What does that mean?
From time to time, and as part of one-way transactions, both users and suppliers might split a Release Reference. Splitting a Release Reference means providing the same release reference to two independent partners who can use the same release reference to pick up containers from a depot.
- Example # 1
A container trader buys 10 containers from a leasing company and gets a release reference from the seller. Instead of trucking those units out of the depot or shifting the units to his own stack, the trader splits the release and sells 6 containers to “John” and 4 containers to “Mike”. Both buyers receive the same release with the instruction to pick up the respective number of containers.
- Example # 2
An NVOCC agrees on a one-way lease for 100 containers and gets a release reference from the supplier. However, he has two independent shippers who he services on the specific trade route - shipper A needs 35 containers, and shipper B needs 65 containers. He then splits the release reference, so that both clients receive the same release reference with the instruction to pick up the respective number of containers.
Why is this dangerous? What can go wrong?
Problems arise when the recipients of the split release reference pick up more boxes than agreed without telling the party who has split the release reference. This can happen both by accident but also as a criminal activity. In example 1 above, imagine that “John” picks up 7 containers instead of the 6 that he has purchased.
The depot cannot be blamed as it only has instructions to release 10 containers against the release reference number provided by its client (the original leasing company). “Mike” cannot be blamed, nor can the original leasing company be blamed.
In most cases, “John” would admit his mistake but in some cases, he is either not aware (e.g., the local agent picked up the containers and used them for another principal) or he hides the additional pickup on purpose. In any case, it is very difficult to pinpoint who exactly picked up the additional container.
Does the Total Loss Insurance cover such cases?
For the xChange Total Loss Insurance, the user of the container is the insured party. Hence as soon as he reports a unit as “picked up” in a Leasing Deal that has insurance enabled, the unit is automatically insured. This is irrespective of whether he picked up additional units under a release reference, as long as the units are reported as picked up.
In cases where the user does not report units as picked up and under his control (in the example above if John’s agent has made the mistake and used the unit for another principal - or if John has deliberately picked up too many units and has hidden that from the seller), the insurance does not cover.
What can be done if a case like this happens?
*First: Try to avoid splitting release reference.
However, when either party becomes aware of a potential splitting issue, please raise this to xChange Service immediately. We will then launch an investigation to find the missing container - usually as a desktop search by talking to the depots, finding out the license plates of the truckers, etc. For this service xChange reserves the right to charge an investigation fee of 89 USD per container, irrespective of the outcome of the investigation.
Please note: Often the depot does not know more than a trucking company abbreviation or license plate which makes it very difficult to trace.
Who is liable? Who needs to bear the cost of the unit?
If the investigation of the case does not yield any results (i.e., the party who picked up the container cannot be identified), then the party who split the release reference is liable for the cost of the unit. In the examples above, this can be the trader in (1) or the NVOCC in (2).