The basic point of “Incoterm:EXW” not suitable for international sale of goods is amply highlighted by the plight of the importer from Nepal.

What are these three terms Bunker, Bunkering and Bunker Adjustment Factor (BAF) that we hear quite often in shipping circles..??

A bit of a historical background first.. Soon after its introduction into the industrialized world as a source of power, steam quickly became a dominant force in both land (locomotives) and sea transport (steamships)..

Steamships used the power of steam to travel and steam was generated by feeding coal into the furnaces on board the ship.. The storage containers for coal was known as a BUNKER..

Since coal was the original fuel for steamships, the term bunker became synonymous with fuel and therefore Bunker is simply nothing but FUEL (oil) used in ships..

There are various types of Fuel Oil and within the Fuel Oils, there are many classifications, standards and grades..

Few types of Fuel Oils are :

MGO (Marine gas oil), MDO (Marine diesel oil), IFO (Intermediate fuel oil) , MFO (Marine fuel oil), HFO (Heavy fuel oil) ..

Bunkers are supplied through various means such as bunker barges, pipelines, road tankers etc.. This depends on the port in question and the accessibility to the ship..

The act of supplying a ship with bunkers is known as bunkering..

A major portion of the ships operating cost is “bunkers”.. As you may have seen, oil prices are quite volatile, and therefore ship operators or owners maybe unable to calculate a consistent operating cost for their ships..

In order to counter the fluctuations in oil prices, the shipping lines charge a surcharge on top of the ocean freight, known as Bunker Adjustment Factor (BAF).. This BAF is usually aligned with the movement of the oil prices much like the fuel for our cars.. When oil prices go up, BAF goes up and when oil prices come down, BAF also comes down..

In some trade lanes, BAF maybe included in the freight rate and may not be shown separately in you freight quotation or invoice..

So the next time you hear that a ship is in port for bunkering, you know that it is there just to fill up some fuel..

Simple, isn’t it, but be prepared to be charged a Bunker Adjustment Factor for the bunkers the ship carrying your cargo burnt..

Yes, because he holds the rights and obligations of the shipment under the terms os sale until the shipment arrive to the destination port ans is claimed showing his rights by the consignee

Before I answer that question, I want to refresh your mind about the what is a Bill of Lading and what is a House Bill of Lading..

Are they different..?? Let’s see..

A bill of lading is issued by a carrier (in the case of seafreight – referred to as Ocean Carrier).. An ocean carrier is someone who has undertaken to provide the transportation of goods from point A to point B using the waterways as the primary mode but also combining rail and road services..

A Bill of Lading, is an important transport document that has 3 basic purposes or roles.. I will refer to this bill of lading as a normal BL throughout this article..

1. Evidence of Contract of Carriage
2. Receipt of Goods and
3. Document of Title to the goods

A House Bill of Lading (HBL) is a bill of lading issued by an NVOCC operator or a Freight Forwarder to their customers.. An NVOCC is similar to an Ocean Carrier except that they don’t operate the vessels used for the transportation.. I will refer to this bill of lading as a House BL or HBL throughout this article..

Although it is a House BL, by virtue of being declared, signed and issued as a Bill of Lading, the HBL performs all 3 of the above roles of a Bill of Lading albeit to different people/entities..

Let me explain what I mean by above..

In any bill of lading, the details shown in the address area of the bill of lading (as discussed in Part1 of the Parts of a Bill of Lading) such as Shipper, Consignee and Notify decides who gets release of the cargo from the carrier..

Below is a matrix when a normal bill of lading is issued by the carrier..

When an HBL & MBL are involved in the transaction, the matrix changes slightly as below..

As you can see from the above matrices, unless disallowed by the Letter of Credit, the HBL is also used/treated as a Normal Bill of Lading.. When a House Bill of Lading is involved, the Master Bill of Lading takes a back seat as far as the trade is concerned and does not play any main role in the documentation between the buyer and seller..

However, there is one very important area where the master bill of lading has an advantage over the house bill of lading and that is at the time of release of the cargo..

For example even if the customer has paid the NVOCC/Forwarder, surrendered the HBL (where applicable) and has done all the documentation relating to the HBL, unless the NVOCC/Forwarder has paid the ocean carrier, surrendered the MBL (where applicable – as shown above) and has done all documentation relating to the MBL, the consignee on the HBL CANNOT secure release of the cargo as the cargo is still under the custody of the ocean carrier..

So what are the reasons and circumstances under which an HBL is issued..??

As per market practice,

• HBL maybe issued by a Groupage operator – Groupage operator books an FCL with the shipping line.. Once the cargo is packed, they issue their own HBL to their clients and collect the MBL from the shipping line..
• HBL maybe issued by an NVOCC or Freight Forwarder who handles the cargo on behalf of their clients, who might be using them for the cost benefit they can provide as compared to booking directly with the shipping line.. The freight forwarder issues their HBL and collects the MBL from the shipping line.. HBL maybe used by a NVOCC or Freight Forwarder to mask the identity of the actual shipper/consignee from the shipping line..

Now that there is a bit of background about the House Bill of Lading and the various roles it can play, let us look at the original question “Can anyone issue a House Bill of Lading“..

To be quite honest, there seems to be no “global” regulations or rules relating to the issuance of House Bill of Lading and who can issue a House Bill of Lading, although there are countries (like USA, India) that require a bill of lading (normal or house) to be registered with the relevant authorities before it can be used..

