Bill of lading: Why is it important in shipping?
There is one thing every shipment transported by sea has in common.
Can you guess what it is?
If you guessed a bill of lading, you’re right!
A bill of lading (B/L or BOL) is one of the most important shipping documents you’ll need to transport any kind of shipment. You won’t be able to make a shipment without it. A BOL is issued for all cargo transported by sea.
It acts as a legal contract of carriage between the various parties involved in the shipment — namely, the shipper, carrier and consignee.
It’s all in the name!
The word ‘bill’ refers to the items to be delivered and their associated costs for services carried out, and the word ‘lading’ means to load cargo onto a mode of transport (ship, plane, truck or train).
In the transportation process, a BOL serves as a record detailing all parties involved. It includes key information, such as:
BOL and booking number
Consignee's name and address
Country and point of origin
Domestic routing/exporting instructions
Exporter/shipper's name and address
Mode of initial carriage
Notify party's name and address
Place of initial receipt
Place of delivery by carrier
Port of loading
Type of cargo shipped
A BOL is a legally binding shipping contract that’s mandatory to import or export any goods.
It states the terms and conditions of carriage, including the carrier’s limited liability. That’s a significant point to note and why insurance is critical to mitigating the risk of a financial loss in if there’s an incident.
The contract puts the responsibility on the carrier to transport goods to the location stated in the BOL and only to release the goods to the consignee listed in the document.
The purpose of a BOL is threefold.
It acts as a legal contract that lays out the terms and conditions of the carriage, as mentioned, including incoterms®. A BOLalso serves as evidence of the shipment; and the consignee must keep it for legal (customs) purposes.
It acts as a title to the goods once they’ve reached their destination. Only the named consignee may receive these goods and can ‘release’ the cargo to receive them.
It’s a receipt of goods that are being shipped.
The various types of bills of lading represent differences in:
Levels of buyer protection.
When we talk about a BOL, it’s usually a house bill of lading (HBL) or a master bill of lading (MBL).
An MBL (sometimes referred to as an original bill of lading) is created and issued by the actual carrier/shipping line of a shipment.
Confused about who handles the shipment at each stage of the journey? Read this.
Consignor: freight forwarder/agent/NVOCC of seller
Consignee: freight forwarder/agent/NVOCC of buyer
Issuer: freight forwarder/NVOCC
Want to know more about bills of lading or need help with shipping documentation?
Get in touch with us, and we’ll be happy to assist you.