Can the Shipper on a Bill of Lading Be a Party Other Than the Beneficiary of the L/C?

Introduction

In international trade, the beneficiary of a letter of credit (L/C) is not necessarily the party that physically ships the goods. This often happens in transactions involving traders, transferable L/Cs, or back-to-back L/Cs.

Sub-article 14(k) of UCP 600 addresses this issue, but does it mean that the shipper must be different from the beneficiary? Mr. Old Man shares his views.

Question

Dear Mr. Old Man,

I have a shipment where the shipper is based in South Korea.

The port of loading is any port in South Korea, and the port of discharge is in Morocco. The beneficiary of the L/C, however, is based in Dubai, UAE.

In this case, the bill of lading will show the beneficiary of the L/C as the shipper.

According to sub-article 14(k) of UCP 600:

“The shipper or consignor of the goods indicated on any document need not be the beneficiary of the credit.”

My understanding is that the shipper can be any party and does not necessarily have to be the beneficiary. Does this mean that the shipper must not be the beneficiary of the L/C?

Furthermore, the L/C specifies the port of loading as “Any port in South Korea.”

Best regards,

Warlockslayer

______

Answer

Dear Warlockslayer,

Thank you for your question.

Your understanding of sub-article 14(k) of UCP 600 is correct, but there is one important point to clarify: the provision does not mean that the shipper must be someone other than the beneficiary.

Sub-article 14(k) states that the shipper or consignor of the goods indicated on any document need not be the beneficiary of the credit. In other words, the shipper may be the beneficiary, but it may also be another party.

This is common in transactions involving transferable L/Cs or back-to-back L/Cs, where the beneficiary acts as a trader and the goods are shipped by the actual supplier.

In your case, the bill of lading may show the beneficiary or another party as the shipper, in accordance with sub-article 14(k) of UCP 600.

One important point to remember: If the bill of lading identifies “ABC Co., Ltd.” as the shipper, and other documents also indicate the shipper, the data must not conflict with one another. Under sub-article 14(d) of UCP 600, data in a document need not be identical to the corresponding data in other documents, but must not conflict with the credit, the document itself, or other stipulated documents when read in context.

Finally, the L/C requirement that the port of loading be “Any port in South Korea” concerns the place of loading, not the identity or location of the shipper. The bill of lading must indicate a port of loading that satisfies this requirement.

Conclusion

The bill of lading may show the beneficiary or another party as the shipper. Sub-article 14(k) of UCP 600 permits either possibility; it does not prohibit the beneficiary from being named as the shipper.

Best regards,
Mr. Old Man