Negotiable Bill of Lading Example 1: "To Order" and Blank Endorsed

According to Incoterms 2010 FOB, CFR, CIF trade terms rules, the seller is required either to deliver the goods on board the vessel or to procure goods already so delivered for shipment.

The reference to “procure” here caters for multiple sales down a chain (‘string sales’), particularly common in the commodity trades.

Above definition explains seller's delivery obligation under FOB, CFR and CIF trade terms according to Incoterms 2010 rules. As mentioned on the 1st paragraph, incoterms rules allow multiple sales or string sales.
But what sort of bill of lading the seller (exporter) should supply to his buyer, which becomes the new seller and trades the same goods to another potential buyer with the same bill of lading?

What sort of bill of lading is suitable if goods will be traded with potential buyers after they are shipped on board the vessel?

Some commodities such as crude oil, copper, bulk food are frequently sold to potential buyers after they are shipped on board the vessel. This kind of international trade transaction is called multiple sales or string sales.

In a string sales operation, the goods may not be sold to any potential buyer at the time of the loading, which means that the consignee company has not been determined even if the goods are shipped on board a vessel.

In such a situation the seller, who is the consignor or shipper, could consign the goods to his own order. The bill of lading, that is issued in this way will be in negotiable form, which means that the seller could transfer the title of goods to a new buyer by endorsement and transfer of the original bills of lading.

Case Study:

Saudi Arabian exporter ships 300.000dwt crude oil on a Very Large Crude Carrier (VLCC) type oil tanker from Port of Yanbu, Saudi Arabia to Louisiana Offshore Oil Port, USA. At the time of shipment, the ultimate buyer was not determined. As a result Saudi Arabian oil company ships the goods with a bill of lading, which is made out to order.

Once the shipper received the bill of lading from the carrier, blank endorsed the bill of lading, which allows transfer of the title of the document further between potential new buyers and sellers.

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