If you constantly ship out items to different parts of the world (whether as an importer or an exporter), you should know that there’s a lot of paperwork to be filed. And one of the most important documents used in moving freight shipment is the bill of lading.
Also known as BL or BoL, it is a legal paper that acts as a binding contract of carriage between the shipper and the carrier. That’s why it’s important to be familiar with this specific document in order to avoid logistics mistakes.
Want to ensure trade goes smoothly? Here’s the complete shipper’s guide to the bill of lading documents.
The Shipper’s Ultimate Guide to Bill of Lading Documents
1. What is the Bill of Lading?
The bill of lading is a legal transportation document that certifies an agreement between a carrier (typically a business that transports and delivers an item) and a shipper (can be a person or business that sells goods) with regards to the products to be shipped out.
2. Why is the Bill of Lading Important?
Filling out the bill of lading documents is an essential step in the logistics process to ensure the successful transportation of goods. It is primarily used for three purposes:
- Contract of carriage – Bill of lading documents serves as a legal binding agreement that helps the carrier process the said cargo according to the terms set up by the shipper. It should include details of the amount, condition, type, and destination of the freight.
- Title to goods – Signing a bill of lading ensures the shipper that the carrier would release the items to the consignee (the person who bought the goods in the first place) listed on the document. In some cases, BoLs also serve as insurance for the shipper if full payment by the consignee for the said goods hasn’t been confirmed.
- Receipt for cargo – This legal document should be issued in order for goods to travel from point A to point B. It also acts as proof that cargo have been properly loaded to the selected mode of transportation vessel.
3. Who Uses a Bill of Lading?
Bill of lading is used by everyone who wants to ship out goods either domestically or internationally. However, those who commonly make use of this legal transportation document on an everyday basis include third-party logistics companies, freight forwarders, steamship lines, and drivers.
4. What are the Different Types of Bill of Lading?
There are various types of bill of lading which differ on many factors such as the purpose, issuer, mode of transport, and provided protection given by the document. Having said that, bill of lading documents are generally divided into two primary categories—based upon carrier’s responsibility or based upon negotiable and non-negotiable documents.
• Negotiable and Non-negotiable Documents
With a negotiable bill of lading, the title (ownership) of the goods can be transferred to another party. In contrast, non-negotiable bill of lading documents is strictly consigned to a named individual. This ultimately means that the title cannot be handed over to another party.
- Straight Bill of Lading – It is a non-negotiable type of bill of lading document which already specifies that the shipment is already paid by a specific consignee. Thus, the carrier’s main job is to simply deliver the items to the address of the named party.
- Order Bill of Lading – This document is a type of negotiable bill of lading that’s used for shipments not yet paid by the consignee. Initially, the named party has the ownership (title) for the goods but he or she can endorse this transportation document to another person.
- Switch Bill of Lading – This type of bill of lading is commonly used by shippers who want to keep their personal information private—a usual case of 3rd party onselling. In order to achieve this, a carrier would issue a second BoL that contains the shipper’s new identity and other updated information.
- Bearer Bill of Lading – It is an extremely rare type of bill of lading due to the fact that there is no consignee named in the document. As the name suggests, the bearer of this BoL is usually just the carrier which leads to huge cargo risks.
- Clean Bill of Lading – This bill of lading is just a simple way to say that the packages loaded by the carriers are in good condition. It’s considered to be their official sign-off.
- Claused Bill of Lading – In contrast, claused bill of lading is a type of BoL which states that the goods received by the carrier are already damaged and the consignee has consented. When it comes to these cases, the carrier has the ability to refuse a claim for damage.
• Carrier’s Responsibility
Bill of lading documents under the carrier’s responsibility simply refers to BoLs based on the mode of transport used.
- Ocean Bill of Lading – Also known as a port-to-port bill of lading, it is a type of BoL in which the shipper agrees for his or her cargo to be transported via sea, regardless if it’s domestic or international. This is usually a popular option if the shipper wants to take control of the consignee’s payment. This document would also state that the carrier (shipping line) would bear all responsibility for the delivery of goods while in transit.
- House Bill of Lading – This is a type of bill of lading also used in sea freight. However, unlike ocean BoLs, the carrier is often an Ocean Transport Intermediary (OTI) such as a freight forwarder or non-vessel operating company (NVOCC) instead of an actual shipping line. In this particular case, both negotiable and non-negotiable options can be arranged depending on the shipper’s requirements.
