International shippers know the abbreviated form of a Bill of Lading as either B/L or BOL. This document is the most important shipping document involved in the import-export process. That is why we hope to share as much information as possible about this essential document in a concise manner.
What is a Bill of Lading or B/L or BOL?
Bill of Lading is a legally binding document between a freight carrier and a shipper which allows the movement of a freight shipment. It can be a printed document or a digital one, which must be completed by a carrier and given to a shipper when the cargo is collected for delivery.
It contains all the necessary details of the freight, the carrier, final destination and terms related to the transportation of the cargo so that the carrier can process the freight shipment and invoice it correctly.
Other important functions are discussed in Purpose and Importance of a Bill of Lading.
Whether a cargo is transported by land, air or sea freight, a Bill of Lading is required. The name of the bill changes according to the mode of transport.
For air freight, it is called an Airway Bill of Lading or AWB. For land freight, it is sometimes called ProBill. For sea freight, it is Ocean Bill of Lading (OBL). Sometimes, just B/L or BOL is used for either.
Origin of the name ‘Bill of Lading’
‘Bill’ is defined as a statement of the cost for goods or services delivered, or to be delivered. ‘Lading’ comes from ‘lade’, which means ‘to put cargo on a ship or other forms of transportation’.
Therefore, a Bill of Lading is actually a record of the goods traded being received on board, i.e. on a ship, airplane, helicopter, truck and so on.
Who issues Bill of Lading
In the freight forwarding and supply chain industry, companies which provide transportation for cargo are called carriers. For example, transportation companies. Some large freight forwarding companies and logistics companies, such as TOP Logistics, also offer carrier services.
A shipper can be anyone who has been assigned to liaise with the carrier for the transportation of the goods. It can be the seller or exporter; at times, the task is outsourced to a third party freight forwarder or logistics company.
First, the shipper fills in a B/L form, which is then passed to a carrier. Once the terms and details in the B/L are agreed upon by the carrier, it is attached to the packaged freight.
The issuance of the bill can be done during the quoting or booking process. Without a B/L, a carrier cannot reserve a space for the shipper’s cargo.
Once the cargo has been loaded onto the transport vehicle, the carrier completes the bill and hands the B/L back to the shipper.
Negotiable BOL
There are two variations of the B/L – negotiable and non-negotiable. In a Negotiable Bill of Lading, an instruction is given to deliver the freight to anyone holding an original copy of the BOL.
Without this Negotiable BOL, the cargo will not be released to the buyer or buyer’s agent. The recipient of the goods must present an original copy of the BOL at the discharge port.
Non-negotiable or Not Negotiable BOL
This type of BOL states a specific receiver’s name (consignee) for the goods to be delivered to. However, this document does not implicate that the consignee is the owner of the goods. To claim the cargo, the consignee’s identity must be confirmed first.
Purpose and importance of a B/L
The Bill of Lading fulfills a few purposes, as explained below.
1. Acts as evidence of contract between shipper and carrier
A Bill of Lading provides the carrier details of a freight shipment, including what goods are shipped, where the shipment is coming from, its final destination, the terms of carriage and so on. The information in it also helps a carrier calculate freight charges.
The shipper hands the BOL to the carrier when the cargo is collected from the shipper. Thus, it acts as evidence of a contract for this transport agreement between shipper and carrier, since the contract is agreed upon before a Bill of Lading is issued.
Carriers have the right to inspect, reweigh and reclassify cargo to ensure all weight and shipping class information are accurately portrayed in the B/L. Any errors can result in additional charges and the delayed delivery of a cargo.
2. Serves as a receipt of freight services and goods
When the cargo has been collected by the carrier, the carrier signs the BOL and returns it to the shipper. The Bill of Lading serves as proof that the carrier received the cargo in good condition as provided by the shipper.
The shipper must then keep a signed copy of the BOL as proof of carrier liability in the event cargo is damaged, destroyed or lost.
When a shipment has been delivered to its final destination, the buyer or consignee must cross-check the information in the BOL with the actual goods. This is to ensure all the goods are accounted for and there are no damages.
If the buyer signs off the document without noting the damage or shortage on the BOL, it is extremely hard for the buyer to claim insurance thereafter, whether the insurance is through the carrier or third party insurer.
3. Functions as a document of title, or ownership, of goods
Being a Document of Title means that the holder of a B/L has legal rights to claim the goods or transfer it to another party.
In most international trades, the arrangement between buyer and seller is to make a deposit to the supplier first. The balance of payment is released upon receipt of the B/L.
Thus, the B/L is used as a form of security. The shipper will only email a copy of this document and other necessary shipping documents to the buyer to prove that the cargo has been sent.
In other words, the shipper still has legal ownership of the goods as long as he holds title to the original B/L. The original will only be handed over to the buyer once balance of payment is made.
4. Enables payment to be released by banks
Since the B/L acts as a Document of Title and evidence of goods delivered, it is also used as a document for communication with banks or for raising funds for the trade. However, not all international systems recognise it as such.
