Ship Cargo Documents

1- Mate’s Receipt (MR)

Mate’s Receipt (MR) is a critical cargo document that comprises information on which the description of goods part in the Bill of Lading (B/L) is based. During the cargo loading process, the goods are tallied (counted) and inspected for visible conditions as the goods are stowed. 

First Officer (First Mate) signs a plain receipt for each consignment, the receipt in effect validating that the cargo had been loaded on board. Then it becomes the authority for the Ship’s Master (on behalf of the Carrier) to sign the presented Bill of Lading (B/L). 

There is a distinction between a Mate’s Receipt (MR) and a Bill of Lading (B/L). The Mate’s Receipt (MR) is merely an acknowledgment of receipt on board and is not a Negotiable Document or Document of Title (DOT). Beyond the shipper’s right to demand a Bill of Lading (B/L) in exchange for the Mate’s Receipt (MR), Mate’s Receipt (MR) does not give the holder any other rights nor assign any obligations upon the holder.

Today, First Officer (First Mate) supervises the overall loading operation rather than receipting unique cargoes. In the container business, this packaged cargo would be loaded into containers at an inland depot. In the liner business, it is common for the Mate’s Receipt (MR) to be replaced by one copy of the Multipurpose Standard Shipping Note.

 

2- Cargo Manifest

Cargo Manifest is a report of all the cargo transported on the vessel. Normally, Cargo Manifest includes a list of cargoes in Bills of Lading (B/L) and also includes the spares, gifts, or things of no commercial value for which Bills of Lading (B/L) have not been issued. 

An accurate Cargo Manifest is of critical importance to Ship Master because the Ship Master can be penalized for failing to report all cargo transported. In some maritime nations, undeclared things are treated as smuggling and subject to confiscation.  

Generally, the Cargo Manifest format is simply an abbreviated copy of the Bill of Lading (B/L) detail however, in some circumstances, the Freight Payable against each must be entered. The freighted Cargo Manifest must be presented to Customs Authority. Cargo Manifest may set the basis of dues and charges against the vessel. Cargo Manifest is more straightforward when the ship is loaded with a single homogenous cargo. Customarily, a copy of the Cargo Manifest is placed in the Ship’s Bag. Furthermore, Cargo Manifest is presented to the Port Authority, Customs Authority, Stevedore Company, and Discharging Port Agent

 

3- Shipping Note

Multipurpose Standard Shipping Note resembles a Bill of Lading (B/L). Multipurpose Standard Shipping Note includes all the details of the cargo, ship, and the shipper. Multipurpose Standard Shipping Note is completed by the shipper or shipper’s freight forwarder. Multipurpose Standard Shipping Note accompanies the cargoes through all stages of transportation. When the cargoes are handed over to different carriers during transportation, the Multipurpose Standard Shipping Note is signed and one copy is maintained by the company handing over the cargoes. Therefore, the trail of the cargoes becomes straightforward to follow. As each signature is proof that the cargoes were received in apparent good order. On the other hand, the point where any damage may have been done to the cargoes is undoubtedly identified. Using one part of the Multipurpose Standard Shipping Note as the Mate’s Receipt (MR) is an apparent extension of its use and presents the evidence for a Bill of Lading (B/L) to be issued, provided it is accurately performed at each stage.

 

4- Bill of Lading (B/L)

There is no more important document in global trade than the Bill of Lading (B/L). A Port Agent can not hide behind the Law of Agency due to their negligence on a Bill of Lading (B/L). Therefore, Port Agent must be familiar with the Bill of Lading (B/L) and all its roles. When delivering cargoes into the custody of the shipowner, it is common for the owner of the cargoes to ask for written evidence that the handover has taken place. This is the Bill of Lading’s (B/L) first function. Usually, the ship’s agent is accountable for the issuance of the Bill of Lading (B/L). The issuance of the Bill of Lading (B/L) requires precision. 

