Bill of Lading – Introduction and Significance

A Bill of Lading, many know it as BOL or B/L, is one of the most important documents and compulsorily required document in the process of international shipping and customs clearance. It is a record of goods that a freight carrier accepts on board from the shipper and is a legally binding document which enlists all the details required for processing the shipment.

A BOL acts like a receipt for the shipper after handing over the goods to the carrier for transportation, be it through road, air or sea.

Components of a Bill of Lading

Name and Address – Complete names and official addresses of the shipper and the consignee (receiver) should be mentioned in the BOL

Purchase Order (PO) / Special reference no. –  PO number or special reference number on the BOL help the shipper to release the goods for pickup and the receiver to accept them at delivery

Pick up Date – The date of pickup is important to track the journey of the freight and when reconciling shipping invoices

Item Description – Number of units, dimension, weight, make, material and other details of the goods to be shipped need to be noted under this head

Type of Packaging – The type of packaging used for the cargo need to be described, be it crates, pallets, cartons or any other type of packaging

NMFC Freight Class – Freight can be classified under 18 freight classes, depending on their dimensions, weight, ease of handling and a few other factors. NMFC freight class needs to be noted down in the BOL

Special Instructions – Depending on the goods being shipped, if there are any special instructions regarding your freight, the same needs to be mentioned in the BOL

Hazardous Goods – In case your goods fall under Hazardous category, they need to be tagged with Department of Transportation hazardous material designation, this helps the carrier to follow special rules and requirements in order to ship such goods.

Significance of Bill of Lading

As we know, a Bill of Lading plays an important role in international shipping and custom clearance procedures. Here are the three most important functions / roles of the BOL –

Evidence of Contract of Carriage – Many shippers confuse BOL as a contract between the buyer and the seller, while many others even think that it is a contract between the shipper and the freight carrier – but it is not so! In fact, a BOL is a document of evidence that a contract has been signed between the freight carrier and the shipper so that the transport of goods can be carried out as per the terms and conditions agreed between the buyer and the seller.

Receipt of Cargo – A Bill of Lading is given by the freight carrier to the shipper (through agent or freight forwarder) upon receiving the goods from the shipper for transport. Thus, a BOL contains all the details and description of the cargo.

Document of Title – A BOL provides its holder the right to take delivery of the goods or transport them further, thus it is called the document of title.

Basis the roles defined, Bill of Lading can be categorized under various types.

Various Types of Bill of Lading

Straight BOL – This type of BOL is issued to a specific consignee named under the document. It cannot be transferred or negotiated or handed over to anyone else other than the named consignee.

Open BOL – A type of BOL that is negotiable where the consignee’s name can be changed with their signature; therefore, it can be easily transferred further.

Order BOL – This type of bill of lading is the most modern BOL, used widely across the world. When a OL is issued in original, consigned “To Order”, “To Order of Shipper” or “To Order of ABC. Ltd.), it can be referred to as Order Bill of Lading. The goods will only be delivered to the bonafide holder of the BOL, which has to be verified by the agent before handing over the goods. Due to this aspect, a BOL can be treated as a negotiable instrument of title or payments.

Bearer BOL – This type of BOL states that the cargo delivery should be made to whoever presents the bill of lading. A bearer BOL is generally used for bulk goods that are broken down in small amounts later on.

A Bill of Lading is thus considered to be one of the most flexible, versatile documents in international shipping process and understanding its importance and role in the process is vital. For more details, query or a new shipment, contact us here.

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