What Is a Bill of Lading?
A bill of lading is a legal document issued by a carrier to a shipper that details the type, quantity, and destination of the goods being carried. The bill of lading acts as a document of title, a receipt for shipped goods, and a contract between a carrier and shipper.The document must accompany the shipped goods andmust be signed by an authorized representative from the carrier, shipper, and receiver. If managed and reviewed properly, a bill of lading can help prevent asset theft.
Key Takeaways:
- A bill of lading is a legal document issued by a carrier to a shipper that details the type, quantity, and destination of the goods being carried.
- For air shipments, an airway bill acts as the bill of lading. However, an airway bill is not a document of title.
- Typically, there are three bills of lading, one for the shipper, one for the consignee, and one for the banker, but there is no limit to the number of bills of lading issued.
- Addition bills of lading increase the risk of fraud, theft, or the unauthorized release of goods.
Understanding the Bill of Lading
Typically three bills are issued—one for the shipper, one for the consignee, and one for the banker, broker, or third party. There is no restriction on the number of bills of lading that can be issued, but the number issued must be stated on the bill. Because the bill of lading is a document of title, it is valuable. For security purposes, it is advisable to only request as many bills of lading as you actually need. If more bills of lading are issued, there is an increased risk of fraud, theft, an unauthorized release of goods, or release to the wrong person.
Types of Bills of Lading
There are two ways to ship, by air and by ocean. Each mode has its own bills of lading: the ocean bill of lading and the airway bill. Determining which mode of shipping to use depends on time. Air travel is reserved for shipments that are time-sensitive or on a tight deadline, and it is usually more expensive. Travel by ocean is slower but more economical, which is why it is used more frequently.
There are many different types of ocean bills of lading, but the most common types are a "straight," a "shipper's order", a "clean," and an "onboard" bill of lading.
The straight bill of lading is non-negotiable and must be marked as such. It can only be released to the person named on the bill.
A shipper's order bill of lading outlines any conditions that have been imposed by the shipper. A common example is when payment has been secured by a letter of credit, and the terms must be met before the delivery is accepted.
The clean bill of lading is when everything in the shipment is in perfect order. Should any shortages of product or damages occur, a clean bill is not issued.
An onboard bill of lading is issued when the goods are loaded onto the ship and is signed by the ship's master. This type of ocean bill of lading is rendered when payment is contingent on a letter of credit.
The Airway Bill
The airway bill is issued by the air carrier of goods on receipt of goods after completion of export customs formalities. The shipper obtains the airway bill once the cargo is transferred to the air carrier. Since the transit time for air cargo is much less that transit time for sea shipment, a set of airway bills is sent along with the cargo for immediate reference on transit and for import customs clearance at the destination port by the importer. Once customs formalities are completed at the loading port customs location, the cargo transfer manifest (CTM) is issued by an International Air Transportation agent along with an airway bill and other required documents for transportation. Original airway bills are issued in quintuplicate, one for the carrier, importer, shipper, and additional copies. The main difference between a bill of lading and an airway bill is that an airway bill is not a document of title.
FAQs
Typically three bills are issued—one for the shipper, one for the consignee, and one for the banker, broker, or third party. There is no restriction on the number of bills of lading that can be issued, but the number issued must be stated on the bill. Because the bill of lading is a document of title, it is valuable.
How many original bills of lading can be issued? ›
There are three original bills of lading because they are required by the carrier, the shipper, and the consignee.
How many original bills of lading must I surrender to get release of cargo? ›
An Original B/L is a physical paper document of a Straight B/L or Order B/L issued to the shipper at the port of lading by the carrier. In the regular shipping process, the release of goods to the consignee at destination occurs only upon surrender of one or more of these original B/Ls issued by the carrier.
What is the original BL 3 copies? ›
The original bill of lading (OB/L) is issued in three copies – one for each party involved: shipper/exporter, carrier/transport company, and consignee/importer. Having multiple copies helps mitigate risks such as loss or misplacement during transit.
How many sets of bill of lading are there? ›
Sets of Bill of Lading
This is an old practice where the bills are signed in sets of three originals to facilitate timely delivery of the goods even when the original is lost. They are stated as the first, second, and third originals on top of the bill.
What are the rules regarding bill of lading? ›
A bill of lading also serves as a shipment receipt when the carrier delivers the goods at a predetermined destination. This document must accompany the shipped products no matter the form of transportation. It must be signed by an authorized representative from the carrier, shipper, and receiver.
What happens if the original bill of lading is lost? ›
Without the Original Bill of Lading, the release of your cargo will be put on hold until a new Bill of Lading is presented, or we get the confirmation from the shipper to release the cargo without a Bill of Lading.
What is the 4 original bill of lading? ›
Original bill of lading: The primary document used in sea transport. It functions as evidence of a contract of carriage, transport goods receipt, and a legal title to the goods.
How do you release cargo without the original bill of lading? ›
Delivery of cargo without production of original bills of lading: enforceability of letters of indemnity. It has long been accepted that letters of indemnity provided by cargo receivers to take delivery of cargo without production of the original bill of lading are, in principle, enforceable.
Who gets the original bill of lading? ›
While the standard practice is to issue three original bills of lading — one for the shipper, one for the consignee, and another for the bank (in the case of a Letter of Credit), freight forwarder, or other interested party — you have the flexibility to issue additional copies if necessary.
An express bill of lading is a type of bill of lading (B/L) in which the carrier is obligated to deliver the goods to the named consignee and no original bills of lading (OBL) are issued at all.
What is the short form of bill of lading? ›
A Bill of Lading (B/L) is a crucial document in the transportation of goods. It serves as a receipt of the goods being transported and also acts as a contract between the carrier and the shipper.
Why 3 original bills of lading? ›
Typically three bills are issued—one for the shipper, one for the consignee, and one for the banker, broker, or third party. There is no restriction on the number of bills of lading that can be issued, but the number issued must be stated on the bill.
Who holds the original bill of lading? ›
This document must be surrendered to the carrier. As long as the shipper retains the original bills, they may receive payment prior to the release of the originals to the consignee or buyer.
What is multiple bills of lading? ›
MULTIPLE BILLS OF LADING. B/L Terms. MULTIPLE BILLS OF LADING. 1. Goods will only be delivered in a Container to an individual Merchant if all Bills of Lading in respect of the content of the Container have been surrendered authorising delivery to that Merchant at a single Place of Delivery.
What is the difference between original bill of lading and bill of lading? ›
The original bill of lading is a physical, transferable document, while the telex release bill of lading is an electronic message or authorization.
