What is a Bill of Lading? - A Guide with Examples

What is a Bill of Lading

A Bill of Lading, often abbreviated as BL or B/L, is the most important document traders have to deal with in any international transaction. Regardless of whether you’re importing, exporting, dealing with ocean freight or air freight, the Bill of Lading acts as a contract of carriage.

There are many different definitions of the Bill of Lading. But they all address the same main points.

Bill of Lading definition

In general, a Bill of Lading definition is as follows:

The Bill of Lading acts as evidence of a contract of carriage between the shipper and the shipping line to carry out the transportation of cargo under the terms and conditions agreed upon between the seller and buyer. It proves the existence of a goods transportation contract.

In many ways, a Bill of Lading is similar to a boarding pass for passenger air travel, except it applies to the merchandise being shipped. In an international maritime transport, it answers the who, why, what, how, and when of the process.

As an evidence of shipment, the Bill of Lading lists the important parties involved in the transportation process. More specifically, it clearly states the essential information such as:

• Type of cargo being shipped
• Seller/Exporter
• Vessel the cargo is being transported on
• Shipping line
• Bill of Lading number
• Freight forwarder
• Buyer/Importer
• Consignee
• Notify party
• Etc.

Besides a contract of carriage, a Bill of Lading definition also covers its role as a receipt of goods and title to goods.

Receipt of goods: At origin, the Bill of Lading represents a receipt of goods. It confirms the goods that are being transported and is proof that the shipper has transferred the cargo to the shipping line in good condition.

Title to goods: Once the goods have arrived at 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 confirmation of delivery.

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

Types of Bills of Lading

In general, when talking about ‘Bills of Ladings’, these refer to original Bills of Ladings.

There are, however, many other different types of Bills of Ladings. These include the Master Bill of Lading, House Bill of Lading, Express Bill of Lading, Telex Release, etc.

It’s extremely important to understand the different types of Bills of Ladings there are and especially the one that you are handling. This will help to avoid misunderstandings and prevent miscommunications.

We will discuss the different types of Bills of Ladings more in detail in the next section.

A comparison of the different types of Bills of Lading

The type of Bill of Lading you deal with depends on many factors, including the issuer of the Bill of Lading, the purpose of the Bill of Lading, its form of transmission, the relationship between buyer and seller, and the protection it offers to the buyer.

Here’s a quick breakdown of the main types of Bills of Lading and how they differ:

Master vs House Master

Original Bill of Lading vs Telex Release

House Bill of Lading vs master Bill of Lading

As previously mentioned, the Bill of Lading acts as a contract of carriage that lists all parties involved in the shipment.

If you’ve booked your shipment through an intermediary, there will be two sets of Bills of Lading involved in the shipment. These are known as the master Bill of Lading and the house Bill of Lading.

To understand why these two types of Bills of Ladings are needed, you need to first understand the different parties involved in an ocean freight shipment.

In most cases, maritime shipments are managed by an intermediary such as an NVOCC. However, both NVOCCs and shipping companies usually work with cargo agents who represent them in the country of origin or destination.

Who issues the master Bill of Lading?

The master Bill of Lading is issued by the shipping line to the intermediary such as the freight forwarder or an NVOCC or their agent. On the master Bill of Lading, both the shipper and consignee listed are the NVOCC or its agent.

Who issues the house Bill of Lading?

The house Bill of Lading is issued by the intermediary (or its agent) to the actual shipper. This is done after the NVOCC receives the shipment from the shipper and ensures that all paperwork has been done.

On the house Bill of Lading, the actual shipper and consignee are listed accordingly.

For more information on the differences between these two types of Bills of Lading, please consult our article on differences between a house and master Bill of Lading.

Original Bill of Lading vs Telex Release

What is a Telex Release?

A Telex Release is a digital version of the original Bill of Lading that allows merchandise to be released without needing to produce a physical copy of the original Bill of Lading.

Hard copies of the original Bill of Lading are still issued and the Telex Release is by no means a substitute. However, by presenting a digital copy in the form of a Telex Release is enough to secure the release of the cargo.

With a Telex Release, the shipper holds on to the set of original Bill of Ladings. There is no need for the shipper to send the originals to the importer. As soon as the shipper gets paid, he sends the set of original Bill of Ladings to the carrier and requests for a Telex Release, with which the buyer or consignee can receive the cargo at destination.

Main advantages of a Telex Release

The Telex Release offers three main advantages:

• It’s fast and convenient.
• It expedites the customs clearance process.
• It eliminates the costs of shipping the original Bill of Lading by courier.

Express Bill of Lading or Sea Waybill

What is an Express Bill of Lading/Express Release?

