In the shipping industry, execution is a critical element of each stage; when, from loading the cargo to its delivery. Loading the cargo is referred to as Lading. Its roots lie in the early 15th century, and it means to put something on a boat, as a load, freight, or cargo.
Transporting cargo is a process that needs to be time-bound and to ensure that there are no challenges or to make the process trouble-free. The documents issued can be about insurance, finances, or the exchange of goods. Bill of lading holds immense significance among the documents. Bill of lading acts as a legal document to prove the ownership of goods that are being carried. It is required for the cargo to move from one place to another. The Bill of Lading varies depending on the terms and conditions, in addition to the situational requirements. The House Bill of Lading is a type of Bill of Lading.
What is the meaning of the House Bill of Lading?
The House Bill of Lading is issued by a Non-Vessel Operating Common Carrier (NVOCC) or a freight forwarder to the supplier post receiving the cargo and inspecting it. The supplier delivers the shipment to the freight forwarder, who inspects the cargo and delivers it to the consignee. The freight forwarder or the NVOCC is the Ocean Transport Intermediary in this process.
What does the House Bill of Lading include?
The House Bill of Lading includes:
- The name and address of the supplier (exporter/seller)
- The name and address of the receiver (importer/consignee)
- Information about the items shipped (dimensions, weight, classification, etc.)
- The value of the items shipped
- Mode of transportation
- Terms of shipment
What is the purpose of a House Bill of Lading?
House Bill of Lading is a formal acknowledgment that the carrier has received the consignment for shipment post-inspection. It is an assurance that the consignment damage-free and is ready to be shipped to the consignee. Any damage incurred during the shipping becomes the liability of the carrier. However, if the House Bill of Lading specifies that the consignment was damaged at the time of receiving, it becomes the liability of the supplier.
The house bill of lading also serves as proof that the carrier has a contract to transport the cargo. In the absence of it, the carrier is deemed to be moving it illegally. The contract is between the supplier and the carrier company and not the ship/train/airplane carrying the consignment. If there occurs any problem during the shipment, it is to be solved between the supplier and the carrier company and not the specific ship/train/airplane that was carrying the goods.
The house bill of lading allows the carrier to be the legal custodian of the consignment if the recipient fails to provide the required documentation that entitled him to pick up the consignment at the destination. The carrier can hold the consignment till the consignee shows up with the right documents.
The house bill of lading binds the carrier to release the goods to the legal recipient only. Failing to do this can make the carrier legally liable.
House Bill of Lading is tracked using the Bill of Lading Number present on the document.
Example explaining the process under House Bill of Lading
For this example, consider goods are being shipped
From Country: United States of America
To Country: Taiwan
Seller X: Seller wanting to ship to Taiwan
Freight Forwarder A: Consolidates and packs goods from Seller X along with other cargo under Less than Container Load (LCL) or Full Container Load (FCL) as required
Shipping Agent in the USA: Collects the container load from Freight Forwarder A and is responsible for shipping it to Taiwan
Shipping Agent in Taiwan: Taiwanese branch of the shipping agent who receives the goods at Taiwan port and surrenders them to Freight Forwarder B
Freight Forwarder B: Collects the goods from Taiwanese Shipping Agent and distributes them to Buyer Y
Buyer Y: Buyer of goods for Seller X in Taiwan
Seller X having a shipment reaches out to Freight Forwarder A in the USA to transport goods to Taiwan. Freight Forwarder A is also a consolidator and consolidates all the goods to make a FCL. Freight Forwarder A then surrenders the Goods to a Shipping Agent at a particular port in the USA. The Shipping Agent in the USA ships these goods to Taiwan, where their Taiwanese branch receives the goods.
After receiving the goods from Freight Forwarder A, the Shipping Agent in the USA issues a Master Bill of Lading to Freight Forwarder A. This Master BL contains details of the shipper (Freight Forwarder A) and the consignee (Freight Forwarder B). After receiving this Master BL from the Shipping Agent in the USA, Freight Forwarder sends this Master BL to Freight Forwarder B. Meanwhile, Freight Forwarder A issues a House Bill of Lading to Seller X,in this document, the shipper is listed as Seller X and the consignee is listed as Buyer Y. Seller X sends this House BL to his Buyer Y.
