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Piecing together the puzzle of switching bills of lading

Tue 11 Apr 2017 by Rebecca Moore

Piecing together the puzzle of switching bills of lading
Switching bills of lading can be confusing. Olatz Muruaga at Unsworth Global Logistics shows the way forward

Switching bills of lading has led to confusion among carriers and shippers. Olatz Muruaga, project co-ordinator for non vessel operators at Unsworth Global Logistics, shows the way forward

Switching bills of lading is a very common procedure in international trade where an issued bill of lading is substituted by a new set called switch bill of lading.

During my years within the logistics industry I have frequently been asked questions along the lines of: Can I change the shipper and consignee’s names within a bill of lading? or: What is a switch bill of lading for?

Imagine a scenario. Company A based in the UK sells gardening tools worldwide which are supplied by Company B based in China. Company C in the USA places an order to purchase some of Company A’s products. As usual, company A contacts its freight forwarder to assist with the shipment from China to the USA.

Once all the necessary customs clearance procedures at the loading port are completed, the freight forwarder issues a bill of lading and sends it to Company A. Up to this point, everything is straightforward.

The shipper and the consignee under this bill of lading are Company B and Company A, respectively. However, Company A does not wish the ultimate buyer in the USA, Company C, to know the name of the supplier in order to avoid any commercial deals between them. By switching bills of lading, Company A can hide the name of its supplier so that for the new set of bills Company A becomes the shipper and Company C the consignee.

Can the final buyer know if the bill of lading has been switched?

Switch bills of lading do not contain any information that indicates that they are not the initial bills. However, the consignee or ultimate buyer can ask the shipping line whether the bills were switched or not, and the shipping line can provide that information without disclosing any further details.

A new invoice and packing list should be issued showing Company A as the supplier and Company C as the business that is invoiced. This is not only to avoid exposing the supplier’s identity but also to maintain consistency with the new set of bills of lading.

What else can be changed?

The following items can be modified in the new set of bills:

  • shipper, consignee and notify party details
  • cargo description, e.g. “tools” instead of “gardening tools.”

Any details other than the above must remain the same as per the initial bill of lading, so the port of loading (POL), the port of discharge (POD) or the weight or number of packages cannot be changed.

It is extremely important that the issuing date is the same on both bills of lading.

Who can ask to switch bills?

The switch bill can be issued only if requested by the cargo owner or principal. In other words, since the bill of lading represents ownership, only the company holding the full set of documents can ask to switch bills.

Who can approve it?

The switch of bills must be approved by the carrier or freight forwarder who needs to carefully consider the differences between the initial bill of lading and the proposed switch bill of lading. Only the carrier or freight forwarder is allowed to sign a bill of lading.

Once switch bills are approved and before releasing them, the initial bill of lading must be out of circulation so that there is only one set of documents in force.

Is there any time limit for switching bills?

The carrier should issue the switch bill of lading once it has received the initial set of documents and before the cargo arrives to port.

In most cases shipping lines do not accept a switch bill of lading requested later than three working days prior to arrival. However, some shipping lines may require earlier notice for certain destinations so I strongly recommend checking with them and ensuring the switch bill of lading is issued within their time-frame. This will avoid incurring additional storage and demurrage charges at destination port.

Where can a bill of lading be switched?

This will depend on the carrier’s coverage. If it covers all ports, the bill of lading may be switched anywhere for shipments from anywhere to anywhere. The key point is that the shipping line or freight forwarder has an office in the country where the switch bill of lading is being issued.