Importers and exporters often come across several important documents in their business. One of them is a bill of lading. It is a legally binding document issued by the carrier to the shipper. A bill of lading is often abbreviated as B/L, BL, or BoL. This document contains details about the shipper, the carrier, and the receiver of the consignment. It also mentions the type of goods and the quantity being carried. Without a proper document, there are chances of miscommunication and the consignment being lost. A bill of lading is a well-written document that helps in avoiding any confusion leading to a smooth transfer of goods from one place to another.
Did you know?
On 16th April 2020, the Secretary of the Ministry of Commerce received a letter from Mr Gopal Krishna, the Secretary of the Ministry of Shipping of the Government of India, to take a step towards digitisation of bill of lading. On approval, a trial run was conducted using the CargoX platform for a digital bill of lading. Since then, Portal Infosystems and CargoX have got into a partnership to digitise bills of lading in the country.
So, what is a bill of lading? One can understand a bill of lading by dividing it into two parts – “bill” and “lading”. “Bill” is a statement containing details of carrying the cargo like the cost, destination, etc. While “lading” means the action of loading cargo on a ship or aircraft for transporting it from one destination to another.
It acts as a receipt for the shipper having details like the condition and the number of goods before handing it over to the carrier. It is a written instrument proving ownership and possession of goods. Therefore, it is extremely valuable. Generally, the carrier issues three copies of the bill of lading. The consignee, shipper, and the third party involved getting one each.
What is the Purpose of a Bill of Lading?
A bill of lading serves the following purpose –
- It serves as a receipt for shipped goods.
- It states the ownership of goods that are being transported.
- It acts as proof of contract between the shipper and the carrier and contains all the terms and conditions of the contract.
- It can be used as a legal document if any dispute arises between the parties involved.
What Details Can You Find on a Bill of Lading?
A bill of lading has all the necessary information required for smooth and hassle-free cargo transportation from its pickup point to its destination. Importers and exporters must verify the details mentioned in this document to avoid any inconveniences in the future. Here is a list of information that one can find on a bill of lading.
- Names and addresses of the shipper and the receiver of the goods: This must be mentioned to establish ownership and correct delivery of goods.
- Date of pickup: It helps in knowing when the carrier collected the cargo and how much time it will take to be delivered. The pickup date also helps track the movement of goods from pickup location to delivery location.
- Details of goods being transported: Details such as the weight, quantity, dimensions, and other details like material and condition of the goods are mentioned in the bill of lading.
- Bill of lading number: This reference number is very important to keep track of the goods transported. It gives a unique identity to the consignment. It is useful for collecting goods at the destination point and in case of loss or theft.
- Information about the carrier: Details about the carrier company or the shipping line are mentioned in this document for the shipper's reference.
- Details about the shipping vessel: This section covers information about the vessel through which the goods will be transported via the sea route.
- Specific designation of goods: Hazardous items must be marked clearly during transportation. The bill of lading must have a special mention when hazardous items are shipped as the rules and policies of such items are different from other goods.
- Packaging material: Different types of packaging material are used to pack goods properly so that they reach the destination safely without any damage. Therefore, the bill of lading mentions the packaging material used for transporting goods such as crates, drums, cartons, etc.
- Freight class: Items are charged differently according to the freight class they belong to. So, this point is also covered.
- Special instructions: Any special instruction for the carrier is also mentioned in the document.
Types of Bills of Lading
Depending on the Consignee and Payment
1. Straight BoL
This type of bill of lading is issued when full payment of the shipment is made in advance. The customer, therefore, enjoys full right to collect the shipment directly at the port of delivery. However, there is no option to transfer the rights for collecting the shipment to someone else.
2. Clean BoL
Clean BoL is issued after the carrier examines the goods to be transported. They ascertain and declare that the shipment received is in good condition with proper packaging and no damage.
3. Bearer BoL
A Bearer BoL allows for the collection of shipment by any person presenting the bill of lading. It is a negotiable document and is therefore used when the shipment receiver is other than the shipper.
4. Claused BoL
A Claused bill of lading has specific clauses enlisted by the carrier about any damages or shortcomings that the goods incurred during transportation. By doing so, the carrier allows the receiver not to accept the shipment. It also allows the bank to decline the payment if the shipment is not delivered as promised.
Depending on the Carrier
1. Master BoL
The Master BoL is also called Carrier BoL. It is similar to a House BoL but has one major difference. The word "consignor" in the document refers to the agent or freight forwarder of the seller and not the actual seller. At the same time, the word "consignee" refers to the agent or freight forwarder of the buyer and not the actual buyer.
2. House BoL
A house BoL is issued by a non-vessel operating common carrier or freight forwarder. It contains all the standard details present in a bill of lading. The word "consignor" in this document refers to the sender or exporter of the shipment. In contrast, "consignee" refers to the receiver or importer of the same shipment.
Depending on Transportation
1. Ocean BoL
Ocean bill of lading is used when the shipment is delivered overseas.
2. Inland BoL
Inland bill of lading is used when the shipment is to be delivered domestically within the country.
3. Multimodal BoL
Multimodal bill of lading is issued when the shipment will be delivered to the destination using at least two means of transport.
4. Through BoL
Through bill of lading is issued when the shipment is transferred to several locations by different means of transport before being delivered to the destination.
The carrier issues a bill of lading with every shipment. It must be signed by the shipper, receiver, and an official carrier representative. Post-Covid – 19 pandemic, many shipping companies have started issuing a digital bill of lading in place of written or printed documents to minimise the spread of the disease and maintain social-distancing norms. Other advantages of digitising this document are quick delivery of the document to any part of the world, ease of making changes, cost-saving by not using paper, and savings on courier charges. If implemented properly, digital bill of lading can also help prevent frauds and thefts that sometimes occur in the business.