In the world of business, the Bill of Lading (BoL or B/L) is one of the main documents used to execute transportation transactions by sea, air, or road.

What Is A Bill Of Lading?

A Bill of Lading is a document issued by a carrier to a shipper, confirming receipt of goods in acceptable condition for shipment. It serves as a contract of carriage between the shipper, carrier, and consignee, outlining the terms for delivering the goods to the consignee.

What Are Bill of Ladings Used For?

A bill of lading meaning can represent a receipt of goods.  

Shipments cannot be executed without a Bill of Lading. BoLs must be issued for goods to travel from Point A to Point B. They are legally binding documents, and they often serve as proof of ownership over the goods being carried.

A bill of lading also covers its role as the title to goods.

Once the goods have arrived at their destination, the Bill of Lading acts as a title to the goods. The consignee* listed will need to present the Bill of Lading in order to secure the release of the shipment by the carrier and claim ownership. In this sense, it is evidence of the confirmation of delivery.

*Only the consignee listed on the Bill of Lading has contractual rights to request for the release of the cargo.

Bills of lading also make sure that the shipper is paid

In some cases, the shipper can hold the original bill until they receive payment. By doing this, the consignee is unable to access their goods until payment has been made and the Bill of Lading released.

Who Uses A Bill Of Lading?

Usually, all companies that sell transportation services generate bills of lading. They can include owner-drivers, freight forwarders, steamship lines, third-party logistics companies and others. They include companies transporting goods by any means, whether it be through air, sea, rail or road.

They can be used for both domestic and international deliveries.

What Is Contained In A Bill Of Lading? 

• Details of the transportation company (i.e. the carrier), the shipper and/or consignee;
• The place where the goods were loaded;
• Destination;
• Transportation mode (i.e. road, rail, air, sea, etc.);
• The terms of the shipment (incoterms); and
• A description of the goods being carried (including their weight, dimensions, classification, etc).

Accuracy Is Critical

We cannot stress the importance of providing accurate information on a Bill of Lading.

Mistakes in preparing bills of lading have led to disasters for transportation companies. For example, in 2017, a freight forwarder was ordered by a court in NSW to pay over $800,000 in damages for ‘misleading and deceptive conduct’ because the bills of lading gave the impression that they were ocean carriers’ bills (when they were not).

Extreme caution must be taken when generating these bills.

Who Issues A Bill Of Lading?

The ‘Carrier’ is the only company that can issue the Bill of Lading.  When transporting by sea freight, the carrier can refer to the Shipping Line (Vessel Operating Common Carrier) or an NVOCC (Non-Vessel Operating Common Carrier) also known as a Freight Forwarder (although not all Freight Forwarders are NVOCC’s).

Who Receives A Bill Of Lading?

Bills of lading are normally provided to:

1. The shipper;
2. A broker, freight forwarder or a third party managing customs; and
3. The consignee – this is the person who purchased the goods in the first place.

As a bill of lading example: if the goods are being imported through a freight forwarder on EXW terms (refer to incoterms again), this is the journey of a Bill of Lading:

If the goods are being exported, this bill of lading journey is as follows:

Is there a bill of lading without a consignee?

The consignee is mandatory on a bill of lading.

The only situation in which this occurs is when someone other than the receiving party or their nominated address is when a shipment is arranged on a Letter of Credit (L/C) which will sometimes require the bill of lading to be consigned ‘To Order’.

Even when this exception occurs, the L/C has been known to require the following varying options:

• To order of the Shipper
• To order of the Bank
• In all these situations the Notify Party is usually the buyer/consignee.

How long does the consignee need to keep a bill of lading?

For the Australian Border Force (a.k.a Customs), records must be kept for 5 Years.

Different Types Of Bills Of Lading

The Bill of Lading comes in different forms, each serving a specific function based on the nature of the shipment:

House BOL & Master BOL: House BOL is issued by a freight forwarder, while a Master BOL is issued by the main carrier.

Straight BOL: Non-negotiable and used when goods are consigned to a specific buyer.

Order BOL: A negotiable BOL that allows the transfer of ownership through endorsements.

Bearer BOL: Allows delivery to any party in possession of the document.

Clean BOL: Indicates that the goods were received in apparent good condition.

Claused BOL: Notes damages or discrepancies in the goods upon receipt.

Through BOL: Covers multiple modes of transport under one document.

Multimodal BOL: Used for shipments involving different types of transportation.

Negotiable And Non Negotiable BoL

An Original Bill of Lading is a negotiable and legal document as it represents the title of the goods. Non-negotiable Bills are in effect copies of the originals but have no power over the title of the goods.

