will pay for the collect charges, he may
check with the consignee before accepting the shipment.
In some areas of the world, from where there is a great risk and/or cost for the carrier to
ship cargo, the carrier may require that all charges are prepaid.  

Sea Waybill - Filing

An original is not collected at destination before releasing the goods. There are no
requirements to keep SWB copies on file.

Sea Waybill - Why use this document?

A Sea Waybill is used in cases where no sale of goods is expected during transit (no
change of consignee) and where the shipper and consignee trust that payment will take
place and legal ownership of the goods can change without the use of an original B/L
document.

This trust may be built based on a long-term relationship between the seller and buyer,
the fact that a Letter of Credit covers the shipment and ensures payment (provided the
shipper fulfils the obligations set out in the L/C) or because it is an inter-company type
carriage.

The advantage of the SWB is that it allows less administration and fast release of the
goods at destination because an exchange of original documents between the shipper and
the consignee and between the consignee and the carrier does not have to take place.

Sea Waybill - The role of ScanwellLogistics

In ScanwellLogistics we do not issue carrier Sea Waybills. However, we work with the
carriers either on behalf of the clients (when we are acting as agents on behalf of the
shipper or the consignee and the customer has agreed freight rates and other terms and
conditions directly with the carrier) or as customers (when we are acting as NVOCC and
have sub-contracted our shipments to the carrier).

For further details, see: Bill of Lading - The role of ScanwellLogistics.

Sea Waybill - Difference between B/L and SWB

1. In which areas are the B/L and the SWB the same?  
- They both function as a Receipt for cargo and Evidence of contract
  of carriage
- They both contain details about the shipment such as shipper,
  consignee, vessel, place of delivery, cargo description and date
- They must not be issued with a date different than the true issuance
date / onboard date
- They are issued by the ocean carrier (VOCC)
- They obligate the carrier to ensure correct description of the goods
- They obligate the carrier to care for the cargo while in his custody
- They obligate the carrier to ensure that he releases the goods to the
  correctly entitled party at destination
2. In which areas are the B/L and the SWB different?
- The B/L is a document of title. The Sea Waybill is NOT.
- A SWB cannot be consigned ´´to order´´, it must always state a
  consignee.
- The B/L is printed in sets of originals and copies (often 3 originals).
  A SWB is only printed as copies.
- The carrier does not require an original SWB in order to release the
  goods at destination

Sea Waybill - Difference between SWB and HSWB

1. In which areas are the carrier SWB and the House SWB the same?
- They have the same two functions: A receipt for cargo and Evidence
  of contract of carriage
- Neither the HSWB nor the SWB can be consigned ´´to order´´ or ´´to
  order of [name/company]´´ and cannot be endorsed and transferred
  to a third party. The goods are to be released at destination to the
  consignee named by the shipper. They are not documents of title.
- They must not be issued with an onboard date different than the true
  onboard date
- They are only issued in copies
- They often have the same format and fields
- They obligate the issuing party to ensure correct description of the
  goods
- They obligate the issuing party to care for the cargo while in his
  custody
- They obligate the issuing party to ensure that the goods are released
  to the correctly entitled party at destination

2. In which areas are the carrier SWB and the House SWB different?
- The HSWB is issued by the NVOCC who does not operate vessels.
  The SWB is issued by an ocean carrier.
- The HSWB evidences a contract between the NVOCC and his
  customer. The carrier SWB evidences a contract between the carrier
  and his customer.
- ScanwellLogistics can issue HSWB. We cannot issue carrier SWB.

House Bill of Lading - Introduction

When discussing Bills of Lading, we must distinguish between a carrier B/L (B/L) and a
House B/L (HBL). Please see separate chapter for carrier B/L.
In ScanwellLogistics, we can issue HBL when we act in the role as NVOCC. We do so as
agents for the principal carrier DSL Star Express Inc. Therefore, our HBL is called a DSL
Star Express B/L (DSE B/L).

We do not issue a ´´ScanwellLogistics HBL´´ unless there are specific reasons to do so

and appropriate management and legal sign-off is in place.

House Bill of Lading - Issuing Party

The HBL is issued by a NVOCC (non-vessel operating common carrier), also called a
NVO.

In some countries, any freight forwarder can act as NVOCC and issue HBL for their
ocean shipments. In other countries (e.g. the USA), only companies registered
specifically as NVOCC are licensed to issue HBL.

House Bill of Lading - Functions

Basically, a House Bill of Lading has 3 functions:
1. A receipt for the cargo
2. A document of title
3. Evidence of a contract of carriage

1. Receipt for cargo

The HBL is a receipt by the NVOCC that the goods are in his custody. The HBL acts as a
receipt between the shipper and the NVOCC until such time as title has been passed to a
third party (the consignee). Then it becomes an independent contract between the
NVOCC and the third party. The third party assumes the rights, responsibilities and
obligations identical to those of the shipper.

Remember that when the NVOCC delivers the goods to the ocean carrier for shipment,
he will in turn receive a carrier B/L or a Sea Waybill which will act as his receipt that the
cargo is in the custody of the carrier.

To the owner of the goods, however, the NVOCC is the party who is responsible for the
cargo.

2. Evidence of contract of carriage

The contract of carriage is the underlying agreement between the NVOCC and the
customer to transport his goods. The HBL is the evidence of this.

You should note that the HBL is NOT evidence of a contract of carriage with the ocean
carrier. The HBL is a matter between the NVOCC and the customer.

The contract of carriage with the ocean carrier is a matter between the NVOCC and the
ocean carrier and is evidenced by the carrier B/L.
This means that the seller or the buyer will not be able to file a claim directly against the
ocean carrier for loss or damage to his goods, because they are not party to the contract of
carriage. The buyer or seller will file claim against the NVOCC who in turn will file
claim against the ocean carrier.

Nor should the ocean carrier provide shipment details and information to the seller or the
buyer directly. The ocean carrier should regard the NVOCC as his customer. The
NVOCC must keep his customer (the seller/buyer) informed.

Document of Title
A HBL is a Document of Title, and the legal right to the goods covered by the HBL can
therefore pass from one party to another by means of endorsements.

The NVOCC will only release the goods at destination to a rightful holder of a duly
endorsed original HBL.

The NVOCC will check the endorsements on the original HBL documents before
releasing the goods. If he is in doubt of the HBL holder´s legal right to the cargo, he
should check with the shipper, notify party and/or any other intermediate party.

To enable endorsement (transfer of title), the HBL must be consigned ´´To order´´ (of
shipper), or ´´To order of [name/company/bank]´´. Example: ´´To order of Import Ltd´´.

If the HBL is consigned to a named individual or company (e.g the HBL is consigned to
Import Ltd) without the notation ´´to order´´, it becomes a ´´straight HBL´´ and cannot be
endorsed to another party (unless domestic law or market practice allows this).

The carrier B/L works the exact same way.

House Bill of Lading - Originals and Copies

The NVOCC will normally print a HBL document in 3 originals and a reasonable number
of copies. It is only an Original HBL document that can be transferred to another party.
The copies may be pre-printed ´Copy´ or ´Non-Negotiable´. Both are non-transferable.

House Bill of Lading - NVOCC´s responsibility

The three main areas of responsibility of the NVOCC are similar to the ocean carrier´s
responsibility under a carrier B/L:
1. Responsibility for correct description of the goods
2. Responsibility to release the goods to the properly entitled party at the proper location
3. Responsibility to care for the cargo while it is in the carrier´s custody

1. Responsibility for correct description of the goods

Any third party buyer may purchase goods by relying on the description of the goods in
the HBL (quantity, condition, etc.).
The description of the goods on the HBL is usually supplied by the shipper or his agent.
(The NVOCC will not know what is inside a container or carton packed by the shipper).
It is however essential that if the NVOCC knows that the description of the goods
supplied by the shipper is not correct (for example that cartons are damaged), the
NVOCC clearly notes the discrepancy on the HBL or refuses to accept the cargo and
issue the HBL.

As you know, the NVOCC will arrange for a carrier B/L. The NVOCC should ensure that
the description of the goods is the same on the HBL and the carrier B/L.

If the ocean carrier at time of receipt of the goods, notes a discrepancy on the B/L about
shortcomings or damages, the NVOCC must ensure that the same discrepancy clause is
noted on the HBL. Otherwise, the NVOCC can become liable and have to pay
compensation to the consignee, but cannot re-claim the money from the ocean carrier.

2. Responsibility to release the goods to the properly entitled party at the proper location

Whoever presents a duly and properly endorsed HBL at the correct destination is entitled
to take delivery of the goods from the NVOCC.

The NVOCC receiving a HBL and being satisfied that the proper endorsement is in place,
when releasing the goods, is relieved of any responsibility should it later appear that the
HBL holder was in fact not the proper receiver.

The NVOCC must of course also ensure that the person who submits the HBL and take
delivery of the goods is a representative of the consignee (e.g. an employee or an agent of
the company to whom the HBL has been consigned).

Release of the cargo without receipt of a properly endorsed HBL compromises the
NVOCC´s responsibility towards the true owner of the goods. This may expose the
NVOCC to unlimited liability inclusive of consequential damages.

If the NVOCC is in doubt about who the rightful owner of the HBL is, e.g. because there
has been a chain of endorsements and the NVOCC is not familiar with all signatures and
stamps of the intermediate consignees, the NVOCC should in principle contact these
parties to check. The NVOCC may also contact the shipper and/or the notify party on the
HBL to hear their views.

In order to effect release of the goods to the consignee, the NVOCC must ensure that he
obtains the goods from the carrier (by paying applicable freight and charges and
submitting any required documentation). Until the NVOCC has obtained release from the
carrier, he cannot release the goods to his own customer.

2a. Release at different destination

If the release of the goods is requested at a destination different from the one mentioned
on the HBL, the NVOCC should first collect the full set of original HBLs (all originals)
for the particular shipment.

2b. Release of goods without original B/L or issuance of a new set of Bills
It is a critical situation when the full set of original Bills are lost. By releasing the goods
without obtaining a duly endorsed original B/L, the carrier (in case of a carrier B/L) or
the NVOCC (in case of a House B/L) expose themselves to unlimited liability, incl.
consequential damages, in case a rightful holder of the B/L later turns up and expects to
receive the cargo. On the other hand, the consignee may in fact be the legal owner of the
goods after having paid the shipper and the carrier/NVOCC will be under pressure from
the consignee to release the goods as soon as possible.

In such a situation, the carrier or NVOCC will typically ask both the shipper and the
consignee to confirm that they agree to the issuance of a new set of bills or release of
goods without the bills. In addition, the party who has asked for a new set of bills (the
shipper or the consignee), or has asked to have the goods released (the consignee), is
asked to sign a Letter of Indemnity (LOI) and this must be backed up by a first class bank
guarantee which is valid for a minimum of 6 years or whatever the B/L filing period is in
that country. The process must be approved and release signed off by appropriate
management.

