A telex release refers to the process whereby the shipper (consignor), after the goods have been loaded on board, surrenders the full set of original bills of lading issued by the carrier (or its agent) back to the carrier (or its agent), while designating the consignee (in the case of a non-named bill of lading). The carrier then authorizes (usually by telex, telegram, or other means of communication) its agent at the port of discharge to release the goods without presentation of the original bill of lading (which has already been surrendered).
The issuance of original bills of lading is relatively common in international container shipping. In recent years, with the rapid development of international trade, telex release has become increasingly familiar to customers due to its convenience and efficiency.
The following is a brief summary by China International Logistics of the circumstances in which telex release is used:
1. Goods arrive at the port of discharge before the bill of lading
With the continuous advancement and development of shipping technology, particularly the widespread use of container transport, the efficiency of loading and discharging ports has greatly improved, making it extremely common for goods to arrive at the port of discharge before their documents. This situation is more pronounced in short-sea shipping. For example, when exporting goods from China to countries or regions in East and Southeast Asia, the short voyage combined with the relatively slow speed of bank document examination and processing often results in goods arriving while the bill of lading is still in transit. In addition, for ocean shipping, unforeseen circumstances may also arise during the mailing of documents, such as delayed or misdirected dispatch, or delays caused by the need to clarify discrepancies in documents, resulting in documents reaching the consignee later than scheduled. In such cases, if the consignee is still required to take delivery against the original bill of lading, the goods may be held up on board or at the port of discharge, causing port congestion and substantial increases in port charges and storage fees, thereby raising the carrier's cost burden. Likewise, it may also cause the consignee to miss favorable opportunities to sell the goods.
2. Risk avoidance: avoiding the risk of document loss
Pursuant to international conventions on the carriage of goods, international trade practices, and the laws of most countries, in international carriage of goods, so long as the carrier has issued a bill of lading, the consignee must present the original bill of lading to take delivery at the port of discharge (except that under relevant U.S. law, the consignee of a straight bill of lading is not required to present the original bill of lading). Therefore, regardless of the method of settlement adopted, the bill of lading must always pass from the shipper to the consignee. During the circulation of the bill of lading, there is a risk of loss in the mail. With respect to the risk of loss of shipping documents in transit, under Article 35 of UCP 600 and Article 14 of URC 522, banks assume no responsibility. Once shipping documents, including the bill of lading, are lost, the trader may request the carrier to reissue the bill of lading. To prevent the holder of a lost bill of lading from fraudulently taking delivery of the goods, carriers are very cautious in this regard and impose stringent requirements on applicants, such as requiring a prior public notice in a newspaper, or depositing cash or a cashier's check equal to several times the value of the goods into the carrier's corporate account without interest, or requiring a bank guarantee, and the guaranteeing bank often requires the trader to provide cash or other counter-guarantees. As a result, not only does the trader have to tie up substantial funds and face significantly higher transaction costs, but the time required to complete the reissuance procedures may range from several months to more than one year. Therefore, for consignees or importers with good credit standing, exporters sometimes proactively request the carrier to release the goods by telex release in order to avoid the risks and additional costs to the shipper, consignee, or importer caused by loss of documents in transit.
3. Taking delivery under a freight forwarder's bill of lading: inability to take delivery with a house bill of lading
With the opening up of China's shipping market, competition in the domestic international transport and freight forwarding business has become intense. Foreign freight forwarding companies operating in China (hereinafter referred to as foreign forwarders or forwarders) began issuing their own house bills of lading (House B/L), thereby entering into contracts of carriage with shippers. At the same time, foreign forwarders must also find actual carriers to carry the export goods. That is, the foreign forwarder itself acts as the shipper, and the shipowner issues a master bill of lading to it, or the forwarder instructs the shipowner to issue a bill of lading naming a shipper designated by the forwarder (usually the importer).
When the goods arrive at the port of discharge, the holder of the foreign forwarder's house bill of lading first exchanges the house bill of lading for the master bill of lading with the forwarder or its agent at the port of discharge, and then takes delivery from the shipowner or its agent against the master bill of lading. Alternatively, the forwarder or its agent first takes delivery from the shipowner against the master bill of lading, and the holder of the house bill of lading then takes delivery from the forwarder or its agent against the house bill of lading.
It can thus be seen that such a forwarder actually has a dual capacity: with respect to the shipowner (the actual carrier), the forwarder is equivalent to a shipper, arranging the shipment of the goods and entering into a contract of carriage with the actual carrier, and obtaining the master bill of lading issued by the shipowner. At the same time, with respect to the cargo owner, the forwarder is equivalent to a carrier and issues its own house bill of lading to the cargo owner. Only when the master bill of lading and the house bill of lading are used in coordination can the entire carriage of goods be completed smoothly.
Although UCP 600 recognizes house bills of lading, that is, a forwarder may issue its own bill of lading as a carrier, in practice not all countries or regions recognize and accept house bills of lading. For example, some South American countries currently do not accept house bills of lading. If the port of discharge accepts only master bills of lading and not house bills of lading, the consignee, even holding an original house bill of lading, may be unable to exchange it for the master bill of lading and take delivery at the port of discharge. In such cases, the consignee may request that the goods be released by telex release.
4. Correction of errors: operational errors in handling the bill of lading
In trade practice, operational errors during the circulation of the bill of lading may also result in the consignee holding an original bill of lading but being unable to take delivery. For example, after the carrier has issued a blank order bill of lading (To Order) or a shipper's order bill of lading (To Order of Shipper), and the traders have agreed to settle by remittance or collection, the shipper, for various reasons, fails to properly endorse the bill of lading when sending the shipping documents to the consignee. When the importer receives such an original bill of lading, the lack of continuity in the endorsements violates the basic operational requirements for bills of lading, meaning the importer cannot prove that it is the lawful holder of the bill of lading. In such circumstances, the shipping company or its agent at the port of discharge will not release the goods to the holder of that bill of lading. At this point, if the bill of lading is sent back to the shipper for supplementary endorsement, it may cause delays. Therefore, an importer holding an unendorsed bill of lading usually requests telex release of the goods in order to take delivery as quickly as possible.
