Difference Between Original and Telex Release Bill of Lading

May 31,2024
Industry News
Bills of lading are mainly divided into two types: original bills of lading and telex-released bills of lading. What are the differences and how to choose during the transportation of goods

Bill of lading is not only a proof of the contract for the carriage of goods, but also a certificate of ownership of the goods. Understanding different types of bills of lading, especially original bills of lading and telex release bills of lading, is crucial for smooth logistics operations and cargo release, affecting the efficiency, safety and legality of cross-border transportation of goods.

Bill of Lading

Bills of lading are mainly divided into two types: original bills of lading and telex release bills of lading. They each have different characteristics and uses. Choosing the right type of bill of lading is of great significance for reducing costs, improving efficiency and ensuring transaction security.

What is an original bill of lading?

An original bill of lading is an original bill of lading that is a proof of the contract for the carriage of goods and also a certificate of ownership of the goods. The holder of the original bill of lading is entitled to collect the goods. The detailed information of the goods, including the type, quantity and destination of the goods being transported, is listed.

In international transportation, the original bill of lading is usually issued by the carrier or its agent as a formal record of the transportation of goods. The original bill of lading can be transferred by endorsement, thereby realizing the transfer of ownership of the goods. The original bill of lading is usually issued in multiple originals (usually three). Each original has the same legal effect.

Key Functions of an Original Bill of Lading

In international transport, the consignee must present the original bill of lading at the port of destination in order to claim the goods. The bill of lading is usually sent to the buyer by courier, bank or other secure means to ensure that the legal owner can claim the goods.

Receipt of Goods: The OBL confirms that the carrier has received the goods described in the document for shipment.

Evidence of Contract: It outlines the terms and conditions of the contract between the shipper and the carrier, including details such as the parties involved, description of the goods and destination.

Document of Title: The OBL represents the title to the goods and is a negotiable instrument that can be transferred to a third party (such as a bank or consignee) by endorsement.

The physical nature of the OBL is crucial because the OBL must be presented to the carrier at the port of destination in order to claim ownership and release the goods. Failure to produce the original document may result in the cargo being detained until the proper documentation is provided.

What is a Telex Release Bill of Lading?

A telex release is an electronic message or authorization sent by a carrier or its agent at the port of origin to the port of destination, allowing the release of goods without the need for the physical original bill of lading. This process is initiated after the shipper surrenders the original bill of lading at the origin, thus speeding up the release process.

Telex release simplifies logistics by eliminating the need to couriers a physical OBL to the destination. This is particularly useful when the original bill of lading is delayed or lost in transit, or the cargo arrives before the physical document. Telex release bills of lading reduce the physical handling of paper documents, improving efficiency, while also introducing new security measures to prevent fraud. This reduces the risk of delays as there is no need to wait for the original bill to be couriered to the destination.

While telex release provides convenience, it lacks the transferability and proof of title provided by the original bill of lading as it is a non-negotiable document.

Main Differences Between Original and Telex Release Bills of Lading

format

The original bill of lading is a physical, transferable document, while the telex release bill of lading is an electronic message or authorization.

Fast and Convenient

The telex release bill of lading makes cargo delivery faster and more convenient due to its electronic nature.

Proof of Ownership and Transferability

The original bill of lading is a document of title, representing ownership of the goods, and ownership can be transferred by endorsement. In contrast, telex release bills of lading are non-transferable and do not confer title.

Handling and security

Original bills, due to their physical nature, offer a high level of security, but are susceptible to loss or theft. Telex releases require stringent electronic security measures to prevent fraud and ensure the integrity of electronic communications.

Expenses involved

Original bills incur costs associated with printing, courier services, and potential delays. Telex releases, on the other hand, reduce costs by eliminating the need for physical document handling and courier services.

Documentation and customs procedures

Customs clearance and other document processing often requires an original bill of lading, while telex releases may not be accepted in certain circumstances or in certain jurisdictions.

Advantages and disadvantages of original bills of lading

Advantages

It is legally binding and is suitable for situations where strict proof of ownership and contract performance is required.

It acts as a negotiable document of title, representing the ownership of the goods.

It provides a higher level of security and fraud prevention through the exchange of physical documents.

It is widely used in customs clearance and document handling processes.

Disadvantages

It is slow to process and susceptible to physical damage or loss.

If the physical documents are delayed or lost during transportation, the release of the goods may be delayed.

Additional costs incurred in couriering the documents to the destination port.

Advantages and Disadvantages of Telex Release Bill of Lading

Advantages

No need to wait for the physical OBL, thus speeding up the release of goods.

Reduces costs associated with courier original bills and potential demurrage charges.

Simplifies logistics processes, especially in time-sensitive situations.

Disadvantages

Lacks the transferability and proof of ownership provided by the original bill of lading.

Potential security issues due to the lack of physical document exchange.

May not be accepted for certain customs clearance or documentation processes.

Choose the most appropriate type of bill of lading to ensure a smooth transaction and safe delivery of goods. Original bills of lading are highly secure and widely accepted, while telex release bills of lading are fast, convenient and quick.

While telex release offers convenience and potential cost savings, original bills of lading remain the preferred method for secure and legally binding transactions, especially where proof of ownership and transferability are key factors. The choice between the two depends on the specific requirements, timelines and risk tolerance of the shipping parties. Understanding these differences can help companies make informed decisions, optimize shipping processes, and ensure smooth international trade operations.