If you are new in the import-export industry and wondering what is a bill of lading, this blog post is definitely going to be for you. Get an in-depth guide discussing everything about BoL – starting from the definition of a bill of lading, its purpose and functions, different types of bill of lading, who issues a bill of lading, and how much does a bill of lading costs.
What is a bill of lading (BOL)?
People in the export-import business are familiar with the definition of Bill of Lading or its abbreviations – also addressed as BL, BoL, or B/L.
Bill of Lading is an essential binding document for the import-export business beginners that defines the type, quantity, and destination of the goods being carried along with details of the shipper, carrier, and consignee.
All the parties involved in the import-export business get the details of the Bill of Lading to help prevent any risk of miscommunication or communication gap between the parties who are involved in the transaction.
What is the purpose and function of Bill of Lading (BOL)?
A Bill of Lading offers 3 main functions:
- It works as a carriage contract between the carrier and the shipper.
- It provides a receipt for shipped goods.
- It provides the title document for goods.
A Bill of Lading is a legal document that connects the sending and receiving parties (importer-exporter) and protects them from false claims and losses.
A bill of lading is a legal agreement whose term has been agreed upon by all involved parties, and thus it works as a legal statement in case of disputes.
Different Types of Bill of Lading (BOL)
There are different types of Bill of Lading with different terms in the contract that are being used in different shipping scenarios.
Here are 18 common types of BOL:
Master Bill of Lading
Master bill of lading provides the shipping line to the trucking company, and it also provides services to the business owners or the operator of the transport ship.
Generally, your freight forwarder or broker uses this type of Bill of Lading, and it provides detailed information regarding your cargo that is used mostly.
House Bill of Lading
This type of BOL, also known as a forwarder’s bill of lading, is provided by the broker, forwarder, or non-vessel or non-vessel operating common carrier (NVOCC) to the clients.
Open Bill of Lading
Openbill of lading is also known as a negotiable bill of lading indicates that you can transfer cargo from one consignee to another as long as the consignee’s signature is there. The consignee is a pre-determined party by the carrier, a bank, or the importer of the goods.
Order Bill of Lading
This common type of bill of lading specifies the cargo delivered to the party or person that the shipper determines. To ensure the safety of the delivery, the agent or mediator in charge of the delivery must check the order bill of lading. It is the most common type of bill of lading globally – also known as a negotiable bill of lading.
Bearer bill of lading
Bearer bill means that the cargo will be delivered to whoever possesses the bill of lading while the consignee may be initially unspecified or negotiated upon delivery of the freight. Bearer bill of lading is used for bulk shipments released in smaller quantities.
Straight bill of lading
This common type of bill of lading is known as a non-negotiable bill of lading that is assigned the cargo to a specific person. When claiming possession of the delivery, neither the endorser nor the endorsee is given priority.
Depending on the destination country’s rules, the consignee is frequently obliged to make any advance payment before receiving the goods. They may or may not be required to show the original bill upon delivery.
Received for shipment bill of lading
The carrier issued this type of Bill of Lading and confirmed that the items have been received but not yet loaded aboard the ship or transport vessel. When the vessel is late, it is used as a temporary BOL and is replaced by a Shipped BOL once the cargo is loaded.
Shipped bill of lading
When the cargo is on board, this common type of bill of lading is issued, connecting the vessel’s owner to the carrier.
Ocean bill of lading
Nationally and internationally, this type of bill of lading helps the cargo transport via ocean freight.
Inland bill of lading
Inland bill of lading allows the carrier to transport it by land (road or rail) but only inside the country’s borders.
Airway bill of lading
An air freight business or forwarder issues this common type of bill of lading, and it’s usually non-negotiable unless the cargo is shipped on the shipper’s order.
Clean bill of lading
A clean bill of lading ensures that the cargo is loaded in good condition. But, packaging and the inside goods can not declare damaged condition. However, a Dirty BOL is replaced if the shipment is damaged or the quantity is missing.
Dirty bill of lading
This common type of bill of lading allows the shipowner to declare the cargo’s condition if he finds out that there is broken cargo, an incorrect quantity of goods specified, significant damage in the packaging, etc.
Through bill of lading
Through bill of lading works as legal documents that define that the cargo directly passes through domestic and international borders and helps to be transferred from one distribution centre to another and across multiple modes of transport. Depending on the shipment’s final destination, it also requires the submission of an inland or ocean BOL.
