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Bill of Lading in International Trade, Logistics & Shipping

04/05/2022 5 Min Read

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What does Bill of Lading mean?

The term ‘Bill of Lading’ (BOL) is of ancient English origin and literally means ‘list of cargo’. It is one of the essential legal documents generated during the shipping of overseas bound cargo and acts both as a contract as well as a receipt.

Essentially, a BOL serves as a receipt for goods that change hands from the exporter to the carrier. It also acts as a contract between the shipper and the carrier for the carriage of goods, particularly in the absence of a separate contract to that effect.

A BOL is issued by the carrier and, in doing so, he acknowledges that the goods have been received from the shipper/exporter in good condition.

What is the Purpose or Importance of Bill of Lading in exports?

Once the goods are shipped, the physical possession shifts from the exporter to the carrier. At this stage, the exporter may not have yet received payment. This makes the BOL a crucial component of the transaction. It allows the exporter to hand over the control of the packages to the carrier, giving the exporter indirect control over the goods during its transportation phase.

The BOL is also important for the shipping of goods because the information it holds influences various activities. This could include the destination of the shipment, the number of packages in the consignment, billing details, payment recovery instructions/details, and special instructions regarding the handling of the packages at the docks or in the trailers.

*Also Read:* GST on Export: How to Claim Refund and More

Types of Bill of Lading

Bills of Lading can be of various types, depending on the terms and conditions and circumstantial requirements that it signifies. Here are the main types:

  • Clean Bill of Lading is provided by the shipper or its agents and does not bear any attestation regarding the defective nature of the goods on board.

  • Claused Bill of Lading indicates that there is damage to the consignment or that all or part of it is missing altogether.

  • Container Bill of Lading indicates that the goods are being delivered in a secure container from the port of origin to another port.

  • Received for Shipment Bill of Lading is an acknowledgement provided by a carrier before the vessel loading with an approved receipt of goods for shipping.

  • Through Bill of Lading allows the carrier to transport a shipment through multiple modes/ distribution centres and may include an Ocean Bill of Lading and/or an Inland Bill of Lading.

  • Master Bill of Lading is a document issued by carriers for their shipping companies, indicating the terms of transportation and details of the shipper or consignor, consignee, and the person in possession of the goods.

  • House Bill of Lading is generated by a non-vessel operating company or ocean transportation intermediary freight forwarder as an assertion of receipt of the goods shipped. Also known as Forwarder’s Bill of Lading, its issuance is meant for the suppliers on receipt of the shipment.

  • Short Form/ Blank Back Bill of Lading is required when the terms of the shipping contract are not mentioned in the original Bill of Lading.

  • Straight Bill of Lading does not grant the endorsee with any better rights than those given to the endorser. Also known as a non-negotiable bill of lading, it may be considered unsafe in a banker’s point of view.

  • Order Bill of Lading is one where the delivery is made in line with a further order from the consignee.

  • Charter Party Bill of Lading signifies an agreement between a vessel owner and charterer for the shipped goods.

  • Multimodal Transport Document (also known as Combined Transport Document) is a kind of Through Bill of Lading where land or ocean transportation is involved.

  • Stale Bill of Lading is provided 21 days after the date of shipment (or other stipulated dates) for negotiation.

  • Surrender Bill of Lading issues the term where the negotiating bank's receipt will have to provided to the bank to release documents.

  • Bearer Bill of Lading allows delivery to be made to the holder of the bill; it can easily be negotiated by simply delivering the goods physically.

Also read: Ocean Freight in International Shipping | The Complete Guide

Contents of Bill of Lading

The exact contents of a BOL will vary on a case-to-case basis, depending on the type of BOL and/or the shipping and business terms. Some of the data you are likely to find in a typical BOL are:

  • Name and details of the shipping line

  • Shipping bill number and date

  • Name and address of the shipper as well as the receiver, along with necessary contact details, plus a mention of the date to facilitate tracking of the shipment

  • Purchase order number or similar reference number; this makes it easier to cross-refer the agreed terms and conditions (E.g. the delivery terms, incidence of expense etc.)

  • Special instructions – this is an important section as it has all the extra service requests, terms and conditions, and reminders for the carriers

  • Description of the goods in the shipment, giving details of the units, their dimension, weight, content details etc.

  • Packaging details, which discloses information of the packaging and use of cartons, crates, pallets, and drums used for shipping

  • Freight classification, which determines the cost of the shipment

  • Indication of hazardous shipment, if applicable

  • Signature and initials of the concerned officer

*Also Read:* Let Export Order (LEO): Everything you need to know

Avani Ghangurde

Senior Associate Communications at Drip Capital

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