Bill of Lading (B/L) may be produced onboard the ship, at a port, and often out of hours. Additionally, the Port Agent may be under a level of time pressure to issue the Bill of Lading (B/L) as the berth may be tidal, or other ships may be stemmed to load from the berth. Customarily, a Draft Bill of Lading (B/L) is produced by the Ship’s Agent and approved by the owners and charterers alike before the agent issuing the bill for signature by the master. The Ship’s Agent may also have to produce a Ship’s Bag that contains Original Bill of Lading (B/L), Copy Bill of Lading (B/L), Cargo Manifest, Mate’s Receipt (MR), and Statement of Facts (SOF) to be carried by ship. There may also be supplementary documents for the discharging Port Agent and Consignee. These supplementary documents are sent either in Ship’s Bag or via courier. Bill of Lading (B/L) must be signed by either the Ship’s Master or by a duly authorized Ship Agent as servants of the Shipowner, Disponent Time Charter, or Carrier. If time does not allow the Ship’s Master to sign the Bill of Lading (B/L), a letter is normally drawn up providing the Port Agent proper authority to sign the Bill of Lading (B/L). There must be no room for uncertainty as to the name of the parties and the cargoes themselves. 

There are many types of Bill of Lading (B/L) but they all have factors in common. Many charters have a particular Bill of Lading (B/L) to be practiced with them, but a typical Bill of Lading (B/L) for general use for cargo carried under a charter party is the Congenbill. The first item to be set is the name and address of the shipper. Shipper Name may be the same as the charterer of the ship, it will not always be so. The charterer may be the buyer of the cargo or a trader who is neither the shipper nor the consignee. The shipper is the party who owned the cargo shortly before placing the cargo on the vessel. The name and address of the Consignee, and Notify Address must be inserted into the Bill of Lading (B/L). Furthermore, the name of the ship and the loading and discharging ports have to be entered into the Bill of Lading (B/L). The mid of the Bill of Lading (B/L) form identifies the cargoes. The accurate description of the cargoes is crucial if payment for the cargoes is to be via a Letter of Credit (L/C) and the cargo description must be accurate. Part of the cargo description may incorporate marks and numbers that will be entered in the Bill of Lading (B/L). Besides cargo description, there is a reference to cargo quantity in the Bill of Lading (B/L). Signing for a larger quantity than has been loaded may result in a cargo claim for shortage against the ship when it discharges the cargo.  

Congenbill exonerates the ship from all liability as to the quantity, however, the shipowners and charterers additionally incorporate the Hague or Hague-Visby Rules into the charter party Bill of Lading (B/L), so the point to which the ship can escape from its responsibility to deliver the quantity stated in the Bill of Lading (B/L) is limited.  

The vessel cannot have any knowledge of the intrinsic quality of the cargoes, which is why a Bill of Lading (B/L) constantly asserts that the Cargo is In Apparent Good Order and Condition. This is especially true for cargoes that are paid for by a Letter of Credit (L/C). For a Letter of Credit (L/C) to be performed, the bank always demands a Clean Bill of Lading (B/L). Clean Bill of Lading (B/L) indicates that there are no adverse remarks or endorsements about the condition of the cargoes.