A buyer and seller can arrange for a Letter of Credit (L/C) with both party’s banks using a Bill of Lading. A Letter of Credit is a contract between the shipper’s bank and buyer’s bank which guarantees payment ‘upon Bill of Lading’.
After a buyer makes the balance of payment to the seller, the seller gives the B/L to its shipper so as to issue an Express Release or Telex Release B/L. This document will allow the title of goods to be transferred to the buyer without the buyer having to receive the original B/L.
The buyer then uses the Express Release or Telex Release B/L to arrange for customs clearance and for the release of goods from the holding port.
When a Bill of Lading is required
It is needed in a shipping process, arranged in chronological order:
- For obtaining a Letter of Credit at a bank
- Before a booking is made on a carrier
- During the pick-up of goods from a shipper
- During the loading of goods on a carrier
- When the buyer or consignee collects goods from the final destination of goods
Not all of the steps above require a B/L. For example, where it is not recognised by a system as a guarantee for payment.
Another example is where a shipper is a specialist and its system is fully automated, such as Fedex. Electronic shipping labels created by its system function as a B/L.
There are always exceptions to the rule. One of the factors affecting the requirement for a B/L or not is the nature of the goods, such as Hazmat shipments.
How to fill out a Bill of Lading
Before you fill up a BOL form, you need to understand all the information that is required on it. Next, we will address a few common questions about B/L forms.
What information is on a bill of lading?
- Shipper’s details – company name, address and contact details
- Consignee’s details – company name, address and contact details
- Notify Party (if different from Consignee) – if Notify Party is the same as the Consignee, the Notify party will be marked as ‘SAME AS CONSIGNEE’; used to notify any third parties which should be aware of the shipment updates, progress and delivery
- Pre-Carriage by – transportation mode and name of transporter to Carrier
- Voyage – details related to Pre-Carriage
- Carrier’s details – company name, logo, address, contact details as well Terms and Conditions of carriage
- B/L Number – the unique B/L number issued by the Shipping Company or Freight Forwarder that is arranging the carriage of the cargo
- Vessel Name and Voyage number
- Place of Receipt, Port of Loading, Port of Discharge, Place of delivery, Final destination
- Container Number, Seal Number, Shipping Marks & Numbers, Description of goods, Gross Weight, Cubic Measurement (m3), Special Instructions
- Freight Prepaid or Freight Collect – terms on which party will be paying for the International Freight costs; Freight Collect IncoTerms include EXW, FCA, FAS and FOB while Freight Pre-Paid IncoTerms include CFR, CIF, CPT, CIP, DAT, DAP and DDP
- Place and Date of Issue, Signature
- Terms and Conditions of Carriage
Who is the consignee on a Bill of Lading?
A consignee is either the buyer himself, or a company or individual assigned by the buyer, to collect the cargo on the buyer’s behalf.
Sometimes a buyer can also assign an end-user as a consignee if the end-user has made arrangements to buy the said goods from the buyer.
Before that, the buyer must have a contract or a letter of instruction with the consignee before inserting the consignee’s in the B/L.
Who is the consignor on a Bill of Lading?
A consignor either is the seller or a shipper assigned by the seller. Similarly, a contract or letter of instruction must be issued between them before a B/L is filled.
What is a Bill of Lading number?
It is a reference number for the cargo, generated by the shipper. The format of the number follows international standards.
What is NMFC on Bill of Lading?
NMFC stands for National Motor Freight Classification. It has codes to streamline freight categorisation and pricing across the industry.
How to prepare a Bill of Lading
There are two ways to go about it. A shipper can generate a B/L if it has its own fleet of vehicles for the mode of transportation required. If not, a shipper must assign a freight forwarder to prepare the B/L.
How to track Bill of Lading
Some companies use printed forms while some use electronic versions. This can make tracking them difficult unless a specific tracking service is provided by the carrier. There are not many companies which tie-up with shipping carriers to track the bill of lading.
Nonetheless, a BOL can be tracked by entering the BOL number into an online cargo tracking function provided by a freight forwarder. There are some independent portals which also offer this service, but these should be verified for security before they are used.
What are the types of Bill of Lading?
There are many types of Bill of Lading documents and formats that carriers can issue along the supply chain. The basic and commonly used types are:
- House Bill of Lading
- Master Bill of Lading
- Surrender Bill of Lading
- Blank Bill of Lading
They can be further classified on two basis: (1) how it is executed, (2) method of operation
- How the B/L is executed
- Straight Bill of Lading
- Open Bill of Lading
- Bearer Bill of Lading
- Order Bill of Lading
- Method of operation
- Received for Shipment B/L
- Shipped B/L
- Clean B/L
- Through B/L
- Combined Transport B/L
- Dirty B/L
Conclusion
As you can see, the B/L or BOL is a very important document and needs to be filled out completely and accurately. With advanced technology, more carriers are moving away from printed bills.
Instead, they are moving towards cloud-based Bills of Lading and invoicing, as these digital versions allow both the shipper and carrier to add critical updates to shipment details in real-time.
Other related articles: