Understanding freight release and telex release
BlueX PayOcean FreightBlog
Created on Nov 24, 2022
Updated on Nov 24, 2022

If you have shipped any kind of cargo before, then you are most likely familiar with the term “Bill of Lading.” A Bill of Lading (B/L) is several things in one document – it’s a cargo release order, a receipt for the freight, and the final proof of which party owns the freight in question. “Freight release” refers to the endorsement of your B/L and means that your goods can be released and have ownership transferred to a buyer.

The physical transfer of a B/L is among the most commonly used methods of freight release. However, in a logistics environment where speed is of the essence and any and all things can occur, the fate of a freight shipment cannot always rest on a paper document alone. This is when a telex release can be used.

In this article, we’ll discuss the different kinds of freight release and in which scenarios telex release would be the best option for shippers.

How is a Bill of Lading used to release freight?

The most traditional and simple form of a freight release relies on using the original paper copy of the Bill of Lading. In this scenario, the B/L most often travels with the goods on the freight or, in certain situations, is mailed from the owner of the goods to the buyer. The carrier cannot release the freight without receiving the B/L, and the buyer cannot receive the freight until they surrender the B/L to the carrier.

There are usually three copies of the B/L produced to make sure that all parties can have a copy, such as one for the shipper, one for the consignee, and a third for the freight forwarding service or other third parties.

What is a telex release?

A telex release is generally used when the original B/L has been surrendered somewhere other than at the intended destination of the freight. It is typically an email version of the Bill of Lading that is sent to the consignee to release the freight.

It should be noted that a telex release does not replace a Bill of Lading and cannot be issued without the original existence of a paper copy. Rather, a telex release is a convenient option for shippers who run into unexpected situations or do not require an original Bill of Lading.

In what situations should I use a telex release?

A telex release is generally required in one of the below scenarios:

  • The original Bill of Lading is issued after the freight is already en route to the discharge port, making it unlikely the document will reach the discharge port in time.
  • The shipper finds another buyer for the goods after the goods are en route, requiring a change of destination.
The pros and cons of using a telex release

Using a telex release instead of the original B/L comes with various advantages, such as:

  • Protection against the loss of the original B/L.
  • Faster release of freight upon arrival.
  • Money saved on courier costs.

In terms of costs, a recent McKinsey analysis found a paper-based Bill of Lading accounts for 10 to 30% of trade documentation expenses. They also found that using an electronic Bill of Lading (such as a telex release) could save $6.5 billion in direct costs as well as improve supply chain resilience.

Though theoretically more convenient, a telex release also comes with the following disadvantages:

  • Requesting a telex release in the event of a lost or stolen B/L can be a time-consuming process.
  • Paperwork issues can cause delays and result in increased costs.
  • Language barriers or poor communication in the creation of the telex release can lead to the release of goods to recipients who are not authorized to receive them.
  • A telex release is potentially vulnerable to wire fraud in the case of faked telex emails.

Regarding the possibility of fraud, it's important to note that many shipping lines have processes to prevent this from happening. However, the wording in the telex release must be extremely precise to avoid any miscommunications and ensure that both parties fulfill their responsibilities correctly.

Why it's crucial to release freight on time

The longer goods sit unreleased at the port, the more likely you will exceed the number of “free days” allotted to you and start racking up demurrage charges.

This is why you need to identify which method of freight release is most effective for your business relative to the time to release your freight, the shipping costs, and the legal protections to ensure the correct ownership of the goods.

More and more technological solutions are emerging to relieve the burden of goods trapped in logistical purgatory. For example, BlueX Pay-it-Later allows BlueX to act as a third-party payment provider so that you as a shipper can release your goods faster and make sure you get paid on time.