Freight Collect statements on Bills of Lading

A Letter of Credit for shipment of goods to Algeria by seafreight has the instruction for the Bills of Lading to include a “Freight to Collect’ notation. Such notations are a necessary part of the issuance of Bills of Lading. Under ISBP (2007 Revision for UCP 600) Article 111 it states that “If a credit requires that a bill of lading show that freight has been paid or is payable at destination, the bill of lading must be marked accordingly.” Article 112 further states that “Applicants and issuing banks should be specific in stating the requirements of documents to show whether freight is to be prepaid or collected.”

Unfortunately, freight collect shipments are not allowed into Algeria. All Bills of Lading have to state that Freight is prepaid and Shipping Lines will not issue a Bill of Lading stating anything other than Freight Prepaid. There are a number of countries world wide where this condition applies, therefore it would be good business practice, whenever a Letter of Credit is received with any notation other than ‘Freight Prepaid’ to check immediately with the shipping lines that this is possible. If not, then an amendment to the Letter of Credit would be required changing this clause, unless the shipper and buyer can agree to accept discrepant documents.

Maria Narancic from Point to Point Export Services is an independent international trade adviser who assists organisations world wide with their international trade projects, documentation, Documentary Credits and import/export training.  She is based in the United Kingdom.  If you require any further assistance with the matters mentioned above, please do contact us by e-mail on info@point-point.com or check out other articles on International Trade on the Point to Point Export Services website at www.point-point.com

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