Bill of Lading comes from an English term meaning ‘a list of cargo’. But in reality, it’s more than just a list. Read on and get the essentials about the Bill of Lading and its importance in the shipping industry.
Click on any of the below to directly jump to a section you want to read:
- Why is the Bill of Lading important
- Receipt for the goods
- Evidence of a contract of carriage
- Title for the goods
- Essentials on Bill of Lading
- Types of Bill of Lading
- How much does a Bill of Lading cost?
What is a Bill of Lading?
Definition of Bill of Lading is, according to Investopedia, “a legal document issued by a carrier to a shipper that carries all the necessary details of the shipment such as type, quantity, and destination of the goods.”
The Bill of Lading acts as a shipment receipt. An authorized representative from the carrier, shipper, and receiver should sign it. However, only the carrier or their agent issues the Bill of Lading.
The Bill of Lading is also known as:
- Waybill (used in the US and Canada)
Why is the Bill of Lading important?
BoL is a crucial part of the shipment process. It’s a legally binding document that serves as,
- A receipt for the goods received and delivered by the carrier
- Evidence of a contract of carriage (transport)
- A title for the goods in shipment
After a BoL has been issued there are only 2 ways the cargo will be released: by an endorsed original bill of lading (OBL) or with a telex release.
Let’s understand the above terms in detail:
Receipt for the goods
After a carrier receives the goods from you to be shipped, the cargo goes through inspection. After which, the carrier creates and handovers a BoL to you. The receipt for the goods has all the details of every item the carrier received. It’s proof that the goods are in good condition. Hereafter, it’s the responsibility of the carrier to keep the items safe and undamaged. Otherwise, the carrier can be held liable. Many shippers hold the original bill until the payment for the same. It ensures that the consignee has access to their goods only after payment and the Bill of Lading is released.
Evidence of a contract of carriage
This type of BoL essentially serves as evidence of a contract’s existence. It gives the carrier a record of how to handle the goods. The carrier gets a go-ahead to pick up the goods and deliver them to the final destination once this BoL is transmitted to the shipper. Without the BoL, you can’t carry out a shipment. It often serves as proof of ownership over the goods the carrier is carrying.
Title for the goods
“Title for the goods” signifies that the shipper has transferred the goods to the carrier, and the latter has temporary rights over the goods.
When the goods arrive at the final destination, the receiver (consignee) is given title for the goods. He should present this to release the shipment and claim ownership. It acts as evidence of the confirmation of delivery.
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What’s on a Bill of Lading?
- Name and address of the shipper
- Name and address of the receiver
- Purchase order or reference number
- Date of pick-up
- Order description of goods (number of units, dimension, nature of cargo, etc.)
- Gross/net/tare weight
- Details of packaging used (crates, pills, drums, etc.)
- Any special note or instruction
The carrier fills out most of the information on the original Bill of Lading. As a shipper, your responsibility is to provide up-to-date information to the carrier and ensure that every detail listed is accurate.
An example of Bill of Lading: How it works
Imagine you own a seafood restaurant in Hamburg. The upcoming holiday season requires you to get fresh fish and other seafood for your restaurant. You find a food vendor in Norway and raise a purchase order. Once the vendor procures your needs, he gets in touch with a logistics company for the shipment. The authorized representatives from both sides sign a BOL (carriage contract) before the logistic company sets sail.
The carrier delivers the consignment to your restaurant in a few days. Your restaurant manager inspects all the items once the shipment arrives to make sure all the items you’ve asked for are there. The payment is made to the vendor only once there’s a confirmation that everything is okay!
Here’s a real freight BoL sample to guide you.
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Types of BoL
There are many different types of BOL based on factors such as:
- The issuer of BoL,
- Purpose of the BoL,
- Relationship between buyer and seller and so on.
Air Waybill (AWB)
- Documents accompanying the goods shipped through international air couriers.
- It’s also called an air consignment note.
- AWB is a standard form distributed by the International Air Transport Association (IATA).
- It’s just a contract of transportation and is non-negotiable.
- When the freight uses the railway for transportation, a rail waybill is issued.
- The shipping agent or the railway line that transports the shipment prepares the Rail Waybill after receiving the instructions from the shipper.
- If you’re transporting your goods via road, your carrier will issue a Road Waybill. The document is called CMR.
- The drivers and forwarders use this international consignment note. It informs about the carriage of goods by road internationally.
Now that you’ve got an idea of the three main kinds of bills, we now take a look at the different types of Bills of Lading under these waybills (another name for BOL).