There is a trend for the banks to insist that the Bill of Lading (B/L) is signed and stamped Clean On Board. Without any adverse clause on the Bill of Lading (B/L), the cargo is deemed to be clean. If the cargoes such as unprotected steels are rusty, or boxed cargo is badly packed, or bagged cargo is leaking from the sacks, there will be problems. The Ship Master wants to endorse the Bill of Lading (B/L), whereas the shipper will ask for a Clean Bill of Lading (B/L). To overcome this deadlock the shipper may offer the Ship Master a Letter of Indemnity (LOI) undertaking to hold the ship harmless from any claims resulting from authorizing cargo to be loaded in a damaged condition without clausing the Bill of Lading (B/L) to this effect. It is important to know that the signing of a Clean Bill of Lading (B/L) while knowing the cargo to be damaged is a Fraud. If a conflict arises and the shipper declines to accomplish its commitment to indemnify the ship, the courts do not enforce the undertaking. In this case, the Letter of Indemnity (LOI) is just toilet paper. The important point to understand is that signing a Clean Bill of Lading (B/L) for damaged cargo is fraud. Therefore, Port Agent must never accept such an indemnity without clear authority from the Ship Master or Principal. The shipper should always be allowed to replace damaged cargo with sound cargo because a Claused Bill of Lading (B/L) could prove to be entirely useless to them. Cargo has been shipped on board is approval to overcome disputes for cargo claimed as lost but which was never actually shipped. Congenbill is a Charter Party Bill of Lading (B/L) and there is a place to enter the date of the applicable charter party at the bottom. The terms and conditions of the original charter party are expressly incorporated by the printed wording on the reverse of the charter party form. Congenbill incorporates freight paid in advance and time used in the loading port. Time used in the loading port is particularly important if the charter party provides for a total number of hours for loading and discharging. The cargo receiver wants to know how much time is left before demurrage is due. Subsequently, there are the boxes in Congenbill for the signatures. The Congenbill Date is important and shows when the cargoes passed into the care of the ship. Furthermore, in Congenbill, there is a reference to the number of Original Bill of Lading (B/L). Each of the Original Bill of Lading (B/L) has the same weight. Therefore, any one of the Original Bill of Lading (B/L) is being accomplished the others shall be void. The multiplicity of Original Bill of Lading (B/L) should not be confused with Copy Bill of Lading (B/L). Copy Bill of Lading (B/L) may be prepared for the report or record purposes. The basis for three (3) Original Bill of Lading (B/L) dates back to the age of sail. During that time, one (1) Original Bill of Lading (B/L) was posted to the destination port in a high-speed mail ship, another one (1) Original Bill of Lading (B/L) was placed in a sealed package in the ship’s bag, and one (1) Original Bill of Lading (B/L) was held by the shipper in case the other two were lost or stolen. Today, none of this applies and if a bank is involved, or if the title to the cargoes is to be sold, then all the Original Bill of Lading (B/L) must change hands. 

On the reverse side of the Bill of Lading (B/L), as well as the words that incorporate the Charter Party, there are several printed clauses. The most important of these is the Clause Paramount. Clause Paramount. incorporates the Hague or Hague-Visby Rules. Hague or Hague-Visby Rules were not intended to cover Charter Parties. Therefore, Hague or Hague-Visby Rules have to be expressly incorporated in the Bill of Lading (B/L) to give both parties their rights, obligations, and limitations of liabilities. In 1924, the Hague Rules were ratified and the convention aimed to unify rules relating to the Bill of Lading (B/L) and to place some protection for the cargo owner. In 1968, the Hague Rules were revised, essentially to take account of the effects of containerization, and the agreed convention became known as the Hague-Visby Rules. Virtually all the maritime nations have incorporated Hague-Visby Rules into their legal systems. In principle, Hague-Visby Rules set out the obligations on the shipowner to provide a seaworthy ship. The obligation of providing a seaworthy ship solely applies to the commencement of the voyage. There is no obligation for the shipowner to ensure the ship is seaworthy throughout the voyage. Certainly, one of the Hague-Visby Rules’ exceptions from liability asserts that the ship shall not be responsible for damages resulting from an “act, neglect, or default of the master mariner pilot or the servants of the carrier in the navigation or the management of the ship”. The other Hague-Visby Rules’ exceptions incorporate matters that are beyond the control of the shipowner. In Hague-Visby Rules, the financial liability of the carrier is limited to 666.67 units of SDRs (Special Drawing Rights) per package or two units of SDRs (Special Drawing Rights) per kilo, whichever is the higher. Cargo claims must be reported immediately to the shipowner or carrier. Hague and Hague-Visby Rules maintain the tradition that the shipowners and the cargo owners are involved in a joint venture. The shipowners and the cargo owners insure their interests for this venture. The shipowners’ primary obligation is to provide a sound, well-managed ship. Hague and Hague-Visby Rules set a clear understanding of where the carrier’s liability stops and where the cargo owner’s insurance should start.

