Transshipment under UCP 600: Same Journey or Separate Journey? Practical Implications for LC and Bills of Lading

Transshipment under UCP 600: Same Journey or Separate Journey? Practical Implications for LC and Bills of Lading

Transshipment is generally permissible under a Letter of Credit (LC) governed by UCP 600, even if the LC prohibits it, under specific conditions related to containerized cargo.

This interpretation is based on Article 20(c)(ii) of UCP 600.

 

​The key article governing this is Article 20 (c) for Bill of Lading, which states:

​Article 20 (c) (i): A bill of lading may indicate that the goods will or may be transshipped provided that the entire carriage is covered by one and the same bill of lading. This means the document must cover the transport from the port of loading to the port of discharge stated in the LC.

​Article 20 (c) (ii): A bill of lading indicating that transshipment will or may take place is acceptable, even if the credit prohibits transshipment, if the goods have been shipped in a container, trailer, or LASH barge (as evidenced by the bill of lading).

​Key Affects of UCP 600 on Transshipment

​Banks Deal with Documents, Not Goods: UCP 600 operates on the principle that banks deal only with documents and not with the underlying goods or transport methods (Article 5).

​Transshipment is Acceptable: 

In most scenarios involving modern containerized shipping, transshipment clauses on the transport document will not create a discrepancy with the LC, even if the LC explicitly says "Transshipment Prohibited," thanks to Article 20 (c) (ii).

​Prohibiting Transshipment is Difficult: 

To truly prevent transshipment in a containerized shipment, the LC applicant would have to explicitly exclude Article 20 (c) (ii) from the credit, which is rare and generally not recommended as it conflicts with standard shipping practices.

​Definition of Transshipment: 

UCP 600 defines transshipment in the context of a Bill of Lading (Article 20) as unloading from one vessel and reloading to another vessel during the carriage between the ports stated in the credit.

It does not refer to the normal re-loading of goods in a Multimodal Transport Document (which is covered under Article 19) where different modes of transport are used.

Is Transshipment Considered the Same Journey or a Separate Journey under UCP 600?

⚖️ Under UCP 600 Article 20 — What Exactly is “Transshipment”?

Definition (as implied in Article 20(c)):

“Transshipment” means unloading goods from one vessel and reloading them onto another vessel during the carriage between the port of loading and port of discharge stated in the LC.

🧭 So, Is It the Same Journey or a Separate Journey?

It is part of the same overall journey, not a separate shipment.

Let’s visualize it:

Example:

LC states: Port of Loading: Chittagong

Port of Discharge: Rotterdam

The Bill of Lading shows:

Goods loaded at Chittagong → carried to Singapore → unloaded → reloaded onto another vessel → then to Rotterdam.

This mid-way unload and reload in Singapore = transshipment under UCP 600.

But the entire voyage — Chittagong → Rotterdam — remains one continuous carriage under one and the same Bill of Lading.

🚫 When It Becomes a Separate Journey

If goods are discharged under one Bill of Lading and then newly shipped under another Bill of Lading, that’s not transshipment under UCP 600 — that’s effectively a new shipment.

In that case, the transport document would not cover the “entire carriage” as required by Article 20(c)(i).

🧩 Therefore:

✅ Transshipment = one continuous journey under a single Bill of Lading, even if goods switch vessels.

❌ Separate journey = new Bill of Lading, new contract of carriage — not covered under the same “entire carriage.”

In essence:

Under UCP 600, transshipment is a transfer between vessels within one continuous journey, not a break or restart of the carriage.

FAQ:

1. What is transshipment in the context of UCP 600?

   • Transshipment refers to the unloading of goods from one vessel and reloading them onto another during the carriage between the port of loading and port of discharge stated in the Letter of Credit, as per Article 20(c) of UCP 600.

2. Is transshipment allowed under a Letter of Credit governed by UCP 600?

   • Yes, transshipment is generally permissible under UCP 600, even if the Letter of Credit prohibits it, under specific conditions related to containerized cargo, trailers, or LASH barges, as outlined in Article 20(c)(ii).

3. Does transshipment constitute a separate journey under UCP 600?

   • No, under UCP 600, transshipment is considered part of the same continuous journey under a single Bill of Lading, even if goods switch vessels mid-route.

4. When does a journey become a separate journey under UCP 600?

   • If goods are discharged under one Bill of Lading and then reshipped under another Bill of Lading, it counts as a separate journey. The “entire carriage” requirement of Article 20(c)(i) is no longer met.

5. Can a bank refuse documents if transshipment occurs?

   • Generally no. Banks deal with documents, not the goods themselves (Article 5). As long as the Bill of Lading complies with Article 20(c), documents are acceptable.

6. Why is transshipment common in modern shipping?

   • Containerized shipments often require transshipment. UCP 600 recognizes this practice, making it generally acceptable unless explicitly excluded in the LC.

7. What types of shipments are covered by Article 20(c)(ii)?

   • Containerized cargo, trailers, or LASH barges, where transshipment occurs during the voyage as shown in the Bill of Lading.

8. How can an LC explicitly prohibit transshipment?

   • The LC must specifically exclude the application of Article 20(c)(ii), which is rare because it can conflict with standard shipping practices.

9. What is the difference between Article 19 and Article 20 in UCP 600?

   • Article 19 covers Multimodal Transport Documents involving different modes of transport (road, rail, sea), while Article 20 deals specifically with Bills of Lading and transshipment by vessel.

10. Does transshipment affect the validity of a Letter of Credit?

    • No, as long as the Bill of Lading shows the entire carriage from the port of loading to the port of discharge, transshipment does not create a discrepancy under UCP 600.

11. Can multiple transshipments occur under one Bill of Lading?

    • Yes, multiple transshipments are allowed as long as the entire carriage is covered by a single Bill of Lading and the shipment meets the conditions of Article 20(c).

12. What should exporters check regarding transshipment in LCs?

    • Ensure the LC wording aligns with Article 20(c), verify containerization details, and confirm that any transshipment shown on the Bill of Lading is permissible under the LC.

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