Can an Air Waybill Cover Air and Inland Transport Under a Letter of Credit?

A reader asked whether an Air Waybill (AWB) can be presented under a documentary credit where the goods move by air to the destination airport and then by truck to the applicant’s warehouse under DDP terms. The question raises an interesting distinction between what UCP 600 permits from a document examination perspective and what is normally achievable in practice.

Question

Hello again,

The LC contains the following routing requirements:

Field 44E: Any seaport or airport in Japan
Field 44F: (Named city) Seaport or (Named city) International Airport
Field 44B: By land to the applicant’s warehouse in (named city)

The sale is on DDP Incoterms® to the applicant’s warehouse.

The transport document required by the LC is an AWB / Combined Transport Document.

The actual shipment will be by air, followed by road transport to the applicant’s warehouse.

The beneficiary wishes to present an Air Waybill (AWB) that indicates the airport of departure, the airport of destination and the applicant’s warehouse as the place of final delivery.

Would such an AWB be acceptable under UCP 600, or should the beneficiary seek an amendment? If an amendment is required, what changes should be made?

Muna Najjar

_______

Answer

Dear Muna Najjar,

Thank you for your question.

The fact that the AWB indicates the applicant’s warehouse as the place of final delivery is merely an assumption.

If the LC expressly requires an AWB to indicate the place of final delivery, and the presented AWB does so, the AWB would comply with the LC requirement. Neither UCP 600 Article 23 nor ISBP 821 prohibits an AWB from containing additional information.

However, in practice, an air carrier may not be willing to issue an AWB that extends beyond the airport of destination to include the applicant’s warehouse as the place of final delivery. An AWB is primarily an air transport document evidencing carriage from the airport of departure to the airport of destination.

Accordingly, where the intended movement is by air followed by inland transport to the applicant’s warehouse under DDP terms, it is more appropriate for the LC to require a multimodal transport document under UCP 600 Article 19 rather than an air transport document under Article 23.

The transport document requirement could be worded as follows:

Full set of clean Multimodal Transport Documents issued to the order of [Bank Name], marked “Freight Prepaid”, notifying the applicant, evidencing dispatch from any seaport or airport in Japan to [named city] seaport or [named city] international airport, with on-carriage by land to the applicant’s warehouse at [address] under DDP Incoterms®.

This wording better reflects the actual movement of the goods and avoids uncertainty over whether an AWB can satisfy the documentary requirements.

Best regards,

Mr. Old Man