Did you know? What is BILL OF LADING ?

One of the most important documents required when shipping cargo internationally is called the Bill of Lading. It contains the names of the consignee, the carrier, and the shipper involved as well as information about the type of goods being transported. 

When using a multimodal service, there will be only one contract and one Bill of Lading.  The responsible logistics provider, referred to as the multimodal transport operator (MTO) is also responsible for issuing the document. In this case, it is called multimodal or combined transport Bill of Lading.  

The only difference when shipping with an intermodal service is that instead of a single document, you would have multiple Bill of Ladings, one for each carrier. 

The meaning of term “bill”, it is defined as a printed or written statement of the cost for the goods or services delivered or to be delivered. The term “ lade” means to put the cargo onto a ship or other form of goods carrier. 

Thus, a bill of lading in shipping is a record of the traded goods which have been received on board. It is a document that establishes an agreement between a shipper and a transportation company for the transportation of goods.  

The Transportation Company (carrier) issues these records to the shipper. 

A bill of lading indicates a particular carrier through which the goods have been placed to their final destination and the conditions for transporting the shipment to its final destination.  Land, ocean, and air are the means used for bills of lading. 

Hence, the bill of lading is considered a legal document that provides all the vital details to the shipper and the carrier to conveniently process the freight shipment through different maritime countries and invoice it correctly. 

The original copy of the bill of lading is provided to the carrier, and a copy of the same should also be ascribed to the packaged freight. 

What is a Negotiable and Non-negotiable bill of lading? 

Negotiable bill of lading:

In this type of bill, clear instruction is provided to make the delivery of the goods to anyone having possession of the original copy of the bill, which itself signifies the title and control of the freight. In this type of bill, the buyer/ receiver or his/her agent has to acquire and present an original copy of the bill of lading at the discharge port. In the absence of an original bill copy, the freight will not be released. 

Non-negotiable bill:

This type of bill of lading fixes a specific consignee/name of the receiver to whom the freights will be shipped and delivered. It, however, does not itself serve the owner of the goods. Under this type of bill, the assigned receiver/ buyers can claim the cargo by confirming their identity. 

Purpose of Bill of Lading: 

The bill of lading document is meant to act as a transport document enacting as the evidence of the contract of carriage of the goods. A negotiable bill of lading has the following legal  qualities: 

• It acts as a piece of evidence for the carriage contract containing the terms and conditions under which the goods transportation will be carried out 

• It represents a receipt that endorses that the carrier has received the cargo as per the contract and the goods are received in good condition. 

• It is a document of title, permitting the sale of goods in transit and the raising of financial credit. 

• Most of the local and international system does not consider a bill of lading as a  document of title. It provides the right for the delivery to be made to the possessor 

Types of Bill of Lading 

The bill of lading can be classified on the basis of “how it is executed” and “Method of operation”- 

On the basis of execution: 

• 1. Straight bill of lading reveals that the goods are consigned to a specified person and it is  not negotiable free from existing equities. It means any endorsee acquires no better rights than those held by the endorser. This type of bill is also known as a non-negotiable bill of lading, and from the banker’s point of view, this type of bill of lading is not safe. This type of bill is prominently used for military cargo. 
• 2. Open bill of lading – This is a negotiable bill of lading where the name of the Consignee can be changed with consignee’s signature and thus transferred. This can be transferred multiple times. A switch bill of lading is a type of open bill of lading. 
• 3. Bearer bill of lading is a bill that states that delivery shall be made to whosoever holds the bill. Such a bill may be created explicitly or it is an order bill that fails to nominate the consignee whether in its original form or through an endorsement in blank. A bearer bill can be negotiated by physical delivery. They are used for bulk cargo that is turned over in small amounts. 
• 4. Order bill of lading is the bill that uses express words to make the bill negotiable. This means that delivery is to be made to the further order of the consignee using words such as “delivery to A Ltd. or to order or assigns. The cargo is only delivered to the bona fide holder of the bill of lading, and it has to be verified by an agent who issues the delivery order and the verified bill of lading. 

ON the basis of Method of Operation: 

• 1. Received for shipment bill of lading–This bill is sent from the agent /charterer to the shipper.  The endorsement of this bill ensures that the carrier has received goods but does not  confirm it is onboard of the assigned vessel 
• 2. Shipped B/L – This bill of lading is Issued when cargo is loaded on board. It binds the  shipowner and the shipper directly 
• 3. A clean bill of lading is one that states that the cargo has been loaded on board the ship in apparent good order and condition. Such a bill of lading will not bear a clause or notation which expressively declares a defective condition of goods and/or the packaging. The opposite term is a soiled bill of lading. It reflects that the goods were received by the carrier in anything but good condition. 
• 4. Through B/L – This bill of lading is a legal document that allows for direct delivery of cargo from point A to point B. The bill allows transportation of goods both within  domestic borders and through international shipment as it serves as a receipt of the  cargo, a contract of carriage, and sometimes title for the products as well 
• 5. Combined transport B/L – This bill gives information about cargo being transported  in large containers by sea and land, i.e. through multi-model transport 
• 6. Dirty bill of lading: If the ship owner raises an objection about “the condition of the cargo is in good order”, he/she can include a clause thereby causing the bill of lading to be “claused or dirty” along with the remarks as per the finding of the cargo condition.  E.g. torn packing, broken cargo, shortage in the quantity of the goods, etc.