'Shipping Guarantee' refers to a written guarantee for picking up the goods in advance, which is issued by the bank to the ship company/freight carrier upon the request of the customer (importer), in the case that the payment is made by an L/C and if the merchandise is shipped by sea arrives at its destination earlier than the documents. Early receipt of the goods means that the importer saves storage costs, in return, however, the importer commits to take up the documents as soon as they arrive.
Processing of a release of goods with a shipping guarantee in System:
- The importer submits an order to the bank for the issuance of a shipping guarantee and simultaneously commits himself to take up the documents, irrespective of the discrepancies they happen to contain.
- The bank issues a shipping guarantee to the freight carrier. Both processes take place in the transaction 'Opening a Shipping Guarantee'(SGTOPN).
- When the original documents arrive at the bank, the documentary value is debited to the importer. If a shipping guarantee has been issued, the latter will be reclaimed by the freight carrier in exchange for the original bills of lading. The surrender of the transport documents and the reclaiming of the shipping guarantee occur as part of the transaction 'Send, Accept and Settle Documents'(BRTPAY).
- On receipt of the original, the bank will reverse the liability entry and close the shipping guarantee.
- In the rare case of utilization, the transaction 'Utilize Shipping Guarantee'(SGTPAY) is available.
Shipping Guarantees may be issued in connection with an import L/C (LI), sets of documents under an import L/C (BR) and also on a stand-alone basis.