Understanding Bill of Lading in Cargo Shipping

Companies engaged in export or import business are certainly familiar with the term Bill of Lading or often abbreviated as BL, BoL or B/L.

Bill of Lading comes from the English term which means 'cargo list'. However, BoL is more than just a list. 

Bill of Lading is an important legally binding document containing details of the type, quantity, and destination of goods being carried as well as details of the shipper (consignor), carrier (transporter), and receiver.  

By detailing this information, it helps prevent the risk of miscommunication or misunderstanding between parties involved in the transaction.

What is Bill Of Lading (BoL)?

Bill of Lading is a document issued by the Carrier (the party that transports and ships goods) to the Shipper (someone who supplies and/or owns goods – also known as consignor).

BoL will confirm that goods have been received in standard condition and are ready to be shipped. 

The goods will then be delivered by the Carrier to the Consignee (the person who purchases the goods). 

Bill of Lading (BoL) essentially means a shipping contract between the Shipper, Consignee, and Carrier that states the terms and conditions of transportation.

Function of Bill of Lading

Shipping cannot be done without Bill of Lading. BoL must be issued for goods for travel from Point A to Point B. 

BoL is a legally binding document and can serve as proof of ownership of goods being transported.

After goods arrive at the destination, Bill of Lading can be used as a certificate for those goods. 

The registered receiver must present the Bill of Lading to claim ownership. This means BoL is also proof of shipping confirmation.

What Are the Contents of Bill Of Lading?

• Details of transportation company (carrier), shipper and/or receiver
• Place where goods are loaded
• Destination
• Mode of transportation (i.e., trucking, railway, air, sea, etc.)
• Shipping terms (incoterms)
• Description of goods being carried (including weight, dimensions, classification, etc.).

Types of Bill Of Lading

There are various types of BoL that are differentiated based on:

• BoL issuer,
• BoL purpose,
• Relationship between buyer and seller.
  

In general, Bill of Lading is divided into three types based on the method of goods transportation. These include:

Air Waybill (AWB)

• Document that accompanies goods sent through international air courier.
• Also called air shipping note.
• AWB is a standard form distributed by the International Air Transport Association (IATA).
• Transportation contract and cannot be negotiated.

Rail Waybill

• When goods use railway for transportation, railway waybill is issued.
• Shipping agent or railway company that transports the shipment prepares Rail Waybill after receiving instructions from the shipper.

Road Waybill 

• The shipping operator will issue Road Waybill. The document is called CMR.
• Driver and shipper use international consignment note. The document will inform about the transportation of goods through international road.

After understanding the overview of three types of Bill of Lading, we will now break down the various types of Bills of Lading under this waybill (another name for BOL).

There are 14 different types of BoL that you can find in the three main waybills listed above.

Master Bill of Lading

Actual shipping carriers such as MSC and Maersk issue Master Bill of Lading.‍

‍

House Bill of Lading

Freight forwarder issues and signs this type of BoL with terms and conditions determined by them. House BoL has a legal status similar to normal BoL.‍

‍

Straight Bill of Lading

When shipping goods directly to customers, Straight BoL is important.

Order Bill of Lading

The most common type of BoL when payment for shipping is delayed. The receiver can endorse the BOL to another party and order the shipment to be delivered in their name. This type of BoL can be negotiated.

Bearer Bill of Lading

This type of BoL is used when the bill bearer is the owner of the cargo. There is no receiver for this type of BoL. It can be negotiated because bill ownership can be transferred.‍

‍

Clean Bill of Lading

BoL states that goods or cargo were not damaged or lost during shipping. It is issued after inspecting the cargo for any discrepancies and serves as a guarantee that the goods shipped are in good condition. Clean BoL is a requirement to fulfill the requirements requested in a letter of credit.

Claused or Foul Bill of Lading

Carrier issues Clause or Foul Bill of Lading when goods are damaged, the quality of goods is compromised, or do not meet the required specifications. Damage, defects, and other discrepancies are detailed in the document. The receiver can reject the shipment if it arrives with a foul B/L.

Through Bill of Lading

This BoL allows the carrier to transfer shipments across different distribution centers – through one or several different modes of transportation. Depending on the shipping mode, Land and/or Sea B/L is required. This is multimodal Bill of Lading. When shipment must go through two or more modes of transportation (sea and railway, or sea and road), this type of BoL is issued.

Surrender Bill of Lading

BoL is issued when the negotiating bank's receipt must be given to the bank to release the documents.‍

‍

Stale Bill of Lading

BoL is given 21 days after the shipping date for negotiation.‍

‍

Charter Party Bill of Lading

Charter Party BoL is an agreement between the ship owner and the charterer for goods being shipped.

Short Form Bill of Lading

This BoL is important when the terms of the shipping contract are not mentioned in the original Bill of Lading.

Container Bill of Lading

Shows that goods are shipped in secure containers from the port of origin to the transshipment port and finally to the destination port.

Received for Shipment Bill of Lading

The carrier provides acknowledgment before the ship loads with a receipt of goods approved for shipment.

Dangers of Incorrect Bill of Lading Submission

There are serious consequences if you fail to submit Bill of Lading, omit information, or submit inaccurate information.

This is why it is advisable to seek assistance from a freight forwarder to fill out any documents regarding Bills of Lading. 

The following are the various possible implications of incomplete or inaccurate bill of lading submission:

• Claims from the receiver: A document with incomplete or inaccurate information will make you vulnerable to claims by the receiver. Claims can include damage claims or receipt of a lesser quantity than agreed. If your documentation is inaccurate or incomplete, the carrier will have the opportunity to dispute your claim that you delivered an undamaged shipment to the carrier, making you directly responsible for providing compensation to the receiver.
• Loss of right to indemnification from the charter party
• Possibility of criminal prosecution
• Loss of right to enforce liability limitation clause
  

There are many components to consider when preparing shipment. If the BoL process overwhelms you, we have a solution for you.

ABC Express is ready to help our customers at every step through the shipping process, including all organized and easy-to-maintain shipping documents, so you can focus on running your business better.

Contact ABC Express Our team is ready and willing to answer any questions you have and ship your goods.

Learn more about ABC Express Services!

‍