Your essential guide in 2024 to understand a Bill of Lading

International Freight Forwarder

Are you wondering what exactly a bill of lading is and why it is so significant in international shipping? 

This article will equip you with a comprehensive knowledge of the bill of lading, explaining its various functions and types, and illustrating its practical importance in international transport. Understanding the bill of lading is essential for any business involved in international trade.

This document plays a key role in the security, legality, and smoothness of transactions. Let's dive into the details of this indispensable document and see how it can transform your logistics operations.

  • Understanding the different types of bill of lading
  • Knowing how to read and issue this document

Definition and role of the Bill of Lading

This section explains what a bill of lading is and its importance in international transport.

Bill of Lading: Definition

The bill of lading, often referred to as the Bill of Lading (BL), is a legal document issued by a carrier to a shipper, detailing the goods being transported, their destination, and the terms of the transport. 

What does the Bill of Lading contain?

It contains essential elements such as:

  • Shipper and consignee details: names, addresses, and contacts.
  • Description of goods: nature, quantity, weight, and dimensions.
  • Transport conditions: specific instructions for transport and delivery.

According to the Commercial Code, the bill of lading serves as proof of the agreement between the parties involved in the shipment of goods.

The 3 functions of the Bill of Lading

The bill of lading fulfills three main functions:

  1. Proof of receipt of goods: the bill of lading confirms that the carrier has received the goods described from the shipper. When the products arrive at the port of shipment, the carrier issues a bill of lading to confirm receipt.
  2. Title of ownership of goods: it can be used as a title document allowing the transfer of ownership of the goods. An importer can sell the goods to a third party simply by transferring the bill of lading.
  3. Transport contract between the carrier and the shipper: the bill of lading details the terms and conditions of the transport of goods. The carrier's liability conditions in case of damage to the goods are stipulated in the bill of lading.

These three functions make the bill of lading an indispensable document for international trade, ensuring the security and smoothness of commercial transactions.

The different types of Bill of Lading

This section explores the different types of bill of lading, each with its specific characteristics and use in international trade.

Negotiable and non-negotiable bills of lading

Bills of lading can be classified into two main categories: negotiable and non-negotiable.

Negotiable bill of lading

A negotiable bill of lading can be transferred by endorsement, allowing the sale of goods during their transport.

Imagine a company selling electronic equipment to a buyer in another country. By using a negotiable bill of lading, the buyer can resell these goods before they even arrive, simply by endorsing the document.

Non-negotiable bill of lading

A non-negotiable bill of lading cannot be transferred by endorsement and the goods must be delivered to the specified consignee.

For example, a company shipping medical supplies directly to a hospital uses a non-negotiable bill of lading to ensure that the goods reach only the designated recipient.

Ocean bill of lading

The ocean bill of lading (OBL) is a document issued by a maritime carrier, certifying the receipt of goods on board the ship. It also serves as proof of contract and title of ownership.

  • Characteristics: The OBL indicates the details of the goods, the terms of transport, and the parties involved.
  • Importance: It is crucial for the transfer of ownership and the release of goods at the destination port.

According to Jacques Durand, a maritime transport expert:

The OBL is the key document to secure international transactions, ensuring that goods are shipped according to agreed terms.

Sea waybill

The sea waybill (SWB) is a non-negotiable document mainly used for shipments where the transfer of ownership does not require documentation.

Unlike the OBL, the SWB does not serve as a title of ownership. It facilitates quick transactions by allowing the delivery of goods without presenting the original document. It is ideal for shipments between trusted parties where speed and efficiency are priorities.

A spare parts manufacturer uses an SWB to ship goods to a regular client. The client receives the products faster, without the delays associated with presenting an OBL.

House bill of lading (HBoL)

The house bill of lading (HBoL) is issued by a freight forwarder for consolidated shipments, grouping several individual shipments under one bill of lading.

Each shipment is identified separately but combined under a single bill of lading issued by the forwarder. This document is useful for small shipments that need to be grouped to reduce costs.

For example, an SME shipping various small batches of products to different clients uses an HBoL to consolidate shipments, thereby saving on transport costs and simplifying logistics management.

Master Air Waybill (MAWB)

The master air waybill (MAWB) is used in air transport for consolidated shipments. It is issued by the main carrier and covers the entire shipment.

