Over Shipment refers to the situation where the actual quantity of goods shipped by the seller exceeds the quantity stipulated in the letter of credit or contract. In foreign trade practice, especially when letter of credit settlement is involved, according to Article 30(b) of UCP600, if the letter of credit does not specify a quantity tolerance, a tolerance of 5% more or less is allowed, provided that the letter of credit does not state that the quantity is to be counted in packing units or individual items, and the amount drawn does not exceed the amount of the letter of credit. If this tolerance is exceeded, the buyer has the right to reject the excess portion or all of the goods and may refuse payment. This situation commonly occurs with bulk cargo (such as grain, ore) where precise quantity control during shipment is difficult, or when the seller ships extra goods to cover potential losses. Precautions: The seller should strictly check the terms of the letter of credit to avoid discrepancies in documents caused by over shipment; if over shipment is necessary, the seller should obtain the buyer's consent in advance and amend the letter of credit. It is the opposite of 'Short Shipment'; both are cases of quantity discrepancy. The difference is: 'More or Less Clause' is a permitted flexibility range in the contract, while over shipment is a breach of contract beyond the allowed range.
📝 Examples
1. This letter of credit stipulates a quantity of 1000 metric tons with a 5% tolerance, but the actual shipment was 1100 metric tons, constituting over shipment, and the bank will refuse to pay for the excess portion. (Note: Over shipment leads to document discrepancies, and the bank may refuse payment.)
2. Because bulk corn is difficult to measure precisely during loading, the seller shipped 3% more. Although this is within the 5% more or less tolerance, if the letter of credit prohibits over shipment, it is still regarded as over shipment, and the seller must bear the cost of amending the letter of credit. (Note: Even with a more or less clause, the letter of credit must explicitly permit it; otherwise, the risk of over shipment is borne by the seller.)
💡 Foreign Trade Tips
Foreign trade terms are the foundation of international business communication
Trade practices may vary slightly by country; pay attention when using them
When using terms in contracts, specify the applicable version (e.g., Incoterms 2020)
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