If documents are delayed, not lost, we should - in principle - not release goods without
obtaining the original B/L. We should wait for them to arrive. Release of goods based on
a Letter of Indemnity should be our last option and we should be very cautious about it.
The problem about releasing goods without an original B/L is that the consequences can
be very serious:

- ScanwellLogistics is in fundamental breach of contract with the

  shipper and is denied the benefits of legal limitations under Hague
  Visby rules/our Standard Terms
- our insurer will most likely consider such a release intentional or
  reckless and therefore deny any coverage under our insurance policy
- our liability to our client and/or shipper therefore unlimited in the
  event of improper release of goods, unless proper procedures are
  followed

[Link] to care for the cargo while in the carrier´s custody

When issuing the HBL, the NVOCC takes on the responsibilities, obligations and
liabilities as a carrier. Even when sub-contracting the carriage to a carrier, the NVOCC is
responsible for the goods towards his own customer (the shipper / consignee).

If the goods are damaged or lost during transit, the shipper or consignee can file claim
against the NVOCC. The NVOCC may be able to re-claim from the ocean carrier but this
is independent from the claim received from the customer.
House Bill of Lading - Amendment
When a shipper requests an amendment to a HBL which has already been printed and
issued, the NVOCC must make a judgement of the request and decide if the HBL can be
amended accordingly.

The HBL must ensure that the full set of original Bs/L are returned (if 3 originals were
issued, 3 originals should be returned for amendment) and ensure that the description of
the goods is still correct.

The NVOCC must also ensure that HBL still corresponds with the carrier B/L, and if not,
that the carrier B/L is amended accordingly. The HBL should not be amended if the
carrier will not agree to amend the carrier B/L.

If a shipper requests a completely new set of House Bs/L, this is considered an

amendment and the full set of originals must be surrendered.

House Bill of Lading - Cargo Description

Cargo description
The transport provider cannot physically verify the contents of the cartons and packages
received from the shipper. For legal reasons, the description of the goods must therefore
always include the wording ´´Said To Contain´´ or ´´S.T.C.´´ to signify that the transport
provider is relying on the description of the goods supplied by the shipper. Example:
S.T.C. 1020 cartons of CD players.

If the NVOCC knows that the description of the goods supplied by the shipper is not
correct (for example that cartons are damaged), the carrier should note the discrepancy on
the HBL or refuse to accept the cargo and issue the HBL.

No. of packages
If cargo is lost during transit, it is the number of units as stated in the ´´no. of pkgs´´ field
that will be used for calculation of potential compensation to the owner. For this reason,
this field should always reflect the smallest number of shipping units. Example 1 (FCL
container): ´´1 x 20´std´´ instead of ´´500 cartons´´. Example 2 (LCL shipment): ´´5
pallets´´ instead of ´´50 cartons´´.

After issuing the HBL to our customer, we must ensure that our own carrier B/L or SWB
adequately covers our liability. For insurance reasons, we need to receive a carrier bill
evidencing the same number of packages as shown on the corresponding House bills.

Example: You have issued 5 HBLs, each for 100 cartons. You have loaded the goods into
a 40´ container. The carrier bill must show 500 cartons in the goods description: 1x40´std
S.T.C. 500 cartons of general merchandise.

Clauses
ScanwellLogistics should insert the clause ´´Shipper´s load, stow and count´´ if the
customer is loading the container at his premises.

´´Shipped onboard´´ must only be used when the document is issued after vessel sailing.
If the customer wants the document issued before vessel sailing, the clause ´´Received for
shipment´´ is used instead. A ´´Shipped on board´´ HBL cannot be issued until
ScanwellLogistics has received confirmation from the ocean carrier that the goods have
been loaded onboard the vessel.

ScanwellLogistics will not insert the clause ´´Clean onboard´´ on the Bill. Even for LCL-
shipments where we are physically handling the cartons, we cannot check the quality and
condition of the merchandise inside the cartons.

24-hour manifest rule (U.S. customs)

You may have heard about the 24-hour manifest rule established by U.S. Customs and its
requirements regarding description of goods - for example that ´´S.T.C.´´ is not allowed
and that the cargo description must be very specific (i.e. ´´general merchandise´´ and
other general cargo descriptions are not allowed).

For the purpose of transport documentation, you should be aware that the U.S. Customs
rules relate to the vessel manifest, not the printed Bill of Lading or Waybill document.
The vessel manifest is used for customs purposes. The printed Bill or Waybill is used for
legal and commercial purposes.

House Bill of Lading - Document Date

The date of the HBL must be the date on which it is actually issued, irrespective of the
date the cargo was received or loaded, however not earlier than the date the cargo was
received or loaded respectively.

For a ´´Shipped on Board´´ HBL, the date cannot be earlier than the date the cargo was
actually loaded on board the first vessel or conveyance mentioned in the document. A
´´Shipped on board´´ HBL cannot be issued until ScanwellLogistics has received
confirmation from the ocean carrier that the goods have been loaded onboard the vessel.

For a ´´Received for Shipment´´ HBL, the date cannot be earlier than the date the cargo
was actually received at the place of receipt or load port mentioned in the document.

Sometimes, a shipper will request a NVOCC to issue the HBL with earlier or later dates
in order to comply with time restrictions in the shipper´s Letter of Credit. The carrier is
not obliged to do so and should not do so. It would be considered an attempt to defraud
the buyer.

House Bill of Lading - Freight payment

The charges payable at origin (usually by the shipper) are called ´´prepaid´´. The charges
payable at destination (usually by the consignee) are called ´´collect´´.

In order to secure payment, the NVOCC will usually not release the original HBL
document to the shipper at origin before he has paid all prepaid charges.

At destination, the NVOCC will usually not release the goods at destination until all
freight charges are paid (even when a duly endorsed B/L is presented).

It is a commercial decision by the NVOCC whether they wish to grant the shipper and/or
consignee credit. If credit has been granted, the NVOCC will release the goods and
expect the freight and other costs to be paid within the agreed time.

The shipper is responsible for advising the NVOCC which charges are prepaid and
collect. If the NVOCC is in doubt whether the consignee will pay for the collect charges,
he may check with the consignee before accepting the shipment.

In some areas of the world, from where there is a great risk and/or cost for the carrier to
ship cargo, the carrier may require that all charges are prepaid.  

House Bill of Lading - Filing

After collecting the original B/L and releasing the goods, the NVOCC should stamp the
original HBL ´´accomplished´´ (or similar).

The NVOCC must then file the original B/L for at least 6 years according to international
and domestic regulations. Local legislation may require a longer filing period.

House Bill of Lading - Why use this document?

1. Why use a NVOCC?

You may wonder if it is not a complicated situation, having a NVOCC involved as a
middle man instead of just dealing directly with the ocean carrier.

In particular small and middle-sized companies often do not have enough shipments
(cargo volume) to negotiate good rates and conditions with the carrier directly. They
therefore use a NVOCC who has a large number of customers and therefore can negotiate
good freight rates with the ocean carrier. Although the NVOCC may add a margin to the
freight rate, the customer still obtains a better deal. It becomes a win-win situation.

The customer will often also purchase additional services from the NVOCC (e.g.
documentation and customs clearance).

2. Why use a House Bill of Lading?

When a HBL is issued (a document of title), the NVOCC will only release the goods at
destination to the party who can present an original HBL that covers the goods. The B/L
becomes the ´´key to the cargo´´.

When the buyer has paid for the goods, the seller will transfer the original HBL to the
buyer. If the buyer does not pay for the goods, the seller can keep the original HBLs and
in this way control that the buyer does not receive the goods from the NVOCC. (In some
cases, the buyer will require to receive the originals before paying).

In cases where the payment for the goods is facilitated by a bank through a Letter of
Credit, the bank at origin may require that they obtain title to the goods in the period
between paying the seller and obtaining payment from the buyer or the buyer´s bank.
This is why the HBL is sometimes consigned ´´to order of [bank]´´. If it happened that
the buyer could not pay for the goods after all, the bank would be able to recover some of
their loss by selling the goods.

In other cases, the HBL is used because goods are sold during transit and there is a need
to have a negotiable/transferable document to cover the shipment. The original consignee
will endorse the HBL to the new consignee who can then obtain release of the goods.

It is important to note that although the HBL is used to facilitate the payment of goods
between seller and buyer, the NVOCC does NOT take part in the change  of ownership of
goods. This is only a matter between the seller and the buyer. The NVOCC follows the
rules and obligations as stated in the HBL and contract of carriage (ships and releases
goods in accordance herewith).

House Bill of Lading - Difference between HBL and HSWB

1. In which areas are the HBL and the HSWB the same?
- They are both issued by the NVOCC to his customer
- They both function as Receipt for the cargo and Evidence of
  contract of carriage
- They both contain details about the shipment such as shipper,
  consignee, vessel, place of delivery, cargo description and date
- They must not be issued with a date different than the true issuance
  date / onboard date
- They can both not be issued until the carrier has issued the B/L or
  SWB and thereby confirmed that the shipment is onboard (unless the
  shipper asks for a ´´received for shipment´´ bill)
- They obligate the NVOCC to ensure correct description of the goods
- They obligate the NVOCC to care for the cargo while in his custody
- They obligate the NVOCC to ensure that he releases the goods to
  the correctly entitled party at destination

2. In which areas are the HBL and the HSWB different?

- The HBL is a document of title. The HSWB is NOT.
- A HSWB cannot be consigned ´´to order´´, it must always state a
  consignee.
- The HBL is printed in sets of originals and copies (often 3 originals).
  A SWB is only printed as copies.
- The NVOCC does not require an original SWB in order to release
  the goods at destination

House Bill of Lading - Difference between B/L and HBL

1. In which areas are the carrier B/L and the House B/L the same?
- They have the same functions: A receipt for cargo, A document of
  title, Evidence of contract of carriage
- They can both be endorsed to another party if the document is
  consigned ´´to order´´ or ´´to order of [name/company]´´
- They must not be issued with an onboard date different than the
  true onboard date
- They are both issued in a set of (usually) 3 originals and a
  reasonable number of copies
- They often have the same format and fields
- They obligate the issuing party to ensure correct description
  of the goods
- They obligate the issuing party to care for the cargo while
  in his custody
- They obligate the issuing party to ensure that the goods are
  released to the correctly entitled party at destination

2. In which areas are the carrier B/L and the House B/L different?
- The HBL is issued by the NVOCC. The B/L is issued by a VOCC.
- The HBL evidences a contract between the NVOCC and his
  customer. The B/L evidences a contract between the carrier
  and his customer.
- ScanwellLogistics can issue HBL. We cannot issue carrier B/L.
House Sea Waybill - Introduction
In ScanwellLogistics, we can issue HSWB when we act in the role as NVOCC. We do so
as agents for the principal carrier DSL Star Express Inc. Therefore, our HSWB is called a
DSL Star Express SWB (DSE SWB).

We do not issue a ´´ScanwellLogistics HSWB´´ unless there are specific reasons to do so

and appropriate management and legal sign-off is in place.

House Sea Waybill - Issuing Party

The HSWB is issued by a NVOCC (non-vessel operating common carrier), also called a
NVO.

In some countries, any freight forwarder can act as NVOCC and issue HSWB for their
ocean shipments. In other countries (e.g. the USA), only companies registered
specifically as NVOCC are licensed to issue HSWB.