Combined transport bill of lading
This type of BOL, also known as a multimodal transport BOL, is a common type of bill of lading, indicating that there are at least two modes of transportation are involved in shipping the cargo.
Direct bill of lading
This BOL is for shipments picked up and delivered by the same ship.
Stale bill of lading
This kind specifies that the bill of lading is considered “stale” whenever the cargo arrives at the port before the bill of lading.
Surrender bill of lading
Once the cargo is received, an exporter issues this type of bill of lading to an importer to confirm the transfer of ownership.
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How to use a Bill of Lading between the Parties involved in Global Trade
Bill of Lading plays an essential role in international trade in the Incoterms®, where the items are sold, and the payment terms are agreed upon between buyer and seller. Buyers and sellers often agree to pay a deposit to the supplier and then arrange for the balance payment upon receipt of Bill of Lading.
It defines the time after the items have been shipped, and the shipper receives the carrier’s bill of lading (B/L). The shipper will email a ‘copy’ of the Bill of Lading and other shipping documents to the buyer to prove that the goods have been shipped and request the balance payment.
Furthermore, the shipper will retain legal ownership of the cargo by holding title to the original Bill of Lading (originals). The shipper will use this as security to confirm that the balance payment for the goods is received.
Shippers and consignees require B/L to arrange Letters of Credit (L/Cs) with parties and banks. Letters of Credit are contracts between the shipper and consignee’s banks to guarantee payment of goods “upon Bill of Lading.”
After the buyer has received the balance payment, the shipper will surrender the B/L and advise the shipping company to issue an ‘Express Release’ or ‘Telex Release’ Bill of Lading.
This Express Release Bill of Lading will allow the buyer to take control of the products without waiting for the original B/L documents to mail. In addition, the buyer will use this Express Release Bill of Lading to coordinate customs clearance and cargo release at the destination port.
What Are Bill of Ladings Used For?
A bill of lading serves receipt of goods. It also plays a key role in shipment because, without a bill of lading, it’s not possible to execute transportation.
To travel from point A to point B, you’ll need a BoL. They are legally binding documents that usually prove ownership of the goods transported. The role of a title to goods is also covered in bil of lading.
The Bill of Lading works as a title to the goods after arriving at their destination. The consignee* listed on the Bill of Lading must show it to the carrier to secure the shipment’s release and claim ownership. It is proof of delivery confirmation in this way.
*On the Bill of Lading, only the consignee mentioned has contractual rights to request cargo release.
Bills of lading ensure the shipper platform invoice and payment information (Bills of lading also ensure that the shipper is paid)
In some cases, the shipper may hold the original bill of lading(OBL) until payment. Until payment is made and the Bill of Lading is released, the consignee will not access their items.
Who Uses A Bill Of Lading?
Transportation services often generate Bills of lading that include companies that transport commodities by air, sea, rail or road. They also include owner-drivers, freight forwarders, steamship lines, third-party logistics companies, etc. They require a bill of lading for domestic and international deliveries.
What should be a must on the BOL?
If you are wondering about what should be included on the BoL, It is essential to understand this part.
A BOL contains the following details:
- Name and address of the shipper
- Name and address of the receiver
- Purchase order or reference number
- Date of pick-up
- Order description of goods (number of units, dimension, nature of cargo, etc.)
- Gross/net/tare weight
- Details of packaging
- Any special note or instruction
The carrier fulfils most of the information on the original Bill of Lading. As a shipper, it is your responsibility to give the carrier up-to-date information and ensure that every detail listed is correct.
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How to read a BOL: Bill of Lading Information
What exactly do the details mentioned above in a BOL imply?
Here’s a quick overview of some of the most common terms that will help you to understand a Bill of Lading:
- Names and addresses: In a bill of lading document the name and address of the shipper should be readable.
- Purchase orders or reference numbers: For pickup and delivery, it is required.
- Special instructions: Special instruction make sure the integrity of the package
- Date of pickup: Pick date defined arrival goods.
- Description of items: It defined the number of goods, dimensions and weight, and other material information.
- Packaging type: It is used during shipping. For example, cartons, crates, pallets or drums.
- NMFC code: That corresponds to the shipment’s freight class, which is based on density, ease of handling, liability, and value.
