What is a Bill of Lading in Import, Export and Shipping?
First, aBill of Ladingis a the most important shipping document involved in the import export process. However, some shippers may not understand the bill of lading meaning or the types of bill of lading that are issued along the supply chain. So, in this article we give insight into the bill of lading and the different types of bill of lading used in International trade.
A Bill of Lading (B/L or BoL) document is an extremely important document involved in the shipping and logistics industry. A Bill of Lading is a document that the Carrier of goods issues to the “Shipper” of the goods.
It’s a document to provide evidence or proof of shipment. This is extremely important in International Trade as it provides ‘title’ as to who legally owns the cargo. Moreover, the Bill of Lading acts as evidence of Contract of Carriage, receipt of goods and document of Title to the goods.
Also, the owner of the cargo (the holder of the B/L) has the legal rights to claim the goods or arrange transfer ownership of the cargo to another party in the supply chain.
How to use a Bill of Lading between the Parties involved in Global Trade
The Bill of Lading is important in International Trade when it comes to theIncoterms®that the goods are sold on and the payment terms agreed between buyer and seller. In alot of cases, buyers and sellers will agree to pay a deposit to the supplier then arrange the balance payment ‘upon receipt of Bill of Lading’.
This means that when the goods have been shipped and the shipper receives the B/L from the carrier (shipping line). The shipper will use this document as security and will only email a ‘copy’ of the Bill of Lading andother shipping documentsto the buyer to prove that the goods have been shipped and to request the balance payment. The shipper will hold title to the original Bill of Lading (originals) and therefore legally retain ownership of the cargo. The shipper will use this as security to ensure that they receive the balance payment for the goods.
A B/L is also used when shippers and consignees arrange Letter’s of Credit (L/Cs) with both party’s banks. Letters of Credit are contracts written between the shipper’s bank and the consignee’s bank that will guarantee payment of goods ‘upon Bill of Lading’.
Once the buyer has made the balance payment the shipper will ‘surrender’ the B/L and tell the shipping company to issue an ‘Express Release’ or ‘Telex Release’ Bill of Lading.
This Express Release B/L will allow the title of goods to be transferred to the buyer without the buyer having to actually receive the original B/L documents in the mail. The buyer will use this Express Release B/L to arrange customs clearance and release of their cargo at the port of destination.
Types of Bill of Lading
There are many types ofBill of Lading documents and formatsthat carriers can issue along the supply chain. Below are a few examples of B/L types:
- House Bill of Lading
- Surrender Bill of Lading
- Straight Bill of Lading
- Master Bill of Lading
- Blank Bill of Lading
What is the difference between Freight Collect and Freight Pre-Paid?
The B/L will state that the shipment has been sent on ‘Freight Collect’ or ‘Freight Pre-Paid’ terms. These terms relate to which party will be paying for the International Freight costs.
If the shipment is sent Freight Collect – the freight charges will be ‘collected’ by the Consignee. If the shipment has been sent on Freight Pre-Paid terms, the shipper will be billed for the freight charges.
It’s important to note that the carrier must receive payment of the shipping charges (by either party) BEFORE they will release the cargo to the Consignee.
Freight Collect Incoterms® include –EXW, FCA, FAS, FOB
Freight Pre-Paid Incoterms® include –CFR, CIF, CPT, CIP, DAP, DPU, DDP
What information is on a Bill of Lading format?
See below Bill of Lading example format.
- Shipper’s details including company name, address and contact details
- Consignee’s details including company name, address and contact details
- Notify Party (if different to the Consignee). In most cases the Notify Party will be the same as the Consignee, so the Notify party will be marked as ‘same as consignee’. This notify party can be used to notify any 3rdparties that need to be made aware of the shipment updates, progress and delivery.
- Carrier’s details, including company name, logo, address, contact details and their Terms and Conditions of carriage.
- B/L Number – the unique B/L number issued by the Shipping Company or Freight Forwarder that is arranging the carriage of the cargo.
- Vessel Name and Voyage number
- Place of Receipt, Port of Loading, Port of Discharge, Place of delivery, Final destination
- Container Number, Seal Number, Shipping Marks & Numbers, Description of goods, Gross Weight, Cubic Measurement (m3), Special Instructions
- Freight Prepaid or Freight Collect
- Place and Date of Issue, Signature
- Terms and Conditions of Carriage (usually on next pages)
Ben Thompson
Ben is passionate about International Trade, Import/Export, International Shipping and connecting world markets. For the last 14 years Ben has specialized in importing and exporting goods around the world, and creating software solutions to streamline the import/export process.
As an expert with over a decade of specialization in international trade, import/export, and international shipping, I have an in-depth understanding of the critical aspects of the shipping and logistics industry. My expertise extends to various documents involved in the import-export process, and one such document that holds paramount importance is the Bill of Lading (B/L or BoL). In this comprehensive overview, I will delve into the intricacies of the Bill of Lading, its significance in international trade, and the different types that play a crucial role along the supply chain.
A Bill of Lading serves as a foundational document issued by the carrier of goods to the shipper, providing evidence or proof of shipment. Its significance lies in establishing 'title'—legally determining the owner of the cargo in international trade. Beyond being a proof of shipment, the Bill of Lading serves as evidence for the Contract of Carriage, receipt of goods, and document of title to the goods.
In the realm of global trade, the Bill of Lading plays a pivotal role in conjunction with Incoterms® and payment terms agreed between buyers and sellers. It often serves as a condition for payment, with buyers arranging the balance payment upon receipt of the Bill of Lading. The shipper, upon obtaining the B/L from the carrier, uses it as security, releasing a copy to the buyer and retaining the original to ensure receipt of the balance payment. This process is particularly crucial when dealing with Letters of Credit (L/Cs) between banks, where the B/L is a key element in guaranteeing payment.
The article also touches upon various types of Bill of Lading, such as House Bill of Lading, Surrender Bill of Lading, Straight Bill of Lading, Master Bill of Lading, and Blank Bill of Lading, each serving specific purposes in the supply chain.
Furthermore, the article sheds light on the distinction between Freight Collect and Freight Pre-Paid terms, providing a detailed list of corresponding Incoterms® for each. The importance of these distinctions lies in determining which party bears the responsibility for international freight costs.
The information is rounded out with a breakdown of the components found in a typical Bill of Lading format, including details about the shipper, consignee, notify party, carrier, B/L number, vessel information, ports, container details, shipping marks, and various other specifics.
In summary, my expertise allows me to elucidate the complexities of the Bill of Lading, its crucial role in international trade, and the interconnected concepts that shape the import-export process. If you have any specific questions or require further clarification on any aspect, feel free to inquire.
