Nowadays, because of faster means of transport (especially by air), goods often reach their destination before the documents.

When the goods are unloaded from the ship or plane they are cleared through customs and stored in warehouses belonging to the shipping company or their agents.

They usually allow a grace period of a few days free storage after which the importer will have to pay demurrage charges until the day of collecting the goods.

Demurrage is a storage fee and can be classified as a penalty so the importer will wish to avoid this type of charge by clearing his goods as soon as possible.

Banks can issue a Shipping Guarantee (S/G) on application in favour of the Shipping Co./Agent, usually using their pre-printed forms, authorising them to release the goods to the importer against our undertaking to deliver the original bill of lading.

The advantages of S/Gs to the importer are:

• avoids demurrage charges
• gains prompt possession of goods

The disadvantages of S/Gs to the importer are:

• loses protection of DC in case of any discrepancies in the documents when they arrive
• port authorities may restrict the number of S/Gs outstanding per importer