- Dept. of Transportation hazardous material destination: Where hazardous materials must be declared and which handling procedures are required.
- BOL number: The issuer of the BOL provides the BOL number.
Tips on Filling Up a Bill of Lading Correctly
Be careful before signing any legal document, and the Bill of Lading is no different. Before you sign it, double-check the following details:
- Identity details of the shipper
- Port, and the date of loading of goods
- Discharge port
- Goods present condition
- Weight and type of cargo
- Freight terms
Make sure the document is free of unclear statements. The terms should be transparent and not to your disadvantage.
Who issues the bill of lading?
A carrier issues a Bill of Lading. When the shipper delivers the items over to the carrier, they are issuing a Bill of Lading. It is a responsibility on the corridor for the whole transportation procedure, from loading to delivery.
Who receives the Bill of Lading?
3 main parties involved in Bill of Lading:
- The shipper who is shipping the goods,
- The consignee: who purchased and received the goods.
- Carrier: The goods will be delivered by the shipping company to the consignee.
How a BOL is issued?
Usually, a bill of lading is issued per shipment, container, or truckload, but it depends on your needs as a shipper – the purchase order, the type of goods you’re delivering, the letter of credit, and various other elements all play a role.
So it’s possible that your shipment will have more than one BOL, whether it’s two full truckloads under one BOL or one truckload with two BOLs.
When is Bill of Lading Signed?
To provide the above purposes, a BOL should sign at several transfer points along the delivery process:
- By the party or the seller who is involved in shipping the goods,
- By Driver once the freight has been received from the shipper and loaded into the truck,
- By the recipient when freight is delivered successfully.
Remember, before signing BOL paperwork, the freight should be doubled checked. A signature verifies that all information – quantity, condition, etc. – is correct. If a party signs off on the BOL for the freight without showing any overages, shortages, or damages, they may have limited options.
A BOL turns a POD (proof of delivery) when the final signature is done. Even if the receiver signs that everything was delivered in good condition, they cannot claim that something is incorrect or damaged the next day.
Their signature works as final confirmation that confirms the order is correct and complete. The carrier/driver is no longer responsible for any harm after this point. Therefore, before signing and claiming ownership of an order, receivers should double-check it.
How much does Bill of Lading cost?
To understand how much does bill of lading costs, it’s essential to understand that the cost is paid by the carrier of goods when the BoL is released. The fees range from USD 5 to USD 20 and cover all of the documentation fees in the Bill of Lading.
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There is a lot to know about the Bill of Lading because the bill of lading is effectively the contract of service between you and your freight shipping service provider. Follow the above information to run your import-export business effectively. GFE helps all inspirational importers and exporters in running their businesses. We have helped 1000+ exporters so far and we would like to do the same for you.
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1. Who Issues a Bill of Lading?
Bill of lading is issued by a carrier to the shipper.
2. What is the Bill of Lading in Logistics?
In the logistics industry, a bill of lading is a legal document having all the information of shipment and transportation for a hassle-free experience.
3. How to get my Bill of Lading (BoL)?
Once the carrier receives the ‘let export’ order delivered by the shipper’s customs house agent, the carrier issues a bill of lading by confirming receipt of cargo from the shipper/exporter.
4. What are the Different Types of Bill of Lading
-Below are the 18 different types of Bill of Lading
- Ocean Bill of Lading:
- Inland Bill of Lading:
- Multimodal/Combined Transport Bill of Lading:
- Direct Bill of Lading
- Clean Bill of Lading
- Clean On Board Bill of Lading
- Unclean Bill of Lading
- Shipped On Board Bill of Lading
- Received Bill of Lading
- Through Bill of Lading
- Stale Bill of Lading
- Straight Bill of Lading
- To Order Bill of Lading
- Transshipment bill of lading
- Charter Party Bill of Lading
- House Bill of Lading
- Master Bill of Lading
- Express Release Bill of Lading
5. What are the Contents of Bill of Lading?
Usually, a bill of lading includes the shipper’s and receiver’s names and addresses, as well as the shipment date, amount, exact weight, value, and freight category.
6. What is a bill of lading process?
-A bill of lading works in 3 essential criteria
- Evidence of Contract of Carriage
- Receipt of Goods
- Document of Title to the goods