Freight Forwarder B, with the Master BL, will be able to clear the goods at the port from the Taiwanese branch of the Shipping Agent. Freight Forwarder B will unpack and distribute the goods to Buyer Y after he surrenders the House BL to Freight Forwarder.
What is the difference between a House BL issued under FCL and LCL?
For FCL, the only difference will be that there will be one seller and one buyer from each country coordinating with both the freight forwarders and they will issue only one house bill of lading against a master bill of lading. Whereas in LCL, one master bill of lading can have multiple House Bill of Ladings which are issued to multiple suppliers who all are having their goods shipped in the same container. The rest of the process will remain the same.
Is the House Bill of Lading negotiable?
Similar to any negotiable Bill of Lading, the House Bill of Lading is also a negotiable document. When a negotiable House Bill of Lading is used, it can fulfill the role of a bill of lading. Due care must be taken by the freight forwarder and the shipping agent when using the House Bill of Lading as a negotiable document, as there have been many cases of a counter-productive and malicious practice of using the House Bill of Lading and the Master Bill of Lading in the same way. This means that for the same cargo, there can be two sets of Bill of Lading documents issued by two different authorities.
When cargo is shipped under a Negotiable status, the Original BL needs to be endorsed by the buyer (consignee) when being transferred to a third party (Freight Forwarder/NVOCC). The freight forwarder is responsible for the proper transfer and hand-over of the BL to the appropriate authority for delivery and possession of the cargo. The original BL should also be surrendered to the authority prior to releasing the consignee or agent. Failure to follow this process will lead to the carrier being responsible for the value of the cargo if the contract between shipper/consignee is not honored.
Using a non-negotiable House Bill of Lading is not a good practice when it comes to security/collateral (when issuing a Letter of Credit from a Bank or Financial Institution). A non-negotiable Bill of lading will not entitle any individual to take delivery unless marked as Shipper or Consignee on the document.
Difference between House Bill of Lading and Master Bill of Lading
House Bill of Lading - Format
Above demonstrated a sample Bill of Lading of Hapag-Lloyd. Kindly note that every shipping line has its own format for B/L, however, the basic details to be filled in are almost the same.
It is the shipper’s responsibility to make sure the details filled are accurate and as per the buyer’s requirements.
Shipper: Shipper is the name and address of the one whose cargo is being shipped. It is not necessarily the owner or manufacturer of the cargo but also can be an exporter or freight forwarder. The one who is booking the space and paying the freight charges to the shipping line has the right to modify the shipper information
Consignee: Consignee is the name and address of the one who is receiving the cargo. It may be the actual owner or recipient or maybe a trader, an importer, or a freight forwarder. Consignee holds the responsibility for any issue that arises at the destination like non or late clearance of cargo, claims, and so on
Notify Party: It is the name and address of the one who is to be notified on the arrival of the cargo at the destination. It might be different from the Consignee depending on the B/L
Pre-Carriage by: If there is an inland port connecting the mainland port via a vessel, then that vessel’s name is shown here. Most times, it remains blank
Place of Receipt: The place where the shipper or the freight forwarder hands over the cargo to the carrier or the shipper is the place of receipt. It is filled when the carrier has done the movement of the cargo from this place to the port of loading. In case of damage during this transit, the carrier bears the liability
Port of Loading: This is the place where the carrier loads the cargo on the designated ocean vessel
Ocean Vessel/Voyage: This contains the vessel name and the voyage number
Port of Discharge: It is the place where the cargo is being discharged by the ocean vessel
Place of Delivery: This is the place where the cargo’s final delivery is to be done. The carrier holds the responsibility to deliver the shipment safe and sound. If the place of delivery is written, then the carrier can not allow the consignee to take the delivery at the port of discharge to transport it to the place of delivery
Marks & Numbers: The packages are marked with some unique identifiers by the shippers so that the consignee can understand the type of cargo
Number and Kinds of Packages: The number of packages that are packed in LCL or FCL is written here. Example: 15 pallets or 20 cartons
Description of Packages or Goods: It describes what exactly is being loaded in the container
Gross Weight: The weight of the cargo comes in this field that is being loaded. The tare weight of the container is not included here, just the weight of the cargo with packaging
Measurement: It shows the total volume of the cargo loaded on board. Example: 25 Cubic Meter
Booking Number and Bill of Lading Number: A unique number given to each B/L for easy tracking and tracing of the container. It is generally in the upper right corner. It can be an 8 to 10 - digit number with the first 4 letters to be the SCAC code of the carrier
Others: Some other information included are:
- Total Number of Containers and/or Packages
- Freight & Charges
- Date on Board
- Date of Issue
- Place of Issue
- Number of Originals
- Carriers Agent
How to issue and create a House Bill of Lading?
