Risk Alert | Canada Repeatedly Experiences Delivery Without Bills of Lading; Chinese Agrochemical Companies Frequently Fall Victim

Recently, several Chinese agrochemical companies have reported to AgroPages that Canadian customs authorities have repeatedly engaged in releasing goods without accompanying bills of lading in recent years. This practice has already led to multiple disputes between overseas importers and Chinese firms, including breaches of payment terms and defaults on outstanding payments. The cases involve agrochemical companies—such as Canada’s Agra**** (referred to as Company A)—that have maintained longstanding business relationships with domestic enterprises. At present, some Chinese companies are preparing to file lawsuits against the relevant parties. AgroPages advises caution and highlights the risk of unaccompanied release of goods in Canada.

Regarding delivery against a bill of lading without the original document

Delivery without a bill of lading refers to the practice of picking up a container without presenting the bill of lading, a business practice that foreign trade professionals detest most.

Under normal circumstances, the consignee must present the original bill of lading, an electronic release, or a sea waybill to take delivery of the goods. However, it is not uncommon for the situation to arise where, despite having the original bill of lading in hand, the cargo has already been released. This phenomenon is known as “delivery without surrender of the bill of lading.”

Delivery of goods without the original bill of lading, also known as delivery against a copy of the bill of lading, refers to the practice whereby the carrier, its agent (freight forwarder), port authorities, or warehouse operators release the cargo—without having retrieved the original bill of lading—upon presentation by the consignee or notify party named on the bill of lading of a duplicate or a photocopy of the bill of lading accompanied by a letter of indemnity.

The standard procedure for this type of transaction is as follows: the customer pays a 30% deposit, the supplier prepares the goods and arranges shipment, then obtains the original bill of lading. The supplier then provides the customer with a copy of the bill of lading; once the customer confirms that the details are correct, they remit the remaining balance. Upon receipt of payment, the supplier either mails the original bill of lading to the customer or arranges for the shipping line to release the goods via telex release, subsequently providing the customer with the telex release number, after which the customer can take delivery. This is the relatively conventional “delivery against no‑originals” practice. In reality, however, one often encounters many non‑standard “no‑originals” arrangements—for example, where no documents whatsoever are required, not even a copy of the bill of lading, yet the goods can still be released.

High-Risk Countries/Regions for “Delivery Without Bill of Lading”

In some countries in Central and South America and in Africa, a unilateral release policy is in place for imported goods, allowing delivery without presentation of the bill of lading. The national customs authority has the sole discretion to decide whether to release the goods to the consignee, and the shipping company has no legal right to exercise control over the cargo.

Specifically, at present, several Central and South American countries—including Brazil, Nicaragua, Guatemala, Honduras, El Salvador, Costa Rica, the Dominican Republic, and Venezuela—as well as African nations such as Angola and the Democratic Republic of the Congo, all permit cargo release without a bill of lading.

The shipping company CMA CGM issued an urgent notice stating that, for shipments bound for Venezuela—including ports such as La Guaira and Puerto Cabello—once the cargo arrives at the port of discharge, the carrier will no longer have control over the goods as of the date of unloading. The cargo will be forcibly handed over to the local customs or port authorities for release to the consignee named on the bill of lading, who may collect the goods without presenting the original bill of lading. China’s Ministry of Commerce has also issued an urgent warning regarding the practice of releasing cargo without a bill of lading in Angola.

In addition, countries such as the United States, Canada, and the United Kingdom permit delivery of goods upon presentation of a copy of a straight bill of lading. Typically, the carrier—whether a freight forwarder or a shipping line—is justified in delivering the cargo to the consignee named on the straight bill of lading, who is usually the importer. The carrier has no obligation to require the consignee to produce the original straight bill of lading at the time of delivery. In other words, under a straight bill of lading, the consignee may take delivery not by presenting the original bill of lading, but simply by showing the endorsement on the notice of arrival and providing proof of identity. This means that if the exporter fails to collect payment promptly, even holding the original bill of lading will be of no avail.

Special attention is also required when exporting to Turkey, India, and Algeria: prior to the cargo’s arrival at the port, once the destination‑port importer submits the manifest declaration, title to the goods automatically transfers to the consignee, meaning the exporter loses control over the shipment.

The countries listed above are prone to instances of delivery without presentation of the bill of lading; therefore, when working with customers in these markets, we must collect full payment prior to shipment.

Why did I fall for it?

An analysis of several Canadian cases involving agrochemical companies.

1. Overseas buyers’ reputation has not yet been established.

Taking Company A as an example, according to AgroPages, the company has been embroiled in multiple lawsuits and has faced scrutiny over its financial viability. These legal proceedings include a patent‑infringement case involving Arysta Lifescience North America (now UPL). At the time, Arysta petitioned the court, seeking an order requiring Company A to cease selling the herbicide Himalaya by September 21, 2019, alleging that such sales infringed on Arysta’s patent for the herbicide Everest (active ingredient: flazasulfuron), which expired on that date. Additionally, Company A was sued by its supplier, FMC Canada.

In addition, Company A’s reputation among users is mixed, having faced criticism and skepticism from some of its customers. These concerns primarily center on charging membership fees without promptly delivering the corresponding services, delayed deliveries that miss the optimal window for crop application, and misleading sales pitches by its representatives.

2. An effective credit blacklist system has not been established.

If Chinese companies, upon encountering a similar case for the first time, place the user on their credit blacklist, they can prevent other industry peers from falling into the same trap.

AgroPages hereby advises Chinese agrochemical companies to exercise due diligence and exercise caution when engaging in overseas business transactions, so as to avoid unnecessary losses.

Source: AgroPages (World Agrochemical Network)