House Sea Waybill - Functions

Basically, a House Sea Waybill has following functions:
1. A receipt for the cargo
2. Evidence of a contract of carriage

The House Sea Waybill is NOT a document of title.

1. Receipt for cargo

A HSWB is a document issued to a shipper in exchange for his cargo. It is a confirmation
by the NVOCC that they have taken the customer´s goods into their custody and take on
the responsibility to care for the goods.

The shipper will nominate the consignee and the NVOCC will only release the cargo to
the named consignee at destination.

2. Evidence of contract of carriage

Just as the HBL, the HSWB is evidence of a contract of carriage, but the actual contract
of carriage is always the underlying agreement between the NVOCC and the customer to
carry his goods. The HSWB is merely evidence of this.

You should note that the HSWB is NOT evidence of a contract of carriage with the ocean
carrier. The HSWB is a matter between the NVOCC and the customer.

The contract of carriage with the ocean carrier is a matter between the NVOCC and the
ocean carrier and is evidenced by the carrier B/L or SWB.

This means that the seller or the buyer will not be able to file a claim directly against the
ocean carrier for loss or damage to his goods, because they are not party to the contract of
carriage. The buyer or seller will file claim against the NVOCC who in turn will file
claim against the ocean carrier.

Nor should the ocean carrier provide shipment details and information to the seller or the
buyer directly. The ocean carrier should regard the NVOCC as his customer. The
NVOCC must keep his customer (the seller/buyer) informed.

Also see: Evidence of contract of carriage in the Glossary.

3. The HSWB is not a document of title

The HSWB is not a Document of Title. It cannot be consigned ´´to order´´ and it cannot
be endorsed and transferred to another consignee.

The NVOCC will only release the goods to the party named as consignee on the HSWB.

The consignee does not have to present an original HSWB at destination to obtain release
of the goods. He just needs to be able to identify himself as a representative of the
consignee in the HSWB.

The shipper can amend his release instructions up until such time as the cargo has been
physically released to the consignee.

House Sea Waybills - Originals and Copies

Because the HSWB is not a document of title and is not required to effect release of the
goods at destination, HSWBs are not issued in ´´originals´´ and ´´copies´´.

Whether the HSWB form says ´´copy´´ or ´´non-negotiable´´ or does not have a notation
at all, does not matter. It is always a copy document which is not transferable.

The shipper or consignee may ask to obtain printed copies of the HSWB and the NVOCC
will issue a reasonable number of copies. Copies of the HSWB may be used for purposes
such as proof of shipment, customs, payment, bank or Letter of Credit requirement and so
on.

House Sea Waybill - NVOCC´s responsibility

The three main areas of responsibility of the NVOCC under a HSWB are more or less the
same as for the House B/L:
1. Responsibility for correct description of the goods
2. Responsibility to release the goods to the properly entitled party at the proper location
3. Responsibility to care for the cargo while it is in the carrier´s custody

1. Responsibility for correct description of the goods

Any third party buyer may purchase goods by relying on the description of the goods in
the HSWB (quantity, condition, etc.).
The description of the goods on the HSWB is usually supplied by the shipper or his
agent. (The NVOCC will not know what is inside a container or carton packed by the
shipper). It is however essential that if the NVOCC knows that the description of the
goods supplied by the shipper is not correct (for example that cartons are damaged), the
NVOCC clearly notes the discrepancy on the HSWB or refuses to accept the cargo and
issue the HSWB.

As you know, the NVOCC will arrange for a carrier B/L or SWB. The NVOCC should
ensure that the description of the goods is the same on the HSWB and the carrier B/L.

If the ocean carrier at time of receipt of the goods, notes a discrepancy on the carrier B/L
or SWB about shortcomings or damages, the NVOCC must ensure that the same
discrepancy clause is noted on the HSWB. Otherwise, the NVOCC can become liable
and have to pay compensation to the consignee, but cannot re-claim the money from the
ocean carrier.

2. Responsibility to care for the cargo while in the carrier´s custody

When issuing the HSWB, the NVOCC takes on the responsibilities, obligations and
liabilities as a carrier. Even when sub-contracting the carriage to a carrier, the NVOCC is
responsible for the goods towards his own customer (the shipper / consignee).

If the goods are damaged or lost during transit, the shipper or consignee can file claim
against the NVOCC.

[Link] to ensure that the party to whom goods are released is in fact a
representative of the consignee

Although a HSWB document is not needed to effect release of the goods, the carrier is
nonetheless obliged to assure himself of the identify of the party to whom cargo is
released.

If he is in doubt, he should contact the shipper.

House Sea Waybill - Amendment

A shipper can amend his release instructions (consignee name) until such time as the
cargo has been physically released to the consignee.

Amendments should be made in writing and are always subject to acceptance by the
carrier.

There is no need for the carrier to have the HSWBs returned in order to make an
amendment (as they are not issued as originals but only copies). But to ensure that no
unnecessary disputes arise because of the amendment, the NVOCC may confirm the
amendment with both the shipper and the consignee.
The NVOCC must ensure that no changes to the description of the goods are made that
can affect his position towards the consignee. This means that the NVOCC must ensure
that the HSWB still corresponds with the carrier B/L or SWB, and if not, that the carrier
B/L or SWB is amended accordingly. The HSWB should not be amended if the carrier
will not agree to amend the carrier B/L.

House Bill of Lading - Cargo Description

The procedures for cargo description on HSWBs are identical to those of the HBL.

Cargo description
The transport provider cannot physically verify the contents of the cartons and packages
received from the shipper. For legal reasons, the description of the goods must therefore
always include the wording ´´Said To Contain´´ or ´´S.T.C.´´ to signify that the transport
provider is relying on the description of the goods supplied by the shipper. Example:
S.T.C. 1020 cartons of CD players.

If the NVOCC knows that the description of the goods supplied by the shipper is not
correct (for example that cartons are damaged), the carrier should note the discrepancy on
the HSWB or refuse to accept the cargo and issue the HSWB.

No. of packages
If cargo is lost during transit, it is the number of units as stated in the ´´no. of pkgs´´ field
that will be used for calculation of potential compensation to the owner. For this reason,
this field should always reflect the smallest number of shipping units. Example 1 (FCL
container): ´´1 x 20´std´´ instead of ´´500 cartons´´. Example 2 (LCL shipment): ´´5
pallets´´ instead of ´´50 cartons´´.

After issuing the HSWB to our customer, we must ensure that our own carrier B/L or
SWB adequately covers our liability. For insurance reasons, we need to receive a carrier
bill evidencing the same number of packages as shown on the corresponding House bills.

Example: You have issued 5 HSWBs, each for 100 cartons. You have loaded the goods
into a 40´ container. The carrier bill must show 500 cartons in the goods description:
1x40´std S.T.C. 500 cartons of general merchandise.

Clauses
ScanwellLogistics should insert the clause ´´Shipper´s load, stow and count´´ if the
customer is loading the container at his premises.

´´Shipped onboard´´ must only be used when the document is issued after vessel sailing.
If the customer wants the document issued before vessel sailing, the clause ´´Received for
shipment´´ is used instead. A ´´Shipped on board´´ HSWB cannot be issued until
ScanwellLogistics has received confirmation from the ocean carrier that the goods have
been loaded onboard the vessel.

ScanwellLogistics will not insert the clause ´´Clean onboard´´ on the Bill. Even for LCL-
shipments where we are physically handling the cartons, we cannot check the quality and
condition of the merchandise inside the cartons.

24-hour manifest rule (U.S. customs)

You may have heard about the 24-hour manifest rule established by U.S. Customs and its
requirements regarding description of goods - for example that ´´S.T.C.´´ is not allowed
and that the cargo description must be very specific (i.e. ´´general merchandise´´ and
other general cargo descriptions are not allowed).

For the purpose of transport documentation, you should be aware that the U.S. Customs
rules relate to the vessel manifest, not the printed Bill of Lading or Waybill document.
The vessel manifest is used for customs purposes. The printed Bill or Waybill is used for
legal and commercial purposes.

House Sea Waybill - Document Date

The date of the HSWB must be the date on which it is actually issued, irrespective of the
date the cargo was received or loaded, however not earlier than the date the cargo was
received or loaded respectively.

For a ´´Shipped on Board´´ HSWB, the date cannot be earlier than the date the cargo was
actually loaded on board the first vessel or conveyance mentioned in the document. A
´´Shipped on board´´ HSWB cannot be issued until ScanwellLogistics has received
confirmation from the ocean carrier that the goods have been loaded onboard the vessel.

For a ´´Received for Shipment´´ HSWB, the date cannot be earlier than the date the cargo
was actually received at the place of receipt or load port mentioned in the document.

Sometimes, a shipper will request a carrier to issue the HSWB with earlier or later dates
in order to comply with time restrictions in the shipper´s Letter of Credit. The carrier is
not obliged to do so and should not do so. It would be considered an attempt to defraud
the buyer.

House Sea Waybill - Freight payment

The charges payable at origin (usually by the shipper) are called ´´prepaid´´. The charges
payable at destination (usually by the consignee) are called ´´collect´´.

In order to secure payment, the NVOCC will usually not release the HSWB document to
the shipper at origin before he has paid all prepaid charges. (But in effect, the goods can
be released at destination without this document so the only way to ensure payment is to
withhold shipment until payment has been received).
At destination, the NVOCC will usually not release the goods at destination until all
freight charges are paid.

It is a commercial decision by the NVOCC whether they wish to grant the shipper and/or
consignee credit. If credit has been granted, the NVOCC will release the goods and
expect the freight and other costs to be paid within the agreed time.

The shipper is responsible for advising the NVOCC which charges are prepaid and
collect. If the NVOCC is in doubt whether the consignee will pay for the collect charges,
he may check with the consignee before accepting the shipment.

In some areas of the world, from where there is a great risk and/or cost for the carrier to
ship cargo, the carrier may require that all charges are prepaid.  

House Sea Waybill - Filing

An original is not collected at destination before releasing the goods. There are no
requirements to keep copies of HSWBs on file.

House Sea Waybill - Why use this document?

1. Why use a NVOCC?
You may wonder if it is not a complicated situation, having a NVOCC involved as a
middle man instead of just dealing directly with the ocean carrier.

In particular small and middle-sized companies often do not have enough shipments
(cargo volume) to negotiate good rates and conditions with the carrier directly. They
therefore use a NVOCC who has a large number of customers and therefore can negotiate
good freight rates with the ocean carrier. Although the NVOCC may add a margin to the
freight rate, the customer still obtains a better deal. It becomes a win-win situation.

The customer will often also purchase additional services from the NVOCC (e.g.
documentation and customs clearance).

2. Why use a House Sea Waybill ?

A Sea Waybill is used in cases where no sale of goods is expected during transit (no
change of consignee) and where the shipper and consignee trust that payment will take
place and legal ownership of the goods can change without the use of an original B/L
document.

This trust may be built based on a long-term relationship between the seller and buyer,
the fact that a Letter of Credit covers the shipment and ensures payment (provided the
shipper fulfils the obligations set out in the L/C) or because it is an inter-company type
carriage.
The advantage of the SWB is that it allows less administration and fast release of the
goods at destination because an exchange of original documents between the shipper and
the consignee and between the consignee and the NVOCC does not have to take place.

