The Lost Bills of Lading: A Cautionary Tale

Published: 24 July 2024

In a recent incident, the loss of paper bills of lading led to significant complications, costs and delays that could easily have been avoided if electronic bills of lading had been used.

Typically, when paper bills are lost, parties accept a Letter of Indemnity (LOI) to reissue new bills. However, in this case, the ship owners insisted on a more stringent process. They required the bill of lading title holder to file an application in court at the port of destination to officially declare the original bills void and remove the title from the lost set.

The cargo interests found themselves in a prolonged debate over who held the title and who was responsible for filing the court application.

Furthermore, the legal process to void the original bills and issue new ones was expected to take up to two months. Given the high value of the cargo, they were understandably hesitant to land it without proper title documents.

Although deemed "unreasonably cautious" by some, the owners’ stance was guided by their P&I club and was legally defensible to avoid a mis-delivery claim. However, their action resulted in the vessel being anchored off the port of destination for over two months, accruing a staggering $2 million in demurrage costs. There is currently no resolution in sight.

This complex and costly scenario highlights the critical importance of safeguarding shipping documents and points to a more efficient solution: electronic bills of lading (eBL). Unlike paper bills, eBLs cannot be lost, damaged, or stolen, offering a secure and efficient alternative. By adopting eBLs, the shipping industry can reduce the risk of lengthy legal disputes, decrease the risk of fraud, and ensure the seamless transfer of cargo ownership.

The lesson from this incident is clear: transitioning to electronic bills of lading can prevent similar logistical nightmares in the future, protecting both time and financial resources.

Find out more about electronic bills of lading and how you can get started here.

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