100% online freight forwarder iContainers is warning all cargo agents to pay extra attention to shipments involving switch bills of lading. The comes amid an increase in fraud cases involving switch bills in recent months. The WCA, the largest network of freight forwarders in the world, has sent emails to its members to advise them of the possibility of fraud cases related to switch bills of lading. The association also indicated it was distancing itself from business related to these bills and warned that repeat complaints lodged against members may jeopardize their membership status.
Switch bills of ladings are often issued against the surrender of the original set and may be required by any of the three parties with direct involvement in the sale of the cargo: the cargo owner or seller or an authorized representative, the trading agent, and the end buyer.
Legitimate reasons for requiring a switch bill of lading are plenty – from needing to split the parcels indicated on the original bills and having to conceal the original supplier’s information to a high sea sale. But according to iContainers, given the risks involved, issuing a switch bill of lading should only be done the last resort.
“Sometimes, a genuine mistake made on the original bills needs to be corrected. Even then, it is always advisable to amend the originals and pay the amendment fee than issue a switch bill of lading,” explains Aliona Yurlova, Agents Developer at iContainers.
There are also many cases whereby switch bills are requested for unlawful motives. These include concealing the cargo’s origins due to sanctions that are in place and modifying the shipment date so that it corresponds with terms stated on the letter of credit.
As the issuing party, freight forwarders put themselves at huge risk when dealing with switch bills of lading. According to Yurlova, in the event a switch bill needs to be issued, freight forwarders and their agents should take extra precaution to protect themselves.
“If a switch bill of lading is inevitable, freight forwarders should verify the reliability of the principal party authorizing the issuance of the second set,” explains Yurlova.
“Obtain their authority in writing and a signed letter of indemnity and have it countersigned by a bank to indemnify the forwarder against all consequences.”
Given the complications and potential ramifications in the event of a resulting lawsuit, Yurlova also advises freight forwarders to crawl through the differences meticulously and ensure that the original bills are taken out of circulation and cancelled before issuing a new set.
One important point to consider is whether there’s information on the switch bill of lading that may mislead a third party about the subject cargo’s origin, date of loading, description, etc. This eliminates the risk of a misdelivery claim by the holder of the original bill.
“At iContainers, we analyze switch bill of lading requests thoroughly and on a case-by-case basis,” says Yurlova.
“And like all other freight forwarders and cargo agents, we work hard to provide all possible solutions to shipping inquiries for customer satisfaction and to secure stable and recurring business. But it’s important to note that it’s common for ocean freight processes and procedures to not go according to plan and we need to have maximum coverage on all fronts to face the possible risks.”
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