Trade Finance Expertise

Sometimes, we face the issue while checking the sea way bill or bills of lading (usually a bills of lading including MMTD, CPBL and NNSWB) to determine if the given charges are additional to freight or not! If letter of credit indicates, charges additional to freight not acceptable, we must need to understand what all are the charges additional to freight : Below are the charges which are considered additional to freight- Free In: If a transport document (usually bills of lading) indicate "Free In" or FI, it means charges for the loading of the goods are not included in main carriage. Free Out : Same concepts apply on    "Free Out" or FO as FI, though, it is used for unloading of goods which are not included in main carriage.   Free In and Out : In this case, both the above charges are not included in main carriage it is also referred in trade term as "FIO". Free In and Out Stowed : Stowage is method by which different types of container vessels are loa

Shipping guarantees and delivery order both are used to take the delivery of goods in absence original transport documents. So here the first question comes in mind, when shipping guarantee and when delivery order! In order to get the answer of the above questions lets understand each topic one by one. Shipping Guarantees: Shipping guarantee is needed when the goods have been arrived in the importing country and ready to be delivered, however, in case of sea shipment if it is not a non-negotiable bills of lading case then original bills of lading are needed to take the delivery of the goods, reason being that the bills of ladings are "Contract of Carriage/Title to Goods" which means that consignee can only take the delivery of the goods upon surrender of originals bills of lading. Sometimes, due to large number of banks involvement documents reach to the applicant via issuing bank well beyond consignment reaches the destination port. Such a case could put applicant into dilem

Charter Party Bills of lading are a transport documents commonly used in letter of credit defined by UCP article 22 and ISBP para G. So when we see the charter party Bills of Lading, first question arises, why charter party instead of a marine Bills of Lading? Let's understand it thoroughly, there are many similarities among other Bills of Lading and Charter Party Bills of Lading, though we will look for differences only. 1. There is no carrier involvement: charter party Bills of Lading does not contain carrier information, reason being that the ship is hired/leased by shipper or group of shippers for their particular shipments as these shipments are bulk commodities. 2. Owner's Involvements: Owner is the person/entity who may be no where related to the letter of credit but may still controls the trade somehow, in case of any default by the charter owner may take the custody of the goods and sale to cover the unpaid lease/rent of the ship. 2. Charter involvement: Charter is th

Though, the letter of credits are defined by UCP-600 only issued by banks, however there are circumstances where a non-bank issuer can issue the letter of credit, The risk involvement is as high as it is in other similar payment method (where no undertaking issued by bank), reason being that there is no undertaking of banks, wherein a commercial letter of credit provides comfort to the applicant that the payment will only be made once we receive the credit compliance documents and beneficiary get the assurance of payment upon presentation of the same credit compliance documents. The beneficiary should exercise caution before shipping the goods and placing reliance on the documentary credit as its guarantee of payment, if a credit is issued by an individual or a corporate field “50b” of the MT700 will come into the picture. The requirement by the seller for a letter of credit is two-fold: first that he has a guarantee of payment, and second that he can use the credit to raise pre-sh