ICC Digital Library Forum

Do you think it is correct to specify in a documentary credit, whether transhipment is allowed (or not) when the credit calls for a charter party bill of lading? I think that transhipment is not applicable in this case. Howeverr allowing / not allowing transhipment is in practice by many issuing banks.

I rember asking this question to Mr. Charles Del Busto when he came down to Bahrain to introduce UCP 500 ie. why UCP does not talk about transhipment when dealing with Charter Party BL. His reply, in summary, was that chartered vessels are not expected to tranship goods enroute but complete the journey by itself.Well why banks are stating "permitted or not permitted" in their Credits even when it is Charter Party BL, it could be that practices die hard or the ever evolving shipping industry has come out with new initiative where even chartered vessels in coordination with others in the charter industry has created a transhipment possibility for chartered vessel too - eg. one chartered vessel carries goods from US and unloads at a Spanish port and another chartered vessel takes on the goods and brings it to Dubai. Theoritically possible, it looks so
N.D. George
Head of Trade Finance
National Bank of Fujairah
P.O. Box 2979
Dubai
ge

Charter Party Bill of Lading typically cover one voyage in respect of a bulk shipment where the ship is chartered for:
a)a specific period;
or
b)a specific voyage.

This is why Article 25 does not make reference to transipment.

However, I have experienced one occasion where a charter party bill of lading indicated transhipment due to the addition of an on-board notation on a charter party bill of lading with a different named vessel and different named port to those in the pr-printed boxes. (the port on the on-board notation complied with the 'shipment from' stipulation in the Credit.)

In this particular case the LC prohibited transhipment/ The Issuing Bank rejected the documents for this discrepancy.

Vincent O'Brien
vob@obrico.com
[edited 4/12/01 10:16:01 PM]

As a columnist of Lloyd's maritime magazine whilst I was in Hong Kong, I would comment that transhipment is possible in theory but in practice it is very difficult to arrange.

Let me tell you why? in layman terms to make it easy for you to understand.

You cannot find two "identical/similar" vessels both being available at the times you want.

The similarity in specifications that you need are:

Same tonnage so that you would not have unutilised cargo spaces (holds) or you have to pay for the "dead freight", that means you have to pay for those unutilised storage spaces.

Two vessels licensed to carry the same category of cargoes, for example, for carriage of wheats you have to have ventilated cargo holds, for oils, you have to have tankers licensed to carry the same kind of hydrocarbon, being "spark free" (or a fire may result from the static electricity), and to meet the strict IMO (International Maritime Organization) requirements in terms of pollution conrtrol.

The same price bracket, not a QEII to go with a tramp.

The same draft (depth which a ship is immersed into the water, not the draft a banker is familiar with) so that they can float at the same berth for transhipment purpose.

The same charter party. Some shipowners have preference for a specific charter party (hire contract). If two different charter parties are used, it is like a presentation of documents against two different LCs to a banker.

What about if the second vessel is being arrested at a seaport due to a previous charter party dispute with the former charterer? When you wait for a replacement vessel, what happens to your cargoes still loaded on the first vessel? You have to pay for heavy demurrage and demurrage is double the sea freight.

So I do not wish to go on for these technicalities. Enough being said that transhipment is not for charter party or C/P BL. That is why ICC does not include it in Article 25 of the UCP 500.

I am from www.tolee.com

[edited 11/22/01 9:49:08 PM]