The Express Release is similar to the Telex Release in the sense that it’s digital. However, the difference being that with the Express Release, no hard copies of the Bill of Lading is issued.

With no hard copies of the original Bill of Lading, the Express Release offers many advantages, but should only be used under very specific circumstances.

At iContainers, we only recommend using the Express Release for shippers and consignees who have a trusting relationship. This may be used, for example, in cases whereby the shipper and consignee are from the same company.

Main advantages of an Express Release

• It’s efficient. Cargo can be released as soon as it arrives at the destination port.
• It eliminates the cost of issuing and shipping the original Bill of Lading.

Note: The Express Release is also known as the Sea Waybill or the Straight Bill of Lading.

If you’re still confused about the differences between the original Bill of Lading, Telex Release, and Express Release, speak to your freight forwarder.

Original Bill Of Lading vs switch Bill of Lading

A switch Bill of Lading is a second set of original Bills of Ladings issued by the shipping line that replaces the original set that was issued at the time of shipment.

The switch Bill of Lading format is exactly the same as the original’s and it deals with the same cargo. It holds the same value and purpose as an original Bill of Lading:

• Evidence of contract of carriage
• A receipt for goods
• Title to the goods

There are many reasons for needing to substitute an original set of Bills of Lading. One of them being having to edit information listed on the original set of bills. This may be because:

• An intermediary wants to conceal the identity of the actual supplier from the buyer to prevent the buyer from going directly to him directly.
• The port of discharge may need to be changed due to the cargo having been resold while en route as a high sea sale.
• The cargo was shipped in separate parcels under separate original B/Ls and the buyer wishes to consolidate everything into one B/L. Or vice versa.
• Etc.

How a switch Bill of Lading works

Since the switch Bill of Lading is simply a second set of original Bill of Lading, it represents ownership. Only the party with all three sets of the originals can request for a switch Bill of Lading to be issued.

Here’s a switch Bill of Lading example and how it works.

Important: A switch Bill of Lading should only be issued once the original set has been taken out of circulation and cancelled. This helps to make sure that there is only one official set of documents in play to prevent problems.

For a more detailed look into switch Bills of Lading, do give our post Switch Bill of Lading: A complete manual and word of advice a read.

Bill of Lading example

Most of the information on an original Bill of Lading will be filled in by the carrier. However, as a shipper, there is information you will need to provide to the carrier beforehand to ensure that everything listed is up-to-date and accurate.

In this section, we’ll go through the different fields listed on an original Bill of Lading, and highlight to you the fields you’re responsible for providing information for. Unless otherwise indicated, most of the fields will be filled in by the carrier.

Most of the fields you see here are standard across all original Bills of Lading but note that there may be minor differences and these can vary from bill to bill. If in doubt, always check with your freight forwarder.

Here’s a real Bill of Lading template to guide you.

1. Shipper/Exporter (information to be provided by shipper)

Full name and address of the shipper/exporter.

2. Consignee (information to be provided by shipper)

Full name and address of final recipient of the shipment.

3. Notify Party (information to be provided by shipper)

Full name and address of party to be notified of shipment status. This may be the consignee or a clearing agent that handles the clearance on behalf of the consignee.

4. Mode Of Initial Carriage

Transportation mode where the carrier first receives the goods until the port of loading. This can be truck or rail or combined.

5. Place Of Initial Receipt

Location where carrier takes possession of cargo. This is usually a city and/or a zip code.

6. Vessel Name

Vessel name and voyage number which will be delivering the shipment to the consignee at destination. This is usually the mother vessel that covers the main route of the shipment.

For example, in the case of a shipment from Savannah to Oslo, this would be the vessel going Savannah to Hamburg, and not the feeder line from Hamburg to Oslo.

7. Port Of Loading

Port where the cargo will be loaded on board the vessel.

8. Port Of Discharge

Port where the cargo will be arriving.

9. Place Of Delivery By Carrier

City where the carrier will be delivering the cargo to the consignee.

10. Booking No. (information to be provided by shipper)

A unique control number to reference the shipment with the carrier.

11. Bill Of Lading No.

A unique control number to reference the Bill of Lading.

12. Export References (information to be provided by shipper)

Shippers’ reference number such as PO numbers, etc. This is any reference number the shipper may use to identify the shipment internally in his system.

13. Forwarding Agent/Fmc No.

Full details of freight forwarder and license number.

14. Point And Country Of Origin

Point and country of the cargo origin.

15. For Delivery Of Goods Please Present Documents To

Full details of carrier’s agent at destination who handles cargo release.

16. Domestic Routing/Export Instructions

The actual terminal where the cargo will be loaded onto the shipping vessel. Eg. Garden City terminal, Port of Savannah.

