A bill of lading is perhaps the most critical document you'll come across when moving your goods globally. It's essential for understanding and navigating international logistics. In this article, we'll explain what bill of lading means in shipping and why it's so vital for smooth, worldwide logistics.
What is a bill of lading? – definition of the shipping term
A bill of lading (B/L) is a vital document that acts as a contract between the shipper (the sender of the goods) and the carrier (the company responsible for delivering them).
It serves as a receipt, confirming that the goods have been received for transport. The B/L also outlines the specifics of the shipping agreement, including details about the cargo, the delivery address, payment terms, and any special instructions.
The bill of lading serves three primary functions:
- Evidence of a contract of carriage: It legally binds the shipper and carrier to the agreed-upon terms of transport.
- Receipt of goods: It's an official acknowledgment that the carrier has taken possession of the freight.
- Document of legal title to goods: For many types of B/Ls, it signifies ownership of the cargo, allowing it to be bought, sold, or financed while in transit.
Read about airway bills here.
Information included in a bill of lading
After you book your transport, you'll give the carrier shipping instructions. This is where you put all the correct information about your shipment. The carrier then uses this to create the official bill of lading.
Here's what you'll typically see on a B/L:
- Who's involved: Names and addresses for the shipper, the consignee, and sometimes a "notify party" (someone else who needs to be told when the shipment arrives).
- What's being shipped: A clear description of your cargo.
- How much: The weight, how many packages there are, and the total size (volume) of your cargo.
- Payment terms: How the shipping cost will be paid – either "prepaid" (you pay upfront) or "collect" (the receiver pays when it arrives).
- Where it starts: The port of loading, which is where your cargo gets on the ship, plane, or truck.
- Where it ends: The port of discharge, which is where your cargo will be unloaded.
- Type of bill: This tells you what kind of bill of lading it is. To learn more about the different bills of lading types, continue reading later in the article.
The importance of the bill of lading
The bill of lading holds significant importance in shipping for two main reasons. Firstly, it functions as a legal document of title, meaning whoever legally possesses it can claim ownership of the cargo it represents. Secondly, it provides evidence of the contract of carriage, clearly detailing the obligations and responsibilities of the carrier to everyone involved in moving the goods.
Also read: Trends in supply chain management
How many types of bills of lading are there?
There are numerous types of bills of lading, which vary depending on your shipping destination, the specific commodity being transported, and your individual requirements. The type of B/L you encounter might be determined by the issuer, the mode of transport (e.g., sea, air, road), or the commercial relationship between yourself and the shipper – for instance, whether you've paid for goods or transportation in advance or on credit.
Three common types of bills of lading you'll often encounter include:
- Original bill of lading: This is the primary document used in sea transport. It serves as evidence of a contract of carriage, a receipt for the goods transported, and crucially, a legal title to the goods. To take possession of the cargo at the destination, the buyer (consignee) is typically required to present the physical original bill of lading.
- Seaway bill: The seaway bill is a specific type of B/L primarily used in sea transport when the supplier (shipper) decides to transfer ownership of the cargo to the buyer (consignee) immediately upon shipment. This means the cargo can be collected by the party identified in the seaway bill without the need to present a document of ownership.
- House bill of lading (HBL): A house bill of lading (HBL) is issued by a freight forwarder to a shipper (exporter) when the forwarder consolidates multiple smaller shipments into one larger shipment (master shipment) for transport by a carrier. The HBL acts as a receipt for the individual shipper and details their specific cargo.
What is the difference between a shipping bill and a bill of lading?
- Shipping bill: A document filed by the exporter with customs authorities for export clearance in the origin country. It's about getting permission to export.
- Bill of lading: A document issued by the carrier to the shipper. It serves as a receipt for goods, a contract of carriage, and, crucially, a document of legal title to the goods. It's about the actual transportation and claiming the goods at the destination.
Seamless delivery process with Bertling
When you book transport with Bertling, we guarantee an accurately completed bill of lading, creating the best conditions for a secure and efficient delivery. We work closely with our customers to ensure the document meets all requirements and complies with international rules and regulations. By providing precise and clear information in the bill of lading, we facilitate customs clearance, streamline the handling of insurance claims, and enable quicker processing at the delivery destination.
FAQ
Who receives a bill of lading?
The shipper (exporter) initially receives the bill of lading from the carrier once the goods have been loaded. The shipper then typically forwards it to the consignee (importer/buyer), usually through their bank or directly, to enable the consignee to claim the goods at the destination.
