Letter of Indemnity

Sometimes a shipper or consignee might wonder what would happen if they misplace or delay their bill of lading before receiving their ocean freight containers. Depending on the situation, there might be a way for the consignee to receive their cargo through a written document known as a letter of indemnity. For example, you might have the ocean freight carrier or freight forwarder who requests a letter of indemnity from the bank so that the cargo can be delivered to a consignee who misplaced their bill of lading and other vital shipping documents. It can also be used in cases where there are any discrepancies in the documents. It protects all of the parties involved and guarantees the freight forwarder from any additional costs or from a possible loss.
Normally a shipper would need the bill of lading to receive their freight after reaching the destination port. A letter of indemnity replaces the bill of lading in cases where the bill of lading is lost. However, the letter of indemnity might decrease the value of the bill of lading. The key points of a letter of indemnity are usually significantly specific in its purpose. It is difficult to imagine a global market without the letters of indemnity. Although there are certainly some risky areas of the letters of indemnity, they have been and will continue to play an important role in international freight transportation. All parties involved with the letter of indemnity should examine the letter before fully agreeing to it.