How do I verify if my goods were actually shipped..??
One of the readers Eliash asked some questions on how to verify if the goods were actually shipped and the safeguards thereof..
1) What happens if the nominated bank sends forged papers based on which the issuing bank releases payment to the nominated bank ?
2) I mean, if there was no actual shipment takes place (only fake papers sent to the Issuing Bank) or if the goods shipped actually does not match the agreed specification of the goods ?
3) As buyer do I have any guarantee that the (1) Goods are actually shipped (2) Goods match agreed specification and quantity ?
4) If they do not match, as buyer how can I have remedy ?
Eliash, to answer the first part of your question about forged documents being sent to/by the bank, if the shipment involves a Letter of Credit (LC), after the shipment is effected, the documents as per the LC are to be submitted to the nominated bank for verification..
The verification by the bank consists of only checking that the documents as required by the LC are submitted properly.. The bank is not expected to verify if the cargo was actually shipped on the vessel mentioned in the bill of lading..
Reasoning could be that, the bill of lading submitted to the bank is issued by a shipping line who is allowed to issue it only after verifying that
1) the container has been cleared by customs
2) the container has been physically loaded on the vessel/voyage from the load port mentioned on the bill of lading
Therefore the bank is taking the bill of lading issued by the shipping line to be authentic and proceeds with the verification of the other documents (like Commercial Invoice, Packing List, Certificate of Origin etc) submitted as per the LC requirement..
As regards the specification of the goods, the bank does not see the cargo physically, so here again they cannot and will not verify if the cargo specifications mentioned in the bill of lading or commercial invoice are physically correct..
They will merely check if the description of the goods mentioned in the bill of lading and commercial invoice and other documents submitted match the description of the good mentioned in the LC..
If there is a variance between these two descriptions, they will reject the wrong document..
As for your Question 3 & 4
- Do I have any guarantee that the Goods are actually shipped
- Do I have any guarantee that the Goods match agreed specification and quantity
To be brutally honest, if you don’t trust the shipper, you don’t have any guarantee and it is upto the buyer to take appropriate measures to safeguard against shipping and freight fraud..
So as a buyer how do you ensure the above..???
If you are unsure of the shipper and the cargo being shipped you can employ an independent surveyor who can be present while the cargo is being packed in the container, verify the quantity and specification of the goods and present that survey report to you along with pictures..
With regards to the cargo being actually shipped, you can also ask your surveyor to track the container from the time it is packed and enters the port and the surveyor can liaise with the shipping line to get you a confirmation that the container has been loaded on board..
If until this stage everything has been above board, then the shipping line’s bill of lading showing that the container has been shipped is proof enough..
If you still want to check further, you can track the container or bill of lading on the shipping line’s tracking system where if you give the bill of lading or container number, it will bring up the details of where the container/vessel is currently located..
As you can see, things like this could be quite tricky and that is one of the main reasons many of the customers employ the services of a Freight Forwarder as these are some of the services that a freight forwarder provides..
Better safe than sorry I say.. 🙂