The bill of lading (B/L) is crucial in international trade and shipping. It serves as proof of the shipment of goods and plays a pivotal role in determining ownership, allocating liability, and resolving legal disputes.
What is a bill of lading in shipping?
A bill of lading is a legal document issued by the carrier to the shipper, certifying that the goods have been accepted and will be delivered to the agreed destination by the agreed mode of transport. It serves as a receipt for the goods shipped and proof of contract and ownership.
What information is included in a bill of lading?
A complete bill of lading should contain the following information:
- Shipper and consignee information: Details of the sender and receiver.
- Goods description: The name, quantity, weight, and packaging of the goods.
- Port of loading and port of destination: The origin and final destination of the goods.
- Transport method: For example, sea, air, or multimodal transport.
- Carrier information: information about the company or ship owner responsible for the transport.
- Issue date: the date on which the bill of lading was issued.
- Special provisions: any additional provisions relating to the transport.
Types of bills of lading
There are various types of bills of lading, which can be divided into the following categories according to their purpose and function:
- Inland bill of lading
- Ocean bill of lading
- Through bill of lading
- Negotiable bill of lading
- Nonnegotiable bill of lading
- Claused bill of lading
- Clean bill of lading
- Uniform bill of lading
What is the purpose of a bill of lading?
Proof of shipment: It shows that the carrier has accepted the goods.
Proof of ownership: The bill of lading can be used to transfer ownership.
Proof of contract: It records the terms of the shipping agreement.
Payment instrument: In letter of credit transactions, the bill of lading is an essential proof of payment.
Who issues the Bill of Lading?
The bill of lading is usually issued by the carrier or its agent and sometimes by a freight forwarder or logistics company. The issuer must ensure the information is accurate. Otherwise, they may be held legally responsible.
Why is a Bill of Lading Important?
The legal and commercial role of the bill of lading makes it a crucial document in international trade. It ensures the smooth delivery of goods and protects the rights and interests of all parties involved. The bill of lading is significant in the following areas:
Proof of ownership: The bill of lading holder is generally considered the legal owner of the goods.
Dispute Resolution: The contents of the bill of lading can be used as substantial evidence in legal disputes.
Trade security: The bill of lading helps prevent fraud and theft of goods.
How to Prepare a Bill of Lading?
Cargo Preparation Stage: Before proceeding with the Bill of Lading process, the cargo must first be prepared. The owner or agent must prepare relevant information, such as the cargo manifest, packing list, bill of lading application form, etc., to ensure the cargo information is accurate.
Contact the carrier: After the goods have been prepared, the owner or agent must contact the airline to confirm the shipment details and the bill of lading process. This step requires clarification of specific bill of lading requirements, such as bill of lading form, bill of lading quantity, bill of lading time, etc.
Bill of Lading Application: According to the carrier’s requirements, the owner or agent must fill out the application form and provide relevant information, such as the bill of goods and packing list. When filling out the bill of lading application form, you need to ensure that the information is accurate so that it does not affect the subsequent transportation of the goods.
Review and Confirmation: Upon receipt of the bill of lading application, the carrier will verify the information on the application form. Once the verification is passed, the airline will confirm with the owner or freight forwarder to ensure the smooth progress of the Bill of Lading operation process. This step may involve payment of transportation charges and related insurance matters.
Bill of Lading Issue: After verification and approval, the carrier will issue the bill of lading and deliver it to the owner or freight forwarder. The bill of lading contains essential information such as the details of the goods, the place of loading, and the place of destination. After receiving the bill of lading, the owner or freight forwarder must carefully check the information on the bill of lading to ensure that it is accurate.
Loading Goods: Loading is integral to the bill of lading process. During the loading process, the owner or agent must load and seal the goods according to the information on the bill of lading. Special attention must be paid to the packaging and labeling of the goods at this stage to ensure that the goods are not damaged during transportation.
Present the bill of lading: Once the goods are loaded, the owner or agent must present the bill of lading to the carrier. The carrier will verify the information on the bill of lading to ensure it matches the actual goods. Once it is confirmed that there are no errors, the airline will sign the bill of lading and begin transporting the goods.
Cargo tracking: During transportation, the owner or agent can track the cargo using the information on the bill of lading. They can track the shipment’s status at any time to ensure it arrives at its destination on time.
