GlossaryEN1 min readUpdated: Jun 25, 2026

Letter of Indemnity (Shipping Guarantee)

Carriers and shipping lines accept a Letter of Indemnity (LOI) when cargo must be released without presentation of the original bill of lading.

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Last updated: 25 June 2026Published: 19 June 2025

Source: https://en.wikipedia.org/wiki/Letter_of_indemnity

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Logistics Concept

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Definition & Explanation

Carriers and shipping lines accept a Letter of Indemnity (LOI) when cargo must be released without presentation of the original bill of lading. The issuing party – typically the consignee or shipper – contractually undertakes to hold the carrier harmless against any third-party claims arising from that early delivery. The scenario is most common in deep-sea trades: the vessel has already discharged, but the original bill of lading is still held up in a documentary credit process or delayed in transit. Without an LOI, the goods would move into port storage, generating demurrage and warehousing costs. Because the carrier absorbs significant legal exposure, shipping lines routinely require a counter-guarantee from a first-class bank before accepting the LOI. It is distinct from a bank's shipping guarantee, which is issued by the buyer's bank directly to the carrier as a separate instrument under letter-of-credit procedures.