In international shipping, a Bill of Lading (B/L) acts as a receipt and contract between the shipper and the carrier. It includes all the details needed to conduct the shipment and prepare the right invoices. This document maintains transparency and complies with the laws of two or more jurisdictions in the course of cross-border trading. The switch bill of lading procedure in India is a widely used practice in international trade, allowing for modifications to shipment documents under certain conditions.
A switch BL in shipping is typically issued to replace the original bill of lading, often for reasons like changing the consignee or the shipment’s details.
What is a Switch Bill of Lading?
So, what is switch BL exactly? It’s a second set of bills issued by the carrier or freight forwarder, usually when goods are sold during transit. The switch BL process involves careful coordination between the shipper, consignee, and carrier, but can we change the port of loading in a switch bill of lading? While many changes are possible, altering the port of loading generally isn't allowed as it contradicts the physical movement of the cargo. It serves the same purpose as the original B/L, which is to act as
- Contractual agreement between the shipper and the carrier for the shipping of perishable cargo.
- A receipt for the safe arrival of the goods at the desired destination port
- Title document for the goods
Why Is A Switch Bill of Lading Issued?
Switch Bills of Lading are issued upon surrender of the first set of original Bills of Lading that can be requested by the cargo owner or seller, trading agent, or end buyer involved in the purchase or sale of the perishable cargo.
- The seller, who may act as a trading agent, doesn't want to disclose the actual exporter's name to the consignee to prevent the consignee from making a deal with the exporter directly.
- The seller doesn't want to reveal the actual country of origin of the cargo to the buyer.
- The original Bill of Lading (B/L) might be delayed or not present when the ship arrives at the discharge port.
- The trading agent prefers to receive the payment from the end receiver prior to making the transaction with the shipper.
- Your goods may already be sold during transit via a high-speed sale, which requires changing the discharge port.
Who Has the Right to Request the Switch Bill of Lading?
A Switch Bill of Lading (B/L) can only be prepared by the original seller of the goods, a trading agent, or the buyer. The original B/L between the seller and the trading agent is replaced with one between the trading agent and the buyer. After going through the differences between the original bill of lading and the switch bill of lading, the freight forwarding agent needs to approve the switch bill of lading. The carriers or freight forwarders have the right to sign the bill of lading. The previous B/L is removed from circulation, so that only one set of bills remains active.
Which Details Can Be Modified in a Switch Bill of Lading?
While issuing a switch bill of lading, some details can be changed prior to the initial bill of lading. These are:
- Identity of the shipper, notification party, or buyer
- Perishable Goods Description
- Details of the port of loading
- Location and the Date of Issue
The original seller can grant permission to change the description of the cargo. As the switch bill is not linked with the original B/L, end buyers won't know if it has been switched. The carrier doesn't need to disclose the information to the buyer. Any conflict or error can cause serious problems for the trading agent and the carrier.
Which Details Should Be Included in a Switch Bill of Lading?
The listed details can’t be changed in the Switch Bill of Lading.
- Location and shipment date (especially crucial for goods that are scheduled for delivery)
- Details on out-of-gauge (OOG), reefer, and hazardous cargo
- Conditions pertaining to the cargo
- Any provisions from the first B/L payment terms
- Location of the loading
- The loading date
- Any unique guidelines, such as shipping temperature requirements
The Steps to Issue a Switch Bill of Lading
- The original exporter of goods, trading agent, or final buyer can fill out the information in the Switch Bill of Lading provided by the carrier. This application consists of two columns: the first column to provide information from the original Bill of Lading B/L, and the second column to add the revised information.
- It is necessary to submit all three copies of the original bill of lading. The copies can be submitted in person at the designated carrier’s office or sent by mail. Establishments should inquire about the B/L deadline with carriers, as it varies. Most carriers don't accept requests within 3 working days prior to the ship's arrival at the port of discharge.
- Once the carrier has verified and approved the request for a switch bill of lading, the parties will receive the bill. The original bill of lading will be removed from circulation and considered invalid.
- After receiving the approved Switch Bill of Lading, the requesting party will make the payment and collect the modified bill from the carrier's office. It will take a few working days to complete the process.
What Are the Risks Involved With the Switch Bill of Lading?
Switch Bills of Lading are associated with certain risks, both for the perishable cargo owners and the freight forwarders and carriers who issue them. These risks include:
Theft and fraud: In the event of more than one set of bills being exported for the same shipment, the carrier might face delivery misplacement. With the use of a switch bill of lading, a duplicate shopper can sell the goods to different consignees. If the original set of bills isn't removed, both consignees could claim the full cargo value from the carrier.
False Claims: Carriers and freight forwarders should remain alert while approving Switch B/L in situations such as hiding the country of origin to avoid sanctions or import duties, hiding the identity of a permanently closed manufacturing business, or forging the date of shipping. These actions are not meant for legal export practices, and hence both parties can undergo legal cases.
Biased Insurance Cover: Some Protection & Indemnity (P&I) insurance companies refuse to cover liabilities from Switch B/Ls. Switch bills tend to cause the loss of P&I insurance for illegal measures. Wrong cargo descriptions in the Switch Bill of Lading can lead to a loss of coverage for cargo claims or unnecessary fines.
The Best Methods to Handle a Switch Bill of Lading
If there is a possibility of an illegal switch bill of lading, the freight forwarders and carriers need to employ the best practices to reduce the risks and protect themselves.
- Go through the details about the shipment description, country of origin, and date of dispatch, and confirm the reason for the switch with the requesting party.
- Obtain a signed letter of security from the requester, accepting responsibility for any risks involved with the Switch Bill of Lading.
- Get an authorized letter from the ship owner's to check whether the carrier has issued the Switch B/L.
- Prior to issuing the new bill, check whether the original bill of lading has been collected and removed.
- In the event of any switching requests, keep the shipper, consignee, and trading agent informed.
- Make sure your insurance covers risks related to the Switch Bill of Lading.
Conclusion
The Switch Bill of Lading plays a crucial role in international trade, permitting the transfer of ownership and responsibility of perishable cargo from one party to another. It allows flexibility in logistics by making changes in contractual agreements between sellers, trading agents, and buyers. But due to misuse and fraudulent activities, the shipper and the carrier might engage in legal proceedings.
Citrus Freight strives to make the best effort to resolve any of your issues related to the Switch Bill of Lading. The Citrus team follows strict measures to avoid exploitation of the bills related to the safe arrival of perishable goods at the port of destination.