Originals Bills of Lading (negotiable) must be endorsed by the consignee (buyer) when being transferred to a third party such as a freight forwarder and much like a cheque that is made out to a specific party.

When cargo moves under a Negotiable status, it is the forwarder’s responsibility to ensure it is surrendered to the appropriate authority to obtain possession. When cargo moves through the forwarder’s NVOCC services (Non Vessel Owning Common Carrier) on Negotiable Bills, the forwarder too must ensure that the Original Bill (Negotiable) is surrendered to them prior to releasing the consignee or their agent.

Failure to follow this process would hold the carrier responsible for the value of the cargo in the event that the contract between the shipper/consignee is not honoured.

Note that both terms only apply to sea freight. For airfreight, terms are Master Air Way Bill (MAWB) and House Air Way Bill (HAWB).

Bill of Lading vs. Airway Bill: Understanding the Difference

While both documents serve similar functions in transport logistics, they differ in application. A Bill of Lading is primarily used for ocean freight, serving as a negotiable document that can transfer ownership. In contrast, an Airway Bill (AWB) is used for air cargo and is non-negotiable (unless they are consigned through a bank), meaning ownership cannot be transferred during transit. Additionally, a BOL often involves longer transit times and complex shipping arrangements, whereas an AWB ensures faster delivery but comes with stricter carrier liability limitations.

Bill of Lading Samples

Ocean Bill Of Lading

This is generated by the Shipping Lines as the Carrier in this instance for containers transiting by sea and is generally used when the shipper would like to retain control of payment by a consignee (buyer) for the goods. The original bill of lading will be utilized to make sure payment is made before the goods are released to the consignee.

Once payment is receipted the document can be actioned in several ways, dependent on what the carrier makes available.

1. Original Bill of Lading can be surrendered to the carrier for a Telex Release (a digital version of the BoL)
2. Original Bill of Lading is couriered to the consignee to present to the reciprocating carrier at the destination to obtain release.

Sea WayBill of Lading

It is a Non Negotiable document issued instead of an Ocean Bill of Lading where the Shipper has no need to control the release of cargo.

House Bill Of Lading (HBoL)

Where cargo is arranged by sea freight through an NVOCC/Freight Forwarder a House Bill of Lading is generated.  This can be arranged as a Negotiable or Non Negotiable option depending on the requirements of the shipper.   Where a Non Negotiable option can be utilised it can sometimes be arranged/referred to as an Express Bill of Lading.

Master Air Way Bill Of Lading 

Master Air Way Bills (MAWB’s) are Airline bills of Lading and are generated by the Airline or Freight Forwarders. They are Non-Negotiable documents except where the cargo is consigned ‘To Order’. This generally means that the shipment has been negotiated through a bank in which case a release from the bank in question would need to be presented prior to the cargo being released by the carrier.

Generally, these are arranged from Forwarder to Forwarder and a House Air Way Bill is generated from the shipper to the consignee.

House Air Way Bill Of Lading 

This is the Air Way Bill that is issued by a Freight Forwarder for consolidated air freight shipments. HAWB’s are treated exactly the same as MAWB’s, provided they indicate that the issuer itself assumes the liability as the carrier or is acting as the agent of a named carrier.

Multimodal Bill Of Lading

These are when you’re using more than one type of transport. For instance, you may use rail for some of the trip and then road for the rest.

Through Bill Of Lading

Through bills of lading are for goods transported by ocean as much as it can possibly be transported by ocean, and then by road or rail to the final destination. Ensure these are not mixed up with multimodal bills of lading.

Switch Bill Of Lading

When goods need to be moved and the supplier’s information needs to be kept private – generally in the case of a Triangle shipment where a buyer is onselling to a 3^rd party, a second BoL is generated replacing the first with the updated information.

We have an entire article dedicated to understanding how and when to use them.

Dirty/Claused Bill of Lading

This term is used when the goods are received by the shipper in a damaged condition. In these cases, the carrier’s insurance company may refuse a claim for damage. Contrast this with a ‘clean’ bill of lading, where the goods are delivered in an acceptable condition.

Straight Bill Of Lading

This is a type of format of either an Ocean or House Bill of Lading and are used when the goods are paid in full and delivered directly to the consignee (i.e. the person or organisation that purchased the goods in the first place).

Cargo is only released to the named consignee at the declared destination and it only happens upon surrender of at least 1 of the original copies issued.

Electronic Bills of Lading (E-BL) – Telex Release and Express Release

Telex release and Express release are not types of Bill of Lading, but are methods of releasing Bill of Lading.