House Sea Waybill - Difference between HBL and HSWB

1. In which areas are the HBL and the HSWB the same?
- They are both issued by the NVOCC to his customer
- They both function as Receipt for the cargo and Evidence of
  contract of carriage
- They both contain details about the shipment such as shipper,
  consignee, vessel, place of delivery, cargo description and date
- They must not be issued with a date different than the true
  issuance date / onboard date
- They can both not be issued until the carrier has issued the B/L
  or SWB and thereby confirmed that the shipment is onboard
  (unless the shipper asks for a ´´received for shipment´´ bill)
- They obligate the NVOCC to ensure correct description of the goods
- They obligate the NVOCC to care for the cargo while in his custody
- They obligate the NVOCC to ensure that he releases the goods to
  the correctly entitled party at destination

2. In which areas are the HBL and the HSWB different?

- The HBL is a document of title. The HSWB is NOT.
- A HSWB cannot be consigned ´´to order´´, it must always state
  a consignee.
- The HBL is printed in sets of originals and copies (often 3 originals).
A SWB is only printed as copies.
- The NVOCC does not require an original SWB in order to release
  the goods at destination

House Sea Waybill - Difference between SWB and HSWB

1. In which areas are the carrier SWB and the House SWB the same?
- They have the same two functions: A receipt for cargo and
  Evidence of contract of carriage
- Neither the HSWB nor the SWB can be consigned ´´to order´´ or
  ´´to order of [name/company]´´ and cannot be endorsed and
  transferred to a third party. The goods are to be released at   destination to the consignee
named by the shipper.
  They are not documents of title.
- They must not be issued with an onboard date different than
  the true onboard date
- They are only issued in copies
- They usually have the same format and fields
- They obligate the issuing party to ensure correct description
  of the goods
- They obligate the issuing party to care for the cargo while in
  his custody
- They obligate the issuing party to ensure that the goods are
  released to the correctly entitled party at destination

[Link] which areas are the carrier SWB and the House SWB different?
- The HSWB is issued by the NVOCC who does not operate vessels.
  The SWB is issued by an ocean carrier.
- The HSWB evidences a contract between the NVOCC and his
  customer. The carrier SWB evidences a contract between the
  carrier and his customer.
- ScanwellLogistics can issue HSWB. We cannot issue carrier SWB.

FCR - Introduction
When ScanwellLogistics, acting as agents for the consignee, have received the goods and
all necessary documentation and payment of charges from the seller, we issue a
Forwarder´s Cargo Receipt (FCR). The seller will use the FCR to confirm to the buyer
and/or the bank that he has delivered the goods for shipment and that the carriage is being
arranged by ScanwellLogistics.

ScanwellLogistics will arrange the ocean transport and the ocean carrier will issue a B/L
(or SWB). The B/L (or SWB) is used to obtain release of the goods at destination.

It is also possible to combine the use of the FCR with a House B/L or House SWB if the
customer is using a NVOCC to supply ocean carriage. If ScanwellLogistics is the
NVOCC and has issued a HBL or HSWB, there is no need to also issue a FCR unless
there are specific reasons to do so (for example that the vendor´s L/C requires a
ScanwellLogistics FCR).

In many ways the FCR document looks similar to the Bill of Lading and House Bill of
Lading. But it is distinctly different than a B/L, SWB, HBL or HSWB in that it does NOT
evidence a contract of carriage.

A FCR cannot replace the B/L, SWB, HBL or HSWB.  It is always used together with
one of these documents.

FCR - Issuing Party

A Forwarder´s Cargo Receipt (FCR) is issued by a freight forwarder who is acting as
agent on behalf of the consignee.

FCR - Functions
The FCR functions as:
1. Receipt for the cargo

Following functions are NOT applicable to the FCR:

2. Evidence of contract of carriage
3. Document of title

1. Receipt for cargo

The FCR is a receipt by the agent / forwarder that the goods are in his custody.

The FCR does not confirm shipment and can therefore be issued before the carrier B/L
has been issued.

2. The FCR is NOT evidence of contract of carriage

The FCR does not evidence of a contract of carriage with the ocean carrier, freight
forwarder or NVOCC. The evidence of contract of carriage will be the document issued
by the ocean carrier (ie. the B/L or SWB) or the NVOCC (HBL or HSWB).

3. The FCR is NOT a document of title and it not used at destination

The FCR is NOT a document of title. It cannot be negotiated, and it cannot be endorsed
to other parties. The consignee cannot be ´´to order´´ and the consignee´s name must be
entered in full.

There is no requirement that a FCR is presented at destination to obtain release of the

goods. The release of the goods take place based on the B/L (or SWB). In fact, the FCR
is seldom used at destination. It is primarily a document for origin use.

Although the client´s SOP specifies that a FCR is to be issued together with a Sea
Waybill, there may be a few situations where a vendor insists to receive a document of
title / a negotiable document, a House Bill of Lading (DSL Star Express B/L) can be
issued instead of the FCR but it requires:

[Link] from consignee (MLOG acts as agents for the

   consignee. We should therefore seek confirmation from the
   consignee before we issue a different document than the FCR.
   Preferably, we ask the consignee to ensure that the shipper
   (and his bank and L/C) will accept the FCR instead of a HBL.
   But, sometimes it can be difficult to change a L/C after is has been
   issued. The consignee may therefore ask that a HBL is issued for
   this shipment. The consignee should ensure that future L/Cs
   require a FCR instead of a document of title)

[Link] a HBL is issued, the carrier SWB or B/L must not be consigned
   to the same person as the HBL. If ScanwellLogistics issue a HBL,
   the carrier bill must be consigned to ScanwellLogistics, not the
   customer.

[Link] notification and follow-up with ScanwellLogistics at destination

   (If a HBL is issued instead of a FCR, MLOG at destination must
   receive a duly endorsed original HBL at destination before the goods
   are released to the consignee. MLOG at origin must ensure that
   MLOG at destination is made aware of this requirement.
   For customers that usually operate under FCRs, it is an unusual
   situation to have a HBL involved in the shipment. MLOG at
   destination will therefore not be aware of the release requirements
   under the HBL unless they receive clear notification from MLOG at
   origin).

FCR - Originals and Copies

The FCR is not a document of title and an original is not needed to effect release of goods
at destination. As such, there is no reason why the FCR should be issued as an original
document.

However, often the shipper (and the bank) will insist to receive an original FCR and
therefore the FCR is often issued in 3 originals and a reasonable number of copies.

It is actually more correct to issue 1 original FCR and a reasonable number of copies (but
3 originals is market practice in some areas of the world today).

FCR - Forwarder´s Responsibility

The two main areas of responsibility of an agent / freight forwarder issuing FCRs are:
1. Responsibility for correct description of the goods
2. Responsibility to care for the goods while in the agent´s custody

1. Responsibility for correct description of the goods

The consignee and the bank will rely on the description of the goods in the FCR
(quantity, condition, etc) to effect payment to the seller.

It is essential that ScanwellLogistics clearly notes any damages or shortcomings on the

FCR or refuse to accept the cargo if the physical goods received do not match the
description.

ScanwellLogistics, acting as agents for the consignee, will arrange a carrier Bill of
Lading or Sea Waybill that covers the carriage performed by the ocean carrier.

ScanwellLogistics should ensure that the description in the carrier B/L (or SWB)
corresponds with the description in the FCR.

The consignee will expect to receive the goods as described in the B/L or SWB.

If a shipper requests a ´´clean FCR´´ in order to meet the requirements in his Letter of
Credit but the carrier will not issue a clean B/L (without any notation of shortcomings or
damages), ScanwellLogistics cannot meet his request.

2. Responsibility to care for the goods while in the agent´s custody

This is closely related to what we have just discussed. ScanwellLogistics is responsible to
take good care of the goods while they are in our custody. If we damage the goods, we
become liable towards the consignee.

However note that when goods are delivered to the carrier and covered by a transport
document (B/L or SWB), it becomes the carrier´s responsibility to care for the goods.

ScanwellLogistics is only responsible for the goods under the FCR as long as the goods
are in our custody. (This is distinctly different from a HBL/HSWB where we take on
responsibility as carrier).

FCR - Amendment
Should the shipper request an amendment to the FCR, the issuing agent should ask to
have the original FCRs returned.

Amendments should be made in writing and are subject to acceptance by the forwarder.
The forwarder must ensure that no changes to the description of the goods are made that
can affect his position towards the consignee.

FCR - Cargo Description

The procedures for FCRs follow the same rules as Bills of Lading and Waybills.
Cargo description
The transport provider cannot physically verify the contents of the cartons and packages
received from the shipper. For legal reasons, the description of the goods must therefore
always include the wording ´´Said To Contain´´ or ´´S.T.C.´´ to signify that the transport
provider is relying on the description of the goods supplied by the shipper. Example:
S.T.C. 1020 cartons of CD players.

If the forwarder knows that the description of the goods supplied by the shipper is not
correct (for example that cartons are damaged), the forwarder should note the
discrepancy on the FCR or refuse to accept the cargo and issue the FCR.

No. of packages
If cargo is lost while in the forwarder´s custody, it is the number of units as stated in the
´´no. of pkgs´´ field that will be used for calculation of potential compensation to the
owner. For this reason, this field should always reflect the smallest number of shipping
units. Example: ´´5 pallets´´ instead of ´´50 cartons´´.

Clauses
The transport provider should insert the clause ´´Shipper´s load, stow and count´´ if the
customer is loading the container at his premises.

FCR - Document Date

The receiving date on the FCR date must be the date on which the goods were received
by ScanwellLogistics (or the CY-container was delivered to the carrier´s terminal).

In some cases, the shipper may ask that the FCR is dated earlier or later than the actual
date in order to comply with conditions in his Letter of Credit. We should not issue the
FCR with an incorrect date - it would be seen as an attempt to defraud the consignee.

FCR - Payment
The issuing agent / freight forwarder of a FCR, will usually not release the FCR to the
shipper until he has not only delivered the goods but also delivered all required
documents (export licence, commercial invoice, etc.) and paid all local charges that are
for the account of the shipper.

You should note that the FCR is not an invoice. It is a cargo receipt. Even though the
FCR is used in connection with the payment of charges at origin, it cannot replace the
issuance of an invoice. But origins may use the same number for the FCR and the
invoice.

FCR - Filing
There are no international requirements for filing of original FCRs. Please check local
procedures. There is no need to collect an original FCR at destination.
FCR - Why use this document?
The FCR document is used to facilitate payment.

When the shipper has delivered his goods to the agent / freight forwarder (and any
required documentation), he will receive the FCR as proof that the goods have been
delivered for shipment.

The L/C will stipulate which documentation must be in place before payment for the
goods will be effected. If the buyer and seller have agreed that the FCR is to act as proof
that the goods have been made available for shipment, the L/C must clearly state that
payment can be effected upon presentation of a ScanwellLogistics FCR.

The advantage to the shipper of using the FCR to effect payment (instead of a B/L, SWB
or HBL) is that the FCR can be issued before the goods have been shipped by the ocean
carrier. Therefore, the seller can obtain payment for his goods faster than if he had had to
wait for the B/L to be issued.

