TRANSHIPMENT AND CHARTER PARTY BILL OF LADING

QUESTION

Dear Mr. Old Man

Thank you for your passionate and willingness to answer us with so many questions. I find your posts extremely useful and valuable.

I am quite new to letter of credit transactions and hope that you could enlighten my mind a little.

I have question relating to transshipment in transport documents. I find that all transport document articles in UCP 600 state a specific sub article c.i and c.ii for transshipment, except for article 22 (charter party BL).

I understand that in a charter party BL, the journey is not yet to determined (which transshipment may occur in any chance) and it depends on the contract. However, it makes me confused a little. Why UCP 600 does not include any transshipment rules for a charter party BL. Whether a charter BL be shown transshipment happened or not, and should an LC allow transshipment?

Actually could you please explain the two sub-article c.i and c.ii in articles 19, 20, 21.. for me?

What are they for? I mean, as c.1 said ” a transport document may indicate that the goods will or may be transshipped provided that the entire carriage is covered by one and the same transport document”. I think that in case of a presentation including more than 1 set of BL, transshipment does not necessary happened, it may be a partial shipment? so what is the point by saying “…covered by one and the same transport document”

Thanks so much !

Best regards,

KH

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ANSWER

Hi,

Please find hereunder my answers to your questions:

What is a Charter Party Bill of Lading?

A Charter Party Bill of Lading (CPBL), is subject to a Charter Party, or an agreement between a charterer and a vessel owner. The CPBL is issued by the charterer of the vessel to the shipper for the goods being shipped on board the vessel.

What is “transhipment” ?

Transhipment means unloading from one vessel and reloading to another vessel during the carriage from the port of loading to the port of discharge stated in the L/C. So, it is understood that where transhipment occurs, two or more vessel are involved in the carriage of the goods to their destination.

UCP 600 Article 22  does not contain rules regarding transhipment because in practice transhipment rarely occurs in a shipment subject to a charter party. The chartered vessel is not expected to transship the goods to another vessel but complete the journey by itself.

Transhipment is not for CPBL. That is why ICC does not include transhipment in Article 22.

According to ICC Opinion R761 / TA751rev, UCP 600 article 22 neither contemplates nor prohibits transhipment. It is fair to say that article 22 does not contain rules relating to transhipment due to the rarity of such an event where charter party bills of lading are involved.

Why a transport document under article 19, 20, 21, 23 and 24 UCP 600 may indicate that the goods will or may be transshipped?

There has been a view that the statement “The goods will or may be transshipped” appears in transport documents reflects the shipping industry practices where the carrier must effect transhipment of the goods to another vessel in case of need or in containerized shipment. So, the transport document indicating that transhipment will or may  take place is acceptable, even if the L/C prohibits transhipment.

If the issuing bank or the applicant wish to really prohibit transhipment, the L/C must include the term “transhipment not allowed” and exclude the relevant article of UCP 600.

Kind regards,

Mr. Old Man