Bill of Lading Settlement: When the cargo arrives at its destination, the owner or agent must settle the bill of lading with the carrier. During the settlement process, the appropriate charges, including transportation charges, loading and unloading charges, and other related charges, must be paid.
What are the consequences of a lost or damaged bill of lading?
1. Delivery is blocked
The bill of lading is an important proof of delivery. If it is lost or damaged, the consignee will have difficulty collecting the goods at the port. The port warehouse or carrier will usually require the original bill of lading before releasing the goods. Without a valid bill of lading, the consignee may not collect the goods smoothly.
In many cases, even a duplicate bill of lading cannot be used alone to collect the goods. Other complicated procedures, such as providing a bank guarantee, must be followed before the goods can be collected.
2. Goods being held up and costs increasing
Because the goods cannot be collected normally, they will be held in the port warehouse or yard. This will result in additional storage costs, which will accumulate over time. In some ports, storage costs are calculated on a daily or weekly basis, and prolonged detention can result in high costs.
In addition to storage costs, demurrage charges may be incurred (if the goods are transported in a container). Containers generally have a free period of use, after which demurrage charges are incurred, which increases the consignee’s costs.
3. Interruption of the trade process
In international trade, the loss or damage of a bill of lading can prevent trade processes from running smoothly. For transactions settled using a letter of credit, the bank requires a complete set of documents to be submitted, of which the bill of lading is an important component. If the bill of lading is defective and a compliant bill of lading cannot be submitted, the bank may refuse to make payment.
Moreover, subsequent sales links will also be affected. If the consignee cannot collect the goods in time and put them on the market, it may affect the performance of the contract with the next customer, leading to a chain of risks of trade defaults.
4. Increased legal risks
The loss or damage of a bill of lading may lead to disputes over the ownership of the goods. If another party claims rights to the goods, the situation becomes complicated without a complete bill of lading to prove the legal right to collect the goods.
To regain the right to collect the goods, it may be necessary to resolve the matter through legal proceedings. This involves applying to the court for public notice, reissuing the bill of lading, and other procedures. The process is time-consuming and laborious, requiring additional legal fees.
FAQ
- Add the Shipper, Carrier, and Consignee’s Address and Business Information
- Describe Your Cargo Information
- Include the Value of the Goods
- Denote the Freight Shipping Class
- Include the Shipping Terms
- Add Freight Charges
- Warn for Hazardous Materials (if Necessary)
- Denote the Bill of Lading Number
- Add Driver Instructions
- Double-Check for Accuracy
- Sign and Date the BOL
- Proof of ownership: The bill of lading symbolises ownership of the goods, and possession of the bill of lading means that you have the right to the goods.
- Proof of the transport contract: The bill of lading proves the transport contract relationship between the carrier and the shipper.
- Goods receipt: It also serves as the carrier’s receipt for the goods.
- Legal document: The bill of lading is one of the essential legal documents for resolving disputes.
The transfer of a bill of lading depends on its type:
- Straight B/L: not transferable; the consignee can only collect the goods.
- Order B/L: can be transferred by endorsement. If the bill of lading states “to order” or “to the order of someone”, the sender can sign the back of the bill of lading and possibly indicate the new holder.
- Bearer B/L: can be transferred to anyone possessing it without endorsement.
They have different functions:
A bill of lading is proof of the contract of carriage and a document of title, while a freight bill is primarily proof of the contract for transport services and not a document of title.
Scope of application:
A bill of lading is mainly used for sea transport but can also be used for other modes of transport; freight bills are widely used for air, land and rail transport.
Transferability:
A bill of lading, especially an order bill of lading and a bearer bill of lading, can be transferred; a freight bill does not have this characteristic.
Legal effect:
Bills of lading have a more substantial legal effect, especially in international trade. Freight notes are also essential transport documents, but they have different legal effects regarding property rights than bills of lading.
Ask the carrier or its agent for a copy.
If you are the shipper, tell the shipping company (carrier) or its agent that you need a blank bill of lading copy for pre-filling cargo information and other purposes. They usually provide a blank bill of lading copy in a specific format, but you may have to give some relevant shipping documents.
You can get this from a freight forwarder.
Freight forwarders coordinate the shipping process. They can get a blank copy of the bill of lading from the carrier and give it to the shipper. Usually, you need to sign an agency contract with the freight forwarder, who will provide you with a blank copy of the bill of lading after completing the booking.