To the consignee, there is an advantage when ScanwellLogistics consolidates goods from

multiple shippers into one container. In such case, a separate FCR will be issued to each
of the shippers but only one carrier B/L (or SWB) will be issued by the carrier. This will
save the consignee documentation and customs clearance fees at destination.

As you know, when a FCR is issued by ScanwellLogistics, the carrier will issue a B/L or
a SWB. When a carrier B/L or SWB is issued, the shipper/seller under normal
circumstances has the right to amend the release instructions (e.g. consignee name and
destination).

By accepting a FCR, the shipper assigns the benefit of these forwarding instructions to
the consignee (buyer). In other words, the seller waives his right to revoke any delivery
instructions after he has delivered the goods to ScanwellLogistics, and ScanwellLogistics
is not legally obliged to comply with the shipper´s instructions after receipt of the cargo
and issuance of the FCR.

ScanwellLogistics will comply with the buyer´s instructions.

You should note that although the FCR is used as a vehicle for payment,
ScanwellLogistics is not involved in the monetary transaction and change of ownership
between the seller and the buyer. We issue the FCR as a receipt for the cargo.

FCR - Differences between FCR and carrier B/L

- The B/L is issued by the ocean carrier. The FCR is issued by a
  freight forwarder, acting as agent on behalf of a consignee.
- The B/L is a document of title and can be endorsed. The FCR is not.
  The FCR cannot be consigned ´´to order´´.

- The B/L is evidence of contract of carriage with the carrier.

  The FCR is not.

- A duly endorsed B/L must be presented to the carrier at destination

  to obtain release of the goods. The FCR does not have this function.

- Under a FCR, ScanwellLogistics is only responsible for the goods

  while they are in our custody. If goods are lost or damaged during
  transit, the client must file claim against the ocean carrier under
  the B/L (or SWB).

FCR - Differences between FCR and carrier SWB

- The SWB is issued by the ocean carrier. The FCR is issued by a
  freight forwarder, acting as agent on behalf of a consignee.

- The SWB is evidence of contract of carriage with the carrier.

  The FCR is not.

- The carrier will release the goods at destination to a person who

  can identify himself as a representative of the consignee stated
  in the SWB. The FCR does not have this function.
  The FCR is only used at origin and is not a release document.

- Under a FCR, ScanwellLogistics is only responsible for the goods

  while they are in our custody. If goods are lost or damaged during
  transit, the client must file claim against the ocean carrier under
  the B/L (or SWB).

FCR - Differences between FCR and HBL

- The HBL is issued by ScanwellLogistics when we act as NVOCC.

- As NVOCC we act as agents of DSL Star Express and take on

  the responsibilities and liabilities as a principal carrier.
  Even when sub-contracting the ocean carriage to an ocean carrier
  such as Scanwell, we have the responsibility and liability of
  a carrier under the HBL.

- When we issue FCRs, we act as agents for the consignee but do

  not take on the responsibility and liability for the carriage of the   goods.
ScanwellLogistics is only responsible and liable for the goods   while they are in our
custody.  
- The HBL is a document of title and can be endorsed.
  The FCR is not.

- The HBL evidences a contract of carriage between the NVOCC

  and the customer. The FCR does not evidence a contract of
  carriage.

- A duly endorsed HBL must be presented to the NVOCC

  (ScanwellLogistics) at destination to obtain release of the goods.
  The FCR does not have this function. The FCR is not a release
  document.

- When cargo is moving under a HBL, the shipper or the consignee

  will agree freight rates with the NVOCC (ScanwellLogistics).
  When a FCR is issued, the customer will have agreed freight rates
  directly with the ocean carrier and the goods will move under a B/L
  or SWB.

- Under a FCR, ScanwellLogistics is only responsible for the goods

  while they are in our custody. If goods are lost or damaged during
  transit, the client must file claim against the ocean carrier under
  the B/L (or SWB).

FCR - Differences between FCR and HSWB

- The HSWB is issued by ScanwellLogistics acting as NVOCC
  (agent for DSL Star Express).

- Neither the HSWB nor the FCR are documents of title.

  None of them can be endorsed or consigned ´´to order´´.

- The HSWB is evidence of contract of carriage with the NVOCC.

  The FCR is not.

- The NVOCC will release the goods at destination to a person

  who can identify himself as a representative of the consignee
  stated in the HSWB. The FCR does not have this function.
  The FCR is only used at origin and is not a release document.

- Under a FCR, ScanwellLogistics is only responsible for the goods

  while they are in our custody. If goods are lost or damaged during
  transit, the client must file claim against the ocean carrier under
  the B/L (or SWB).
Master Air Waybill - Introduction
Airfreight is usually selected as transport mode when lead time is of essence or when the
value of the cargo is high.

In a typical airfreight scenario, three parties will be involved at origin: The shipper
(and/or a freight forwarder working on his behalf), an airfreight agent and an airline.

The MAWB is a document between the airline and the airfreight agent. The airfreight
agent at origin and his handling agent at destination appear as shipper and consignee in
the document.

The airfreight agent issues a HAWB to his own customer (the shipper).

Sometimes the MAWB is showing the actual exporter/importer as shipper/consignee (not

the airfreight agent). This is called a Direct Air Waybill.

Master Air Waybill - Issuing Party

The MAWB is issued by an airline but filled in and printed by an airfreight agent on
behalf of the airline.

What is quite interesting in this scenario is that it is the airfreight agent who fills in and
prints the MAWB, not the airline. The airfreight agent acts as an agent on behalf of the
airline. In order to do so, the airfreight forwarder must be licensed / certified.

A licensed agent is an airfreight forwarder who:

- Is certified/licensed by IATA (is an IATA agent), or
- Has a relationship with / credit approval from an airline.

IATA is the International Air Transport Association which is a co-operation of the

majority of airlines in the world. If an agent is IATA certified, he can issue air waybills
on behalf of all the airlines who are members of IATA.

Some freight forwarders are not IATA certified but have a relationship (credit approval)
with one or more airlines. In such case, the agent can be approved or otherwise accredited
to issue air waybills on behalf of these particular airlines.

Master Air Waybill - Functions

The main functions of a Master Air Waybill are:

1. Receipt for the goods

2. Evidence of contract of carriage

The Master Air Waybill is NOT a document of title.

1. Receipt for goods

The MAWB is a receipt by the carrier that goods have been accepted for carriage.

The document is issued in a number of copies, usually 12, of which the first 3 are
considered ´´originals´´.

Original 1 is to be signed by the shipper (showing on the MAWB) or his agent and
handed to the carrier. Original 2 is to accompany the goods through to the airport of
destination and to the consignee. It is signed by the carrier and the shipper / agent.
Original 3 is signed by the carrier and given to the shipper after the goods have been
accepted for carriage.

Note that the MAWB will have been prepared before the goods are delivered to the
airline.

In principle, the licensed agent / freight forwarder should not release the MAWB to the
shipper before the airline has accepted the goods and signed the MAWB (in case, at time
of receipt, the airline makes notations on the MAWB regarding the condition of the
cargo, e.g. damages).

2. Evidence of contract of carriage

The MAWB is evidence of a contract of carriage between the shipper (as shown in the
MAWB) and the airline.
Note that it is not the actual contract of carriage. The actual contract of carriage is the
underlying agreement between the carrier and his customer to carry goods. But the
MAWB is prima facie evidence of the terms and conditions agreed.

3. The MAWB is not a document of title

The MAWB is NOT a document of title. It cannot be consigned ´´to order´´ and cannot
be transferred to other parties by means of endorsements.

If a Letter of Credit requires an original B/L consigned ´´to order of [bank]´´, the AWB
must be consigned to the bank. In such case, at destination, the airline will only release
the goods to the agent/buyer/importer when the bank has sent release instructions to the
airline. This is known as a ´´bank release´´.

There is no requirement that an AWB document is submitted at destination to effect

release of the goods. The carrier will release the goods to the party named as consignee in
the air waybill. The carrier must ensure that the party to whom the goods are released are
in fact at proper representative of the consignee.

Master Air Waybill - Originals and Copies

An AWB is printed in a set of minimum 8 copies of which 3 are considered originals.
The three AWB originals (part 1, 2 and 3) bear on the reverse the conditions of the
contract and all have the same validity.

Original 1 (for issuing carrier) is retained by the carrier issuing the air waybill for
accounting purposes and to serve as documentary evidence of carrier´s and shipper´s
signature of the contract of carriage.

Original 2 (for consignee) accompanies the consignment all the way to final destination
and will be given to the consignee (or his agent) on delivery.

Original 3 (for shipper) is given to the shipper and serves as proof of receipt of goods for
shipment and documentary evidence of the carrier´s and shipper´s signature to the
contract of carriage.

Master Air Waybill - Airfreight agent´s and Airline´s Responsibility

The main responsibility of the agent when issuing a MAWB on behalf of the airline is:
1. To ensure correct description of the goods
2. To ensure that the goods are ready for carriage.

The main responsibilities of the airline under a MAWB are:

3. To care for the goods while in the airline´s custody
4. To complete the carriage with reasonable dispatch
5. To ensure that the party to whom the goods are released at destination is in fact a
representative of the consignee
[Link] agent must ensure correct description of the goods
The consignee may rely on the description of the goods in the MAWB (quantity,
condition) to effect payment.

The airline (carrier) will rely on the description of the goods to plan the carriage (aircrafts
will have limitations both in volume and weight) and to handle the goods, in particularly
when the goods contain hazardous materials.

It is therefore essential that the airfreight agent carefully fills out the details in the
MAWB.

The description is supplied by the shipper (or his agent / freight forwarder) to the licensed
agent. If the licensed agent is knowledgeable about a discrepancy (e.g. damages or
shortcomings) between the description of the goods and the actual physical state of the
goods, he should clearly note this on the MAWB or refuse to issue the document. In other
words, a ´´clean AWB´´ should not be issued unless the goods are received without
damages, irregularities or short shipment.

The licensed agent will issue the MAWB on behalf of the airline. At time of receipt of the
goods, the airline signs a copy of the MAWB confirming that goods have been received
in the state and condition as described in the MAWB (or they issue a receipt note). If
there are any discrepancies, the airline should clearly mark this on the 3 original MAWBs
(or refuse to receive the goods). If not, they can be held liable for the discrepancy (e.g.
damage).

2. Airfreight agent must ensure that the goods are ready for carriage
A primary function of the licensed agent is to ensure that the goods are properly packed
and labelled when delivered to the airline. For example, that the goods are properly
secured onto the pallet and that the required documentation follow the goods.

The responsibility of adherance to local and destination security is shared with the other
parties involved in the shipment; the freight forwarder and the airline.

[Link] airline must care for the goods while in their custody
If the goods arrive damaged at the airport of destination and no note has been made on
the MAWB regarding the condition of the cargo, it is the carrier´s responsibility. He will
become liable for claims made by the consignee within the liability limits set forth in the
contract of carriage (stated on the back of the AWB document).

