Getting the Goods: The Essentials of OBL vs. Telex vs. Express Release
As we explain in our primer on Bills of Lading (B/Ls), importers (or their agents, such as a freight forwarder or customs broker) can present an original bill of lading (OBL) to claim possession of goods once they have reached their destination. This handoff is known as a freight release, though is often just referred to as a release. (Note that in the US, the cargo is not considered the property of the importer until it has cleared customs).
Here is how an original bill of lading (OBL) release works. The exporter/supplier (or their agent) receives the OBL—it can be a master or house B/L—from the ocean carrier. Once they have confirmed receipt of payment from the importer, they send the OBL to the importer (or their agent). Then either the importer or their agents endorses the OBL. Note that agents must have power of attorney to do so.
An OBL release is often preferred when the relationship between supplier and importer is new and the two parties have not built up trust. However, an OBL involves original paper documents and requires international mail service, so it involves added costs as well as the risk of delays or loss of the original document.
For trade partners who have already created a relationship of trust, there are two other alternatives to the OBL release: 1) a telex release and; 2) an express release. In practice, the two terms—telex and express release—are used interchangeably, since both do away with the need for an importer to present an OBL. But they are actually two distinct processes.
In the case of the telex release, the supplier or their agent receives the original bill of lading (OBL) but surrenders it to the importer’s agent in the country of origin. At this point, that agent (or the carrier) sends a release via an email (including a digital copy of the original bill) to the shipper or their agent confirming the fact that the cargo can be released without producing the original, paper copy of the B/L (i.e. the OBL).
The benefits of a telex release include:
Eliminating costs & possible delays related to sending OLB via international mail/courier service
Expedited customs clearance
In the old days, the transaction was completed by telex rather than email, hence the name.
Under certain limited circumstances, goods are imported without any B/L. This happens when there is an implicit relationship of trust between exporter and importer—for example, both work for the same group. It can also happen when, for whatever reason, the shipper does not have time to complete an OBL or telex release.
The benefits of an express release include:
Instant release of merchandise at destination port
Eliminates costs of issuing & managing B/L
Eliminates costs & possible delays related to sending OBL via international mail/courier service—or the loss of the document while in transit.
Are there downsides to express and telex releases?
In a word, yes—especially for the exporter. Telex and express releases are more susceptible to fraud. With an OBL release, the exporter can guarantee they receive payment before they send the OBL to the importer. However, for the importer, an express or telex release is almost always the preferred method.
If you have questions about bills of lading, freight releases or any other importing matter, don’t hesitate to contact us.