In 1978, the United Nations organized a convention known as the Hamburg Rules which was ratified by 20 countries. Hamburg Rules represent a tiny portion of global seaborne trade. The Hamburg Rules adopt a more effective demand for seaworthiness and even claims for delay are allowable. Furthermore, live animals and deck cargo are covered by the Hamburg Rules which are outside the scope of Hague and Hague-Visby Rules. 

The Port Agent should know the rules apply to any Bill of Lading (B/L) with which they are associated. One critical benefit incorporated in Hague-Visby Rules, however not included in the old Hague and not included in the Hamburg Rules, is the Himalaya Clause. Hague-Visby Rules incorporates the Himalaya Clause which extends the Bill of Lading (B/L) limits of liability to servants of the carrier.

The United Nations has developed the Rotterdam Rules that are intended to clarify the current situation. The Rotterdam Rules have been introduced with the liner trades in mind. The Rotterdam Rules extend coverage beyond the sea carriage to transport on land. In liner trades, the shipowner may handle all modes of transport from factory door to final point of delivery under a Through Transport Bill of Lading (B/L).  

A Bill of Lading (B/L) issued for a ship operating on a liner trade will resemble the Congenbill but will include many more clauses.

Bill of Lading (B/L) Functions:

A- Bill of Lading (B/L) as a Receipt
B – Bill of Lading (B/L) as Evidence of Contract
C- Bill of Lading (B/L) as a Document of Title (DOT)

A- Bill of Lading (B/L) as a Receipt: the consignee (cargo receiver) expects to receive what has been described and may start claims against the vessel should there be any inconsistency between the description in the Bill of Lading (B/L) and what is ultimately delivered.

B- Bill of Lading (B/L) as Evidence of Contract: in the Congenbill, reference to the charter party covering the contract is inserted. In the liner trades, there is no covering charter party and a different form of a Bill of Lading (B/L) is required. Each liner operator may produce its exclusive Bill of Lading (B/L) or use a generic type of Bill of Lading (B/L). The principal distinction is the mass of wording on the reverse of the latter. BIMCO (Baltic and International Maritime Council) has a Liner Bill of Lading. In the liner trades, there is no charter party and the actual contract may well not be in writing, possibly being no more than agreed via a phone call. Whenever a person purchases a railway ticket, that person enters into a contract with the railway company, however, the only evidence of that contract is the ticket itself. The reverse side of the ticket incorporates the conditions of carriage. Same as the Bill of Lading (B/L), they are the evidence of a contract made sometime previously between the shipper and carrier. The reverse of a Liner Bill of Lading (B/L) is not the actual contract. The actual contract was constructed when the shipper agreed to ship and the carrier agreed to carry. The Bill of Lading (B/L) can only come into existence when the cargoes have been shipped or received for shipment. In a Charter Party Bill of Lading (B/L), the situation is more straightforward to understand because there are terms expressly incorporating the charter party. Therefore, looking at the Bill of Lading (B/L) as clear evidence of that contract is pretty clear. However, if a cargo under a Charter Party Bill of Lading (B/L) is endorsed and sold to a new consignee, the Charter Party Bill of Lading (B/L) becomes a contract rather than simply evidence of a contract. 

A liner operator may offer more than port-to-port transport. Therefore, Through Bill of Lading (B/L) and Combined Transport Bill of Lading (B/L) have been devised. A Through Bill of Lading (B/L) includes other modes of transportation in addition to the ocean carrier. These may be before the ocean voyage or after it and may cover shore transport by truck or train or water transportation, which could be feeder ships, coasters, or barges. A Combined Transport Bill of Lading (B/L) has boxes to showplace of first acceptance and the place of final delivery as well as the beginning and end of the ocean voyage. Through Bill of Lading (B/L) may be for break-bulk cargo or cargo in a container. In Through Bill of Lading (B/L), the ocean carrier is solely responsible as an agent for the pre-carriage and on-carriage. A Combined Transport Bill of Lading (B/L) is produced for cargo carried in a container ship and, like the through bill of lading, will have spaces showing the place of receipt and place of delivery. Nevertheless, unlike the Through Bill of Lading (B/L), the carrier issuing a Combined Transport Bill of Lading (B/L) accepts liability for the entire transportation.

