Shipping Guarantee

A shipping bank guarantee (SG) is a written document issued by the bank in which it accepts joint liability along with the importer for taking possession of the goods that arrived earlier than the original bill of lading. Such a bank guarantee helps the customer to pick up his commodities in time and thereby avoid incurring demurrage charges. As one of the leading Letter of Credit issuers in the UAE, we seek to help our clients equip themselves with a shipping guarantee and thereby protect their business. To learn more SG or how you can acquire one, contact our sales consultants today!

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Shipping Guarantee

Understanding Shipping Guarantee

When it comes to cross-border trade and transactions, banks and financial institutions deal with documents rather than physical goods. The document here represents both the goods and its movement, and the non-arrival of the same can result in the importer facing a loss if he is unable to take hold of the goods and sell them on time. In such circumstances, an SG is issued in favor of the carrier of the goods. The bank here jointly indemnifies the importer so that the consignee named can take delivery without providing the relevant documents. Mentioned below are the three common situations during which a shipping guarantee is issued:

  • To facilitate the discharge of cargo from the carrying vessel without presenting the required documents.
  • To discharge the cargo at a destination that is different from the one mentioned on the bill of lading.
  • To get the required payment from the buyer without producing the original shipping documents.

Benefits of Shipping Guarantee

Fast Shipping
Cost Saving
Enhanced Cash Flow
Fast

Take possession of your goods immediately after they arrive.

Cost-Saving

Avoid the expenses you would otherwise have to spend on storage and port demurrage charges.

Enhanced Cash Flow

Sell your goods as soon as they arrive and enhance your business cash flow.

How it Works

SG is commonly used for short shipping voyages in which the goods are arriving before the documents under LC. Listed is the typical process of obtaining a shipping bank guarantee:

  • If the goods are coming before the papers, the buyer will need to apply for an SG from the bank.
  • Upon thorough due-diligence check, the bank shall provide the applicant with an SG as per his/her requirement.
  • The buyer can now take possession of the required goods from the port by representing the SG.
  • When the buyer receives the required documents, they should first take the documents against set payment terms to the bank, and then exchange the SG that they have with the original bill of lading from the shipping company and submit the same to the bank.
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