Risk Management in Maritime Exports

Exporting goods by sea involves more than loading them aboard a ship. From the sales contract and delivery terms to the method of payment, insurance, loading and stowage, and transport documents, the process forms a chain of interconnected links. A deficiency in any of these links may lead, at later stages, to delayed payment, additional costs, delivery disruptions or legal disputes.

The legal, commercial and operational risks involved in maritime exports are interdependent. An issue that initially appears to be merely a “documentation problem” may develop into a much larger difficulty, ranging from refusal of payment under a letter of credit to disputes over freight and demurrage.

In practice, five areas of difficulty generally stand out: discrepancies between the delivery order and the bill of lading; the time gap between loading and the issuance of the bill of lading in FOB sales; the rejection of documents under a letter of credit because of a claused bill of lading; inadequate electronic documentation infrastructure; and documentary disputes arising alongside foreign exchange regulatory obligations relating to export proceeds. To prevent these risks, exporters should consider the following matters from the outset and take the necessary precautions.

The First Step: Establishing a Sound Sales Contract

The first link in the export chain is the contract for the sale of goods. The contract should clearly specify the parties’ identification details, the description and HS code of the goods, the price and currency, the delivery and payment terms, the payment due date and shipment dates, and the place of delivery. It should also address force majeure, the applicable law, court jurisdiction or arbitration, and penalty clauses.

In international sales, whether the CISG (United Nations Convention on Contracts for the International Sale of Goods) is to apply should be clearly stated. The provisions should not conflict with the choice of law or other contractual terms. Where the parties intend the CISG to apply, expressly stating this in the contract may help establish their intention.

A contract is more than a price and a delivery date. Carriage, insurance, payment and documentary requirements are also parts of the same contractual structure. A provision left open may later be interpreted differently and give rise to a dispute.

Incoterms and Insurance: Delivery Point, Risk and Costs

Incoterms® 2020 are not legislation. They are trade rules that the parties incorporate into their contracts. The chosen Incoterms® rule should therefore be specified in the contract together with its version and the named port or place. The Incoterms® rules do not replace the sales contract or the applicable law.

FOB is widely used in maritime exports. Under FOB, the seller delivers the goods by placing them on board the vessel nominated by the buyer, and risk passes to the buyer when the goods are on board. However, in container transport, the goods are often handed over to the carrier or terminal before being loaded aboard the vessel. The ICC therefore recommends using FCA instead of FOB for transactions of this kind. Particularly in containerised and multimodal transport, FCA may align delivery and the transfer of risk more closely with the actual transport arrangements.

Under CIF, the seller bears the freight and insurance costs. Risk, however, passes to the buyer when the goods are loaded aboard the vessel. As regards insurance, Incoterms® 2020 require, as a minimum, cover under Institute Cargo Clauses (C), or similar cover, for CIF, while CIP requires the broader cover provided by Institute Cargo Clauses (A), or similar cover. The parties may separately agree on wider cover.

FOB and FCA do not impose an obligation on the seller to arrange insurance. Nevertheless, sellers should separately consider appropriate insurance cover for the periods during which they bear the risk under these delivery terms. Türk Eximbank’s export credit insurance may also provide additional protection against commercial and political risks in eligible transactions. Insurance premiums vary according to country risk, the payment term, the sum insured and the scope of the policy.

Payment Methods and Documents Must Be Considered Together

The choice of payment method requires a balance between payment security and competitiveness in the market. From the exporter’s perspective, advance payment generally carries a lower risk of non-payment. A letter of credit provides a strong documentary and payment mechanism under certain conditions, whereas documentary collection and open-account payment do not involve a payment undertaking by the bank. Exporters must therefore pay closer attention to counterparty and country risk.

Under a letter of credit governed by UCP 600, banks examine the documents presented and their compliance with the credit’s terms, rather than the goods themselves. The information in the documents required under the credit should therefore be consistent, as far as possible, with the sales contract, shipping instructions and bill of lading.

Under Article 20 of UCP 600, a marine bill of lading must indicate that the goods have been shipped on board a named vessel at the port of loading stated in the credit. This requirement may be satisfied by “Shipped on Board” wording or an on-board notation that complies with the rules. The wording “Received for Shipment” alone does not establish that the goods have been loaded aboard the vessel and may therefore fail to satisfy a requirement for an on-board bill of lading. The position may change, however, if an appropriate on-board notation is added to the document.

Under Article 27 of UCP 600, banks require a clean transport document, such as a clean bill of lading. A clean transport document does not contain a clause or notation expressly recording an apparent defect in the goods or their packaging. A clause recording such a defect may therefore constitute a documentary discrepancy under the credit and consequently lead to refusal of payment.

In documentary collection, banks act as intermediaries in the collection process under URC 522. Unlike a letter of credit, however, this arrangement does not involve a payment undertaking by the bank. This distinction is particularly significant where buyer or country risk is high.

