With the issuance of Normative Instruction 1356/13, the Brazilian Customs Authority has authorized that goods can be released in the country without presentation of an original bill of lading. This is a huge cause for worry for both shippers and insurers, as highlighted in a bulletin by the UK P&I Club, found here.
Brazil is an economic force in South America and one that the world is paying closer attention to with the World Cup in 2014 and the Olympics in 2016. However, it is still a very much developing economy and one where its citizen are increasingly exercising their right to protest government policies in increasingly large numbers. The largest national economy in Latin America and seventh largest in the world, Brazil has a labor force of over 107 million people and unemployment of 6.2%.
Globally, they are also one of the most challenging countries to import into. This is due to a combination of federal and state level regulations and taxes, penalties for documentation errors, misdeclared weight or lack of import license. It is a standard practice for us not to send a shipment to Brazil without getting the approval of our excellent agent partner there, DC Logistics.
Six Lines, Scarbrough’s trade name for our NVOCC service, maintains a bond that is on file with the Federal Maritime Commission (FMC). That bond exists for a variety of reasons, but mostly to protect the shipping public in the event of a discrepancy or disagreement during the course of a regulated shipment. One of the things that can happen is that if goods are released without presentation of a properly endorsed bill of lading, a claim can be filed against that bond for the value of the goods.
This has tremendous implications for not just goods that are moving on original bills of lading between a commercial shipper and consignee, but especially for goods traveling under a letter of credit where documents that are consigned to the bank are moving between financial institutions who require their endorsement evidencing payment of the goods prior to release of those documents, especially the original bills of lading.
The issue is currently being discussed at national and international levels between applicable government entities, but we strongly encourage our customers who are doing business in Brazil to be aware and to take appropriate credit and risk mitigation precautions.
Scarbrough and DC Logistics are capable of working on your behalf and taking as many precautions as are allowed under law to protect your interests in this vital and growing trading partner.