Part of the Freight Term Glossary
The ocean freight trade is a trillion dollar business which hinges on buyers getting the goods and sellers getting paid. That mostly comes down to one incredibly important freight document – the Bill of Lading (aka BOL, B/L, BL, Sea Waybill). This little document punches well above its weight because…
The Bill of Lading is really three documents rolled into one:
- Loading Receipt
- Contract of Carriage
- Document of Title
The Bill of Lading Is A Loading Receipt
The word “Lading” is an archaic form of “loading”. Blackbeard would have used it when piling more booty onto his pirate ship. The bill of lading started out as a receipt issued when a shipment was loaded onto a vessel, not that Blackbeard was too fussed about paperwork. It is still used as a receipt at pickup, handed to the seller as proof that the goods were handed over. It is also a receipt that the shipment was handed over in good condition, unless a note to the contrary is made on the BOL at pickup.
The Bill Of Lading Is A Contract Of Carriage
The second role a bill of lading plays is as a shipment contract. The terms and conditions of the forwarder arranging the international transit is included on the bill of lading. Technically, the contract begins when you accept the forwarder’s freight quote. But the bill of carriage is evidence of that contract otherwise why is the shipment being picked up for international transit?
Forwarder terms and conditions are usually written on the reverse side. And it turns out that forwarders (carriers too, for that matter) limit their liability for the shipment if something goes wrong. That’s why taking out comprehensive cargo insurance is so important.
The Bill of Lading Is A Document Of Title
The third role a BOL plays is as proof of ownership. Technically, the commercial invoice does that. The buyer and seller select freight terms (choose an incoterm) when putting the deal together. The incoterm listed on the commercial invoice sets the point during transit when the goods change hands. Possession is nine tenths of the law, and possessing the bill of lading has come to be used as proof of ownership. The seller gets it in their hands at pickup. Later on, the buyer will need it for shipment release.
The BOL Is Useful In Other Ways Too
Tracking: If the master bill of lading number (more on that later) is recorded on the BOL, it can also be used for shipment tracking. Other tracking identifiers, like container numbers, are often recorded on the BOL.
Payment: The bill of lading is one of the key documents submitted in the Letter of Credit (L/C) process.
Insurance claims: The BOL must be submitted when filing a claim for lost or damaged cargo.
Insurance liability: If a bill of lading has been issued in a freight forwarder’s name, they can be liable for damage to freight – even if they don’t handle it.
What You’ll Find On The Bill of Lading Form
Forwarders create their own forms, each with their own design. Fortunately, they all essentially have the same information and in roughly in the same place on the form, as laid out in this conceptual design.
The following tables explains each of the sections in more detail. Or skip to:
Shipment Details | Load Details | Contract Details
Bill of Lading: Shipment Details
|Shipper||Name and contact details of seller (factory owner or supplier), unless a L/C specifies otherwise.|
|Consignee||Name and contact details of buyer, unless a L/C specifies otherwise.This field can be used to specify negotiability:
|Notify Party||Name and contact details of any other party that should be notified, such as the destination customs broker or third party warehouse.|
|Voyage Details||The port to port ocean leg.
Bill of Lading: Load Details
|Load Details||These usually sprawl over several columns in the central section of the form.
Bill of Lading: Contractual Details
Freight payable sometimes appears near Delivery Instructions.
|Corrections||Amendments made to the BOL, e.g. changes to weight and dimensions made by the port authority after VGM weighing.|
|Release method||Release details often appears elsewhere on the form, e.g. at the top, or stamped over the load details table. Count of originals often appears in the Legal Clauses section.The BOL format the buyer must use when receiving the shipment, either:
Using originals is slower and more expensive, but is still preferred when paying by L/C – with the bank only triggering payment when all originals have been delivered. Sometimes, payment occurs before delivery. If the shipper notifies the forwarder, the release of goods can occur without originals. This hybrid method is called telex release.
|Forwarder Sign-off||Place of Issue, Date of Issue, and Signature.|
|Forwarder||Specified at the top of the form.Logo, name, and sometimes contact details.|
|Negotiability||Usually specified at the top of the form, and/or in the consignee field.Most BOLs are marked negotiable, meaning the goods can change ownership while in transit. Only large companies shipping in-house or between sister companies should mark the shipment as non-negotiable.|
The Bill Of Lading And You
The bill of lading described here is the contract of carriage between the forwarder and their customer. It is more properly called the house BOL, to distinguish it from a very similar document called the master BOL. Both BOLs are created for each international shipment, but the master bill of lading is the contract of carriage between the forwarder and the carrier. Incidentally, most information online is about the master, not the house, document.
The master bill of lading also acts as the forwarder’s receipt of delivery and contract of carriage. The end customer doesn’t get a copy of this document, but their forwarder should provide them with the master bill of lading number. It acts as a tracking number while the shipment is in the carrier’s hands.
You will first see the House BOL as a draft. Soon after reserving a carrier booking, the forwarder will send a draft to confirm weights and dimensions. It is important to check them because the departure port will weigh the shipment, and any discrepancy may lead to fines being imposed, and the BOL being updated.
As well as checking weights and dimensions, the customer should also carefully check that all other information is correct. Even minor discrepancies between the House BOL and the commercial invoice or shipping records could trigger costly customs inspections later on.
When using original copy release, be careful not to lose your copy. It’s much more tortuous than the forwarder simply writing out and sending a replacement.
There’s more that importers could learn about the ocean bill of lading, for instance how a trucking bill of lading or Air Waybill are different again. But Freightos likes shippers to quickly get what they really need. Just like the Freightos online marketplace, which gives shippers quick access to quotes from respected forwarders.