SGS is the largest of the independent inspection, testing and certification companies. In a commodity deal an SGS inspection confirms, at loading or discharge, that the quantity and the quality of the cargo match the contract. Its certificates are named in the letter of credit and are paid for by the party the contract designates, usually the seller at loading and the buyer at discharge. A certificate is only meaningful if you verify it with SGS directly.
Who inspects
SGS (Société Générale de Surveillance, headquartered in Geneva) is the best-known name, which is why "SGS inspection" has become shorthand for independent inspection in general. Bureau Veritas, Intertek, Cotecna, Control Union and Saybolt provide the same services, and many contracts say "SGS or equivalent". What matters is that the inspector is independent of both buyer and seller, is appointed under the contract, and reports to the party that appointed it.
What an inspection covers
Quantity
- Liquids (fuels, crude, oils): tank gauging or ullage at the shore tank and on the vessel, temperature and density measurement, and calculation of net standard volume and metric tonnes. The inspector's quantity certificate is the figure the invoice is based on.
- Dry bulk (grain, sugar, urea): draft survey of the vessel before and after loading, or weighbridge and belt-scale readings, with tolerances stated in the contract.
- Containers and bagged goods: tally of units, bag weights, container seal numbers.
Quality
The inspector draws samples according to the relevant standard (ASTM, ISO, ICUMSA, and so on), seals them, and sends them to an accredited laboratory. The lab tests the parameters named in the contract specification, for example sulphur, density, flash point and cetane for EN590 diesel; nitrogen, biuret and moisture for urea; polarisation and colour for sugar. The quality certificate compares each result with the contract limit.
Supervision and condition
Loading and discharge supervision, tank and hold cleanliness before loading, sealing of valves and hatches, and, for food cargo, hygiene and temperature checks. For some import markets a Pre-Shipment Inspection (PSI) is a regulatory requirement.
Where the certificates go
The Documentary Letter of Credit lists the inspection certificates the seller must present: usually a certificate of quantity and a certificate of quality issued by the named agency at the loading port. If the certificate is missing, is from a different agency, or shows a result outside the specification, the bank treats it as a discrepancy and payment stops until it is resolved.
Who pays
The contract decides. The most common arrangement is that the seller pays for inspection at the loading port and the buyer pays for any inspection at discharge. Some buyers appoint and pay their own inspector at loading as well, especially for high-value tanker cargoes. Fees depend on the cargo, the port and the scope; they are a small fraction of cargo value and are not a reason to skip inspection.
How to verify a certificate
Certificates arrive as PDFs and PDFs can be edited. To verify one:
- Note the certificate number, the issuing office and the date.
- Contact that SGS office through the contact details on SGS's own website, not through the email or phone number on the document or provided by the counterparty.
- Ask the office to confirm that it issued that certificate number for that cargo on that date.
Your bank does not verify the contents of an inspection certificate; it only checks that a document with the right title and issuer name was presented. Verification is your job, and it is the single most effective check against paper cargoes.
Fuel-trading scams often promise a "dip test" at a tank farm, or "tank-to-tank" delivery, with an "SGS-authorised" contact who will arrange access once the buyer pays a fee. SGS does not sell tank access, does not "authorise" dip tests through brokers, and does not take fees from buyers on behalf of sellers. A genuine loading inspection is appointed under a signed contract and paid to the inspection company directly against its own invoice.
What we ask for
JOLL LLC's procedures require independent inspection of quality and quantity wherever the contract calls for it, with the agency named in the contract and in the letter of credit. We treat an unverifiable certificate as no certificate at all.
Structuring a purchase or a supply contract and want the instruments in the right order? Request a consultation or message us on WhatsApp at +1 941 202 4887.