There are 15 different types of BoL that you can find under the three main waybills listed above.
Master Bill of Lading
Actual shipping carrier such as MSC and Maersk issues the Master Bill of Lading.
House Bill of Lading
Freight forwarders issue and sign this type of BoL with terms and conditions specified by them. House BoL has a legal standing similar to a normal BoL.
Straight Bill of Lading
When you’re shipping directly to a customer, the Straight BoL is important. These customers already make an advance payment for the complete shipment. The specified consignee receives the goods, and cannot reassign or transfer the BoL to another party’s name. It’s non-negotiable.
Order Bill of Lading
It’s the most common type of BoL when the payment for the shipment is pending. The consignee can endorse the BoL to another party and order the shipment to be delivered in their name. It’s negotiable.
Bearer Bill of Lading
It’s simple to understand. When the bearer of the bill is the owner of the cargo, the Bearer BoL comes into the picture. There’s no consignee on this type of BoL. It’s negotiable because the ownership of the bill can be transferred.
Clean Bill of Lading
This BoL declares that the goods or cargo isn’t damaged or lost during the shipment. It’s issued after inspecting the cargo for any discrepancies and acts as a guarantee that the shipped goods are in good condition. A clean BoL is a must to complete the requirements asked in the letter of credit.
Claused or Foul Bill of Lading
The carrier issues a Claused or Foul Bill of Lading when the goods are damaged, the quality or quality of goods is compromised, or doesn’t meet the required specifications. The damage, defects, and other discrepancies are outlined in the document. The consignee can reject a shipment if it arrives with a foul B/L.
Through Bill of Lading
This BoL allows the carrier to move the shipment across different distribution centers – through one or several different modes of transport. Depending on the mode of shipping, it needs an Inland and/or Ocean B/L. It‘s a multimodal Bill of Lading. When the shipment has to move through two or more modes of transport (ocean and rail, or ocean and road), this type of BoL is issued.
Surrender Bill of Lading
A surrender BoL issues the term where the negotiating bank’s receipt will have to be provided to the bank to release documents.
Stale Bill of Lading
This type of BoL is provided 21 days after the date of shipment for negotiation.
Charter Party Bill of Lading
The Charter Party BoL is an agreement between a vessel owner and charterer for the shipped goods.
Short Form Bill of Lading
This Bol is essential when the terms of the shipping contract are not mentioned in the original Bill of Lading.
Container Bill of Lading
It indicates that goods are delivered in a secure container from the port of origin to the transshipment port and finally the destination port.
Received for Shipment Bill of Lading
The carrier provides an acknowledgment before the vessel loading with an approved receipt of goods for shipping.
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Who issues Bill of Lading?
A carrier issues a Bill of Lading. Here, issuing a Bill of Lading means when the shipper hands over the goods to the carrier. Now, the responsibility of the entire shipment process is on the carrier – from initial loading to the destination.
Who receives it?
Bill of Lading has three prominent parties involved:
- The shipper: the one who is sending the goods,
- The consignee: the one who purchased and is receiving the goods.
- Carrier: The shipping company transporting the goods to the consignee.
How much does a BoL cost?
Now that you’ve read extensively about the BoL. You must be wondering how much it costs to get a BoL, right? Well, first of all, it’s necessary to know that this is a cost payable by the carrier of goods at the time of releasing the BoL. The charges can start at approximately USD 5 to USD 20 and include all the documentation charges covered under the Bill of Lading. Keep yourself updated with the latest information on Bills of Lading and other necessary shipping documents.
BoL is crucial for the transportation of goods internationally. Thus, it’s considered a good practice to mention all relevant details clearly in the document. This will help you avoid any miscommunication between the shipper and the consignee and subsequent delays.
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Bill of lading: Common FAQs
What does a Bill of Lading track and prove?
BoL is used as a receipt issued by the carrier to the shipper when cargo is loaded onto the vessel. It comes in handy when goods are moving and a transfer of title happens. It serves as proof of ownership over the goods being carried.
Can a shipment be executed without a Bill of Lading?
No, a shipment can’t be executed without a Bill of Lading. This legally binding document is a must to transport goods from Point A to Point B.
What happens when the original Bill of Lading is lost?
If you lose your original Bill of Lading, you need court orders to issue a new document. Here, the court contacts the carrier and orders to release the cargo. It also orders shippers to pay the cost of the document. It's a lengthy process and can cause inconvenience. Thus, it’s necessary to keep the BoL safe.