- Air Way Bill of Lading – It is a type of bill of lading document used for air freight that is further divided into two categories—master and house. Master air waybills (MAWBs) refer to a non-negotiable type of BoL provided by an airline in which the cargo is consigned “to order.” It simply means that the goods have been negotiated with a bank and need their consent for release. House air waybills (HAWBs), on the other hand, are generated by freight forwarders but work under the same conditions as MAWBs.
- Multimodal Bill of Lading – This is used for combined transport (sea, land, and air) of cargo in which the carrier takes responsibility for the entire period of shipping. Out of all the transportation modes covered, sea freight is the most commonly used in this type of BoL but it’s not necessarily required.
- Through Bill of Lading – This BoL is similar to multimodal but with one major difference. In this particular type of bill of lading, the shipping line is only responsible for the safety of your cargo for the mode of transportation they take care of—such as exclusive sea passage or air transport only.
Aside from these types, bill of lading documents can be further classified into electronic files called Telex Release and Express Release. These two are not types of BoLs but rather, methods of releasing the paperwork.
A Telex Release is simply an electronic data interchange (EDI) message sent by a shipper from origin point to their agent at the destination which acknowledges that the shipper has surrendered a copy of the original BoL to them. This ultimately allows the agent at discharge port to release the cargo to the recipient without the need to present the original copy of BoL. It’s usually done if the original BoL cannot be mailed to the destination in time for the release of the freight shipment.
In contrast, Express Release means that there’s no bill of lading ever issued or printed. Thus, the shipper is not required to hold a BoL in order to secure payment for the cargo. This scenario usually just happens if both the parties are related or have a strong business relationship.
5. Who Issues a Bill of Lading?
Bill of lading documents can only be issued by carriers—shipping line, airline company, freight forwarder, or non-vessel operating company (NVOCC)—to the shippers and recipients. It usually comes in three original copies in which one should be presented at the destination to secure the release of goods.
However, since there are various parties and types of BoLs involved in logistics, these kinds can be provided by different groups. For instance, the master bill of lading is issued by the shipping line to an intermediary such as the freight forwarder. On the other hand, the house bill of lading is provided by the intermediary to the actual shipper.
6. How Does the Bill of Lading Process Works?
The whole process of bill of lading are dependent on the type and terms (called the incoterms) of the legal contract. With that being said, here’s a basic breakdown of how bill of lading—under EXW terms (minimum responsibility for the shipper)—works.
- Service requested – The consignee (importer/seller) contacts a carrier (typically a freight forwarding company) to arrange the transportation of goods.
- Request processed – By this time, the carrier would get in touch with their agents at the point of destination and process the request.
- Bill of lading documents issued – Once the agent is informed, the bill of lading is created and is ready to be sent to the carrier. The said carrier would then issue the legal documents to the consignee.
- Invoice created – The consignee (importer/seller) must accomplish these bill of lading documents. Then he or she will send an invoice for the shipment of goods to the buyer.
- Cargo is cleared – After the payment is processed between the seller and buyer, the carrier would declare that the cargo is cleared for delivery.
- Final delivery – In bill of lading documents under EXW terms, the buyer is usually the one responsible for all costs and risk of the goods until it gets delivered to him or her.
- Order received – The consignor (supplier) receives an order from a customer.
- Order processed – Once all the order details are confirmed, the consignor would contact a carrier (freight forwarding company) to start processing the delivery of the items.
- Bill of lading documents issued – The carrier would then provide bill of lading and other transport documents to the consignor. The consignor should then fill out these legal papers and submit it to the carrier.
- Transport is arranged – After the carrier receives the bill of lading, he or she will arrange the transportation of goods and ensure it’s cleared for customs.
- Cargo is cleared – The next process would be the actual transit of the cargo from the point of origin to the destination.
- Import process starts – By this time, the carrier would transfer the bill of lading documents to the agent. This is when the process of import starts.
7. What Does a Bill of Lading Contain?
Like the process of bill of lading, the contents of BoL documents would also entirely depend on the type you use. But in general, the following information should be present in every BoL issued.
