Telex release by e-mail - precautions and pitfalls

What is a Telex release?

A Telex release is the industry term for the release of cargo at one port when the original bill of lading has been surrendered at another. Although this is still referred to as a Telex release, today the release is almost always made by e-mail. Telex release is a normal part of liner shipping. The shipper, or a forwarder, or an NVOCC may choose (for one reason or another) to surrender the bills of lading to the carrier’s agent in a port other than the discharge port. The carrier’s agent has a duty to collect the original bills of lading before releasing cargo and the bills of lading are normally surrendered to the discharge port agent, but it is not necessary for this to be the case. However, collection by another agent does need to be handled carefully.

How is “Telex release” achieved?

The bills of lading are surrendered by the shipper or forwarder or NVOCC to an agent in a port other than the discharge port (the “Third Country Receiving Agent” - usually, but not always, the agent at the port of loading) with an instruction to release the cargo to the consignee or a named party. Once the original bills of lading are in the hands of the Third Country Receiving Agent he sends a “Telex release” to the discharge port agent (the “Releasing Agent”), confirming that the full set of original bills of lading have been surrendered to him and that the cargo can be released to either the consignee on the bill of lading or some other party authorised by the shipper or the consignee (depending on whether it is a non negotiable or negotiable bill of lading).

Problems which can result from “Telex Releases”

There are two main problems with Telex releases. The first is carelessness in the way that they are worded and dealt with. Considering the value of some of the cargoes which are released in this way, the release instructions which are sent between agents are often extremely casual. There have been several claims reported to ITIC where the Releasing Agent has taken an ambiguously worded message from a Third Country Receiving Agent to be a release, when it was not. In one typical case the Singapore shipper of a container of quartz clocks shipped to the UK had not been paid by the original consignee in the UK and had found another buyer in Durban. The shipper requested that the cargo be shipped from the UK to Durban. The line agreed to a change of destination (COD), on condition that the shipper paid additional freight and surrendered the original bills of lading issued in Singapore in exchange for new bills of lading showing the new destination. The Singapore agent sent an e-mail to the UK agent which said “Shipper has confirmed COD charges and bills are now surrendered. Please kindly go ahead, Thanks.” One of the staff in the office of the UK agent took the “go ahead” to mean that the cargo could be released without collecting the original bills of lading to the original UK consignee, when “go ahead” actually meant that the cargo should be shipped to Durban. In this case the Singapore agent had not taken the trouble to make clear what he meant by “go ahead” and the UK agent, in receipt of an unclear message, had not clarified it. As a result, valuable cargo was misreleased and the Singapore shipper claimed his losses from the line, who claimed reimbursement from the agents.

The second problem with Telex Releases has resulted from e-mail fraud. In the ITIC GUIDELINES FOR THE RELEASE OF CARGO (available on the ITIC website) we recommend that agents check the authenticity of messages from other agents to release cargo. This recommendation was based on previous experience of forged faxes ordering Telex Release. ITIC has recently received several claims involving Telex release by faked e-mails. These are e-mails, received by discharge port agents which have been manipulated to appear as though they have originated from the load port agent, and authorise release of cargoes and confirm that freight has been received when it has not.

One forged e-mail confirmed that the original bills of lading had been collected at the load port for four containers of mobile phones, and another forged e-mail confirmed that the original bills of lading for a cargo of fruit and the freight had been collected. In both cases the fake e-mails were accepted by the discharge port agent at face value, and cargo was released. In the first case valuable cargo was misdelivered and in the second case a large amount of freight remained unpaid.

What should agents do when asked to perform a “Telex release”?

The first thing any agent should do is to obtain written authority from the principal. Shipping lines often include Telex release procedures in their Agency Manuals, which set out standard procedures to be followed by the Third Country Receiving Agent and the Releasing Agent. These procedures must be followed strictly by both agents. If the principal does not have standard Telex release procedures, then, in every case, the Releasing Agent must obtain written authority from the principal before releasing cargo in this way.

Third Country Receiving Agents must:

• “Straight” (non negotiable) bs/l - obtain full set of three originals

“To Order” (negotiable) bs/l – obtain full set of three originals, properly endorsed by “To Order” party;

• collect outstanding freight and charges to be collected at his port (as appropriate);

• obtain written instruction from shipper (or valid endorsee) that cargo can be released at Releasing Agent’s port (to be specified) against surrender of bs/l to Third Country Receiving Agent. The shipper or endorsee should be asked to provide in writing details of consignee or other party to whom cargo should be released (full style, name, address, phone, fax, e-mail);

• send clear and unambiguous instruction to Releasing Agent including:

a) confirmation that full set of three original bills of lading, properly endorsed (if appropriate) have been surrendered and that cargo can be released at Releasing Agent’s port;

b) confirmation that all charges (such as freight and other charges payable at load port) have been collected;

c) full details of the cargo to be released (i.e. b/l number/date/place of issue, container number and cargo details);

d) full name, style, address, telephone, fax and e-mail address of consignee, or valid endorsee, to whom cargo should be released;

• ask Releasing Agent to confirm once cargo has been released, at which time the bills of lading should be stamped “ACCOMPLISHED” and placed on the voyage file, which should be retained for the length of time the principal requires such documents to be retained.

Releasing Agent must:

• make sure that principal’s authority to release against “Telex release” has been received. If the principal has other requirements (such as Letters of Guarantee from shippers/receivers or to be notified of all Telex releases) then these requirements must be followed;

• check wording of “Telex release” carefully. The Releasing Agent should double-check with the Third Country Receiving Agent if it does not clearly state the following:

a) that original bills of lading have been collected and that cargo can be released; AND

b) that freight and other charges payable at the load port have been collected, AND

c) full details of the cargo, container number, name, address etc. of consignee or party to whom delivery should be given.

• FINALLY AND MOST IMPORTANTLY - Releasing Agents in receipt of Telex releases MUST NOT ACCEPT THEM AT FACE VALUE. In every case the Releasing Agents should send an e-mail to the Third Country Receiving Agent (not by pressing the “Reply” button to respond to the purported Telex release but by finding, checking and using the genuine e-mail address of the Third Country Receiving Agent). The Telex release should be copied into the e-mail to the Third Country Receiving Agent, who should be asked to confirm that the message originated with him. Only then should the Releasing Agent release the cargo.

Conclusion

Misrelease of valuable cargo is a major factor in claims by principals against their agents. Carelessness in dealing with Telex release has contributed to these losses, and agents are now faced with attempts to obtain delivery using forged e-mails. Fraud in shipping is endemic, cargoes are valuable, and it has never been easier to forge documents, electronic communications, bills of lading, etc. Carriers and their agents have to continuously be aware of this fact and to take whatever steps are necessary to avoid becoming unnecessarily involved in costly claims for damages which have resulted from a failure to be careful and vigilant.