Sea Waybill Explained

Sea Waybill (SWB)

A Sea Waybill is a non-negotiable document that serves as evidence of the contract of carriage and confirms that the goods have been received or loaded by the carrier, who undertakes to deliver them to the specified consignee.

PART 01: Overview of Sea Waybill

1. Development of Sea Waybill
With global economic development and the trend of globalization, the nature and forms of international trade are continuously evolving. To adapt to these changes, carriers in international maritime transport must adjust their technologies, systems, and documentation.

Simpler trade procedures tend to attract more business, making streamlined transportation processes a critical factor in the growth of global trade. Moreover, global cargo transport has evolved from traditional single-mode transport to advanced international multimodal transport, such as "door-to-door" services, integrated with modern logistics concepts.

Is the Bill of Lading always necessary in international maritime transport? In certain cases, can other documents replace the Bill of Lading to meet practical needs? Other modes of transport, such as air, road, and rail, have long operated without "documents of title," using waybills instead. Years of practice have proven this approach feasible. Therefore, when the seller does not need to transfer the goods during transit, a Sea Waybill can be used.

As Sea Waybills enable faster, safer, and simpler delivery compared to Bills of Lading, their use has expanded significantly since the late 1970s. Currently, Sea Waybills are widely adopted in Europe, including countries such as the UK, Belgium, Denmark, France, Germany, Ireland, Italy, the Netherlands, Spain, Sweden, and Russia. In North America, Canada primarily uses Sea Waybills for containerized cargo, while the U.S. employs Straight Bills of Lading, which function similarly to Sea Waybills (under U.S. law, delivery requires only proof of identity as the consignee). Brazil in South America and Japan in Asia have also adopted Sea Waybills. Chinese shipping companies began using Sea Waybills in the mid-1990s.

2. Functions of Sea Waybill
The Sea Waybill serves as proof of the contract of carriage between the shipper and the carrier and as a receipt for the goods taken over or loaded. However, it is not a negotiable document or a "document of title." Its two main functions are:
(1) It is a receipt for goods issued by the carrier to the shipper.
(2) It is evidence of the contract of carriage between the carrier and the shipper.

3. Differences Between Sea Waybill and Bill of Lading
The key difference lies in their functions:

(1) Sea Waybill is Not a Document of Title
The most significant distinction is that a Bill of Lading is a "document of title," while a Sea Waybill is not. Possession of a Bill of Lading legally signifies ownership of the goods described in it, enabling the transfer of goods through the transfer of the document. A Sea Waybill, however, is not legally transferable and lacks the legal status of a "document of title." Some Sea Waybills explicitly state this, such as: "The waybill should not be construed as a Bill of Lading nor any other similar document of title."

Since a Sea Waybill is not a document of title, the consignee does not need to present the original Sea Waybill to take delivery. They only need to verify their identity as the consignee. This feature allows Sea Waybills to meet the demands of faster maritime transport, enabling shippers to provide more efficient services and offering convenience to both carriers and consignees. In contrast, delays in Bill of Lading delivery can prevent consignees from taking timely delivery or force carriers to accept letters of indemnity for releasing goods.

The "document of title" nature of Bills of Lading facilitates the buying and selling of goods, while Sea Waybills lack this feature. Thus, Sea Waybills cannot fully replace Bills of Lading.

(2) Differences as Evidence of the Contract of Carriage
Sea Waybills are often simplified in form. Without appropriate clauses or incorporation of rules from international organizations (e.g., the Comité Maritime International - CMI) or industry groups, they serve only as evidence of the contract between the shipper and the carrier. The consignee cannot claim against the carrier based on the terms in the Sea Waybill, nor can the carrier use these terms for defense. In contrast, when a Bill of Lading is transferred to the consignee, the consignee gains rights and assumes responsibilities under its terms.

To address this limitation, Sea Waybills often incorporate relevant rules or include a "Privity of Contract" clause, which states that the shipper accepts the terms on behalf of the consignee and warrants the authority to do so. An example clause is: "The shipper accepts all said terms and conditions, including but not limited to the per package and other limitations of liability contained therein, on behalf of the Consignee and the Owner of the Goods and warrants that he has authority to do so."

(3) Differences in Evidentiary Value as a Receipt
Bill of Lading transactions involve documentary trade, where the Bill of Lading's descriptions serve as conclusive evidence to protect third parties who acquire the document in good faith. In Sea Waybill transactions, which do not involve documentary trade, the consignee does not rely solely on the Sea Waybill's descriptions to decide whether to purchase the goods. Thus, there is no need for the Sea Waybill's descriptions to be conclusive evidence.

To promote the use of Sea Waybills and ensure a fair distribution of rights and obligations, the CMI Uniform Rules for Sea Waybills stipulate that the Sea Waybill's descriptions are prima facie evidence between the carrier and the shipper but conclusive evidence between the carrier and the consignee, provided the consignee acts in good faith.

4. Advantages of Sea Waybills
Under certain conditions, Sea Waybills offer speed, simplicity, and security.

(1) For the Shipper:

• The Sea Waybill does not need to be sent to the consignee.

• Saves postage costs.

• Reduces the need to check Bills of Lading and other supporting documents of title.

• Enables simpler and faster service for customers.

• Streamlines documentation processes, enhancing market competitiveness.

• Allows conversion of the Sea Waybill to a Bill of Lading if the goods have not been released, enabling the shipper to issue a new Bill of Lading to a new consignee (e.g., if the original market is lost and a new buyer is found).

(2) For the Carrier: Reduces Delivery Risks
Delivery under a Sea Waybill does not require the presentation of the document. The carrier only needs to deliver the goods to the consignee or their authorized agent named in the Sea Waybill, simplifying the process.

(3) For the Consignee:

• Avoids delays in taking delivery due to waiting for the Bill of Lading.

• Eliminates the need to provide bank guarantees to the carrier for misdelivery.

• Reduces the administrative burden of tracking delayed or lost Bills of Lading.

• Avoids demurrage and storage charges.

(4) Security
As Sea Waybills are non-negotiable, they are secure and reduce the risk of fraud. Even if a third party obtains a lost Sea Waybill, they cannot take delivery, minimizing risk for the consignee.

(5) Document Flow
Since the Sea Waybill does not need to be sent to the consignee, supporting documents such as insurance policies and commercial invoices can be sent to relevant parties immediately after loading.

PART 02: Use of Sea Waybills
Key considerations when using Sea Waybills:

1. Requirements for Issuance
When using a Sea Waybill instead of a Bill of Lading, it must be issued based on mutually agreed terms (e.g., freight prepaid or collect, goods received for shipment or shipped on board).

2. Number of Originals
Typically, only one original Sea Waybill is issued. However, two or more originals may be issued upon request. If the shipper needs to change the consignee, the carrier should request the surrender of the originally issued Sea Waybill before issuing a new one with the updated consignee.

3. Sea Waybill Flow Process
(1) The carrier issues the Sea Waybill to the shipper.
(2) Before the ship arrives at the destination port, the carrier sends an arrival notice to the consignee named in the Sea Waybill, indicating that the goods are transported under a Sea Waybill.
(3) The consignee verifies their identity at the destination and presents a copy of the Sea Waybill to the carrier's office or local agent.
(4) The carrier or their agent issues a delivery order to the consignee.
(5) Once all freight and other charges are settled, and customs and other formalities are completed, the consignee can take delivery of the goods.