What Is a Bill of Lading in Shipping?

Bill of lading: what is it and why is it important?

A bill of lading (sometimes abbreviated as B/L or BOL) is a legally-binding document that specifies the type, quantity, and destination of the goods being carried. While not a contract in the strictest sense, this document functions as an agreement between the shipper (cargo owner or agent) and carrier.

The bill of lading is crucial for protecting both the carrier and shipper, as it documents important facts about the shipment. It also includes instructions for handling the shipment, such as special requirements or conditions. The document is essential for international trade and is required for customs clearance. Without a bill of lading, the shipment may not be accepted by the carrier, and the shipper may face delays, additional costs, or even legal issues.

What are the purposes of the bill of lading?

The 3 main purposes of the bill of lading are:

Receipt of shipment: A bill of lading confirms that the carrier loaded the goods onto the transport vessel. The shipper gets several original bills of lading, which they can give to different parties to control the cargo.
Contract of carriage: The bill of lading lists the shipment type, quantity, destination, and sometimes condition. It does not serve as a contract itself, but rather as proof that the previously agreed-upon contract between the shipper and carrier is being executed per the terms.
Document of title (representing ownership): The document contains the receiver’s details, but ownership is not transferred until the bill of lading has been passed to them. The shipper retains ownership until the receiving party gets the bill of lading after full payment has been made.

The general structure of a bill of lading:

What is included in a bill of lading?

The contents of a bill of lading may differ based on the shipment, but generally, it will contain the following:

Full names, addresses and contact details of both the shipper and the consignee
Carrier details and signature to confirm receipt of the shipment
Reference numbers such as purchase order (PO) or invoice numbers
Pick-up or loading date, to facilitate cargo tracking
Full description of the goods, including weight, dimensions, number of units, hazardous classification (if any)
Packaging type: box, pallet, crate, drum, container, etc
Terms of sale (Incoterm)
Special instructions or notes for the carrier

Types of bills of lading

There are many types of bills of lading that differ based on the terms, conditions, and requirements. Selecting the proper bill of lading is crucial as it can prevent delivery delays or assist in locating lost goods during transport.

Here are some of the most commonly used:

1. Clean bill of lading

A clean bill of lading confirms that the cargo was loaded in good condition and does not explicitly state any defects in the packaging or contents.

2. Claused bill of lading

This document indicates that there is an issue with the goods being shipped, such as damage or incorrect quantities. A claused bill of lading may also be referred to as a dirty, fouled, unclean, or soiled bill of lading.

3. Negotiable or order bill of lading

This document allows anyone holding the original copy to take control of the goods, signifying proof of cargo ownership. The buyer/receiver or their agent must present the endorsed original bill of lading at the discharge port to receive the goods. No original bill copy means no release of the freight.

4. Non-negotiable or straight bill of lading

A non-negotiable bill of lading designates a specific consignee/receiver for the shipment. It is not a document of title and cannot be used to transfer ownership from one party to another. This type of bill is mainly used for military cargo.

5. House bill of lading

Also referred to as a forwarder’s bill of lading, this document is issued by a non-vessel operating company or ocean transport intermediary freight forwarder to confirm receipt of shipped goods. It is intended for suppliers upon receipt of the shipment.

6. Master bill of lading

This document, created by carriers for their shipping companies as a transfer receipt, outlines the transport terms and includes information about the shipper, receiver, and the person possessing the goods.

7. Inland bill of lading

This type of bill of lading enables the carrier to transport the shipment domestically by road, railways, and inland water domestically. It is often the first transport document issued for an international shipment – especially if the goods are being transported towards a seaport

8. Ocean bill of lading

This bill of lading is needed for international sea freight shipments. It is like a receipt from the carrier to the shipper that shows what is being transported. Both the shipper and carrier have to sign it before the receiver can get it.

9. Container bill of lading

A container bill of lading indicates that the goods are being delivered securely in a container from the port of origin to another port.

10. Airway bill of lading (AWB)

An airway bill is usually not negotiable and is not consigned “to order”. It is issued by an air freight company or forwarder and can only be negotiable if the cargo is consigned to the shipper’s order.

11. Through bill of lading

This type of billof lading is more complicated than others. It lets the carrier transport the cargo across various transport modes, distribution centres, and domestic and international borders. An inland bill of lading or ocean bill of lading must also be included, depending on the shipping destination.

12. Charter party bill of lading

A charter party bill of lading signifies a mutual agreement between a vessel owner and charterer for the transport of goods. The vessel’s charterer issues the document to the shipper for the goods shipped on board.

13. Short-term or blank back bill of lading

This document is required when the specific terms and conditions of a carriage contract are not included on the body or back of the original bill of lading.

14. Bearer bill of lading

This allows the cargo to be delivered to whoever possesses the bill of lading. The receiver may be unspecified originally or negotiated upon delivery. A bearer bill of lading is commonly used for bulk shipments released in smaller quantities.

15. Stale bill of lading

A bill of lading is considered stale if it is presented for negotiation 21 days after the shipment date (or other stipulated dates).

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FAQ about the bill of lading and international freight shipping

What is a CMR bill of lading?

A CMR bill of lading is a document that follows the requirements set by the international CMR Convention. The CMR Convention, also known as the Convention relative au Contrat de Transport International de Marchandises par Route or Convention on the International Carriage of Goods by Road, is a treaty that establishes the legal regulations governing road freight transport in European countries and certain countries outside of Europe.

Who provides the bill of lading?

Carriers, brokers, or forwarders typically provide the shipper with a blank bill of lading form. The shipper fills out this form with the necessary details of the consignment. Once the goods are delivered, the document is transferred to the receiver/consignee. This transfer of ownership enables the shipper to release the goods.

How many bills of lading are needed for a shipment?

Three copies of the bill of lading are generally issued: one for the shipper, one for the receiver, and one for the broker or third party. The original bill must state the number of bills of lading issued, but there is no maximum limit to the number of bills that can be issued.

What is a telex release?

A telex release is an electronic message that allows the recipient of the cargo to receive it without showing the original bill of lading. The telex release is sent from the shipping company's office at the port of origin to the office at the port of destination, instructing them to release the cargo to the recipient without the need for the physical bill of lading. This helps to speed up the process of releasing the cargo at the destination port.

The receiver must present the telex release to customs officials at the destination port, and their identity must match the party named in the telex release.

Although a telex release cannot replace a bill of lading, it can be a convenient alternative for shippers who do not require original documents for accounting or legal records.

Disclaimer: The information above serves as a guideline and reflects the requirements for international cross-border shipments. You may be asked to provide additional documentation if needed, depending on different country regulations. It is the shipper’s responsibility to check and fill in the documentation correctly.