When a single order can be delivered in multiple shipments under one LC.
✅ What Is a Partial Shipment in a Letter of Credit?
A partial shipment is a delivery of goods under a Letter of Credit (LC) made in two or more separate consignments, instead of one single shipment.
When an LC allows partial shipments, the seller (beneficiary) can send the goods in multiple batches, and receive payment for each shipment, as long as documents comply with the LC terms.
One LC, multiple deliveries, multiple payments — all legally secured.
✅ Synonyms
Partial shipments under LC
Fractional delivery
Split delivery under Letter of Credit
✅ Associated Terms
Shipping clause
UCP 600 compliance
International commercial contracts
✅ Why Partial Shipments Are Used
In many industries, it is not practical to ship all goods at once. Examples:
Production schedules on multiple dates
Supplier stock availability
Seasonal or agricultural products
Custom manufacturing timelines
Limited warehouse or container space
High volume bulk commodities
Allowing partial shipments gives flexibility to both seller and buyer.
✅ How It Works
1️⃣ The LC states that partial shipments are allowed
2️⃣ The seller ships the first batch
3️⃣ The seller presents documents for that batch
4️⃣ Bank verifies documents
5️⃣ Bank releases partial payment
6️⃣ Seller continues shipping until full quantity is delivered
7️⃣ Final payment is made after last compliant shipment
Each shipment must have its own Bill of Lading, invoice, and required documents.
✅ Benefits for the Seller (Beneficiary)
✔ Ship goods as they become available
✔ Receive payment earlier, not at the end
✔ Reduced storage and logistics costs
✔ Lower pressure on production capacity
✔ Better cash flow throughout the contract
✅ Benefits for the Buyer (Applicant)
✔ Pay progressively, not all at once
✔ Receive goods faster instead of waiting for full production
✔ Easier inventory management
✔ Reduces delays in supply chain
✅ When Partial Shipments Are Common
Commodities (sugar, rice, wheat, oil, metals)
Machinery delivered in components
Pharmaceuticals or perishables
Factory deliveries based on production batches
Heavy equipment requiring multiple vessels
Large international procurement contracts
In global trade, partial shipments are often more practical than a single delivery.
✅ What If the LC Does Not Allow Partial Shipments?
If the LC states “partial shipments not allowed”, then only one shipment is permitted.
If the seller ships in more than one batch, documents can be rejected as non-compliant, delaying payment.
Clear wording is critical.
✅ How It Appears in an LC
Examples of LC text:
“Partial shipments allowed”
“Multiple shipments permitted before expiry date”
“Partial drawings permitted”
Banks consider partial shipments allowed by default under UCP 600, unless the LC specifically prohibits them.
✅ Practical Example
A buyer orders 9,000 MT of sugar.
The supplier only has space to load 3,000 MT per vessel.
LC allows partial shipments →
3 shipments × 3,000 MT
3 presentations of documents
3 partial payments
Logistics become manageable and faster.
✅ Frequently Asked Questions
1. Are partial shipments allowed automatically?
Yes, under UCP 600, unless the LC clearly prohibits them.
2. Can each shipment be paid separately?
Yes — each shipment generates its own document presentation and payment.
3. Do partial shipments need separate Bills of Lading?
Yes, each shipment requires full compliant documents.
4. Can expiry date apply to all shipments?
Yes — all shipments must occur before LC expiry, unless extended.
5. Why would a buyer refuse partial shipments?
If they need all goods at once or face customs/warehouse restrictions.
✅ Conclusion
A Letter of Credit with partial shipments gives flexibility, speed, and financial efficiency.
It supports real-world logistics where production, shipping capacity, and timing may not align perfectly into a single shipment.
Allowing partial shipments means:
✅ Faster first delivery
✅ Faster payment
✅ Better cash flow
✅ Less risk for both parties
In international trade, this clause often turns a difficult contract into an achievable one.
