A letter of credit pays against documents, and the document that stands in for the cargo is the inspection certificate. If the inspection clause is loose, everything built on it is loose. This guide sets out what an independent inspector does on a commodity cargo and what to write into the contract.
Who inspects, and for whom
Independent inspection companies such as SGS, Intertek, Bureau Veritas, Cotecna, AmSpec and Alex Stewart International weigh, sample and analyse cargoes for a fee. The party that appoints and pays the inspector is the inspector's client, so the contract should say who appoints, who pays and whether the other side may attend or appoint its own. Grain and feed contracts on GAFTA terms use GAFTA-approved superintendents and analysts; oils and oilseeds on FOSFA terms use FOSFA member superintendents and analysts.
An inspector certifies what it saw and tested. It does not guarantee the cargo, and its liability is limited by its terms of business.
Quantity: how a cargo is weighed
- Draft survey. For dry bulk. The surveyor reads the ship's draught marks before and after loading, corrects for water density, trim, hull deformation, ballast, fuel and stores, and calculates the cargo weight from the ship's hydrostatic tables. A careful survey in calm water is accurate to about 0.5%. Swell, poor draught marks and unknown ballast make it worse.
- Shore scale or belt weigher. A certified weighbridge or conveyor scale. Many contracts take shore scale where one exists and draft survey where it does not.
- Tank measurement. For liquids. Shore tanks are gauged before and after loading and the volume converted to weight at standard temperature under the API Manual of Petroleum Measurement Standards. The ship's own figures, adjusted by her vessel experience factor, are the cross-check, and the quantity on board before loading (OBQ) and remaining after discharge (ROB) are recorded.
- Bag count and check-weighing. For bagged cargo: a tally, with a stated percentage of bags weighed.
The contract should name the method, the place and which figure is final. Most FOB, CFR and CIF sales take the bill of lading quantity from the load-port survey as final.
Quality: sampling comes before analysis
A laboratory result is only as good as the sample. A 50,000 tonne cargo is judged on a few kilograms, so the method of drawing them is set by standards:
| Commodity | Sampling standard commonly written |
|---|---|
| Iron ore | ISO 3082 |
| Coal | ISO 13909 (mechanical), ISO 18283 (manual) |
| Cereals and pulses | ISO 24333; GAFTA Sampling Rules No. 124 |
| Fertilisers | EN 1482-1 |
| Petroleum and liquid chemicals | ASTM D4057 (manual), ASTM D4177 (automatic) |
| Vegetable oils | ISO 5555; FOSFA rules |
Increments are taken across the whole loading, from the conveyor or the falling stream rather than from the top of a stockpile, then combined, reduced and divided into sealed sets: one for analysis, one for each party, and one or more kept by the inspector as umpire samples, normally for 90 days.
Load port or discharge port
The contract must say which analysis is final:
- Load-port final. The standard for most FOB, CFR and CIF sales. The seller is paid against the load-port certificate. A buyer who doubts the result relies on the retained sealed sample and the umpire clause.
- Discharge-port final. Common for coal sold to utilities and for some ores, with price adjustment on the discharge analysis. Sellers price the extra risk.
- Both, with a tolerance. If the two results differ by more than an agreed margin, the umpire sample is analysed by a third laboratory and that result, or the mean of the two closest, is final.
Without one of these the parties have two certificates and no rule for choosing between them.
Checks before loading
- Hold or tank cleanliness. Holds are inspected for residues of the last cargo, rust scale and water, and hatch covers are hose-tested or ultrasonic-tested. Food, grain and fertiliser cargoes need a clean-hold certificate; tankers need a tank inspection against the last three cargoes.
- Moisture and transportable moisture limit. Cargoes that may liquefy, such as mineral concentrates, nickel ore and some iron ore fines, are Group A under the IMSBC Code. The shipper must give the master a certificate of the transportable moisture limit, tested within the last six months, and a moisture content determined no more than seven days before loading. A cargo above its limit must not be loaded.
- Fumigation. Grain, pulses and nuts are fumigated with phosphine or, where the importing country requires it, methyl bromide, and the certificate travels with the phytosanitary certificate.
- Radiation. Scrap metal cargoes carry a radiation-free certificate; many importing countries require it at customs.
Destination inspection programmes
Some importing countries require a pre-export verification of conformity or a pre-shipment inspection by an appointed agency before the goods may clear customs. Kenya, Tanzania, Nigeria, Saudi Arabia and India for metal scrap are common examples. These certify conformity to the importing country's standards and are separate from the commercial inspection between buyer and seller. A cargo can pass one and still need the other.
What a good inspection clause states
- The inspector, by name, or the list either party may choose from.
- Who appoints and who pays at each end.
- Quantity method and which figure is final.
- Sampling standard and the test method for each guaranteed property.
- Which analysis is final, and the umpire procedure.
- How long sealed samples are kept.
- The price adjustment or rejection limit for each property.
Reading the resulting certificate is covered in our guide to spec sheets and certificates of analysis.
How CBIL works
Every cargo we arrange ships against independent inspection of quality and quantity at the load port, with the producing plant or mill named on the certificate of origin. The inspector, the standards and the finality of each certificate are stated in the offer.
Request a quote with your specification and the inspection your bank or customs requires.