T4 – Cargo Documentation

Topics to be covered:
• 1.1 Bill of Lading
• 1.2 Cargo Manifest/Dangerous Goods Manifest
• 1.3 Cargo Plan
• 1.3 Cargo Claims/Marine Insurance
(Principles of marine insurance: Indemnity,
Utmost good faith & Insurable interest)
 1.1 Bill of Lading
As each consignment is loaded the ‘mate’s
Receipt’ is issued. This notes the nature of the
consignment, i.e. its weight, marks and condition.
Bill of lading is:
• Evidence of the contract of carriage (but not
the actual contract)
• A receipt of good shipped
• A transferable document of title to the goods
thereby enabling the holder to demand the
cargo
How Bill of Lading works
 DOCUMETATION PROCEDURE
1. Shipper instruct his forwarding agent to arrange shipment
2. Freight forwarder collects a blank B/L from shipowner and fills up all the
details and returns it to the shipowner’s office
3. Shipowner instructs the shipper via freight forwarder, as to when to bring
the cargo to the port
4. When the cargo received at the port terminal, the cargo will be inspected
and the shipper’s driver will present a standard shipping note (SSN)
5. When cargo is loaded a tally clerk will note the event and a further copy of
SSN will be signed and sent to the shipping company’s office
6. SSN will arrive on the desk of a loading broker who will compare the
details on the SSN with the B/L receive from the shipper. If all is in order
the B/L will be stamped ‘SHIPPED’ and signed by the loading broker.
7. The B/L will then send to the shipper who will take it to his bank, where he
will receive his money for the goods
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8. This bank will send it onto the consignee’s bank, who will
pass it onto the consignee.
9. When the ship arrives with the cargo, the owner’s agent will
notify the consignee who will bring the B/L down to the
agent’s office. The agent will then give the consignee a
release note to go down to the import terminal to collect the
cargo.
Types
Types oft
of Bill of Lading
1) Straight bill of lading
• A receipt that is not negotiable
• It means any endorsee acquires no better rights than those held by the
endorser.
• from the banker’s point of view this type of bill of lading is not safe.
2) Order bill of lading
• A receipt that is negotiable
• Proof of title and can be used to transfer title from one person to another
• Covered by article 7 of the Uniform Commercial Code (UCC)
3) Bearer bill of lading
• Bill states that delivery shall be made to whosoever holds the bill.
• Such bill may be created explicitly or it is an order bill that fails to
nominate the consignee whether in its original form or through an
endorsement in blank.
• A bearer bill can be negotiated by physical delivery.
4) Surrender bill of lading
• Under a term ‘import documentary credit’
• The bank releases the documents on receipt from the
negotiating bank but the importer does not pay the bank until
the maturity of the draft under the relative credit
• This direct liability is called Surrender Bill of Lading. (SBL)
5) A clean bill of lading
• Which states that the cargo has been loaded on board the ship
in apparent good order and condition
• Such a bill of lading will not bear a clause or notation which
expressively declares a defective condition of goods and/or the
packaging.
• It reflects that the goods were received by the carrier in
anything but good condition.
Example Bill of lading
 What Precautions Should be Taken Before Signing the
Bill of Lading?
Bill of lading is a receipt for the goods carried on ship, or when
technically put, is an evidence of contract between the shipper
and the carrier. It is a documented title for the goods, signifying
that the holder of the Bill of Lading is the legal owner of the goods
it states.

