As consumerised societies around the globe rushed to take advantage of discounts on the day after Thanksgiving in the United States it may be appropriate to highlight the recurring issue of shipments that are wrongly released. In view of a spate of mis-delivery incidents, here is a reminder of advice previously provided. It is always preferable for cargo to be released to the correct person, once all amounts due have been settled.

From time to time the TT Club recognises an increase in claims against transport operator Members for release of cargo without presentation of the transport operator bill of lading. There are times when this is closely associated with fraudulent or other criminal activity, although there are also times when it is more a process error in terms of handling the different elements of trade documentation.

International shipments commonly move under bills of lading issued both by transport operators and ocean carriers. These bills of lading are frequently independent of each other and in many cases the ocean carrier releases the cargo to the consignee under its bill of lading in circumstances where the transport operator bill of lading has not been presented. This can expose the transport operator to claims from cargo interests for the full cargo value if the shipper has not been paid by the consignee.

A further complicating factor is that straight non-negotiable bills of lading and waybills do not need to be submitted to the carrier or terminal in order for the consignee to take delivery. Ocean carriers do not have a contract with the transport operator's 'shipper' so they may have no way of knowing or establishing easily if the shipper has been paid by the consignee or if the transport operator bill of lading has been submitted prior to the shipment being released.

To avoid these claims, it is imperative that proper procedures are in place to prevent one party from releasing the cargo when the other party has not received the bill of lading. We offer guidance below to transport operators to prevent mis-release of shipments by ocean carriers and terminal operators.

Transport operators:

• Must not use the same bill of lading number as the ocean carrier;

• Must receive the negotiable bill of lading between the transport operator and the shipper or consignee and payment of ocean freight prior to releasing the negotiable bill of lading between the transport operator and the ocean carrier;

• Should, if possible, appoint an agent at the discharge port and ensure that the agent is shown as consignee on the ocean carrier's bill of lading. The ocean carrier can then release the cargo to the agent on production of the ocean carrier's bill, allowing the transport operator retain control of it and authorise its release only against the transport operator's bill;

• Should instruct the ocean carrier in writing not to release the shipment to the consignee until the transport operator authorizes them to release the cargo. Further, this should be done on all shipments which have arrived at the discharge port;

• Must not present ocean carrier's negotiable bills of lading until they have received their negotiable bill of lading and ocean freight.

Ocean Carriers:

• Must obtain the transport operator negotiable bill of lading, payment of ocean freight and ensure the cargo is released by customs prior to instructing the terminal operator to release the cargo to the consignee;

• Must never assume that just because the consignee is ready to take delivery of the cargo at the discharge port, that all negotiable bills of lading have been presented, that ocean freight has been paid and received and that the shipper has been paid.

For further guidance, please refer to TT Club's Stop Loss 2 "Release of Cargo Documents" or speak to your TT Club contact.

We hope that you have found the above interesting. If you would like further information, or have any comments, please email us, or take this opportunity to forward to any colleagues who you may feel would be interested.

We look forward to hearing from you.

Peregrine Storrs-Fox

Risk Management Director, TT Club