What's the most common documentary discrepancy that delays payment on an air freight LC?

Inconsistencies between documents — a different spelling of a name, a mismatched date, or a goods description on the AWB that doesn't precisely match the commercial invoice's wording — are common triggers. Confirm consistency across every document set before presentation.

Does UAL act as the bank's nominated agent in these arrangements?

No — UAL prepares the shipping documentation and AWB per the LC's requirements, but the bank's own nominated agent or branch, not the freight forwarder, holds that specific financial role.

Is an LC required for every export shipment, or only some?

Only where the buyer and seller (or their banks) have agreed to use one as the payment mechanism — many shipments on this corridor move under simpler payment terms (advance payment, open account) without an LC involved at all.

Air Freight Fundamentals

Letter of Credit Basics for Air Freight Shippers

A Letter of Credit is a bank's payment guarantee against specific documents, not against the goods themselves — and an AWB's non-negotiable status changes how that guarantee has to be structured.

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UCP 600

ICC rules governing documentary credits

Non-negotiable

AWB's legal status under UCP 600

Consignee named

Common LC structure for air shipments

Strict compliance

Standard banks apply to document review

Documents, not goods, drive an LC

A documentary Letter of Credit (LC) is a bank's conditional payment guarantee to a seller, released once the seller presents documents that strictly comply with the credit's terms — commercial invoice, packing list, transport document, and often a certificate of origin or insurance certificate, among others. The bank examines documents, not the actual goods, under the ICC's Uniform Customs and Practice for Documentary Credits (UCP 600).

This creates a genuine structural issue for air freight: an AWB is not a negotiable document of title the way an order Bill of Lading is (see our What is an Air Waybill guide) — it can't be endorsed and transferred to a bank as collateral for the transaction the way sea freight LCs are often structured. Air freight LCs instead typically name the bank, or an entity the bank controls, directly as consignee on the AWB, so the bank retains practical control over the goods' release even without a negotiable document to hold.

Strict compliance is the operative standard under UCP 600 — a bank can refuse to honour a credit over a documentary discrepancy as small as a misspelled name or a date inconsistency between documents, even where the underlying goods are exactly as described. This makes document accuracy at booking, not just at goods preparation, a real financial risk for the exporter.

UCP 600 Note

An AWB's non-negotiability means air freight LCs are typically structured with the bank named as consignee, not with an endorsable transport document

Confirm with your bank how the specific LC is structured for an air shipment before assuming the same mechanics used in a sea freight LC apply directly — the underlying document types aren't interchangeable.

Source: ICC Uniform Customs and Practice for Documentary Credits (UCP 600).

Worked example

A worked example: structuring an LC around a non-negotiable AWB

Take a garments export shipment (see our garments commodity page) financed under a documentary LC, moving by air rather than sea.

Because the AWB can't be endorsed to the bank the way an order Bill of Lading could, the LC names the issuing or negotiating bank (or its nominated agent) directly as consignee on the AWB — giving the bank practical control over who can claim the goods at destination, functionally substituting for the negotiability a Bill of Lading would otherwise provide.

UAL prepares the AWB and accompanying documents to match the LC's specific requirements exactly — consignee name, description of goods, and any required certificate — since a discrepancy here can result in the bank refusing payment under strict compliance, independent of whether the goods themselves are correct.

What UAL confirms before booking an LC-financed shipment

We confirm the LC's specific consignee and document requirements before preparing the AWB, so the documentation matches what the bank will actually check — rather than preparing standard documentation and discovering a mismatch after the goods have already shipped.

Documentation prepared against specific LC terms

Coordination on AWB consignee structuring for bank-financed shipments

Frequently asked questions

No — an AWB's non-negotiable status is fixed by the governing carriage law, not a choice that can be structured around by rewording the LC. If a bank insists on a strictly negotiable transport document, that's a genuine mismatch with air freight that needs to be resolved by restructuring the LC's consignee terms, not by trying to make the AWB itself negotiable.

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Source: ICC Uniform Customs and Practice for Documentary Credits (UCP 600). Last verified July 2026.