A House Bill of Lading is issued and created by “Carriers”. As a general market practice:
A House Bill of Lading can be issued by Groupage Operators. These operators usually book an FCL with the shipping line and once the cargo is packed and ready to be transported, they issue a House Bill of Lading to their customers and receive a Master Bill of lading from the shipping line.
A House Bill of Lading can be issued by a Freight Forwarder or NVOCC. Customers usually transport their goods/cargo through a Freight Forwarder as they provide a cost-benefit instead of directly working with the shipping line. Similar to Groupage Operators, Freight Forwarders issue the House Bill of Lading and collect the Master Bill of Lading from the shipping line. Freight Forwarder or NVOCC may use the House Bill of Lading to hide the identity of the actual consignee/shipper from the shipping line.
Although the House Bill of Lading is issued by carriers, as long as the shipping contract is acceptable to all the parties involved, there is no restriction for any one party or group to issue and create their own House Bill of Lading. While preparing the House Bill of Lading, both the issuing party and the receiver will take all the necessary precautions to safeguard themselves from risk/fraud.
Terms and Conditions under House Bill of Lading
The terms and conditions for a House Bill Lading clearly define the terms Carrier, Merchant, Goods, Container, Carriage, Combined Transport, Hague Rules, Hague-Visby Rules, COGSA-Carriage of Goods by Sea Act, COGWA-Carriage of Goods by Water Act, Charges, Shipping Unit, Person and Stuffed.
It further sheds light on the Carrier’s tariff. If there are any provisions, they are included in the bill. These provisions can be obtained from the carrier as well. If there is a mismatch between the applicable tariff and the house bill, the House bill should be considered for the tariff.
With the House Bill of lading, the carrier can warrant that he is carrying the goods legally.
House Bill is non-negotiable unless there are already conditions incorporated. The holding or receiving authority shall be as per the conditions that are incorporated.
The bill acts as the prima facie evidence for the carrier to claim that he is carrying the goods legally however, correct supporting documents have to be produced to prove it. The proof is not needed if there is mentioned in the bill that the third-party carrier is acting in good faith.
The carrier should have the liberty to subcontract for part or whole voyage The Carrier company keeps the carrier out of any problem that occurs. No liability is put on the carrier in case of any dispute. It has to be solved between the shipper and the carrier company and not the vessel.
The cargo and the carrier will have to abide by the rules of the waters that it enters. Different countries can have changes in rules and those should be kept in mind for the voyage.
The Carrier’s responsibility is only port to port. Cargo responsibility in other transit does not involve the carrier.
There are general provisions related to delay, consequential loss, package or shipping unit limitation, Ad Valorem (Declared value of the cargo), Notice of loss or damage, provision of rust, and time-bar.
The House Bill of Lading clearly states the merchant’s responsibilities during the voyage. It also states the acceptable level of filling the containers with cargo. Provision for temperature-controlled cargo and inspection of goods is included in the terms and conditions of the bill.
Description of cargo, deck cargo, and live stock are included in the House bill.
Different charges that are levied for the shipment, custody of goods, and lien are stated in the terms and conditions.
Unless any provisions are included, there can be no waivers for the house bill. Applicable laws are clearly stated for the voyage.
Handling of personal data and information is agreed upon as stated in the bill and the parties involved comply with the sharing of required data.
House Bill of lading is issued by the carrier along with the provision of terms and conditions. It is suggested to have a thorough reference of the shared details to avoid any dispute in the voyage.