Following are the points that must be considered before signing

the bill of lading:
1)The Shipper’s Identity
• The shipper is at a contract with the carrier which means that
any information provided by the shipper if untrue could make
the carrier liable. The shipper has to indemnify the carrier and
may also have to back freight in this respect.
2)Port and Date of Loading
• The date of loading should coincide with the date as stated in
the Mates’ receipt. This provides an indication of the origin of
goods and is at times crucial to determine the customs duty
structure or permissibility of the goods into a country.
3)Port of Discharge
• Unless the charter party for a port to be nominated after the
vessel sails to avoid deviation charges, the ship must precede
with all dispatch to the port of discharge as said. The master
must ensure that this falls within the charter party limits.
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4) Condition of the Goods
• Confirm that the goods have indeed actually or physically been
shipped on board the ship. Check accordingly that an accurate
description of the goods is present on the Bill of lading,
whether any short-loading or dead-freights are correctly
mentioned. Ensure that all of the conditions must be in lieu
with the Mates’ receipt and the Bill may have a clause to reflect
the actual condition of the goods.
5) Quantity and Description of Cargo Loaded
• Prior to endorsing the Bill of lading, the master should ensure
that the quantity and description of the goods is true to its
correct value of that loaded on board. This can be done by
counter-checking the Mates’ receipt along with the other cargo
documents.
6) Freight
• Ensure that the Bill of Lading is not marked “Freight Paid” or
“Freight Prepaid”, as in certain cases, if not true. The master
must confirm and verify the factual position of the freight with
the ship owner or shipper.
• It is also recommended to get a written confirmation from
either of the two.
7) Conflicting terms
• No clause of the Bill of Lading should ever conflict with that of
the charter party terms. If the Bill has to be clause as per the
charter party terms then such references must be clear and
unambiguous
Finally, check to see whether the number of original Bill of
ladings are in the set provided as stated.
A ship manager will frequently come upon requests that the bill of Lading be
endorsed:
• Freight Prepaid or Freight Paid – 1) Some shippers ask that the Bills of
Lading be so endorsed against a promise to pay the freight later. Once the
bill of lading marked ‘Freight Paid’, the consignee is entitled to demand
delivery of the goods at destination. 2) If the payment is not fulfilled, the
ship owner has lost the security of his lien* on the cargo for that freight.
• Clean on Board – This is a statement that the cargo is in perfect condition.
Unfortunately, some shippers ask for such an endorsement even though
the cargo is not in perfect condition. Not only the practice is fraudulent, but
also makes the chances of defending a cargo claim virtually non-existent.
There may be a particular problem where cargo is sold under a letter of
credit. That documentary credit calls for ‘Clean on board bills of lading’ and
the banks will not negotiate the credit if it is claused in respect of cargo
condition even though the cargo has already been loaded.
*lien is a right to keep property belonging to another person until a debt is
paid.
The master should only sign a Bill of Lading for a quantity of the cargo
he/she genuinely believes to be on board using, if needs be, a draft
survey for checking the shore weight.

The person who owns the Bill of Lading owns the cargo mentioned on it.
At the end of the voyage the master must only deliver the cargo to its
proper owner who should surrender the Bill of Lading in return for the
goods.

If no Bill of Lading is available, the master should take very good care that
the he does not release the cargo to the wrong person. If he does, he
becomes liable for the full value of the goods to their owner.

To safeguard, the master must insist, in the event of the non-availability of

the Bill of Lading, that the receiver signs a letter of indemnity, which must
be counter-signed by a bank.
Following the completion of loading the following will be drown up
and issued in addition to the Bill of Lading:
• Cargo Manifest- a list of all the cargo on board giving Bill of
Lading number, the name of the shipper and the port of
loading/ discharge
• Stowage Plan – A plan of the ship showing where all the
cargo is stowed
 1.2 Dangerous Goods Manifest and cargo plan
Vessels carrying dangerous goods must have onboard a dangerous
goods manifest and a copy of the dangerous goods declaration for
each item of cargo.
Before accepting dangerous cargo, the ship manager must check:
•If the ship can meet with the onboard stowage conditions
•If either the vessel’s Hull Underwriters or P&I Club* have to be
advised. It is in fact wise to consult with the P&I Club who should have
useful additional information and guidance for the owners in respect of
the loading, stowing and discharge of the dangerous cargo.
•If the vessel’s articles call for additional payment to the crew if
dangerous cargo is carried.

*P&I Club is similar to a marine insurance, stand for Protection and

Indemnity
 1.3 Cargo claims
The master is obliged to deliver the cargo in the same good order that he received it.
This is why it is important for any defects found during the loading to be noted on the
Bill of Lading.
Failing which the Master will be responsible for these defects even though they were
present before shipment.
In order to protect the owner’s interest the manager should ensure that:
• In the event of bad weather on the voyage the master should always ‘Note Protest’
on his arrival. That is to appear before a notary public or the appropriate local official
of the country to declare that the vessel encountered adverse weather during the
voyage.
• For steel cargoes the P&I Club’s requirement of a pre-shipment survey of the cargo
be strictly followed and an independent survey at the discharge port be effected.
• In the event of homogenous cargo either bagged or bulk, the master should arrange
for the customs to seal the hatches at the loading port. The master should arrange
in conjunction with the P&I representative to carry out a draft survey before
discharge starts. –in case of non-bulk, a check tally.