- Names and addresses – Full names, signatures, and addresses of both the shipper and the consignee (receiver of the cargo) should be readable and easy to locate on the bill of lading. The details of the legal representatives of these two parties can also be included in the document.
- Date – This indicates the day when the cargo would be picked up and loaded into the vessel by a carrier. It also acts as the shippers’ reference for tracking their freight during transit or reconciling shipping invoices.
- Port of loading and the port of destination – The bill of lading document should state a notation of the place where the cargo is loaded and dropped off.
- Purchase orders – These special reference numbers are important to shippers as they allow freight to be released for pickup or accepted at delivery.
- Mode of shipping – This information found on the bill of lading document states the transportation mode to be used when shipping cargo. It could either be via sea, air, land, or a combination of the three.
- Description of items – All the details regarding the shipment should be included in every bill of lading document. This is usually accomplished by the shippers and includes the number of units, size, weight, value, and any markings of the cargo being transported.
- Packaging type – This notes the type of packaging—cartons, crates, drums, and pallets—shippers used in their cargo.
- Terms of the shipment (incoterms) – The bill of lading document should also state terms of shipment, also known as incoterms, both agreed by the carrier and shipper. Usually, references to these agreements are also available in another printed transportation document.
- Special instructions – Extra instructions of the carrier can also be noted on bill of lading documents. These could refer to requests like delivery notification or liftgate.
Again, these following information are just some of the required fields to be filled out in a bill of lading document. Other details, such as the vessel name, are only included depending on the specific type of bill of lading issued.
How to Fill Out a Bill of Lading Document: 6 Essential Tips Every Shipper Should Know
Now that you have an idea about all the vital information needed in one bill of lading, it might be overwhelming to fill such paperwork—especially if you’re constantly facing other transport documents as well. However, not accomplishing it right could bring you a lot of problems down the road. So if you want to avoid inconsistencies and errors during the transit of your goods, read on to know some essential tips on how to properly fill out a bill of lading document.
1. Fill Out All the Required Fields
Make sure to fill in all the required fields of this transport document. In doing so, use accurate and legible writing as much as possible to prevent costly mistakes such as cargo not reaching its point of destination and loss of right to claim.
It’s also recommended to research about all the information needed on the bill of lading in order to obtain them in time. If you’re unsure of some fields, you can always ask your carrier (third-party logistics company or freight forwarder).
2. Be Specific When Putting Descriptions
In bill of lading documents, shippers are required to describe the freight accurately. So be specific and thorough when filling out such descriptions.
Include the value, weight, and size of the goods you would be shipping out. You should also indicate the number of containers and the number of items in each container. Lastly, don’t forget to state any special shipping instructions that your cargo may require.
3. Identify Hazardous Materials
If you deal with any hazardous or dangerous materials, take responsibility and label such information when filling out your bill of lading. Alongside BoL, you should also accomplish a material safety data sheet (MSDS) which presents all the details on potential hazards found in your cargo.
4. Avoid Putting False Information
As the bill of lading document is considered a legal contract, you should never try to mislead by putting incorrect information. This could lead to a lot of logistics consequences such as delay of shipment, unclaimed payment, and loss of right to claims.
5. Ensure Document is Error-Free
Before sending out a fully accomplished bill of lading document, make it a habit to double check all the information written—whether it’s entirely done by you or pre-filled by your carrier.
If you opt for sea freight, inspect if the seal number found on your original BoL matches the one in the container. You should also pay special attention if the carrier, shipper, and consignee details are all correct.
6. Send Bill of Lading Through a Courier Service
Bill of ladings are very important documents when shipping out goods. As such, you should handle the original copies with care and send it to the carrier either personally or through a courier service.
Of course, you can always send it via regular mail but this takes a lot longer. With courier companies, not only will you be ensured that your document arrives on time but you’ll also be guaranteed that it will be safe and not loss.
Have a Telex Release or Express Release? There’s no need to acquire the service of a courier company because everything is done digitally.
Bill of lading is a legal transportation document that a shipper must complete before the freight forwarding process begins. It ultimately acts as the proof of title, contract of carriage, and the receipt in order for the goods to be shipped out.
Still need help in filling out this document? As one of the most reliable courier companies in the Philippines, Worklink Services Inc. would be glad to assist you in the whole process including the shipment of your cargo through our range of DALIvery services. Contact us today to learn more!
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