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Saturday, September 25, 2010

Letter of Indemnity for non presentation of Bills of Lading

Ok - So the cargo of coal (or any other dry bulk) is on the water (in transit) and it appears the paperwork (original bills of lading) will not arrive to the discharge port in time. A shipowner will not discharge the cargo unless the bills of lading are there. If unavailable the only other way to get the cargo discharged is if charterers agree to sign a Letter of Indemnity.

The shipowners sends the charterer his Letter of Indemnity (LOI) basis his P and I club wording. This is standard but also a painful process. If a full stop or a comma is out of place then it will not be passed. I have spent hours getting this part of the process right because the loi needs to be passed through the chain right back the the head owner of the ship.

Make sure you start working on the LOI as soon as the ship has left its load port. As a broker you should be asking owners for their LOI wording and on receipt you should pass throught to charterers. Charterers, agents and brokers should be keeping an eye on the whereabouts of the original bills and if there is a slight chance they will not arrive in time then the LOI process should then be in full swing.

Again I must re- iterate...getting thr LOI wording correct, the process can take days. So dont be caught out and leave it till the last minute.

Yours
VS

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