17. Freight Payable At

‘Origin’ or ‘destination’ depending on whether freight has already been prepaid or will need to be paid upon collection at destination.

18. Type Of Movement

Door-to-door or port-to-port or CFS-to-CFS.

19. Marks & Numbers/Container Numbers (information to be provided by shipper)

Markings that are on the outer packing of the cargo for identification purposes.

For LCL, this would be a label located on the outside of a carton or on the shrinkwrap around a pallet.

For FCL, it’s the container number. Remember to list the container seal number as well for easy reference.

20. No. Of Packages (information to be provided by shipper)

For FCLs, this is the number of containers.

For LCLs, this is the number of packages in the largest unit.

21. Total Number Of Pkgs (information to be provided by shipper)

Sum of what’s listed in the above field.

22. Description Of Packages And Goods (information to be provided by shipper)

Description of each package, including the specifics of the commodity in its smallest units (eg. 2000 cartons of plates loaded on 10 pallets), type of package (boxes, barrel, etc.) and the quantity per package.

Also include handling instructions (i.e. fragile, should be kept cool, etc.).

23. Gross Weight (information to be provided by shipper)

Total gross weight, in kilograms, for each item per line. If shipping to/from the US, list both kilograms and pounds.

24. Measurement (information to be provided by shipper)

For LCLs, these are the dimensions of each package you’re shipping.

In the case of FCLs, this information is not needed for most countries.

If in doubt, check with your freight forwarder.

25. Freight Charges

Full list of freight charges such as ocean freight, terminal handling, etc.

26. Prepaid

Amount that has been prepaid by the shipper. This is usually the ocean freight price and any extra charges at origin.

27. Collect

Amount that needs to be paid for cargo collection. This can be the ocean freight price if it hasn’t been prepaid, as well as the DTHC charges and other local charges that apply.

28. & 29. By & Dated

Signature or stamp by the individual representing the shipping line.

How to fill out a Bill of Lading

With so much paperwork involved in one simple shipment, it may be tempting to just glance over the Bill of Lading and not pay much attention to it—especially since there are over 30 fields to fill in.

But inconsistencies and errors on the Bill of Lading aren’t tolerated and not filling it out right can bring you many problems. Our advice is to familiar yourself with each and every field on this important document.

Here are six things you should look out for when filling out a Bill of Lading.

Tips on filling out a Bill of Lading

Fill in all required fields

Make sure to fill in all required fields as accurately and legibly as possible.

Plan ahead and check all fields required on the Bill of Lading as soon as you can to have more time to enquire and obtain the information you need.

This prevents mistakes and what could potentially be costly errors. If you’re unsure of certain fields, check with your freight forwarder.

Double check to make sure information on the B/L is correctly filled in

Double check the information on the draft Bill of Lading that the carrier and/or NVOCC will send to you for your approval.

Ensure that every detail is accurate - not only the information you’ve provided but what was pre-filled by the carrier and/or NVOCC.

Check that your container and seal number match. We recommend taking a picture of the seal affixed to the container showing the seal number to double check and make sure it is correctly noted.

Also pay special attention to the shipper, consignee, and notify party fields are filled in correctly.

Tip: Include the contact information of your consignee so that the agent at destination can contact them locally.

Identify hazardous materials

If shipping hazardous materials, clearly label this on your Bill of Lading. Be as detailed as you can.

Remember to obtain the necessary licenses and permits to ship hazardous materials. The type of license will depend on your merchandise and destination country.

Detail as much as you can

Be as specific and thorough as you can in your freight description. In this field, the more descriptive you are, the better.

• Indicate the number of containers and the number of goods in each container.
• Include the value, weight, size, etc of the goods, down to the material of manufacture and common name
• If shipping multiple units, indicate the exact weight of the whole shipment and each unit’s exact weight
• Detail the shipment type and number of pallets
• Note down any special shipping instructions

Never put false information

The Bill of Lading is a legal contract that is used as evidence in court if your shipment gets implicated in legal issues.

Never try to mislead by indicating false information. This could lead to shipment and/or payment delays and expose you to claims.

Always send your Bill of Lading by courier service

When dealing with an original Bill of Lading, send it by courier mail as it provides you with a tracking service. Plus, it tends to be faster than regular mail.

Losing the Bill of Lading will bring you legal and financial problems. To avoid this, err on the safe side and opt for courier service.

Before sending it off, check with your consignee if you should send the complete set of Bill of Ladings (usually three) and if they need to be signed and stamped, which is usually the case if it’s accompanied by a Letter of Credit.

If using a Telex Release or Express Release, there will be no need for this as everything is done digitally.