A Telex Release is simply an EDI message or email which is sent by the carrier or agent at load port to their office or agent at discharge port informing that the shipper has surrendered one or all of the original bills of lading that have been issued to them. Based on this, the discharge port agent can release cargo to the named consignee shown on the bill of lading without the presentation of any original bills of lading. Find a Telex Release Example and Guide here.

The Express Release Bill is similar to the Telex Release in the sense that it can be digital. However, the difference being that with the Express Release, no hard copies of the Bill of Lading are issued. With no originals created, the Express Release offers many advantages, but should only be used under very specific circumstances.

Why Are Incoterms Important To A Bill Of Lading?

Your choice of incoterms will determine how the whole process will be handled. Before reading on, check out our Beginner’s Guide to Incoterms to understand how the two interact. 

Which incoterms to use can be tricky, as it will depend on the nature of the business and what goods are being handled.

You must determine exactly what terms you are shipping on so there is clarity on who is responsible for what part of the shipping process.

Common Bill of Lading Clauses Explained

The ‘Said To Contain’ Clause

This clause indicates the carrier’s acknowledgment of the cargo’s quantity and type as per the shipper’s declaration, without independent verification by the carrier.

How to Use: Cargo owners should be aware that this clause limits the carrier’s liability for discrepancies in cargo quantity or type, emphasizing the need for accurate self-reporting and independent verification when possible.

The Paramount Clause

This clause specifies the governing legislation for the B/L, often referencing international rules like the Hague-Visby Rules.

How to Use: Check this clause to understand which legal framework applies to your shipment, which can be crucial in case of a dispute or claim.

Interpreting The New Jason Clause

Applies in general average situations, especially under American law, allowing carriers to claim a contribution from cargo beneficiaries in certain scenarios.

How to Use: Cargo owners should be aware of their potential financial obligations under this clause in the event of a general average declaration.

Dealing With The Both To Blame Collision Clause

This clause is relevant in collisions under American law, detailing the distribution of liability and the right to claim damages.

How to Use: Understand your rights and liabilities if your cargo is involved in a maritime collision, especially when operating under American jurisdiction.

Managing General Average Situations

General average clauses require cargo owners to financially contribute to losses incurred for saving the vessel and cargo.

How to Use: Be prepared to cover your share of losses in general average situations, as outlined in the B/L.

Deciphering The ‘Weight, Measure, Quality, Quantity, Condition, Contents And Value Unknown’ Clause

This clause indicates that the carrier does not independently verify these details about the cargo.

How to Use: Cargo owners should ensure the accuracy of these details themselves, as carriers are not liable for discrepancies under this clause.

Understanding ‘On Deck At Shipper’s Risk’

Indicates that cargo stowed on deck is at the shipper’s risk, with limited carrier liability.

How to Use: When agreeing to on-deck carriage, be aware of the increased risk and consider appropriate insurance coverage.

Claims and Disputes Related to a BOL

Cargo insurance often relies on BL details to process claims. If disputes arise, the BL provides a legal basis for resolution through arbitration or court proceedings. Disputes may arise regarding cargo damage, shortages, or discrepancies in shipment details. Filing a claim requires:

1. Notifying the carrier immediately upon discovery of an issue.
2. Gathering evidence, including inspection reports and photographs.
3. Submitting a formal claim to the responsible party.
4. Following up with insurers and legal representatives if necessary.

How a Bill of Lading Relates to Charter Parties

When shipping under a charter agreement, the Bill of Lading interacts with the charter party contract. The charter party outlines terms between shipowners and charterers, while the BOL acts as a legal receipt. It is important to clarify liability distribution, especially when disputes arise.

Important Practices for Managing a Bill of Lading!

• Double-check names, addresses, cargo description, and weight for errors and omissions
• Ensure all mandatory details and necessary supporting documents are provided.
• Issue BLs promptly to avoid logistical and financial issues.
• Ensure adherence to shipping, trade, and regulatory laws.
• Maintain the confidentiality of BLs to prevent fraud, misuse, and theft.
• Be familiar with C-8 and C-11 rules, which outline BL usage and security
• Address any BL discrepancies immediately to avoid claims and legal issues.
• Establish effective communication with shippers, carriers, and consignees.
• Stay informed on legal, trade practices, and BL format changes. The industry is also gradually shifting toward electronic Bills of Lading (E-BL).

One Last Tip

Whenever embarking in shipping activity, be sure to engage an experienced forwarder to ensure all documentation and the flow of BoLs are handled correctly.

International Cargo Express have an in-house team of customs brokers with over 150 years of combined experience to assist you with your shipping documentation. Give us a call today on 1300 227 461.