4. The airline must complete the carriage with reasonable dispatch

A MAWB is issued before the goods depart from the originating airport, ie. it does not
confirm that the goods have departed. The carrier is however responsible for completing
the carriage ´´within reasonable time´´.
The flight, date and routing showing on the face of the MAWB can be changed by the
carrier without notice.

Also note that the flight number can actually be a truck number! The carrier is not
obliged to transport the goods via air but may use other means of transportation (e.g.
trucking) as long as he does so ´´with due regard to the interests of the shipper´´. In some
countries this is however not allowed (e.g. USA).

5. The airline must ensure that the party to whom the goods are released at destination is
in fact a representative of the consignee
A physical copy of the MAWB is not needed at destination to effect release of the goods,
but the carrier is obliged to assure himself of the identify of the party to whom cargo is
released. The cargo can only be released to the party named as consignee in the MAWB
(or an appointed agent working on his behalf).

Master Air Waybill - Amendment

A shipper can amend his release instructions (consignee name) until such time as the
cargo has been physically released to the consignee. Amendments should be made in
writing and are always subject to acceptance by the airline. The carrier must ensure that
no changes to the description of the goods are made that can affect his position towards
the consignee.

Master Air Waybill - Cargo Description

The MAWB contains a short description of the goods, the number of pieces and the
volume (cubic) of the goods. Often, the description field also contains details on the
dimensions of the cargo for airline use. There are specific rules for the description of
dangerous goods and live animals.

For consolidated cargo, the MAWB will refer to ´´consolidated cargo as per attached
manifest´´ and the cargo details will be updated in the attachment.

Some freight forwarders send their HAWB details to the licensed agent electronically. In
this way, the licensed agent will create the MAWB almost automatically by incorporating
the details updated by the freight forwarder directly into the MAWB manifest. When
sending the HAWB details to the licensed agent, the freight forwarder will usually not
reveal the name of the actual shipper and consignee.

Master Air Waybill - Document Date

The MAWB is filled in and printed by the party who is effecting the booking.
Note that the carrier can change flight number and departure date without notice to the
shipper/consignee. The air waybill does not confirm that the goods have departed, only
that they have been accepted for carriage. The carrier must however ensure that the
carriage is completed ´´within reasonable despatch´´.
Master Air Waybill - Payment
The charges payable at origin (usually by the shipper) are called ´´prepaid´´. The charges
payable at destination (usually by the consignee) are called ´´collect´´.

Generally, MAWBs are always prepaid.

Airfreight rates
Within airfreight, freight rates are quoted based on weight (KGS or LBS).

All consignments are converted from volume (CBM) to weight (KGS or LBS) by using
the following factor: 1 CBM = 167 KGS.

A comparison then takes place between the converted volume and the actual weight of
the cargo. The customer pays for whatever is the highest value - gross weight or ´´volume
converted to weight´´.

You should also note that the freight rate stated on the MAWB is the so-called official
rate or IATA rate. The actual rate paid at origin can however be significantly less. The
actual rate will have been stipulated in an underlying contract or agreement between the
shipper/agent and the airline. If not prepaid, the printed rate on the MAWB will be
applied at destination. (Therefore most MAWBs are prepaid).

Master Air Waybill - Filing

An original is not collected at destination before releasing the goods. There are no
requirements to keep MAWB copies on file.

Master Air Waybill - Why use this document?

The MAWB is always used in airfreight as it is the receipt and evidence of contract with
the airline.

You may wonder why the licensed agent consolidates the goods onto just one MAWB
instead of creating one per customer. The reasons are:
- The more cargo, the better rates. Airfreight rates are usually quoted
  on a ´´sliding scale´´ - e.g. USD 5 per kg for consignments
  (one MAWB) of less than 500 kgs, but USD 2 per kg for
  consignments of a total of more than 500 kgs.
- Mixing voluminous but light cargo with heavy cargo can improve
  the total rate due to the special freight calculation within airfreight.

As mentioned earlier, the freight is calculated based on ´´converted volume´´ or weight,

whichever is the highest value. If you have heavy cargo (but only little volume - e.g. a
ship´s motor), you pay relatively little. If you have light cargo which however is
voluminous (e.g. garments), you pay relatively much. The freight forwarder can gain
advantages by consolidating voluminous goods with heavy goods onto one MAWB.

Master Air Waybill - Differences between MAWB, HAWB and DAWB

- The MAWB evidences a contract of carriage between the airline
  and the shipper/consignee in the MAWB, usually the airfreight agent.
  If goods are lost or damaged under a MAWB, the airline is liable
  towards the shipper/consignee in the MAWB.
- The HAWB evidences a contract of carriage between the airfreight
  agent/forwarder and the shipper/consignee in the HAWB. If any
  goods are lost or damaged under a HAWB, the issuing party
  (the freight forwarder) is liable towards the shipper/consignee
  in the HAWB
- The DAWB evidences a contract of carriage between the airline and
  the shipper/consignee in the MAWB, usually the exporter/importer.

All Air Waybills function as Receipt for goods and Evidence of contract of carriage. No
Air Waybills are documents of title, ie. no types of AWBs can be consigned ´´to order´´
and they cannot be endorsed.

The MAWB, HAWB and DAWB are usually in the same format (following the IATA
standards) but there are a few ways of differentiating between them.

MAWB is recognised by following factors:

[Link] same MAWB number is shown in the three corners
[Link] ´´issued by´´ shows the name/address of the AIRLINE
[Link] shipper is the airfreight agent
   (equal to the ´´Issuing Carrier´s Agent name´´)
[Link] consignee is the handling agent at destination.
[Link] charges are usually always prepaid
[Link] description of the goods shows ´´consolidated cargo as per
   attached manifest´´

HAWB is recognised by the following factors:

[Link] MAWB number is shown in the upper left corner.
[Link] HAWB number (which is different from the MAWB number)
   shows in the upper right and lower right corners.
[Link] ´´issued by´´ shows the name/address of the airfreight agent
   or airfreight forwarder
[Link] shipper is not the airfreight agent (not equal to the ´´Issuing
   Carrier´s Agent name). Shipper will either be the actual exporter
   or an airfreight forwarder.
[Link] can be collect (or prepaid)
[Link] description of the goods is more detailed than in the MAWB
DAWB is recognised by the following factors:
[Link] same MAWB number is shown in the three corners.
[Link] ´´issued by´´ shows the name/address of the AIRLINE
[Link] shipper is not the airfreight agent (not equal to the ´´Issuing
   Carrier´s Agent name´´). Shipper and consignee are the actual
   exporter/importer.
[Link] are usually always prepaid
[Link] description of the goods is more detailed than a consolidated
   MAWB
  
House Air Waybill - Introduction
The HAWB is a document between the airfreight agent/forwarder and his customer.

The format of the HAWB is very similar to the MAWB (follows the IATA standard). The
terms and conditions printed on the back of the document are usually identical to those
that apply to MAWBs. In this way, the freight forwarder ensures that he has the same
liability towards his customer as the liability he is offered by the carrier under his own
MAWB.

House Air Waybill - Issuing Party

The HAWB is issued by an airfreight forwarder / airfreight agent to his customer.

House Air Waybill - Functions

The main functions of a House Air Waybill are:
1. Receipt for the goods
2. Evidence of contract of carriage

The House Air Waybill is NOT a document of title.

[Link] for goods

The HAWB is a receipt by the freight forwarder that the goods have been accepted for
carriage.

The HAWB will usually have been prepared before the goods are delivered to the airline.
In principle, the licensed agent / freight forwarder should not release the HAWB to the
shipper before the airline has accepted the goods and signed the MAWB (in case, at time
of receipt, the airline makes notations on the MAWB regarding the condition of the
cargo, e.g. damages).

[Link] of contract of carriage

The HAWB evidences a contract of carriage between the issuing agent (the freight
forwarder or airfreight agent) and the shipper/consignee on the HAWB. The HAWB is
prima facie evidence of the terms and conditions agreed.

Note that it does not evidence a contract of carriage with the airline. (The contract of
carriage with the airline is evidenced by the Master AWB).

[Link] HAWB is not a document of title

A HAWB is NOT a document of title. It cannot be consigned ´´to order´´ and cannot be
transferred to other parties by means of endorsements.

There is no requirement that a HAWB is submitted at destination to obtain release of the

goods. The freight forwarder (handling agent) at destination will release the goods to the
party named as consignee in the HAWB. The freight forwarder himself must first obtain
release of the goods from the airline (based on the MAWB).

If a Letter of Credit requires an original B/L consigned ´´to order of [bank]´´, the HAWB
must be consigned to the bank. In such case, at destination, the airline will only release
the goods to the agent/buyer/importer when the bank has sent release instructions to the
airfreight agent. This is known as a ´´bank release´´. The bank is the consignee on the
HAWB and only upon confirmation from the consignee, will the forwarder release the
goods to another party.

House Air Waybill - Originals and Copies

An AWB is printed in a set of minimum 8 copies of which 3 are considered originals.
The three AWB originals (part 1, 2 and 3) bear on the reverse the conditions of the
contract and all have the same validity.

Original 1 (for issuing carrier) is retained by the airfreight forwarder issuing the air
waybill for accounting purposes and to serve as documentary evidence of forwarder´s and
shipper´s signature of the contract of carriage.

Original 2 (for consignee) accompanies the consignment all the way to final destination
and will be given to the consignee (or his agent) on delivery.

Original 3 (for shipper) is given to the shipper and serves as proof of receipt of goods for
shipment and documentary evidence of the forwarder´s and shipper´s signature to the
contract of carriage.

House Air Waybill - Airfreight agent´s and Airline´s Responsibility

The main responsibilities of the airfreight forwarder / agent when issuing a HAWB are:
[Link] ensure correct description of the goods
[Link] care for the goods while in custody
[Link] ensure that carriage is completed within reasonable dispatch
[Link] ensure that the party to whom the goods are released at
   destination is in fact a representative of the consignee

1. To must ensure correct description of the goods

The importer will rely on the description in the HAWB and expect to receive the goods in
the quantity and condition as described.

The licensed agent will rely on the HAWB to fill out the description of the goods in the
MAWB.

If any shortcomings, damages or other discrepancies are noted on the MAWB by the
airline or the licensed agent, the freight forwarder should ensure that such notation is also
inserted on the HAWB.

2. To care for the goods also while in the airline´s custody

By issuing a HAWB, the freight forwarder takes on the responsibility as a ´´carrier´´ for
the goods, even when the carriage is sub-contracted to an airline.

If the goods are lost or damaged in transit, the freight forwarder becomes responsible
towards the exporter/importer. The exporter/importer will file a potential claim against
the freight forwarder, not the airline. If the goods were damaged or lost by the airline, the
freight forwarder will have to file claim against the airline based on the Master Air
Waybill.

3. To ensure that the carriage is completed within reasonable dispatch

A HAWB is issued before the goods depart from the originating airport, ie. It does not
confirm that the goods have departed - only that they have been accepted for carriage.
The freight forwarder is however responsible for ensuring that the carriage is completing
´´within reasonable time´´.

4. To ensure that the party to whom the goods are released at destination is in fact a
representative of the consignee
The cargo can only be released at destination to the consignee named in the HAWB or a
representative appointed by him. The freight forwarder at destination will have to obtain
release of the goods from the airline before she can release the goods to the consignee
(the importer). The importer cannot obtain release of the goods directly from the airline
as he is not the consignee on the MAWB.

