Can a Bill of Lading Show a Third Party as Shipper When the Credit Doesn’t mention it?

 QUESTION

Dear Sir,

Greetings from Himalayan Bank!!!

I am here to ask for your valuable suggestion on below.

Bill of Lading mentions Shipper as Third party acting on behalf of the Beneficiary but there is no provision for third party in the credit. Does this mean the third party is an authorized agent acting for the beneficiary? Can this be quoted as a discrepancy?  Certificate of Origin issued by the Chamber also mentions the same third party as Shipper.

There is no clear explanation of the case in UCP 600 and ISBP 821. I would be grateful if you could share your thoughts.

Regards,

Ruby Shrestha

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ANSWER

Hi Ruby,

The shipper shown on a bill of lading is typically the party who owns or is responsible for the goods and who contracts with the carrier for their transportation. This is often the seller in a commercial transaction. However, the seller is not always the shipper. The goods may originate from another party and be handed over to the seller for export, or the shipper may be a freight forwarder acting on behalf of the seller.

In some situations — depending on the Incoterms used — the buyer or their agent may appear as the shipper. For example, under EXW (Ex Works) terms, the buyer or their nominated agent is responsible for collecting the goods from the seller’s premises and arranging the carriage, in which case the buyer may rightfully appear as the shipper on the bill of lading.

According to ISBP 821, paragraph E13(a), when a bill of lading is issued “to order” or “to order of the shipper,” it must be endorsed by the shipper. That endorsement may be executed by another named party, provided it is made for or on behalf of the shipper.

This is to explain why a bill of lading can indicate the shipper as a party other than the seller or the beneficiary.

Therefore, a bill of lading showing a third party as the shipper — and endorsed either by that party or by another on its behalf — can be considered acceptable.

Similarly, a certificate of origin showing the same third-party shipper is also acceptable. As clarified in ISBP 821, paragraph L6, the consignor or exporter shown on a certificate of origin may be a party other than the beneficiary or the shipper as shown on other stipulated documents.

Best regards,

Mr. Old Man