Bill of lading is one of the most important documents in the shipping and freight industry. The bill of lading was created due to the practical needs of transportation of goods in the early years. However, it has transformed into more than just a proof of transportation in the recent times.
Definition of Bill of Lading
A bill of lading is a trade document provided by a carrier to a seller/ shipper. This document acknowledges the boarding of certain goods on the ship as a cargo which is to be delivered to the consignee. The consignee is mostly already identified. The document got its name from the verb ‘to lade’ that means loading a cargo or goods on to a type of transportation, mostly a ship.
Contents of Bill of Lading
A typical bill of lading contains the following information:
- Names and detailed addresses of the shipper and the receiver.
- Account numbers and PO numbers used for tracking the orders.
- Details of the ports of destination and departure.
- Special instructions to ensure swift delivery.
- Shipment date and arrival date.
- A number of units to be shipped.
- Kind of packaging used such as cartons, drums, pallets, etc.
- An accompanied note if a hazardous material is being shipped.
- Items’ description, including the common name and the material of which it is made of.
- Freight classification.
- The weight of the consignment.
- The value of the item being shipped.
Features of Bill of Lading
A bill of lading has the following three important features:
Proof of Contract of Shipment
The bill of lading is the ‘proof’ of a contract of shipment between the shipper and the carrier and not the contract of shipment as many would think. It is also not a contract between the buyer and the seller. It is only the evidence of the shipment’s contract to transport the cargo as decided by the buyer and the seller.
Receipt of Shipment
The bill of lading also acts as a receipt for goods received by the carrier in good condition from the shipper. The carrier issues the bill of lading in exchange for the receipt of the goods to be shipped.
Title to the Shipment
The bill of lading gives the holder the ‘title’ to the shipment. The goods are transferred to the holder, who can either claim them or transfer to someone further.
Types of Bill of Lading
There are various types of bill of lading depending on the requirements of the shipment:
Straight Bill of Lading
This is used when the goods are already paid for and are directly shipped to the customer.
To Order Bill of Lading
This is used when the goods are sold on trade credit and the shipment can be either to a distributor or the customer.
Clean Bill of Lading
This is used to state that the goods were in proper condition when loaded. This is a sign off from the carrier.
Soiled Bill of Lading
This is used when the goods are marred in any way or are damaged.
Inland Bill of Lading
This is used to ship goods domestically through railways or roads, but not through seas.
Ocean Bill of Lading
This is used to ship goods through seas, both nationally and internationally.
Through Bill of Lading
This is used in complex transactions where the shipment passes through different ways of transportation and also various centers of distribution. This bill of lading requires an ocean and inland bill of lading.
Multimodal/ Combined Transport Bill of Lading
A type of through bill of lading where a shipment involves at least two ways of transport.
Direct Bill of Lading
This is used when the vessel used to pick up the cargo, delivers the shipment to final destination as well.
Stale Bill of Lading
This is used when the goods reach the port before the bill of lading.
Conclusion: The bill of lading is, thus, an important part of trade transactions. Though there are several types of bill of lading, it is the best to discuss the shipping requirements with the shipping carrier to choose one.