News / New UN convention on sale of cargo in transit good news for shippers

© Armth99

Shippers will be able to sell goods in transit following changes to international law, boosting opportunities to avoid outbreaks of unexpected chaos in global supply chains – particularly pertinent given the ongoing tariff wars.

Finalised this year, the new UN Convention on Negotiable Cargo Documents is awaiting a rubber stamp from the international body’s General Assembly on Monday. It then must be ratified, with at least 10 states adopting it into national legislation, expected in the second half of next year.

After that, shippers using all transport modes will be legally entitled to sell goods in transit.

Director of the Global Shippers Forum, James Hookham, told The Loadstar: “This new convention not only extends the negotiable bills of lading concept that allows goods to be sold while at sea to all modes, but joins it up for those making multimodal shipments.

“This issue became pertinent during Covid and, because of the way the world has gone since, the ability to sell goods while in transit offers a way to get around sudden, abrupt changes. For instance, if destination countries are unexpectedly hit with a 25% tariff or port closures.”

Mr Hookham said the changes would prove particularly beneficial for landlocked countries where long overland journeys increase the prospect of unexpected changes in transit, and that there was a “big opportunity” in the Eurasian rail and road corridors.

This opportunity, he said, came from the fact that goods could depart origin valued at one price but be worth substantially more on arrival.

“That new selling opportunity is there for a buyer who has seen its value increase by such an extent in transit that it is perhaps better to sell the product on than to receive it,” Mr Hookham continued.

“Equally it provides some defensive cover – maybe when you bought the shipment you wanted it, but since it departed you’ve realised you no longer want it; this gives you that chance to sell it rather than having to take delivery.”

Throughout the pandemic, there was a trend of volumes being bought up, because at the time of buying they were needed, only for complications in transport to delay delivery, meaning the goods were no longer required or being accepted late by the retailer client.

While it has been possible to include provisions within contracts offering the ability to sell goods on in transit, the new convention provides parties with the legal right to do this, rather than having to rely on clauses in a commercial agreement.

“Without the ability to sell goods during international road and rail transport law, shippers were finding themselves facing fines for the delays in delivery, but were not able to see if someone else in the world could take it, because it had to be delivered to the named consignee,” Mr Hookham noted.

“Once ratified, this convention will provide a formal legal framework allowing forwarders to issue a negotiable bill of lading for multimodal transport shipments, meaning the consignee can be changed in transit, avoiding situations of shippers being penalised for issues beyond their control.”