House Air Waybill - Amendment

A shipper can amend his release instructions (consignee name) until such time as the
cargo has been physically released to the consignee. Amendments should be made in
writing and are always subject to acceptance by the airfreight forwarder. The forwarder
must ensure that no changes to the description of the goods are made that can affect his
position towards the consignee.

House Air Waybill - Cargo Description

The HAWB contains a short description of the goods, the number of pieces and the
volume (cubic) of the goods. Often, the description field also contains details on the
dimensions of the cargo for airline use. There are specific rules for the description of
dangerous goods and live animals.

Some freight forwarders send their HAWB details to the licensed agent electronically. In
this way, the licensed agent will create the MAWB almost automatically by incorporating
the details updated by the freight forwarder directly into the MAWB manifest. When
sending the HAWB details to the licensed agent, the freight forwarder will usually not
reveal the name of the actual shipper and consignee.

House Air Waybill - Document Date

The HAWB is filled in and printed by the party who is effecting the booking.
Note that the carrier can change flight number and departure date without notice to the
shipper/consignee. The air waybill does not confirm that the goods have departed, only
that they have been accepted for carriage. The carrier must however ensure that the
carriage is completed ´´within reasonable despatch´´.

House Air Waybill - Payment

The charges payable at origin (usually by the shipper) are called ´´prepaid´´. The charges
payable at destination (usually by the consignee) are called ´´collect´´.

HAWBs can be both prepaid and collect.

House Air Waybill - Filing

An original is not collected at destination before releasing the goods. There are no
requirements to keep HAWB copies on file.

House Air Waybill - Why use this document?

It is customary within airfreight that the actual shippers and consignees (the merchants)
do not deal directly with the airlines. The airlines usually work together with airfreight
agents. The contract between the airline and the agent is evidenced by the MAWB
whereas the contract between the airfreight agent and his customers is evidenced by the
HAWB.

House Air Waybill - Differences between MAWB, HAWB and DAWB

- The MAWB evidences a contract of carriage between the airline
  and the shipper/consignee in the MAWB, usually the airfreight agent.
  If goods are lost or damaged under a MAWB, the airline is liable
  towards the shipper/consignee in the MAWB.
- The HAWB evidences a contract of carriage between the airfreight
  agent/forwarder and the shipper/consignee in the HAWB. If any
  goods are lost or damaged under a HAWB, the issuing party
  (the freight forwarder) is liable towards the shipper/consignee
  in the HAWB
- The DAWB evidences a contract of carriage between the airline
  and the shipper/consignee in the MAWB, usually the
  exporter/importer.

All Air Waybills function as Receipt for goods and Evidence of contract of carriage. No
Air Waybills are documents of title, ie. no types of AWBs can be consigned ´´to order´´
and they cannot be endorsed.

The MAWB, HAWB and DAWB are usually in the same format (following the IATA
standards) but there are a few ways of differentiating between them.

MAWB is recognised by following factors:

[Link] same MAWB number is shown in the three corners
[Link] ´´issued by´´ shows the name/address of the AIRLINE
[Link] shipper is the airfreight agent
   (equal to the ´´Issuing Carrier´s Agent name´´)
[Link] consignee is the handling agent at destination.
[Link] charges are usually always prepaid
[Link] description of the goods shows ´´consolidated cargo as per
   attached manifest´´

HAWB is recognised by the following factors:

[Link] MAWB number is shown in the upper left corner.
[Link] HAWB number (which is different from the MAWB number)
   shows in the upper right and lower right corners.
[Link] ´´issued by´´ shows the name/address of the airfreight agent
   or airfreight forwarder
[Link] shipper is not the airfreight agent (not equal to the ´´Issuing
   Carrier´s Agent name). Shipper will either be the actual exporter or
   an airfreight forwarder.
[Link] can be collect (or prepaid)
[Link] description of the goods is more detailed than in the MAWB

DAWB is recognised by the following factors:

[Link] same MAWB number is shown in the three corners.
[Link] ´´issued by´´ shows the name/address of the AIRLINE
[Link] shipper is not the airfreight agent (not equal to the ´´Issuing
   Carrier´s Agent name´´). Shipper and consignee are the actual
   exporter/importer.
[Link] are usually always prepaid
[Link] description of the goods is more detailed than a consolidated
   MAWB
Direct Air Waybill - Introduction
A Direct Air Waybill is a Master Air Waybill that is issued directly to the actual
shipper/consignee (ie, the merchants) instead of the airfreight agent. The airfreight agent
only acts as a booking agent but is not a party to the contract.

Direct Air Waybill - Issuing Party

The DAWB is issued by an airline but filled in and printed by an airfreight agent on
behalf of the airline.

Please also see: MAWB - Issuing Party.

irect Air Waybill - Functions

The main functions of a Direct Air Waybill are:

1. Receipt for the goods

2. Evidence of contract of carriage between the airline and the
    shipper/consignee

The Direct Air Waybill is NOT a document of title.

For further details on the functions, please refer to: MAWB - Functions.

irect Air Waybill - Originals and Copies

Please see: MAWB - Originals and Copes.

Direct Air Waybill - Airfreight agent´s and Airline´s Responsibility

Please see: MAWB - Airfreight agent´s and Airline´s Responsibility.

Direct Air Waybill - Amendment

Please see: MAWB - Amendment.

Direct Air Waybill - Cargo Description

Please see: MAWB - Cargo Description.

Direct Air Waybill - Document Date

Please see: MAWB - Document Date.

Direct Air Waybill - Payment

Please see: MAWB - Payment.

Direct Air Waybill - Filing

Please see: MAWB - Filing.

Direct Air Waybill - Why use this document?

It is typically a matter of speed - a normal MAWB typically consolidates goods from
multiple shippers. If the goods are urgent (e.g. spare parts) and there is a need to have the
goods released fast at destination, the customer may not want to wait for the airline to
release the goods to the airfreight agent who will first have to de-consolidate the
consignment and then release the goods. If a Direct AWB is issued, the airline can release
the goods to the actual consignee and this will speed up the process. This will of course
require that the consignee can handle the appropriate customs and pick-up requirements.

Direct Air Waybill - Differences between MAWB, HAWB and DAWB

Please see MAWB: Differences between MAWB, HAWB and DAWB.  

Legislation - Introduction
The carrier (or NVOCC) will have a set of responsibilities under a contract of carriage.
The main responsibility is to carry the goods from/to the agreed place and deliver the
goods to the consignee in the same quantity and condition as received from the shipper.

If the carrier does not fulfil his obligations, the cargo owner may file claim against the
carrier for breach of contract. The most common claim is for damaged or lost goods
where the shipper/consignee claims that the carrier is at fault.
Legislation - Claims
In case goods are lost or damaged during transit, the cargo owner will incur a loss as the
goods cannot be sold at the expected price to his  customer(s). The cargo owner (shipper
or consignee) will therefore seek to recover as much of his loss from the carrier as
possible.

The carrier will (naturally) want to limit the amount of compensation he has to pay as
much as possible. In this process, he will need to take both legal and commercial issues
into consideration.

A claim is a request for compensation. It initiates the process of evaluating the cause of a
loss or damage and determining if a compensation should be paid to the
shipper/consignee. Compensation is also known as damages.  

It is worth noting that not all claims go to court.  Often the settlement and potential
payment of damages from the carrier to the cargo owner is agreed between the two
parties without going to court (also known as a commercial settlement).

Legislation - Terms and Conditions.

The terms and conditions of the contract of carriage will stipulate the responsibilities of
the carrier as well as the liability of the carrier (how  much compensation he can become
liable to pay in case of loss or damage to the cargo).

The terms and conditions of a contract of carriage are usually printed on the back of the
transport document or reference is made to the standard trading terms and conditions
(S.T.T.C.) of the transport provider which must be available upon request.

Therefore, the transport document becomes prima facie evidence of the terms of the
contract. Prima facie is a legal term which means ´´Sufficient to establish a fact or a case
unless disproved´´. In other words, the tems and conditions that are printed on the Bill
will be considered the agreement between the transport provider and the
shipper/consignee unless it can be proved that other terms and conditions were agreed in
an underlying contract, e.g. in a service contract between the carrier and the customer.

This relates to both ocean and air. The Bill is not in itself a contract because the
agreement between the transport provider and a shipper/consignee to carry his goods has
been concluded before the Bill was issued (e.g. at the booking stage) - at this stage, the
transport provider and the shipper/consignee could have agreed to additional or different
terms than those printed on the Bill. However, usually, the parties will conclude the
contract with reference to the standard terms and conditions of the Bill or under the
assumption that the standard terms and conditions of the Bill will apply. Otherwise, a full
contract negotiation would have to take place every time a booking was placed which is
of course not practical.
Legislation - Limitation of Liability
In principle, two parties to a contract can negotiate and  agree to any terms and conditions
they wish. However, during the 19th century it was recognised that the carriers had
stronger bargaining power than the cargo owners. The carriers abused this to agree terms
and conditions that were favourable to the carrier by excluding any liability in case of
cargo loss or damage. (In other words, if goods were lost or damaged, it was ´´tough luck
´´ for the cargo owners).

To protect cargo owners from this widespread exclusion of liability by sea carriers, a
number of nations met to discuss the idea of creating legislation in this area. The result
was the formulation of a set of rules, known as the Hague Rules, in 1924. This
international convention established a set of contractual clauses for incorporation in a
contract of carriage.

The clauses dealt with the liability of the carriers and to what extent the carrier would
have to compensate the cargo owner if goods were lost or damaged during transit. The
clauses defined the risks that the carrier must carry and the maximum protection he could
claim from limitation of liability clauses. In other words, the clauses defined in which
cases a carrier becomes liable to compensate a cargo owner for losses but also defined a
maximum liability.

The concept of limitation of liability dates all the way back to the 16th century and was
originally designed to encourage investment in shipping. If there is a risk that the carrier
will have to cover the full cargo value in case the goods are lost, he would need to know
the cargo value from the shipper and will quote freight rates accordingly (freight
increases). A standard level of liability and a certain protection of the carrier in terms of
his maximum risk, enables the carrier to offer uniform and cheaper rates. Another
argument has been that the carrier´s liability should be of a reasonable level compared to
his income (freight rate) which is usually less than the value of the goods.

The liability limitation is based on the number of packages or units as enumerated in the
B/L. In 1924, a standard amount of £100 per package or unit was agreed. The countries
that incorporated the Convention into local legislation in many cases converted this
amount into local currencies (e.g. US$ 500). You will still see these amounts being
referred to, e.g. on the Scanwell B/L and in ScanwellLogistics´ Standard Terms and
Conditions.

In 1968, the Hague Rules were amended. The new protocol is commonly referred to as
the Hague/Visby Rules. The Hague/Visby Rules make use of the so-called SDR (Special
Drawing Right) for limitation purposes. The SDR is a unit defined by the International
Monetary Fund and based on a basket of currencies.
The limitation amounts are prescribed as 666.67 SDR units per unit or package
enumerated in the B/L or 2 SDR per kg. of gross weight whichever is higher.
Legislation - Application of Hague Rules and Hague/Visby Rules
The Hague Rules and Hague/Visby Rules were made applicable only to contracts of
carriage covered by a B/L or a similar document of title relating to carriage of goods by
sea.

