UPDATE to – Question regarding cargo under Letter of Credit

This post is an update to my previous post of a Question regarding cargo under Letter of Credit..

John Alan, has below question regarding cargo under Letter of Credit..

Hi there, I would like to submit a doubt I have:

what happens if the exporter would like to send in the same container goods covered by L/C in addition to some other goods.

Should the carrier issues two bill of lading, or mentioning in the same B/L the goods under L/C and goods that aren’t is enough?

What can you advise John..??

Image for opinion


My view is as below :

A very interesting question indeed, John Alan, although I personally haven’t come across a situation as above..

As described in Part 1 of my multi-part article about Parts of a Bill of Lading, the Consignee is a key entity in the shipping chain and is the person or company that is legally allowed to receive the cargo..

1) If there is a shipment under a Letter of Credit, it will invariably be a Negotiable (To Order) bill of lading (as that is the whole purpose of an L/C) and might be consigned to one of the below :

  1. To Order
  2. To Order of Shipper
  3. To Order of XYZ Bank

image for part bills2) If the shipment is NOT covered under a L/C, it might invariably be a Straight Bill of Lading, in which case it will be consigned directly to a company or person and which is therefore not negotiable..

As there can only be 1 consignee on a bill of lading the answer to the above question is NO, one bill of lading cannot be issued for two cargoes in the same container, where one is covered under an L/C and the other is not covered under an L/C..

So, is there no solution to above..??

There could be 1 solution and that is the issuance of Part Bills of Lading.. However, there are some criteria/requirement in order for the carrier to be able to issue Part Bills of Lading and for the customer to accept Part Bills of Lading for this particular scenario..

I will discuss about this in the next article..

Be part of the discussion and share your views about the article here..

3 comments on “UPDATE to – Question regarding cargo under Letter of Credit

  1. John Alan says:

    Thanks a lot for your answers following my question. You’ve been very helpful to me. As you suggested me, Shipping line will issue two bill of lading: one for cargo covered by L/C and one seawaybill for the free cargo.

    Now another problem came at the top of it: L/C requires the vessel Imo number on the B/L. This time shipping line said they won’t accept my request as per their policy.
    what should I do now? Have you got any suggestions for this issue?

  2. humayun1952 says:

    Generally a shipping line issues B/L for shipment which is covered by Letter of Credit. L/C is the basic sale contract/ agreement between a seller and buyer through which the total process of shipment takes place and bank plays a vital role regarding settlement of value of goods plus transportation cost as middle man. Without involvement of bank and establishment of L/C, how international transaction can take place? It is really confusing to me.

    1. Hello Humayun, L/C is neither a sales contract or an agreement between seller and buyer.. A Letter of Credit is a form of Documentary Credit governed by UCP (Uniform Customs and Practice) 600.. A letter of credit is basically a guarantee or promise by a bank on behalf of the buyer to pay the seller a specified sum in the agreed currency, provided that the seller submits the required documents by a predetermined deadline.. You may read further about a letter of credit here..

      There are several methods of payment for international transactions such as Cash in Advance, Letter of Credit, Open Account and Documentary collections.. The buyer and seller must decide which method suits them most and come to an agreement on a mutually acceptable method of payment..

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