What is a Dual-Named Bill of Lading: Convenience or Risk?

Definition

A dual-named bill of lading is a B/L where the consignee or shipper field includes two or more company names.

Forms

In the consignee field, a dual-named B/L might appear as "A COMPANY AND B COMPANY" or "A COMPANY O/B (ON BEHALF OF) B COMPANY." Similarly, in the shipper field, it might read "A GROUP(S) PTE LTD C/O (CARE OF) B SUPPLY CHAIN MANAGEMENT PTE LTD."

Common Scenarios

Sometimes, exporters receive orders from traders where the goods are to be shipped to other countries for end users. In such cases, intermediaries might request a dual-named B/L, where the shipper field lists the export company along with the intermediary’s company name.

Considerations for Using Dual-Named B/L

1. Prepaid Transactions:

   • If the payment method is 100% prepaid, agreeing to a dual-named B/L is generally safe because the payment is already secured. The exporter's focus shifts to helping the client with smooth customs clearance. Since ownership is less critical at this stage, the risk associated with a dual-named B/L is minimal.

2. Non-Prepaid Transactions (e.g., Letter of Credit):

   • For transactions involving letters of credit, caution is necessary. The risk lies in potential discrepancies during document presentation. Since ownership is with the intermediary, any inconsistencies might lead to payment refusal. In cases of returned goods, the exporter might face a situation where they neither have the goods nor the payment.

Assessing Customer Requests

When a client requests a dual-named B/L, ensure the request is reasonable. Avoid agreeing to conditions that might compromise your ability to secure payment. Always prioritize safeguarding your financial interests before accommodating client demands.

Risks of Dual-Named B/L

1. Bank Regulations and Foreign Exchange Payment:

   • Different banks have varied policies on handling dual-named B/Ls. Some may allow public account foreign exchange payments, while others have stricter rules, leading to potential uncertainties in the payment process.

2. Complex VAT Deductions:

   • Dual-named B/Ls are often used to assist companies without import-export rights in customs clearance and fixed VAT deductions. This process can introduce complexities and operational challenges.

3. Transfer of Rights:

   • With two consignees listed, determining the transfer of ownership can be complex. This requires careful consideration of each party's rights and responsibilities, especially in joint procurement or cooperative sales scenarios.

4. Coordination with Shipping Companies and Ports:

   • Properly managing dual-named shipments requires selecting reputable, experienced shipping companies and ensuring the port of origin has the necessary facilities and services. Poor coordination can lead to transit issues.