What is a Switch Bill of Lading and when

and why is it used..??

Hariesh Manaadiar || 6 June, 2012 || Bill of Lading, Export Documentation, Marine
Insurance || Bill of Lading, Insurance, shipping education, shipping knowledge, switch bill of
lading, TT Club
73 Comments - Add yours..
In the normal course of business you might have come across the term Switch Bill of Lading.. A
Switch bill of lading is the second set of bill of lading that may be issued by the carrier (or
agent) in exchange for the first set of bill of lading originally issued when the shipment was

effected..
Why does one ask for or require a Switch bill of lading..?? Switch bills are requested generally
when there has been a change in the original trading conditions.. Some of the reasons could be :

Goods could have been resold and the discharge port has now been changed to another
port and this could have occurred as a high-seas sale..
The seller (who could be an intending agent) does not wish the name of the actual
exporter to be known to the consignee in case the consignee strikes a deal with the
exporter directly..
The seller does not want to know the buyer to know the actual country of origin of the
cargo so he requests that the port of loading be shown as some port other than the one the
cargo was loaded from..

The practice of issuance of switch bills of lading is considered by many, including TT Clubs and
insurance companies, to be dubious or fraudulent depending upon the reasons why the switch bill
of lading is required to be issued..

In order to protect themselves from any possible claims arising out of issuing switch bills of

lading, the shipping line/agent have to ensure that

They are covered by their insurance for issuance of such switch bills of lading
They should provide their insurance company with the exact reason for the issuance of
the switch bill of lading..

They must have the written authority of the principal before issuing the switch bill of
lading, if the issuing party is acting as agents for a shipping line or principal..

They must issue the switched bill only after collecting the first set of bills, as the dangers
of two sets of original bills in circulation for the same cargo are many..

The switched set should not contain any information different to that of the original bill
of lading, (like incorrect port of loading, or change in the condition and quantity of the
cargo).. If switch bills contains misrepresentations, the carrier/agent will be at risk of
claims from parties who have suffered a loss because of such misrepresentations..

If the agent has been asked by the principal to issue the switch bill of lading based on an
indemnity from the customer, the agent should ensure to get the wording format from the
principal and get the completed indemnity approved by the principal before issuing the
switch bill of lading..

It seems to be the concerted view of almost all insurance companies covering exports, that a
switch bill of lading issued with any misrepresentation or information contrary to the first set
issued, without the express acceptance and understanding of the buyer is a fraudulent document..

Newsletter

Switch Bills of Lading - Revisited

Author: M Jagannath
Date: August 10, 2014

At the request of their customers, Carriers regularly issue Switch Bills of Lading. This articles
touches on the risks together with the risk management procedures which should be considered
by the Carriers prior to issue of any Switch Bills of Lading

1. There have been many articles written on the Switch Bills of Lading (SBL)
and therefore our intention is not to revisit the ground already covered but to
focus on the process to be followed by a Carrier issuing a SBL. SBLs are
generally issued to mask the details of the Shipper, Consignee or Notify Party
from one of the contractual parties. It is often done so that one of the parties
is able to shield the name of the supplier from the buyer or vice versa. Issue
of SBLs are commercial arrangement which is obviously fraught with danger
but given that this is frequently required to facilitate trade, it is often given
without a proper understanding of the risks involved.
2. The first question to be asked is what can be amended in a SBL? The details
which can be amended are the details of the Shipper, Consignee and / or
notify party. If a request for the change in cargo or any other details is
requested, Carriers should not agree as any changes of this sought would be
akin to participating in fraud.
a. However, Carriers may agree to incorporate details of the relevant
letters of credit of the second sale in the SBL as it does not materially
change the details of the cargo / shipment mentioned in the SBL.
b. In some circumstances, if the cargo details on the first set of Bill of
Lading (B/L) are incorrectly stated, the Carrier must direct the party
seeking changes in the SBL to get the first set of B/L amended (if the
amendment process requires the custom authorities of load port to be
notified, then they must be notified so that this is above-board). Once
the original B/L is amended with the correct cargo details, the SBL
would mention the cargo listed in the first set of B/L issued.
3. The second question to be asked is when should a Carrier proceed to issue a
SBL? Many a times, cargo interests would request for SBL and provide
relevant details for manifestation purposes and only surrender the first set of
B/L at the time when they collect the SBL. We would caution against following
this process and instead suggest that if a request is made for switching a B/L,
the Carrier must first seek surrender of all originals of the first set of B/L's

