By necessity, international shipping involves substantial amounts of documentation. One key part of this paperwork is the Bill of Lading. This helps facilitate the smooth transit of goods and the transfer of ownership from the sender to the recipient.
Here we’ll explore what a Bill of Lading is and the role it plays in the shipping of goods.
What is a Bill of Lading?
A Bill of Lading or B/L has been a part of international shipping documentation for centuries. It’s a document that has a number of functions in international trade and relates specifically to sea-borne cargo. It effectively serves as a contract between the owner of the goods and the carrier. It states the goods that are being shipped, where the shipment is coming from and their destination. It also serves as a receipt and will be issued by the carrier once the shipment has been picked up.
Bills of Lading are regulated by national laws of sea carriage, which are themselves based on established International Conventions – The Hague Rules (1924), The Hague-Visby Rules (1968), and the Hamburg Rules (1978). These conventions establish a set of uniform rules for issuing Bills of Ladings, and the rights, responsibilities and obligations of the parties involved when taking part in a trade and being under contract.
What is the purpose of a Bill of Lading?
A Bill of Lading has three primary functions. Firstly, it provides evidence of the contract of the terms of carriage. It will usually provide details of what’s being shipped, the quantity and where it’s heading. It might sometimes include details of the condition of the shipment. The Bill of Lading isn’t a contract, but it is documentation that provides evidence that a contract exists.
As well as providing evidence of a contract, it also acts as a receipt. A bill of lading will be issued by the carrier to the shipper. This confirms that the goods have been loaded onto the ship for transit onwards. The shipper will usually receive a number of original bills of lading, which can then be passed on to different parties right along the route.
Finally, the Bill of Lading establishes ownership of the goods. It will include the details of the receiving party/organisation who are awaiting receipt of the goods from the shipper. Ownership of the goods isn’t transferred to the receiving party until they are given the Bill of Lading. Whoever holds the original Bill of Lading has ownership of the cargo, and it won’t normally be surrendered to the receiving party until payment for the goods has been received in full.
What’s in a freight Bill of Lading?
The information that’s listed on a Bill of Lading will include a range of details about the shipment. Firstly, it will contain the details of both the shipper and the recipient, the carrier’s details will also be included. The carrier will usually sign the document to confirm they have received it.
Next up, is the date and port of loading. This is when the carrier received the goods and they were loaded onto the ship reading for transporting onwards. It will also include the destination port.
As well as the essential details required for the physical transportation of the goods from the shipper to the recipient, it will also contain some details of the goods that are being transported. The terms and conditions of shipping will also be included. These are especially important, as they detail who is responsible for paying for the shipping and who is responsible for it at any particular stage. The Bill of Lading may not include all of the terms and conditions, but it will refer to them.
What’s the difference between negotiable and non-negotiable?
A Negotiable Bill of Lading is considered a document of title. This means that it can be used to transfer the ownership of commodities from one party to another. The original consignee of the goods transfers the title of the goods to the recipient party by signing the back of the bill. This is sometimes known as ‘indorsing’. Once this has been done, the consignee is then able to transfer the title to someone else.
In contrast, a Non-Negotiable Bill of Lading is not considered a document of title. As such, you cannot use it to facilitate the transfer of ownership of goods from one party to another.
The Bill of Lading must contain the words ‘negotiable’ or ‘non-negotiable’ when is it issued. If the original Bill of Lading is non-negotiable, the goods can only be released to the specified recipient after the presentation of at least one of the original bills at the end destination. You cannot grant further rights to a recipient or make the contract negotiable by indorsing a non-negotiable bill at this stage.
Can a freight forwarder issue the Bill of Lading?
A freight forwarder may issue a Bill of Lading which effectively serves as a transport document. It’s sometimes known as a ‘House Bill of Lading’ and differs from a Master Bill of Lading, in that it’s not always subject to the conventions that govern sea carriage. It will usually state the terms and conditions for carriage from the freight forwarders point of view.
The documentation involved in shipping goods internationally can seem complicated. Using the correct documentation and ensuring it’s filled in correctly is all-important if you want to avoid delays and potential problems.
An experienced freight forwarding service can take the complexity out of the process.
Contact SSO Logistics today to find out more about how we can help.