Bill of lading

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Bill of lading

What is a bill of lading?

A bill of lading (BL or BoL) is a legal document that is issued to a shipper and defines the type, quantity, and destination of the goods that are being carried. The BoL also works as a shipment receipt when the carrier delivers the goods at a predetermined destination.

Irrespective of the mode of transportation, the bill of lading must accompany the shipped goods and needs to be signed by an authorized representative from the carrier, shipper, and receiver. 

These are legally binding documents that provide the carrier and shipper with all of the details required for the shipment to be accurately processed. This is important because it implies that it can be used in litigation should the need should arise and that all parties involved will take great pains to ensure the accuracy of the document.

The bill of lading will generally have the names and addresses of the shipper (consigner) and receiver (consignee), shipment date, quantity, exact weight, value, and freight classification. It would also have a complete description of the items including whether the goods are classified as hazardous, the type of packaging used, particular instructions for the carrier, and any special order tracking numbers.

A House Bill of Lading is issued by a Freight Forwarder or NVOCC to show who the actual buyer and seller of the goods are. A Master Bill Of Lading will be issued by the carrier or shipping line and shows the shipper and consignee to be the local and foreign freight forwarders or agents that are involved in transporting the goods.

Bill of Lading
Source: Marine Insight

What is the purpose of a bill of lading?

The purpose of the bill of lading is to serve as a receipt of freight services, a contract between a freight carrier and shipper as well as a document of title. 

So, to break it down, the BoL is a document of title to the goods described in the bill of lading and also a receipt for the shipped products. It even represents the agreed terms and conditions for the transportation of the goods.

The bill of lading acts as undisputed proof of shipment. It even enables the segregation of duties that is a vital part of a firm's internal control structure to prevent theft. This helps you make sure that too much control is not left in the hands of any single employee. Most internal controls systems subscribe to a standard set of core philosophies that have become standard management practices. Having these internal controls in place can assist with streamlining operations and preventing fraud. The bill of lading is one of the most important documents that need to be properly managed and reviewed to prevent asset theft.

Who issues the bill of lading to the exporter?

The bill of lading is issued by the carrier of the goods after receiving the cargo by them after completion of customs formalities. The carrier will issue the bill of lading after confirming the receipt of cargo from the shipper/exporter, once after receipt of the ‘let export’ order delivered by the shipper’s customs house agent.


When should a bill of lading be issued?

A bill of lading needs to be issued in order for the delivery to take place. Bills of lading are issued by the carrier or the ocean carrier if the goods are being transported through sea freight. 

It is issued to show that the shipment has been loaded onto the right vessel for international transit.

The bill of lading is issued when the goods are loaded onto a vessel for international transit. If seaway transit is being used, the Bill Of Lading is issued at the time when the consignment is loaded onto the ocean vessel. 

When it comes to multimodal transport, however, there is an exception. Freight Forwarders and NVOCC’s are allowed to issue a multimodal Bill Of Lading when they load the goods at a rail port.

What is the difference between an invoice and a bill of lading?

The main difference between an invoice and a bill of lading is that the invoice is a financial document while the bill of lading is a legal document. An invoice is created and posted to a customer’s account. After the invoice is paid, it is cleared from the accounting system.  A bill of lading, on the other hand, is not an accounting document. It is a legal document that reflects the title to goods as passing from the shipper to the buyer (the consignee).

Since the invoice is a financial document it reflects the product name, the quantity shipped, a price per unit of measure, and a subtotal for the items shipped. It may also have additional line items for freight and tax noted on the invoice with a total amount that has to be paid, and it reflects the payment terms and specifics regarding where the payment must be sent.

Since the bill of lading is basically a shipping confirmation, it does not mention the price or cost anywhere. It reflects the product and quantity shipped, the terms of shipment (whether collect or prepaid), as well as the trailer or carrier vehicle number. The carrier’s driver will review and sign the bill of lading when they collect up the cargo from the seller’s warehouse or plant. After receiving the delivery of the shipment, the buyer will review the contents and sign the bill of lading, thus confirming receipt. Any discrepancies like damaged or missing pieces must be noted on the bill of lading prior to the carrier leaving the buyer’s premises with the signed copy. A bill of lading could even make note of batch numbers and the product’s country of origin.

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