BIFA warns forwarders to avoid 'risky' switch bills of lading

© Kostyantine Pankin

BIFA has become the latest forwarder association in recent months to issue a warning to members over switch bills of lading.

In a note today, the UK freight forwarding association reminded members of the “dangers of requesting a switch bill of lading without being fully aware of potential liabilities”. 

A switch bill of lading can be used to hide the identity of the supplier and end user from each other – which can be for legitimate, commercial reasons, but they can also be used for fraudulent purposes. 

BIFA noted: “Issuers should be very aware when dealing with [a request for switching bills of lading].” 

It added: “It is of the utmost importance that all the originals of the first bills of lading are collected and cancelled before the replacement set is produced and issued.

“If this action is not taken, there is a risk of facing competing claims from two consignees, each holding a technically valid bill of lading.” 

Last year, the WCA network issued a warning to its members over the practice, in which a request is made to the issuer/carrier (or the carrier’s agent) for a second set of bills of lading, in substitution for the original documents issued at the time of shipment. This can often occur at a port other than the load port and subsequent to initial loading. 

The WCA said: “There are high risks to agents that involve themselves in [switch bills of lading], especially at destination. 

“We were advised by a reputable maritime law firm to stay away from them as they could contain an element of fraud and, as we have seen a number of members experience issues arising from SB/Ls, we feel this is good advice.” 

WCA CEO Dan March said: “We strongly discourage SB/Ls. It’s a risky practice for a forwarder. They are open to fraud.” 

One legal expert at a logistics service provider added: “The simple answer is forwarders can be liable, as they are often the party instructing the shipping line… and the forwarder is often the first port of call for liability, as they often have the largest pockets and are easy to track down and pursue. 

“UK forwarders theoretically could seek to rely on the BIFA conditions, which would on pass any liability to the customer or whoever gave the initial instruction. However, practically it could be difficult to enforce if your customer is a one-man band or a foreign entity, for example. 

“In short, if you are asked to do a switch bill of lading, ensure that all due diligence has been completed – but we, as a business, tend to avoid them where possible.”