There are many “groupings” of freight forwarders who operate a global network to offer their clients a global service.. These networks have their own house bill of lading templates for use between their agency networks.. Only members belonging to those paid networks can issue those specific house bills of lading.. NVOCC/Freight Forwarders outside of these paid networks have no access or are not allowed to use/issue these specific house bills of lading..

The House Bills of Lading are issued by the issuing entities as “Carriers” and as long as the conditions of the contract of carriage are suitable and acceptable to all, there seems to no restriction for anyone or any group/network to create and issue their own house bill of lading.. 

The terms of the contract of carriage in these house bills of lading maybe similar or different, but one can only assume that those who issue their own house bills of lading, take all necessary precautions, suitable insurance, fraud and risk covers before doing this..

One can also only assume that the customers who ship cargo using these house bills of lading understand the requirements and take the necessary precautions to safeguard themselves suitably..

Exporter = is a person or company or entity that is authorised by Customs and Govt authorities to export cargoes to various countries..

This is also the party responsible for filing the export declaration with the customs authorities..

Exporter need not necessarily be the actual seller of the cargo or the entity actually concluding the deal..

Shipper = is a person or company or entity that is shown in all the shipping documents (bill of lading, commercial invoice, packing list) as the party responsible for procuring and/or placing the order for shipment and maybe also for arranging the freight payment etc..

Shipper shown on the bill of lading need not necessarily be a registered exporter.. A Freight Forwarder can also be shown as the shipper on a lines bill of lading..

There are a lot of international traders based all over the world (say London) shipping cargo from one country (say South Africa) to another country (say India) and on the bills of lading that are released for such shipments, the shipper could be the trader in London..

So the short answer to the above question is YES OF COURSE IT CAN..

whenever there is an LC involved, there will be a bank involved and invariably the Original Bill of Lading will be consigned To order of XYZ Bank.. Your role as a Shipper is to export the goods as per the contract, prepare the documentation as per the LC requirement and submit to the bank, which you have done in this case..

There is no limitation on number of original bills of lading issued.. In your case, 3 originals have been issued..

Irrespective of number of bills of lading issued, if a Negotiable bill of lading has been issued, upon surrender of 1 duly discharged original bill of lading to the shipping line/agent at destination in exchange for the good or delivery order, all other bills of lading issued will be considered null and void.. 

So in your case, all 3 originals have been sent to the bank, but your customer at destination is requesting for an Express Release message for the release of the goods.. As this shipment is covered by an LC and the bill of lading that is issued is a negotiable bill of lading, it is NOT POSSIBLE for the shipping line to issue an Express Release for the same.. The shipping line has fulfilled its obligation..

Its between the Issuing bank and Confirming bank to discuss between themselves the reasons for the delay in the release of the Original Bills of Lading and arrange for at least one of those originals to be surrendered to the shipping line/agent at destination for the release of the cargo..

If all the issued originals have already been despatched to the customer, then you don’t have any further original bills of lading left to surrender to the shipping line, so you can’t get a Telex Release..

The customer that has all the issued originals must ask the shipping line to issue a telex release message to the destination port agent.. But if the OBLs are already at the destination, then there is no need for a telex release, the customer can simply surrender the OBLs at the destination office of the shipping line..

Regarding the amendment, since all originals are with the customer, any amendment can be done only by the customer..

1. Once they surrender all issued originals to the closest office of the shipping line or their agent, they can get a new set issued.. This is the only option if you absolutely have to show the correct notify in the bill of lading..
2. If the customer has despatched the OBLs already to the destination and it is en-route to the final receiver, you can (assuming you are the shipper or booking agent), with the approval of the customer, request the shipping line to amend the manifest to the new notify party with a remark that the Original Bills of Lading have not been amended, however this will be subject to manifest amendment regulations at port of discharge..

Yes, all shipping lines/agents will charge you for the issuance of a Telex Release and also for any amendment, hence it is prudent for the shipper to check the bill of lading draft and verify the same before the final original is printed..

if this has been done, then it would be TOTALLY due to the IGNORANCE of the person and company that released the cargo to the consignee without collecting the relevant charges.. Especially as you mention that the shipper has sent some charges as collect from consignee.. Either the shipping line (or agent) at load port failed to manifest this clearly or the shipping line (or agent) at destination didn’t take note of the charges in the cargo manifest and released without collecting it..

Since you mentioned that the shipping line insisted that they cannot hold release of the cargo in lieu of collection of charges, it could also suggest that the destination agent might have been too lazy to check with the load port if any charges were pending (in case the load port failed to manifest it)..

The charges for any shipment from Point A to Point B must be paid either at Point A (Prepaid) or Point B (Collect or in some cases at Point C (Collect Elsewhere) which could be anywhere in the world where the shipping line has accounting facilities) with the manifest and bill of lading showing the info of where the freight and other charges are being paid, clearly..

Overstay is the process of moving uncleared containers into a customs bonded/authorised depot for storage purposes till the consignee is ready to clear the container and take delivery.. This is generally done after the expiry of the standard free days offered at the port of discharge.. This is done by the shipping line concerned..

This term is used in South Africa.. It maybe called other names in other countries..

Storage is the charge that is levied by either the port (if cargo is not cleared after the respective free days at the port) or by the shipping line if the cargo goes into overstay and is stored at a depot..