Payment security alone is insufficient; foreign exchange and customs deadlines must also be monitored. The general rule requires export proceeds to be repatriated to Türkiye within 180 days of the actual export date. Special provisions and extensions of time must also be taken into account. Since the proportion of export proceeds that must be sold to the Central Bank of the Republic of Türkiye (CBRT) may change through periodic regulations, the CBRT Export Circular and the relevant implementation instructions in force on the transaction date must be checked. Documentary disputes that coincide with these deadlines can compound commercial and administrative difficulties.

Freight and Chartering: Costs Hidden in the Clauses

A contract of carriage by sea may take the form of a general cargo contract or a voyage charter. Under a general cargo contract, no particular part of the vessel is allocated exclusively to a single contracting shipper. The arrangement of cargo on board is governed by the contract of carriage and the applicable operational arrangements. This contractual structure is common in container and Ro-Ro services. Under a voyage charter, the vessel is placed at the charterer’s disposal for a specified voyage; standard forms such as GENCON for dry cargo and SHELLVOY for liquid cargo may be used. Under a time charter, commercial employment and voyage decisions generally fall within the charterer’s remit, whereas under a bareboat charter, possession and operation of the vessel are transferred to the charterer.

The actual costs are often hidden in the clauses. FIO places responsibility for loading and discharging costs and operations on the charterer; FIOS adds stowage and lashing; and FIOST also includes trimming. These clauses do not, however, entirely exempt the carrier from liability. Even where stowage and lashing are carried out by the charterer’s personnel, the master’s and carrier’s statutory and contractual responsibilities concerning the vessel’s safety and seaworthiness continue.

A Notice of Readiness (NOR) is relevant to the commencement of laytime, provided that it is tendered in accordance with the relevant charterparty terms and the necessary conditions are met. If laytime is exceeded, the charterer may be required to pay demurrage. Clauses such as WIPON, WIBON, WIFPON and WCCON regulate how the validity of the notice of readiness is affected by conditions such as the vessel having entered the port, reached the berth, obtained free pratique or completed customs formalities. If these matters are not clearly addressed in the contract of carriage, disputes may arise over the calculation of laytime and demurrage.

Under certain conditions, a Himalaya clause also enables third parties, such as agents, subcontractors and employees, to benefit from the limitations of liability available to the carrier.

Loading, Stowage and Special Cargoes

In container transport, the distinction between FCL and LCL is relevant to determining who stuffs the container and under what arrangements. Liability should not, however, be determined solely by the FCL or LCL designation. The contract of carriage, the bill of lading and the actual loading arrangements must be assessed together. Improper stowage and inadequate lashing may cause serious damage and accidents.

The carriage of dangerous goods by sea is subject to special rules. Under SOLAS Chapter VII, the carriage of dangerous goods in packaged form is subject to the IMDG Code. The IMDG Code, implemented in 2004, is one of the principal sets of international rules in this field. Amendment 42-24 to the IMDG Code, which is designed to enhance the safety of the carriage of dangerous goods by sea in packaged form, entered into force on 1 January 2026. The shipper must comply with the relevant rules on classification, packaging and marking, and on the required notifications and declarations. Ships and shore facilities must also comply with the applicable national and international requirements.

The IMO/ILO/UNECE CTU Code provides important practical guidance on packing containers and other cargo transport units, and on stowing and securing cargo. However, without prejudice to the mandatory provisions governing the carriage of dangerous goods under the IMDG Code, the CTU Code is not generally binding. The IMO describes it as a “non-mandatory global code of practice”. It is therefore necessary to examine separately whether obligations relating to the CTU Code derive from the relevant contract, national legislation, conditions of carriage or other specific rules, particularly for cargoes that are not subject to the IMDG Code.

Maritime exports occasionally involve cargo that is not collected. Depending on the circumstances and the contractual terms, the buyer’s refusal to accept the goods, or a failure to complete delivery, may not relieve the contracting shipper of liability for freight, safekeeping, storage and other charges. The contract of carriage should therefore clearly allocate the costs arising from uncollected cargo and identify the parties from whom those costs may be recovered.

Bills of Lading, Delivery Orders and LOIs: Apparently Minor Details

A bill of lading performs three principal functions. It evidences the conclusion of the contract of carriage and shows that the goods have been received by the carrier or loaded aboard the vessel. As a general rule, it requires the carrier to deliver the goods against presentation of the document. Order bills of lading are among the most commonly used types in practice. They are negotiable documents of title and may be transferred by endorsement. The transfer of a straight bill of lading, by contrast, must be considered under its own legal regime, including rules on the transfer of possession. The same transfer mechanism should therefore not be assumed to apply to both types.

Consistency between the information in the bill of lading and the delivery order reduces the risk of unnecessary delays and costs at delivery. Particularly in transactions involving a letter of credit, confirming loading information and documentary requirements with the carrier or its representative before the bill of lading is issued is an important control point.