The MAWB contains the details of the shipper, consignee, and goods, as well as the transport conditions. It is essential for tracking and managing consolidated air shipments.

A large retailer uses a MAWB to ship several pallets of electronic products to a distribution center abroad, ensuring efficient management and precise tracking of the goods.

House Air Waybill (HAWB)

The house air waybill (HAWB) is used by freight forwarders for consolidated air shipments. Each individual shipment receives a distinct HAWB. It allows detailing each individual shipment under a general consolidation. The HAWB is practical for forwarders managing multiple shipments for various clients.

Pierre, a freight forwarder, explains:

The HAWB allows us to efficiently manage our clients' consolidated shipments, ensuring clear and distinct documentation for each shipment while benefiting from grouped freight rates.

Multimodal Bill of Lading

The multimodal bill of lading covers shipments using multiple modes of transport (maritime, rail, road). It combines the transport modalities under a single document, simplifying logistics management. This document is frequently used for complex supply chains requiring coordination between different types of transport.

Switch Bill of Lading

The switch bill of lading is issued to replace the initial OBL, usually for commercial reasons or a change of destination.

It reflects changes to the shipping terms or the parties involved, very useful in case of resale of goods in transit or modification of destinations.

A trading company that sold goods in transit to a new buyer used a switch bill of lading to reflect the new sales and delivery conditions, thus ensuring correct and legal documentation.

Dirty/claused Bill of Lading

The dirty or claused bill of lading contains annotations indicating problems with the goods or packaging at the time of receipt by the carrier.

The annotations can signal damages, shortages, or non-conformities. It can affect insurance claims and the liability of the parties.

Straight Bill of Lading

The straight bill of lading is non-negotiable and the goods must be delivered only to the named consignee. It is often used for direct and secure shipments between parties with an established trust relationship.

An automotive spare parts manufacturer uses a straight bill of lading to ship directly to an automobile manufacturer, ensuring that the parts can only be handed over to the specified consignee.

These different types of bills of lading play a crucial role in international trade, each offering specific advantages depending on logistical and commercial needs. 

For a deeper understanding and personalized advice, feel free to contact our experts.

Practical use of the Bill of Lading

This section focuses on the practical application of the bill of lading in the context of international transport. 

You will master how to read this crucial document and understand who is responsible for issuing it and at what stage of the transport process.

How to read a Bill of Lading

Reading a bill of lading may seem complex, but each section has crucial importance to ensure safe and compliant transport. Here is a detailed guide:

  1. Header: Contains basic information such as the bill of lading number, date, and carrier name.
  2. Shipper and consignee details: Names, addresses, and contact details of the shipper and consignee.
  3. Description of goods: Nature, quantity, weight, dimensions, and description of the goods.
  4. Terms and conditions: Details of the transport conditions, including the responsibilities of the carrier and the shipper.
  5. Signatures and stamps: Confirmation by the involved parties that the information is correct and that the goods have been received for transport.

Who should provide and issue the Bill of Lading?

The bill of lading must be provided and issued by the carrier or the carrier's agent. 

Here are the key steps in the process:

  1. Provision by the shipper: The shipper provides all necessary information about the goods and transport conditions.
  2. Issuance by the carrier: Once the goods are loaded on board, the carrier issues the bill of lading, certifying the receipt of the goods.

Jean-Luc Martin, a consultant in international logistics at Worldgistic, explains:

The carrier plays a crucial role in issuing the bill of lading. This document is the cornerstone of the transport chain, ensuring the security and legality of transactions.

The parties responsible for issuing and providing the bill of lading must work closely together to ensure that all information is correct and complete before transporting the goods. 

This cooperation is essential to avoid delays and complications during customs procedures and delivery.

Interested in shipping goods by sea?

For even more useful information regarding maritime freight to optimize your shipments to the fullest, we invite you to consult our FAQ about sea freight. There you will find detailed answers to your questions and valuable tips for effectively managing your maritime shipments.

Feel free to contact our experts for personalized advice and logistical solutions tailored to your needs.

Worldgistic

Worldgistic is the number one international freight forwarder in Southeast Asia and Europe. With over 15 years of experience and a team of qualified experts, choose Worldgistic!

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