Therefore, they do not explicitly apply to contracts of carriage covered by a Sea Waybill
(Sea Waybills did not exist in 1924).

Often carriers will however insert a clause in the terms and conditions of their SWB form
which states that the liability clauses of the Rules will apply. In this way, the application
of the Rules can be extended to include both Bs/L and SWBs. But the Rules are only
mandatorily applicable to contracts of carriage covered by a B/L.

In order for an international convention to take effect, the participating nations must
ratify the convention and incorporate the protocol into their own national legislation.

Not all countries in the world have ratified the Hague Rules or the Hague/Visby Rules. It
will therefore depend on the jurisdiction in which legal proceedings take place whether
the Hague or  the Hague/Visby Rules are mandatorily applicable (can be ´´forced´´ upon
the contract of carriage even when they are not part of the terms of the B/L).

This being said, if the standard liability clauses from the Rules are incorporated into the
terms of the B/L or SWB, they become part of the contract whether the nation in which
proceedings take place has ratified the convention or not.

Legislation - Additional Liability

Re-call that the Rules were established to protect cargo owners from exclusion of liability
by the carriers. It renders void any attempt by the carrier to lessen his liability. In this
context, it is worth noting some additional issues:

1. There is no rule preventing the carrier from taking on a more extensive liability than
the minimum standard prescribed by the Rules. The carrier and the cargo owner are free
to negotiate additional terms. The carriers may do so in their service contracts with
clients.

2. If any mandatory national legislation grants the cargo owner more protection than
prescribed in the Rules, the national legislation will prevail.

3. In order for the carrier to invoke his rights to limitation of liability, he must insert a so-
called ´´paramount clause´´ into the B/L (or SWB) that expressly incorporates the Rules.
(Unless national legislation has given the Rules the ´´force of law´´ which is the case for
the Hague/Visby Rules under English law).
4. The cargo owner can obtain additional liability cover by expressly stating the value of
the goods to the carrier who will quote a freight rate on this basis. This option is however
not normally used by cargo owners (because the freight rate will usually increase).
Instead, the cargo owner will often insure his cargo through separate cargo insurance.

5. And last but not least: The limitation clauses of the Rules do not apply if it can be
proved that the damage or loss to the cargo resulted from acts or omissions from the
carrier that were done with intent to cause damage or in a reckless manner which was
known by the carrier to probably result in damage.

Legislation - Hague Rules

As mentioned above, the Hague Rules were agreed in 1924. Some 30 countries were
involved in the process at that time and since then, another some 65 countries ratified the
convention.

Some 25 countries have later adopted the amendments done in 1968, also known as the
Hague/Visby Rules. However, as you can see, the original Hague Rules are still in effect
in a large number of jurisdictions, among them the United States (to the extent that the
rules are incorporated into national legislation).

In 1924, a standard amount of £100 per package or unit was agreed. The countries that
incorporated the Convention into local legislation in many cases converted this amount
into local currencies (e.g. US$ 500). You will still see these amounts being referred to
today.

Legislation - Hamburg Rules

The modifications to the Hague Rules in 1968 did not gain universal approval. Many
cargo owning countries (as opposed to ship-owning countries) felt that there was a need
for a thorough review of the carrier liability clauses and a more comprehensive code that
would cover more aspects of contract of carriage (compared to the Hague and the
Hague/Visby Rules).

This movement resulted in the formulation of a new convention in 1978, known as the
Hamburg Rules. It became effective in 1992 after 20 countries had ratified it.

Today, 25 states adhere to the convention, representing approximately 5of world trade by
sea.

Legislation - Choice of law and jurisdiction

With three international conventions all covering issues relating to contracts of carriage
by sea, there are times when a carrying voyage could become mandatorily subject to two
conflicting conventions. For example if the voyage was from a port in the UK (who
ratified the Hague/Visby Rules) to a port in Chile (who is a party to the Hamburg Rules).
It will then depend on the forum in which the dispute is litigated and the choice of law
and jurisdiction in the contract of carriage which set of Rules will apply.

Legislation - Warsaw Convention

The legislation within airfreight is much simpler. The Warsaw Convention is an
international convention that applies to international carriage of persons, luggage and
goods by air. It was established in 1929 and has been ratified by most countries.

The Warsaw Convention prescribes a maximum liability of USD 20.00 per kilogram of
goods lost, damaged or delayed unless a higher value is declared by the shipper and a
supplementary charge has been paid.
FMC - Introduction
The Federal Maritime Commission (FMC) is a U.S. government agency, responsible for
the regulation of shipping in foreign trades of the Unites States.

The learnings in this lesson therefore only apply to ocean shipments to and from the
United States. ScanwellLogistics employees, even when not directly involved in the US
trade lane, should be aware of the existence of FMC and how it impacts our role as
NVOCC.

FMC - Purpose and Role

FMC exists:
- To protect shippers and consignees, particularly small ones,
  from unfair practices by ocean common carriers
- To protect U.S. flag common carriers and U.S.-based NVOs
  from discriminatory practices by foreign carriers or nations

FMC has statutory authority to take actions to correct unfair or adverse foreign practices
which affect US shipping or US carriers in international commerce.

FMC administers a number of U.S. government statutes related to shipping such as The
Shipping Act of 1916, The Shipping Act of 1984, The Ocean Shipping Reform Act of
1998 (OSRA) and others.

FMC investigates and monitors activities of ocean carriers, ocean transport intermediaries
(NVOCCs), freight forwarders, shippers, ports and terminals to ensure compliance with
these statutes and regulations.

The Shipping Act of 1984 and The Ocean Shipping Reform Act of 1998 are the two most
important pieces of legislation to our business.

FMC - License
If a person or company wants to operate as either a NVOCC or a Freight Forwarder
(FFW) in the U.S., they are required to obtain a  license.

The licensing requirements are met when certain qualifications are fulfilled and when a
bond for USD 75,000 (NVOCC) or USD 50,000 (FFW) has been posted (e.g. as a bank
guarantee). Such surety bond and license eliminate dishonest and inadequately funded
companies from opening up an office.

The Ocean Shipping Reform Act of 1998 recognises both NVOCCs and Freight
Forwarders as ocean transport intermediaries. But only NVOCCs are allowed to issue
House Bills of Lading and House Sea Waybills.
ScanwellLogistics holds its FMC OTI license as a NVOCC under the name: DSL Star
Express, Inc. When acting as NVOCC (issuing House Bills of Lading) to or from the
United States, we must therefore always issue a DSL Star Express B/L. We cannot issue
a ´´ScanwellLogistics HBL´´.

ScanwellLogistics Inc. also has a Freight Forwarder License.

FMC -Tariff Publishing

A key area that impacts NVOCCs (such as ScanwellLogistics) is FMCs requirements of
rate publishing.

Up until 1984, both VOCCs (ocean carriers) and NVOCCs were required to publish their
rates and rules in a public tariff with the FMC. In other words, the FMC maintained a
tariff database of all rates, charges, rules and practices of each VOCC and NVOCC that
applied to shipments to and from the USA.

With OSRA in 1998, the ocean carriers (VOCCs) won the right to negotiate Confidential
Service Contracts with their customers. The NVOCCs did not, however. As per the US
Ocean Shipping Reform Act of 1998:
´´unless otherwise exempted, all common carriers (NVOCCs) shall keep open for public
inspection in automated tariff systems, tariffs showing all rates, charges, classifications,
rules and practices between all points and ports on their own routes and on any through
transportation routes that have been established´´.

The change was that rates did not have to be filed in a central FMC tariff database any
longer. The FMC and the public must however be allowed access to the rates at any time.
Rates must therefore be filed in a public database.

When ScanwellLogistics issues a DSL Star Express B/L or SWB to or from the USA, we
must ensure that the rate is filed in the public database.

FMC - Rate Filing

All rates that will be applied to shipments to and from the USA will be filed by the
Forwarding Pricing Department  in the USA. Likewise, all NVOCC shipments to and
from the USA must move on a DSE B/L or DSE SWB. We cannot use a
´´ScanwellLogistics HBL´´.

The origin office (if they are the ones quoting the rate to the customer) will have to co-
ordinate with the Pricing Department in the USA to have the rate filed.
If you will be quoting rates to a shipper or consignee, you must familiarise yourself with
the specific procedures concerning rate filing. You will be able to find these on the
intranet.

The rate must be filed before cargo is received from the shipper.

FMC - Non-compliance with FMC regulations

The FMC will conduct investigations into alleged violations, e.g.:
- illegal rebating
- misdescriptions or misdeclarations of cargo
- illegal or unfiled service agreements
- unlicensed NVOCC operations
- un-tariffed cargo carriage

Non-compliance with FMC rules often results in heavy fines and in worst case,
withdrawal of license to conduct business. Examples of fines:
- NYK was fined USD 425,000 in January 1998
- Eastern Mediterranean Shipping was fined USD 1.1 million in
  March 1999
- World Line Shipping was fined USD 880,000 in January 2002

When issuing a House Bill of Lading or a House Sea Waybill to or from the USA, it is
therefore of utmost importance that the rate is filed in the tariff database.

FMC - DSL Star Express

DSL Star Express Inc. is ScanwellLogistics´ NVOCC entity. DSL Star Express is the
principal carrier (legal entity) that has appointed ScanwellLogistics organisations as
agents. This is why our House B/L is called a DSL Star Express B/L.

Up until 2001, ScanwellLogistics was not registered as a NVOCC in the USA and was
therefore not able to offer NVOCC services to and from the USA. (We were not allowed
to issue House Bills of Lading). This was due to legal requirements in the USA that said
that a NVOCC had to be registered as a separate legal entity. ScanwellLogistics was not
regarded a separate legal entity from Scanwell and we could therefore not operate as
NVOCC. Although ScanwellLogistics was not a NVOCC in the USA-trade, we did
however offer this service in other parts of the world. In such cases, we issued a
ScanwellLogistics HBL.

In 2001, ScanwellLogistics acquired an American company called DSL (Distribution

Services Limited). DSL had a substantial market share and experience within NVOCC
services and were registered as NVOCC under the name ´´DSL Star Express´´. Through
the acquisition, ScanwellLogistics obtained the right to the name and registration ´´DSL
Star Express´´. ScanwellLogistics was therefore able to start offering NVOCC services to
and from the USA by using the DSL Star Express B/L. The DSL name already had a
significant market value in the USA and therefore it was decided not to change name.
Re-call that ScanwellLogistics had already been offering NVOCC services in other parts
of the world for some time. In order to streamline procedures and documentation, it was
decided that the DSL Star Express name would be used in all other parts of the world as
well.  

Therefore, whenever ScanwellLogistics acts as a NVOCC and issues a House Bill of

Lading, the document issued is the
DSL Star Express B/L (unless there are specific reasons not to do so. Such cases have to
be signed off by appropriate management and legal advisors for liability and insurance
reasons).