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whether to pay or not. Payment carries no guarantee that the unscrupulous freight operator will actually release the bill of lading, since these are not necessarily legitimate businesses. Electing not to pay the demand potentially leads to a series of financially and commercially damaging discussions with customers and lawyers. Invariably, when faced with this situation, it will be necessary to


appoint a local law firm to engage with the fraudster with a view to reaching an amicable solution, obtaining the original bills of lading and facilitating the release of the cargo at destination. Such cases demonstrate the importance of performing due


diligence through the initial selection process. Where the decision to change or use an alternative agent is derived from an unsolicited approach, determining its legitimacy can be challenging, but in itself should raise red flags. Similarly, where searches for local agents are conducted online,


proceed with caution. For example, low rates are often a poor selection criterion. If what is being offered seems too good to be true, it probably is.


Daunting task Performing due diligence on a prospective freight agent in another jurisdiction can appear a daunting task; in an age where every conceivable document can be manipulated and forged, relying on electronic documentation should no longer be considered a satisfactory means of verifying the legitimacy of a business. There exist several options for a foreign entity to search for and


January 2019


screen reliable candidates. Following experiences with Chinese entities, here are pointers for that jurisdiction. 1.Where possible, consult with others in the freight industry who may be familiar with the market and able to recommend a reliable candidate.


2.Where using the TT Club, seek guidance from its local office. 3. Consult with the China International Freight Forwarders Association (CIFA) www.cifa.org.cn. CIFA has a number of dedicated departments such as membership affairs (email: wangxy@cifa.org.cn) and credit risk evaluation (email: linzhong@cifa.org.cn).


4. Interrogate official websites, such as the National Enterprise Credit Information Publicity System (www.gsxt.gov.cn/index.html – only available in Mandarin) where you may verify the company has been duly registered, including details of when was it registered or cancelled, any censure by an authority, lawsuits and judgments.


5. Consult the Chinese Shipping official website, www.chineseshipping.com.cn/bl/blzcd01.asp. This site enables a search against all freight forwarders who have duly registered as an NVOCC with the authorities.


6. If still unsure, appoint a local lawyer to conduct an independent investigation into the freight forwarder’s background. While this will attract a modest upfront cost, it will undoubtedly reduce the risk of becoming the victim of fraudulent activity.


7. In the very last analysis, a visit to the potential new agent may be required.


We hope that you have found the above interesting. If you would like further information, or have any comments, please email r.windsor@bifa.org


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