issued. Only when this has been accomplished, should the Carrier consider
making any changes in the manifest and proceeding with the SBL. The reason
why we state this is that if the Carrier proceeds to manifest the details prior
to collecting the first set of B/L's and if the switch requestor has a change of
mind, the carrier may be faced with a situation in that they may have to
expend time, energy and costs in getting the details again amended in the
manifest. Moreover, in certain countries, once the name of the consignee has
been listed in the manifest and filed with the appropriate authorities
(custom/revenue), it may be difficult if not impossible to amend them as the
law in these countries would recognise them as the owners of the cargo even
though they may not have title to the cargo!
4. We would recommend that Carriers seek a properly worded Letter of
Indemnity (LOI) from the party seeking the SBL. Both the wordings of the
LOI and the antecedents of the party providing the LOI (is the party good for
the Letter of Indemnity provided?) are important in managing the risks to the
Carrier. If the Carrier is not comfortable with the party providing the LOI, they
must ask for a LOI from a party who can satisfy their risk management
process. The reason why we recommend that a LOI be sought is that while
the B/L contract is a contract in which the shippers liability subsists
throughout as they are the original parties to the contract, an argument could
be made that once the B/L has been surrendered with the Carrier for a SBL,
the original Shippers liability ceases (as the Carrier has agreed to vary the
contract). This being the case, Carriers may not be able to recover from the
original Shippers to the contract should there be any mis-declaration, or other
issues with the shipment and instead may have to consider pursuit of the
party who has sought the SBL. If the party seeking the SBL is impecunious,
then the carrier may not have any recourse available to recover their losses.
Further, if there any claims from other parties or from competing interests,
the Carrier may be drawn into the dispute due to their having released a SBL
and for which they would have to expend monies to defend themselves (the
LOI would assist in recovering costs incurred by the Carrier for defending
and / or paying any award/judgement against them).
5. It is our understanding that non of the Transport Liability Insurers exclude
cover for liability arising from the issue of SBLs. However, all of the transport
liability policies would require that their member/insured (as the case may
be) have proper standard operating procedure for their operations.
Otherwise, failure to have proper standard operating procedure may be
considered as reckless behaviour and which is generally one of the exclusions
in the Rules/Policy of the Mutual/Liability Insurers. This being the case,
Carriers may find themselves without cover should a claim arise out of their
releasing a SBL without having a proper process in place.
6. In conclusions, Carriers must ensure to :
a. have a Standard Operating Procedure for the issue of SBLs which
ideally should have been endorsed by their liability insurers.
b. seek a LOI from the party requesting for a SBL.

c. check that the parties signing the LOI are good for their word.
d. vet this process regularly to ensure that their (Carrier's) risk are
appropriately managed.

Who can request shipping line to issue switch bill of lading..??

A very important point raised by Tom regarding the issuance of switch bill of lading..
Question : Considering container liner traffic, who is considered to be the Principal
authorised to request the switch? Is it the shipper stated on the B/L or th party booking the
container(paying the freight). As these partys are not always the same?

The entity that is authorised to request the shipping line to issue a switch bill
of lading would be the shipper on the first set of bill of lading.. The shipper of the bill of lading
is deemed to be the owner of the cargo and the ownership does not transfer to another party until
such time the bill of lading has been negotiated and sent to the consignee..
This request must come on an Original letter head of the shipper and sent to the shipping line
or their agent.. The shipping line or agent would then follow the process as covered in my
original article regarding Switch Bill of Lading.