NCD Convention: The “Missing Piece” in Multimodal Transport Documents

Background: Why Does the World Need an NCD Convention?

For decades, the maritime bill of lading has been almost the only star in the universe of negotiable documents. It is recognised as a document of title: whoever holds a duly issued bill of lading has the right to take delivery of the goods, resell them or use them as security. Yet that advantage has been reserved almost exclusively for cargo carried by sea. Goods transported by truck, train or aircraft are typically covered by non‑negotiable transport documents or consignment notes, which are difficult for banks to accept as collateral. The resale of goods already in transit often has to be handled through additional contracts and side agreements, without a unified legal foundation.

As global trade has shifted towards multimodal transport models and inland corridors and land‑based routes have grown in importance, this gap has become more visible. Businesses in landlocked countries, or those that depend heavily on road and rail corridors to reach seaports, tend to be at a disadvantage when seeking trade finance compared with exporters and importers using pure sea transport.

To address this reality, the United Nations Commission on International Trade Law (UNCITRAL) tasked Working Group VI with drafting a new convention on negotiable cargo documents. After extensive negotiations involving organisations such as UNCITRAL, FIATA, ICC and the Global Shippers Forum, the draft was finalised and eventually adopted by the UN General Assembly on 15 December 2025. Under the Convention, once at least ten States have ratified it, this legal framework will enter into force, opening a new chapter for transport documents in global trade.

What Is an NCD and How Does It Differ from Traditional Bills of Lading?

According to the set of Frequently Asked Questions (FAQ) published by UNCITRAL and its partner organisations, a Negotiable Cargo Document (NCD) is designed as a new type of document of title that can exist either in paper form or in electronic form. Its core feature is that the transfer of control over an NCD has the same legal effect, in terms of rights to the goods, as transferring physical possession of those goods. In other words, the holder of an NCD – the person who is legally recognised as controlling the document – is the one entitled to take delivery of the goods, to sell them or to use them as collateral. A good‑faith third party is entitled to rely on the information stated in the NCD and does not have to undertake additional external verification.

The FAQ highlights four main characteristics of NCDs. First, an NCD is a document of title: rights relating to the goods are bundled into the document and move with it. Second, NCDs are negotiable: only the holder can exercise the rights embodied in the document, and good‑faith third parties are protected when they rely on its contents. Third, NCDs are issued only on an opt‑in basis: the carrier (or contractual carrier) and the shipper must agree to use an NCD, avoiding any sense of compulsion. Fourth, NCDs are highly flexible: they may take the form of a notation on an existing transport document (such as a bill of lading, road consignment note, rail waybill or air waybill) or a standalone document, so long as they meet the legal criteria set out in the Convention.

Importantly, the NCD Convention does not replace existing transport liability regimes such as the Hague‑Visby Rules, the Hamburg Rules, CMR, CIM or the Montreal Convention. Those rules on carrier liability and limitation of liability continue to apply as before; NCDs function as an additional legal layer governing rights of ownership and transfer in relation to goods in transit.

How Will NCDs Reshape Supply Chains and Trade Finance?

Extending the concept of negotiable documents beyond maritime transport promises significant changes for both supply chains and the trade finance market. For sellers – typically exporters – NCDs offer greater flexibility over goods already on the move. If the original transaction runs into trouble – a buyer delays payment, a route is disrupted, or market conditions turn unfavourable – the seller can look for a new buyer and transfer the NCD instead of renegotiating contracts, arranging for the goods to be returned or waiting for a compromise solution.

For buyers – usually importers – NCDs broaden access to trade finance. Using an NCD as collateral for letters of credit, purchase finance or supply‑chain finance structures becomes possible not only for sea shipments, but also for cargo moving by rail, road, air or any combination of modes. This is particularly valuable for sectors with complex multimodal supply chains such as agriculture, industrial components or omni‑channel retail.

For banks and financial institutions, NCDs help diversify the collateral pool. Instead of relying solely on bills of lading, banks can accept NCDs for inland or multimodal routes that rarely qualified for financing in the past, thereby expanding credit volumes while spreading risk. The NCD Convention itself aims to reduce fraud and increase legal certainty by setting common standards for the validity of NCDs and the rights of their holders.

At the national level – especially for landlocked States or countries that depend heavily on road and rail corridors to reach ports – the NCD Convention is expected to enhance the attractiveness of their trade and investment environment. Having a negotiable, internationally recognised document for inland routes makes cross‑border logistics corridors more “liquid”, easing the inflow of credit and infrastructure investment.

A “Window of Opportunity” for Early Movers

The NCD Convention is not a magic wand that will instantly transform how businesses run their logistics or how banks extend credit. What it does offer is the missing legal “rail track” needed for goods on all routes – not only at sea – to be treated as negotiable, protected assets within the financial system.

For developing economies like Viet Nam, strategically located at the gateway to Mekong sub‑regional and ASEAN corridors, the NCD Convention opens up opportunities to upgrade multimodal supply chains and improve exporters’ access to capital. The key question is no longer whether the NCD Convention is necessary, but how rapidly each country will prepare to turn it into a competitive advantage before it becomes the global standard for trade.