What is a “foreign-to-foreign” shipment?
A foreign-to-foreign shipment is classified as cargo that does not touch the United States. Many distributors interested in simplifying their supply chain, ship directly from their supplier to the end user. For example, a Miami-based electronics distributor ships direct from their Asian supplier to their end user in Latin America instead of shipping the goods to the United States. This eliminates U.S. Customs & Border Protection holds and significantly decreases the total transportation time for the shipper.
What are the risks?
The complexities involved in a direct foreign-to-foreign shipment sometimes discourage shippers from exploring this option. Exposing the direct supplier to the distributor’s end user would be devastating to business if the consignee strikes a deal directly with the supplier.
Document Switch Solution:
The success of a foreign-to-foreign shipment hinges on the ability to keep their supplier information private. It is vital to have a trusted partner seasoned in the ability to issue a Blind Bill of Lading, also known as a “Switch” Bill of Lading.
To facilitate this, the forwarding agent creates a “Dummy” Bill of Lading which is given to the supplier once the cargo is picked up. This Bill of Lading will only contain the original purchaser information and is used by the origin supplier for customs and exporting purposes.
Blind House Bill of Lading:
The second set of the Bill of Lading that is issued in exchange for the first issued set of Bill of Lading. In order to protect supplier information from the final customer and vice versa, this Bill of Lading is elaborated with the information provided by the first hand purchasing party according to their selling terms and the commercial invoice to the final customer.
Due to the sensitive and complex nature of document switching, it is vital for the shipper to use a trusted partner. What complexities exist?
- Cargo insurance MUST have coverage for Bill of Lading switched, along with direct communication with the insurance company with the reason for the switch.
- There must never be two issued Bill of Ladings out at the same time – the second issued set of Bill of Lading can only be issued after collecting the first original set.
- Written authority of the principal must be garnered prior to the switched bill of lading.
- The two sets of bill of lading should not have any different information (I.E. port of loadings, change in condition and quantity of cargo) that would cause a misrepresentation in any way.