News / Multimodal negotiable cargo documents a step closer to reality

© Dmitry Rogatnev

Negotiable cargo documents are one step closer to realisation, allowing goods to be sold in transit on any mode of transport.

Last week in Vienna, UNCITRAL Working Group VI continued to set out proposals which would see cargo able to be bought, sold or transferred while in transit, across all modes.

While bills of lading are used as documents of title in the maritime sector, transport documents issued by rail, road and air carriers (often known as “consignment notes”) cannot.

Instead, a new type of document of title, a negotiable cargo document (NCD), could be used across any mode or combination of modes.

James Hookham, head of the Global Shippers Forum, explained earlier this year: “In international trade, goods are often not sold directly to the end user but to intermediaries such as commodity traders. In commodity trades, goods are often sold multiple times while in transit.

“A negotiable cargo document, once developed, could allow goods to be sold while in transit. Such sales could be further facilitated when negotiable electronic cargo records are issued.”

He said the new document would help build supply chain resilience during times of disruption.

“For example, the decision by many shipping lines to reroute vessels away from the Red Sea and Suez Canal has prompted the development of new services combining shipping services with road, rail, or air transport. Switching between modes and with the flexibility to sell goods to another buyer is of potential interest to shippers.

“The call for a new type of document of title originally came from China, where buyers faced difficulties obtaining trade finance, particularly letters of credit, when sellers in Europe chose to transport goods by railway,” he added.

There have already been two pilot projects, said Andrea Tang, legal services director of FIATA, which is supporting the proposals.

“In today’s disruptive world, multimodality and preparedness and flexibility is really key,” she said. “And this is why it is crucial that we can have a multimodal transport document that allows for this flexibility and the ability to plan transportation across different routes and different modes.

“We are pleased to have had the EFBL (electronic FIATA bill of lading) being the basis of two pilot projects that were issued in relation to the draft NCD convention. One concerning goods moving from Kazakhstan to China and one concerning goods moving from Turkmenistan to Romania.

“We look forward to compiling the results of these pilots and to continuing support the work of the working group.”

The plans have been on the table for a long while: the UNCITRAL secretariat began working on negotiable cargo documents in 2019. The draft instrument, currently in the form of an international convention, may be presented to the commission for approval in July, and then to the general assembly for adoption in late 2025.