C- Bill of Lading (B/L) as a Document of Title (DOT): whoever legitimately holds the Bill of Lading (B/L) has the right of ownership of the cargo. Therefore, the first way in which this operates is that the consignee named in the Bill of Lading (B/L) is ready at the port of discharge and the consignee claims their cargo from the ship. The consignee has the right to demand that what they receive is in fact what is described in the Bill of Lading (B/L). Delivering cargoes to a named consignee does not need a document of title when an uncomplicated instruction could do the same. Sea Waybill serves just such a purpose. A Sea Waybill is a receipt for cargo and evidence of contract just like a Bill of Lading (B/L) but it differs in one crucial respect. The Bill of Lading (B/L) is a negotiable document. The consignee can sell its interest in the cargo and, by endorsing (signing) the Bill of Lading (B/L), can pass the title to the cargoes to another party. This can be done so long as the cargoes are still in transit. The Bill of Lading (B/L) being a document of title and it is negotiable. Furthermore, the Bill of Lading (B/L) is as security for payment. When the Bill of Lading (B/L) is properly endorsed by the shipper (Blank Endorsement), the Bill of Lading (B/L) becomes rather like a blank cheque drawn to a bearer in that the person who holds the Bill of Lading (B/L) can claim title to the goods. This may seem risky because if a person finds a Bill of Lading (B/L) in the street, that person may claim the cargoes. However, that person would still be guilty of theft. The Consignee’s Name is not written in the consignee box in the Bill of Lading (B/L), because the consignee cannot be given title to the cargoes until the consignee has paid for the cargoes particularly if the payment is made through the Letter of Credit (L/C). The shipper presents the Bill of Lading (B/L) and other related documents to the bank in the country designated in the Letter of Credit (L/C). The bank pays the shipper and then utilizes the Bill of Lading (B/L) as security for payment that will be collected from the bank in the buyer’s country. That bank holds the Bill of Lading (B/L) as security until the consignee pays for the cargoes when the Bill of Lading (B/L) is handed over so that the consignee can claim their cargo or may sell the cargo to another party by exchanging the Bill of Lading (B/L) for money. A bank does not want to be the consignee and does not want to assume the liabilities of the consignee. A bank solely wants to hold the Bill of Lading (B/L) as security for payment. In the case of failure to receive the payment that the bank would be obliged to take possession of the cargoes. The liabilities of a consignee are numerous and are classified under a Charter Party Bill of Lading (B/L) because the provisions of the charter party are incorporated into that Bill of Lading (B/L). 

 

Bill of Lading (B/L) and the Discharging Port Agent 

The Port Agents should check the Original Bill of Lading (B/L) and present it to the carrier. When the carrier is satisfied that the Original Bill of Lading (B/L) is correct, the carrier releases the cargo or issue a delivery order in exchange for the Original Bill of Lading (B/L). Cargo should only be delivered to a consignee who can produce an Original Bill of Lading (B/L) covering the item of cargo claimed. Consequently, the consignee presents the delivery order to the terminal operator or the stevedores and claims the release of the cargo concerned. The Original Bill of Lading (B/L) presented should be stamped, signed, and dated by the Port Agent. In doing this, the Port Agent is said to have sighted the Bill of Lading (B/L) on the Ship Master’s behalf. The Port Agent should return the Bill of Lading (B/L) to the consignee where this is the custom, instead of issuing a delivery order they must keep a careful record. Not more than one original must be sighted, or more than one delivery order be prepared, for every set of bills. As an aid to recordkeeping in this regard, a copy of the Cargo Manifest may be utilized on which to record the Sighted Bill of Lading (B/L). If the consignee claims an Original Bill of Lading (B/L) from the ship’s bag, the Ship Master and Port Agent must satisfy themselves with the accurate identification of the claimant. Customarily, a consignee to endorse the reverse sides of the Bill of Lading (B/L) with confirmation of receipt of cargo and such bills are said to be accomplished and are called Accomplished Bill of Lading (B/L) 

