What is a Bill of Lading? Why it is Important in Shipping

A bill of lading (BOL) is a common type of shipping receipt. It is a record of items that are being shipped from a supplier to a receiver through a freight carrier. Just like any other receipt, a BOL is important because it helps ensure that the number and types of items shipped are the same items that arrive at their final destination. It helps track where a shipment is at a given time, especially if it’s LTL freight that is handled by multiple carriers, as well as determine whether any damage happened in transit by cross-referencing the condition of the items when they shipped to how they arrived. A bill of lading is essentially a contract of carriage between the shipper, consignee, and carrier stating the terms and conditions of carriage. A bill of lading also has important ownership and financial implications, as it not only serves as a legal document of title, but also provides the details needed for accurate invoicing. The size, weight, and density of the items shipped all go into determining how much the shipment costs to transport.

What Does a Bill of Lading Do?

Provides Proof of the Contract Terms of Carriage

The bill of lading will detail what is being shipped including the type of shipment, how much of it there is, and the destination. It will sometimes also mention the condition of the shipment. Note that the bill of lading is not an actual contract in itself – just documentation that provides evidence of one.

Functions as a Receipt

When a bill of lading is issued by the carrier to the shipper, it is confirming that the goods have been loaded onto the transporting vessel. The shipper is usually issued with several original bills of lading, which can be passed to different parties along the route, essentially passing on control of the cargo.

Acts as the Title of Goods

The bill of lading usually includes the details of the receiving party (buyer/consignee) that the carrier is shipping the goods to. Until the bill of lading has been passed to the receiving party, however, ownership hasn’t been transferred. The shipper may forward a copy of the bill of lading to the receiving party as proof of shipping, but whoever holds the original bill of lading retains ownership of the cargo. The bill of lading is normally only surrendered to the receiving party after full payment has been made.

Contents of Bill of Lading

The exact contents of a bill of lading will vary on a case-to-case basis, depending on the type of BOL and/or the shipping and business terms. Some of the data you are likely to find in a typical BOL are:

  • Name and details of the shipping line
  • Shipping bill number and date
  • Name and address of the shipper as well as the receiver, along with necessary contact details, plus a mention of the date to facilitate tracking of the shipment
  • Purchase order number or similar reference number; this makes it easier to cross-refer the agreed terms and conditions (e.g. the delivery terms, incidence of expense etc.)
  • Special instructions – this is an important section as it has all the extra service requests, terms and conditions, and reminders for the carriers
  • Description of the goods in the shipment, giving details of the units, their dimension, weight, content details etc.
  • Packaging details, which discloses information of the packaging and use of cartons, crates, pallets, and drums used for shipping
  • Freight classification, which determines the cost of the shipment
  • Indication of hazardous shipment, if applicable
  • Signature and initials of the concerned officer

Types of Bill of Lading

There are many different types of bills of lading, depending on the terms and conditions and circumstantial requirements that it signifies.

Here are the most commonly used:

  • Clean Bill of Lading: Provided by the shipper or its agents and does not bear any attestation regarding the defective nature of the goods on board.
  • Claused Bill of Lading: Indicates that there is damage to the consignment or that all or part of it is missing altogether.
  • Container Bill of Lading: Indicates that the goods are being delivered in a secure container from the port of origin to another port.
  • Received for Shipment Bill of Lading: An acknowledgement provided by a carrier before the vessel loading with an approved receipt of goods for shipping.
  • Through Bill of Lading: Allows the carrier to transport a shipment through multiple modes/fulfillment centers and may include an ocean bill of lading and/or an inland bill of lading.
  • Master Bill of Lading: A document issued by carriers for their shipping companies, indicating the terms of transportation and details of the shipper or consignor, consignee, and the person in possession of the goods.
  • House Bill of Lading: Generated by a non-vessel operating company or ocean transportation intermediary freight forwarder as an assertion of receipt of the goods shipped. Also known as forwarder’s bill of lading, its issuance is meant for the suppliers on receipt of the shipment.
  • Short Form/Blank Back Bill of Lading: Required when the terms of the shipping contract are not mentioned in the original bill of lading.
  • Straight Bill of Lading: Does not grant the endorsee with any better rights than those given to the endorser. Also known as a non-negotiable bill of lading, it may be considered unsafe in a banker’s point of view.
  • Order Bill of Lading: Where the delivery is made in line with a further order from the consignee.
  • Charter Party Bill of Lading: Signifies an agreement between a vessel owner and charterer for the shipped goods.
  • Multimodal Transport Document: Also known as Combined Transport Document, a type of through bill of lading where land or ocean transportation is involved.
  • Stale Bill of Lading: Provided 21 days after the date of shipment (or other stipulated dates) for negotiation.
  • Surrender Bill of Lading: Issues the term where the negotiating bank’s receipt will have to be provided to the bank to release documents.
  • Bearer Bill of Lading: Allows delivery to be made to the holder of the bill; it can easily be negotiated by simply delivering the goods physically.

Bottom Line

This should help clarify what a bill of lading is, and why it’s so important. Things can become even more complicated, however, when it comes to the various types of bill of lading that can be used. A good 3PL (third-party logistics provider) will be able to advise you on the right kind of bill of lading for your shipment, so ensure you make the most of their expertise and in-depth knowledge of the required documentation for shipping.


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