A bill of lading is one of the most important documents for shipping companies.
A bill of lading is one of the most important documents for shipping companies.

A bill of lading is used in shipping and it is a record of the goods that are received on board. The bill establishes an agreement between the transportation company and the shipper of goods. The transportation carries use the records and provide it to the shipper.

It shows the details about a carrier that carries goods to its final destination and it has the terms and conditions for transporting the shipment.

Importance of the bill

When there is a delivery of goods, the carrier does not need the originals to be submitted at the time of delivery. Hence, it is important that an exporter has control over the entire set of originals until the payment is made or a bill of exchange is accepted. It is important to assure that the payment will be made on the delivery of goods. Hence, the bill is very important. It is used when shipments are made to carry the cargo from one location to another. It is an agreement between the shipper and carrier for the transportation of goods and also serves as a receipt issued by the carrier to the shipper.

The purpose of the bill is to provide important information to the carrier and the shipper to process the freight shipment and invoice it in the right manner. The original bill is given to the carrier and a copy is ascribed to the packaged freight.

Purpose of a bill of lading

A bill of lading works as a transport document that provides evidence of the contract of carriage of the goods. It serves the below-mentioned purpose:

  • The bill is evidence for the contract of transporting of goods and it contains the terms and conditions under which goods will be transported.
  • It acts as a receipt that endorses that the carrier has received the cargo according to the contract and the goods have been received.
  • The bill is a document of title that allows the sale of goods in transit and raises financial credit.
A bill of lading is used in shipping and it is a record of the goods that are received on board.

Contents of the bill

A bill of lading consists of the following:

  1. Name and address of the shipper and receiver,
  2. Date of pickup,
  3. Purchase orders or invoice numbers that help the shipper to release the goods at the time of delivery,
  4. Details of the item with the number of units being shipped, dimension and weight of the product,
  5. In the case of hazardous goods, there will be a tag of hazardous material and it will be shown on the bill,
  6. Information about the packaging used like palates, crates, drums, etc.
  7. Additional notes or instructions for the carrier. 

Types of bill of lading

There are different types of bills based on the circumstances and terms and conditions.

Clean bill of lading

This bill is provided by the shopping company and has no attestation about the defective nature of goods on the carrier.

Claused bill of lading

The bill has a clause which shows that there is damage to the consignment or that a part of the consignment is missing completely.

Container bill of lading

This type of bill shows that goods are being delivered in a secure container from the origin port to another port.

Received for shipment bill of lading

It is an acknowledgment given by the carrier before loading the vessel with a receipt of goods for shipping.

Through bill of lading

This type of bill allows the carrier to transport a shipment from different distribution channels including an ocean.

Master bill of lading

This is a document issued by carriers for the shipping companies and it indicates the details of the consigner, terms of transportation, details of the consignee, and the individual who has the goods.

House bill of lading

This bill of lading is used by a nonvessel company as an assertion of receipt of the goods shipped.

Short-form bill of lading

The bill is used when the shipping contract terms have not been provided in the original bill of lading.

Order bill of lading

It is used where the delivery is made about a future order from the consignee.

Charter party bill of lading

It is an agreement between the charterer for the goods and the vessel owner.

Straight bill of lading

This bill does not grant the endorsee with any rights besides those given as an endorser.

Surrender bill of lading

It is issued when the negotiating banker’s receipt will have to be given to the bank to release the documents.

Bearer bill of lading

The bill allows delivery to be made to the holder of the bill and can be negotiated by delivering the goods physically.

Consequences of inaccurate bill

If the bill of lading is not prepared with the necessary information, the obvious consequence is that you will not get the product to the desired recipient. The other consequences include:

  • Exposure to a claim: When the bill of lading states that the goods were loaded in good condition but the consignee receives them in damaged condition, the consignee has a right to make a claim for the damage against the bill. You might not be able to get the full freight claim paid and you will be exposed to a claim.
  • A loss of right to restrict liability,
  • Criminal prosecution,
  • Loss or profit & loss cover, and 
  • Loss of the right of indemnity from the charterer. 

Tips to ensure that the bill of lading is accurate

  • Use a transport management system: When you employ an automated system, it will take all the data entry points that are needed to prepare the bill. It will reduce the chance of an error and will also store the documents for future reference. 
  • Use a Standard Bill of lading: You will find various bills form online but you need to choose one that is easy to use for you and your consignees. 
  • Check thoroughly before you sign: Triple check all the information that is written in the bill and only then sign the document. 

Conclusion

  • A bill of lading is used in shipping and it is a record of the goods that are received on board.
  • It is one of the most important documents to take the delivery of goods.
  • It is an agreement between the shipper and carrier for the transportation of goods.
  • There are various types of bill of lading based on different terms and conditions.

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