Who pays for a bill of lading?
There isn't a direct "fee" specifically for the bill of lading document itself in most cases. The cost associated with its issuance is generally included in the overall freight charges paid by either the shipper or the consignee, depending on the agreed-upon Incoterms of the sale. The party responsible for the freight typically bears this bundled cost.
Who generates bills of lading?
The carrier or their authorized agent generates the bill of lading. They are the party acknowledging receipt of the goods and undertaking their transport.
Who confirms the bill of lading?
The shipper confirms the details on the bill of lading before it's finalized to ensure accuracy. Once issued, the carrier confirms its authenticity, and at the destination, the consignee confirms its validity to claim the goods. Banks involved in trade finance also meticulously confirm the details on the B/L against the credit terms.
Is a bill of lading proof of payment?
No, a bill of lading is generally not proof of payment for the goods themselves. It is proof that the goods have been received by the carrier for shipment and evidence of the contract of carriage.
Payment for the goods is a separate commercial transaction between the buyer and seller, which might be facilitated by other documents like invoices or letters of credit. While the B/L might indicate whether the freight charges are "prepaid" or "collect," this only refers to the shipping costs, not the value of the cargo.
Can I make my own bill of lading?
No, you cannot make your own bill of lading for commercial shipments. A bill of lading must be issued by the carrier or their authorized agent. Attempting to create your own would render it invalid and unenforceable.
Are bills of lading confidential?
While bills of lading hold sensitive details like shipper, consignee, and cargo information, this data isn't always private by default. In fact, some of it can be publicly available.
However, importers have a way to protect their privacy. They can request confidentiality for their name and address, as well as the shipper's name and address, on inbound manifests. This request, often made under specific privacy regulations, covers the information found on the bill of lading. This confidentiality typically lasts for two years and can be renewed.
What is a bill of lading in trucking?
In trucking, a bill of lading (often called a "freight bill") serves the same fundamental purposes as in ocean or air freight. It acts as:
- A receipt for the goods picked up by the truck driver.
- A contract of carriage between the shipper and the trucking company, outlining the terms of the shipment.
- A document of title in some cases, though straight (non-negotiable) bills are more common in domestic trucking.
Prepare for shipping delays in advance
Shipping delays can’t always be avoided, but you can plan and reduce their impact. Here are some simple ways to stay ready and keep your customers happy:
1. Plan ahead
Try to predict when delays might happen, like during holidays, bad weather, or global events, and have a plan in place. It’s smart to create backup options, like extra suppliers or extra inventory, just in case.
2. Keep everyone in the loop
Talk regularly with your suppliers to stay updated on possible delays. This gives you time to fix the problem before it affects your customers.
Also, be open and clear with your customers. If their order is delayed, send updates by email or text, and be available to answer questions. Clear communication builds trust.
3. Track your orders
Give your customers a tracking number so they can follow their order. Even if it’s delayed, being able to see where it is helps reduce worry and shows that their package is still on its way.
4. Watch your supply chain closely
Check in often on every part of your supply chain – from raw materials to shipping. If you spot a problem early, you’ll have more time to react.
For example, if you hear about a storm or a new regulation that might slow things down, you can reorder supplies or switch suppliers before it causes delays.
How to tell customers about shipping delays?
If an order is delayed, a well-written email can make a big difference. Here are some easy tips to help you communicate clearly and keep your customers happy.
- Be honest: Explain what caused the delay – whether it’s weather, supply chain problems, or something else. Customers appreciate honesty.
- Give a new delivery estimate: Let them know when they can expect their order now. A clear timeline helps manage expectations and reduce frustration.
- Offer a solution: If possible, offer something helpful, like faster shipping later, a discount, or a small freebie. It shows you care about their experience.
- Make it personal: Use the customer’s name and mention their order details. It feels more thoughtful and less like a copy-paste message.
- Follow up: Once the order ships, send another update to thank them for their patience and let them know it’s on the way.
Mitigate shipping delays with Bertling
At Bertling, we know how disruptive shipping delays can be – that’s why we’re constantly working to make supply chains more reliable and transparent.
To help our clients stay ahead, we’ve launched a new deviation tool in our BLU4U tracking-system. This feature provides early visibility into shipment issues, allowing you to act faster and reduce risks. You can read more about it here: New deviation tool for BLU4U
Want to understand more about what’s happening in the market?
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With Bertling you’re better equipped to navigate shipping challenges – before they become problems.