Where the original bill of lading cannot be presented, or delivery without documents is requested for other reasons, carriers may in practice require a Letter of Indemnity (LOI). An LOI does not, however, automatically replace the legal functions of a bill of lading. It may also create additional legal and commercial risks for the carrier. Its scope, issuer, circumstances of use and the parties’ obligations should therefore be carefully assessed in the context of the particular transaction.

Digital Documents: Law Matters as Much as Technology

Electronic bills of lading (e-B/Ls) have the potential to reduce problems such as the loss of paper documents, fraud and delays caused by the physical circulation of documents. Bolero, essDOCS, WAVE and CargoX are among the systems used in this field. BIMCO has developed standard contractual clauses on electronic bills of lading.

Nevertheless, the legal recognition of electronic transport documents, the rules governing their transfer and the arrangements for ensuring exclusive control vary between jurisdictions. Although the Rotterdam Rules provide a comprehensive international framework for electronic transport records, they are not yet in force. In e-B/L transactions, attention must therefore be paid not only to the technical infrastructure but also to the applicable law, the rules of the system used and the parties’ contracts.

Conclusions and Recommendations

Risks in maritime exports must be managed as an interconnected chain. The exporter’s roadmap should be established before the export process begins.

Operational Documentation

Sales contract: The parties’ intention regarding the application of the CISG, the choice of law, court jurisdiction or arbitration, and force majeure provisions should be clearly stated.
Delivery terms: Incoterms® 2020 should be expressly incorporated into the contract, and the use of FCA instead of FOB should be considered for container transport.
Payment: In higher-risk transactions, the use of a letter of credit instead of documentary collection should be considered. It must nevertheless be remembered that payment under a letter of credit depends on a presentation of documents that complies with its requirements. In FOB or FCA transactions, the consistency of bill of lading requirements with the credit should be checked in advance. Supporting documents, such as independent expert or survey reports, should be included where necessary.
Insurance: Although FOB and FCA do not impose an insurance obligation on the seller, appropriate cover should be considered separately for risks arising before loading and before delivery to the carrier. For CIF and CIP transactions, the minimum levels of cover required by Incoterms® 2020 should be taken into account.
Charterparty clauses: Before the contract is signed, the implications for time, costs and liability of notice of readiness clauses (WIPON, WIBON, WIFPON and WCCON), loading and discharging clauses (FIO, FIOS and FIOST), the Himalaya clause and any LOI should be clarified.
Special cargoes: For cargoes subject to the IMDG Code, the current IMDG provisions and relevant national legislation must be followed. In the carriage of containerised cargoes covered by these mandatory requirements, the CTU Code’s role as guidance should also be taken into account.
Bills of lading and delivery: The relevant details should be agreed with the carrier’s representative before the bill of lading is issued. Consistency between the delivery order and the bill of lading should be verified, the scope of any LOI should be defined in writing, and provisions on liability and recourse for freight, storage and other costs associated with uncollected cargo should be clearly established.
Foreign exchange and customs: Attention should be paid to the deadline for repatriating export proceeds and the deadline for closing the customs declaration. If force majeure or payment collection difficulties arise, the relevant bank and authorities should be contacted without delay.

Measures at System Level

Digital documents and legislation: The use of e-B/L systems should be expanded, and a clear and predictable framework should be established for the legal status and evidential value of electronic transport documents, electronic delivery orders and blockchain-based systems. The Rotterdam Rules and international developments in electronic commerce should be taken into account in this work.
Support: Existing extensions and relief measures concerning the repatriation of export proceeds in cases of force majeure or payment collection difficulties should be made more accessible in practice. SMEs’ access to Türk Eximbank export credit insurance should also be facilitated.
Training and guidance: Training in bill of lading law, UCP 600, the CISG and Incoterms® should be expanded. Model contracts and guidance issued by the Ministry of Trade and the Turkish Exporters Assembly (TİM) should be developed further to support practice. SMEs that charter vessels should be encouraged to obtain advice on maritime trade law and contract management from the organisations with which they are affiliated.
Legislative measures: Practical problems concerning electronic transport documents, the liability of terminal operators and special forms of carriage should be reviewed regularly, and legislation should be updated where necessary.
Fleet: Options for structural reform of the Turkish International Ship Registry (TUGS) should be assessed alongside open-registry and flag-of-convenience (FOC) models in terms of competition, taxation, financing and maritime policy.
Ports: Feasibility studies should be conducted on smart-port and digitalisation investments, port-centric logistics (PCL) and free-port practices. Pilot projects should be developed at export ports considered suitable.

Uncertainty over the chosen Incoterms® rule, a clause in the bill of lading, a documentary discrepancy under a letter of credit or a gap in insurance cover may trigger a chain of problems involving payment, delivery, freight and demurrage. The aim is not merely to load cargo aboard a ship on time, but to establish the entire process, from contract to delivery, on a legally secure, commercially predictable and operationally workable basis.

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