Original Bill of Lading (B/L) should comply with the subsequent inquiries to be considered as Accomplished Bill of Lading (B/L):

• Endorsement of the Original Bill of Lading (B/L)(signature, stamp, and date of the shipper on the reverse side)
• Freight, either pre-paid by endorsement on the face of the Original Bill of Lading (B/L) or formal notification by the carrier of freight receipt or received by the agent 
• Endorsement of the Original Bill of Lading (B/L) by the ultimate receiver on the reverse side. There might be numerous intermediate endorsements on the reverse of the Original Bill of Lading (B/L) as the cargoes change hands.  

Accomplished Bill of Lading (B/L) is a receipt releasing the carriers from liabilities. Furthermore, Accomplished Bill of Lading (B/L) is a receipt releasing the merchant from their obligations. 

 

Letter of Indemnity (LOI) 

Signing a Clean Bill of Lading (B/L) against a shipper’s Letter of Indemnity (LOI) for damaged cargo is fraud. However, not all Letters of Indemnity (LOI) are fraud. In some circumstances, using a Letter of Indemnity (LOI) is legitimate. For instance, the cargo may arrive before the cargo documents have been processed through the banking system or have been lost. Therefore, the consignees are unable to present their Bill of Lading (B/L) to lay claim to their cargoes. This situation may be overcome by the consignee producing a Letter of Indemnity (LOI) instead of the Bill of Lading (B/L). Such a Letter of Indemnity (LOI) should be countersigned by a first-class bank and be worded in a way that is acceptable to the principal. The Port Agent should secure that the principal’s authority to accept a Letter of Indemnity (LOI) is completely clear. Consequently, the ship’s agent has an absolute duty to deliver the cargoes to the title-holder. A ship’s agent who releases cargo to the wrong party will become liable to the actual holder of the Bill of Lading (B/L) for the full value of the consignment in the subject. In shipping law, this is the Tort of Conversion. In this situation, there is no protection for the ship’s agent under the Bill of Lading (B/L), even with a Himalaya Clause. The Limitation of Liability and the one-year time-bar under the Bill of Lading (B/L) disappear and the normal statute of limitation, normally six (6) years, takes effect. 

Bill of Lading (B/L) Himalaya Clause stipulates that all servants of the shipowner enjoy the same protection under the Bill of Lading (B/L) as the shipowners themselves. The Himalaya Clause brings every servant and agent of the carrier within the protection, and thus the Limitation of Liability of the contract evidenced by the Bill of Lading (B/L). The Hague-Visby Rules have incorporated such a clause in the rules themselves. The term servant or agent of the carrier specifically excludes independent contractors. Regardless of how Himalaya Clause is incorporated, Himalaya Clause does not help either the shipowner or the agent when the cargo is delivered to the wrong consignee.

 

5- Quality Certificates

Quality Certificate acts as a record of quality. Quality Certificate is becoming more extensively used. Usually, a Quality Certificate is carried in the ship’s bag because of its significance and value. Normally, Quality Certificates are issued by a cargo superintendent. Quality Certificates apply frequently to cereal and tanker businesses. Many tanker terminals do not begin discharge until in possession of a report concerning the cargo that the tanker terminal is going to receive. Quality Certificates are commercial documents in that their absence would not legally restrict the discharge of the cargo however would solely generate problems.

 

6- Other Cargo Documents

Some cargoes require an import license or export license. Some cargoes require phytosanitary or plant health certificates. Some cargoes require veterinary certificates. Regulations differ about whether or not such certificates have to accompany the cargo or if these certificates can be despatched by other means from the seller to the buyer. Customarily, copies of these certificates are kept on board in case the originals are lost.