Telex Release & Bill of Lading Explained
A Telex Release and Bill of Lading may share many similarities, but they are not the same thing. In a quick snapshot, here are the definitions of each:
- A Bill of Lading is an original paper bill that is issued to a customer (often referred to as “B/L”)
- A Telex Release is a release issued electronically in exchange for the original Bill of Lading
Generally, it helps to dive a bit deeper into the definitions of each of these articles.
Bill of Lading
There are multiple types of B/L documents that can be released, and B/L documents in general play a key role when it comes to documenting ocean freight. However, contrary to widespread misconception, a B/L is not a contract between the carrier and shipper, nor is it a contract between the seller and buyer.
The reason why a Bill of Lading is so essential is because it is oftentimes the most powerful negotiable instrument when it comes to payment plans between a seller and a buyer that involves a Letter of Credit. Basically, a B/L can function as evidence that there is a contract of the carriage along with a
receipt of goods and a ‘Document of Title’ to the goods. Multiple types exist.
Straight Bill of Lading
A “Straight Bill of Lading” is a B/L that is issued in original to a named consignee. A Straight Bill of Lading is not transferable and it is not negotiable. This means that the cargo that a Straight Bill of Lading covers is only able to be released to the consignee named on the bill; thus, it cannot be transferred to anybody else. It simply functions as evidence that a receipt of goods and contract of carriage have been established.
Negotiable Bill of Lading / Order Bill of Lading
A Negotiable Bill of Lading or Order Bill of Lading is one that is issued in original and consigned as:
“TO ORDER” OR “TO ORDER OF SHIPPER” OR “TO ORDER OF XYZ BANK”
This type of B/L is the only negotiable B/L in existence. This B/L is able to be
transferred to another party but it must be done through written endorsements on the Bill of Lading itself. This negotiable bill of lading serves multiple purposes and can be used for all three purposes listed above, which are: evidence for a contract of carriage, a receipt of goods, and a document of
title to the goods.
Seaway Bill of Lading
If a B/L has a named consignee when issued but does not have any originals, it will be considered a “Seaway Bill of Lading”. This is similar to a Straight Bill of Lading in that a Seaway Bill of Lading is not negotiable. It also cannot be transferred through an endorsement on the B/L like an Order Bill of lading can be.
A Seaway Bill of Lading is a document that shows evidence that there is a contract of the carrier. It can also act as a receipt of goods. However, the Seaway Bill of Lading cannot be used as a Document of Title to the goods. In industry lingo, a Seaway Bill of Lading is oftentimes called by the name “Express Release”. This alternative name indicts the speedy import release that this Bill of Lading enables.
All three of these Bill of Lading types are popular in container trade.
Original Bill of Lading
Now, if you are curious about what an “Original Bill of Lading” is, it’s important to clarify that there is no “type” of Bill of Lading referred to as the Original Bill of Lading. When you hear people speak of an Original Bill of Lading, they are simply referring to the physical, hard copy paper document. It can be a Straight Bill of Lading or an Order Bill of Lading that was issued to the shipping company by the carrier before they left port.
With the typical shipping procedure, goods will only be released to the consignee specified on the Bill of Lading at the goods’ final destination once the original Bills of Lading issued by the carrier have been surrendered. If the cargo is released and the Bill(s) of Lading is not released at the cargo’s destination, that can only mean one of two circumstances:
- The Original Bill of Lading was already surrendered at the port of
loading, or somewhere else, to the carrier. A release message will be
sent to the discharge port to release the cargo without the need to
physically present the Original Bill of Lading.
- The Bill of Lading was a Seaway Bill of Lading. Since a Seaway Bill of
Lading has no Original Bill of Lading issued, there is nothing for them
to surrender at the final destination or anywhere else.
In the first circumstances described above where an Original Bill of Lading is surrendered at the load port (or elsewhere), the carrier/the carrier’s agent will be required to send a release form authorizing the port of discharge to release the cargo. This form will allow the consignee to secure the cargo’s release without needing to present the Original Bill of Lading.
This authorization of the cargo’s release without presenting the Original Bill of Lading is called a “Telex Release” and the name dates back to vintage shipping when electronic messages were transmitted with the use of a now-vintage Telex machine. TELEX is the acronym for TELegraph EXchange
Today, shipping companies don’t use the Telex machine anymore, but the concept remains the same. The shipper or consignee will seek out a Telex Release only if a Straight Bill of Lading was issued. An Order Bill of Lading will never involve a Telex release because an Order Bill of Lading (Negotiable Bill of Lading)’s originals are typically required by banks for negotiation purposes.
The originals will later be sent back to the consignees after negotiation has been completed.