International shipping can be very fast-paced and efficient. Sometimes the goods can make it to their destination before the paper documents, which is impressive but also frustrating for the parties involved.
Waiting on the necessary customs documents can sometimes incur higher costs and cause a logistical bottleneck. To counter this, there is a digital solution available known as a telex release.
In this article, we will discuss what a telex release is, how the process works compared to a traditional bill of lading (B/L), and how to obtain one. We will also understand how it is crucial for modern supply chains and how letters of indemnity play a vital role in countering various shipping problems.
What Is a Telex Release?
Telex means a system of telegraphy. A telex release is known as an electronic release in layman’s terms. It is a digital document that can forgo the need to present the physical bill of lading at a port to claim the goods from the destination port.
The electronic cargo release issued by the shipping line is managed in a secure electronic authorization system. When this electronic release is used, the physical bill of Lading is rendered void or surrendered.
The use of this electronic document makes the entire shipping process faster and much more efficient.
Why Is Telex Release Better Than the Original Bill of Lading?
An original bill of lading is a three-in-one document in international trade. It acts as a receipt, contract, and a document of title, which can be further divided into an order and a straight bill of lading.
A straight B/L is issued in a paper format meant for the consignee named in the document only. It can not be transferred to another one. But the order bill of lading is negotiable, meaning it can be transferred to someone else if there is an endorsement on the B/L.
While these documents provide vital security and solid proof of ownership, they can postpone the whole shipping process. This is because the cargo and the title document have to be transported separately.
After the carrier at the departure port issues the paper bill of lading to the shipper, the shipper sends the document to the consignee overseas via express. However, sometimes the cargo reaches the port before the original bill of lading.
This means the cargo is stuck at the terminal, and port storage and demurrage fees can pile up fast. Besides inflating the logistical cost, the subsequent delay can halt production lines and damage sales opportunities.
Due to this inherent flaw of the physical B/L, the electronic release has emerged as a smart and viable solution to the problem. A telex release functions as a digital all-clear message to the agent at the destination port, so the inflated logistical costs can be circumvented.
Cargo Release Process: How to Get a Telex Release?
When the cargo is booked and loaded onto the ship at the port of origin, the carrier responsible for the shipment issues an original bill of lading to the shipper.
The seller or shipper then fills out the carrier’s telex release request form and submits the signed or endorsed OBL to the carrier or its agent. Shipping fees are settled with the carrier at this stage.
Once the carrier verifies the original bill of lading against the shipment manifest, they can void or retain the OBL. Then they send a digital release message to their designated agent at the port of destination, sharing details about the shipment and who is authorized to receive the shipment.
When the cargo arrives at the destination port after customs clearance, the consignee or their agent can claim the goods without having to wait for a paper OBL document.
Cargo Release With Letter of Indemnity
Telex release helps secure cargo without the original B/L, but it isn’t the only case when a physical B/L is unnecessary.
The letter of indemnity (LOI) is a legally binding contract for the carrier, usually signed by the shipper, sometimes cosigned with the consignee. It is issued by a bank as a form of guarantee that explains that the cargo should be released without the original B/L.
The letter of indemnity takes full responsibility for any losses, legal issues, or damages the carrier might face as a result of this request. The letter of indemnity is used when a problem arises and before the electronic release process is initiated.
For instance, if the original B/Ls are lost before the electronic cargo release was requested or arranged, and the products are either en route or have arrived at the destination port, a LOI is used to claim the shipment. This absolves the carrier of any legal trouble as a result of handing the goods over without a B/L.
Similarly, an LOI is useful in cases where the B/L has been surrendered for an electronic release already, but the goods have been sold at sea to another party. For this new party to receive the goods at the port, the carrier will need an LOI from the original shipper in the name of the new consignee.
Is Shipping Without the Original Bill of Lading Possible?
Shipping without the OBL is possible. If the shipping uses sea waybills, the consignee simply needs to provide identification and the waybill number to pick up the cargo at the destination. This can be highly risky since this means you are bypassing a critical legal document that proves ownership of the shipment. Usually, only trusted shippers and consignees adopt sea waybills.
On the other hand, if you have no B/L and no prior arrangement, such as a sea waybill, LOI, or telex release, you will not be able to have the cargo released.
Conclusion
A telex release is considered revolutionary in global shipping. It has changed the cargo release process from an old paper-dependent process to a much more efficient electronic process.
This change has made the shipping and transfer of ownership swifter. With a telex release of the bill of lading, shippers can reduce the risk of lost or delayed documents and develop more responsive supply chains.
Frequently Asked Questions (FAQs)
What is the difference between a Telex Release and a bill of lading?
Bill of Lading (B/L) is the first legal document that evidences the ownership of the goods as well as a contract of carriage. Telex release is the electronic request of the shipping line in the origin port to its agent in the destination port, releasing its cargo without presentation of the original B/L. Basically, the B/L itself is the key to the good, and the electronic release is a message along the lines of: the key has been surrendered electronically, so you can release the goods.
Who sends the telex release?
It is sent by the shipping line or their agent at the origin port to their agent at the destination port, at the request of the shipper (exporter).
Who pays for the electronic cargo release?
The cost is normally paid by the shipper to the shipping line. This payment is a component of the whole shipping fees.
