Shipper’s Indemnity

Shipper’s Indemnity

A Shipper’s Indemnity is an agreement provided by the beneficiary of a letter of credit to the negotiating bank. This ensures reimbursement for the negotiating bank despite any discrepancies in the shipping documents. This agreement facilitates payment processing until all document issues are resolved.

Examples of discrepancies include incomplete invoices, missing bills of lading, and incorrect packing lists. The negotiating bank relies on the Shipper’s Indemnity to proceed with the transaction without financial risk.

Banks, such as Citibank and HSBC, frequently request a Shipper’s Indemnity in international trade transactions. Shipping companies, including Maersk and MSC, often deal with such indemnities to expedite trade logistics.