According to the letter of credit rules, each shipment needs to be verified by a corresponding transport document and must follow the route, that is stated in the letter of credit.
A transport document covering at least two different modes of transport is regarded as a multimodal transport document or combined transport document as per letter of credit rules.
Letter of credit rules accept following documents as transport documents in addition to multimodal transport document:
- Bill of lading,
- Non-negotiable sea waybill,
- Charter party bill of lading,
- Air transport document,
- Railway transport document,
- Road transport document,
- Inland waterway transport document
- Courier receipt and post receipt (only if used to transport actual good.) (not sending documents etc…)
If the issuing bank finds out that the shipment has been effected with a different route, other than what is identified in the letter of credit, then the issuing bank will issue a discrepancy, which is known as transport route is not as per letter of credit.
Discrepancy Example: Transport Route Discrepancy under a Letter of Credit
A letter of credit has been issued in SWIFT format, subject to UCPURR latest version, with the following details:
Letter of Credit Conditions
Field 44A: Place of Taking in Charge/Dispatch from …/Place of Receipt:
Field 44E: Port of Loading/Airport of Departure:
Field 44F: Port of Discharge/Airport of Destination:
ANY PORT IN CHINA
Field 46A: Documents Required: Full set of multimodal transport document issued by a shipping company marked freight (prepaid) made out to order of Agricultural Bank of China marked notify applicant indicating that the goods have been dispatched, taken in charge or loaded on board.
The beneficiary presented a multimodal transport bill of lading with the following shipment route:
Place of Receipt: WOLFSBURG, GERMANY
Port of Loading: HAMBURG PORT, GERMANY
Port of Discharge: PORT OF GUANGZHOU, CHINA
Multimodal Bill of Lading
Discrepancy: Multimodal bill of lading shows a transport route different than what is stated in the letter of credit. Place of receipt should have been Hannover, Germany but it was stated as Wolfsburg, Germany which is not as per letter of credit conditions.
Reason for Discrepancy: A multimodal transport document is to indicate the place of receipt, dispatch, taking in charge, port of loading or airport of departure stated in the credit.