Bill of Lading. MarketCheese

A bill of lading (sometimes abbreviated as BoL, or simply BL) is a legally binding official record serving as a formal basis for shipment of goods. It contains all the relevant information on the goods being shipped, such as quantity and quality, a type of good, a hazard class if there’s any, parties involved, a final place of delivery, etc.

Any shipment and delivery between different companies must be accompanied by a bill of lading, as the document ensures protection against theft, aids in regulating disputes, protects legal interests of all participants, and maintains general order and transparency of shipment processes.

A bill of lading is not a single document used for shipment, but one of the most important ones. It’s necessary to distinguish it from other significant papers, though. A bill of lading should not be confused with an invoice, for instance, as an invoice is a record mainly used to document a trading operation, while a bill of lading is about delivery of goods.

How Bill of Lading works

When a shipment or delivery is organized between two or more parties (even within the same organization), there are three sides involved. It’s important to distinguish those parties to understand how a bill of lading works.

So, three main participants of a shipment are the following:

A shipper, which is the one who prepares the goods for shipment (this participant might be alternatively called a consignor);
A carrier, who then deliver the goods to the destination;
A receiver, which is the one who initially ordered the goods in question (another possible term for this side is “consignee”).

A bill of lading is used by all abovementioned parties. It is prepared and released by a carrier upon receiving the goods from a shipper. The goods are then checked and all the important data is represented in a bill of lading, which is then signed by both parties. After the delivery, the bill of lading is passed to the next party, the receiver, and is checked and signed again.

A bill of lading traditionally contains the details listed below:

Names, addresses (and sometimes optional information) of a shipper and a receiver;
A shipment number, or an order number, or any other significant numerical designation of a given procedure allowing to identify it;
Date of shipment;
Cargo description, which includes quantities, parameters and dimensions, weight, significant qualities, package information, and so on;
Freight class and hazard class, if necessary;
Any specific recommendations or instructions for the delivery.

Why Bill of Lading is important

A bill of lading serves three crucial purposes in shipment and accounting:

It works as a contract between the parties, containing the agreed-upon terms and conditions of the delivery.
It is also a receipt stating a certain amount of valuable cargo being transported from one place to another.
It additionally acts as a document of title, as it provides its holder with a right to own the goods in question.

If a bill of lading for a given shipment is correctly drafted, issued and filled by authorized representatives of all parties, it allows an unhindered and clear processing of delivery without delays, and also aids in a better efficiency of a business in general.

One more undisputable advantage of bills of lading is that it prevents theft and other fraudulent activities. Due to a requiring of bill of lading to be signed by different individuals, not connected with each other and obliged to check the goods independently, a bill of lading acts as a multi-stage protective mechanism.

Bill of Lading main types

As shipments and delivery might be organized in different ways, and the circumstances might vary, a wide range of bills of lading has been developed over time. Their varieties might be divided into several groups according to their characteristics.

One way of classifying is based on a shipment type, whether it is performed over the land, or over the sea, whether any boards are crossed, and so on.

The most common types in this classification are these:

An inland bill of lading, according to which the goods are delivered overland without sea shipping;
An ocean bill of lading, suggesting that the goods would be transported overseas to other countries;

Other popular types of bills of lading include a through bill of lading (designed for cargo shipment within a country and across the border), an air waybill for shipment using airfreight, and some others.

If a state of a cargo shipped is considered, it’s possible to divide bills of lading the following way:

A clean bill of lading, which is used when the goods and the description fully match, and the cargo is undamaged;
A “dirty” (or claused) bill of lading, in which case there are some discrepancies;
A “Said-To-Contain” bill of lading, or STC, which is used when it’s impossible to inspect the goods sealed in a container.

There are more possible variations of bills of lading, including negotiable and non-negotiable ones, uniform bills of lading, and others, and it’s important to know which one should be used in each case. A correctly chosen and issued bill of lading serves to avoid delays, especially in a complex system of shipments, and also acts as a legal protection and evidence in case any problems arise, being a proof of the performed shipment of certain goods. As a result of this, it’s critically important to make sure that bills of lading are issued, checked and signed by qualified personnel, and all the details mentioned are correct.