What Is a Bill of Lading?

Last Updated June 24, 2024

The bill of lading (BOL) is a key legal document in shipping. It acts as a contract, receipt, and sometimes title for transported goods and details the cargo’s type, quantity, and destination.

However, a typical bill of lading can be a pretty complex document with a plethora of information on a single page, so it’s useful to know what everything means.

By the time you finish reading this article, you’ll know the different types of BOLs, their uses, when they are required, and how a bill of lading differs from other documents in trucking, such as a standard invoice.

What Is a Bill of Lading?

A bill of lading (BOL) is a legal document detailing the type, quantity, and destination of the goods being carried. The carrier is the party that issues the bill of lading to a shipper.

This document serves as a shipment receipt when the carrier delivers the cargo at the predetermined destination. In the logistics and transportation industry, it acts as a binding contract between the shipper and the carrier for the transportation of goods.

When Is a Bill of Lading Required?

A bill of lading is required whenever goods are transported from one place to another via a carrier, whether by land, sea, or air. This document is essential in various scenarios. Here are some key instances when a BOL is required:

• International Trade
• Freight Shipment
• Goods Ownership Transfer
• Claiming Cargo
• Dispute Resolution

It’s also important to note situations where a bill of lading might not be required. For smaller, less formal shipments—such as parcel or courier services—a different type of receipt might be used, such as a waybill. However, for the majority of freight and cargo shipments, especially those involving multiple carriers or international destinations, a BOL is required.

What Is a Bill of Lading Used for and Why Is It Important?

The bill of lading is more than a document. It is a foundational component of the global trade and transportation system. It is useful and important for the legal, operational, and financial aspects of shipping.

As the official contract of carriage, the bill of lading delineates the terms under which goods are transported, including the route, delivery dates, and liability clauses. This ensures clarity and agreement between the shipper and the carrier regarding their respective obligations. Upon taking possession of the shipment, the carrier issues the BOL as proof of receipt. This verifies that the goods were received in good condition and as described.

Moreover, the BOL can also act as a title document. This is important in transactions where ownership changes hands. For international shipments, the document is needed for customs declaration. It provides the essential information for customs clearance, including the nature, quantity, and destination of the cargo.

The bill of lading also provides an official record of the agreement between the shipper and the carrier. By standardizing the logistics process, the BOL ensures smooth transitions between different modes of transport. Its format, recognized worldwide, makes international shipments more straightforward and reliable.

What Is Listed on a Bill of Lading?

While the exact content can vary depending on the type of shipment and the requirements of the involved parties, there are common elements found on most bills of lading. These essential items facilitate the document’s functions as a receipt, a contract, and a title document.

• Shipper and Consignee’s Information: The names and addresses of the shipper (the person or company sending the goods) and the consignee (the recipient of the goods) are clearly stated.
• Carrier Details: The name and contact information of the carrier (the company responsible for transporting the goods) are included to identify the party in charge of the shipment.
• Description of Goods: A detailed description of the goods being shipped, including type, quantity, weight, and dimensions, to ensure all parties agree on what is being transported.
• Special Handling Instructions: If the goods require special handling (e.g., refrigeration, fragile handling, etc.), these instructions are specified to prevent damage during transport.
• Terms and Conditions: The bill of lading outlines the terms and conditions of the shipment, including liability clauses and claims procedures, forming the contractual aspect of the document.
• Bill of Lading Number: A unique identifier for the document, used for tracking and referencing the shipment.
• Origin and Destination: The places of origin and destination are listed to define the shipment’s route.
• Freight Charges: Details on the freight charges, including whether they are prepaid or to be collected at the destination, are indicated.
• Date of Shipment: The date when the goods were handed over to the carrier, which is crucial for tracking and logistics planning.
• Signature: Signatures from the carrier and, in some cases, the shipper, to validate the agreement and receipt of goods.

Types of Bills of Lading

The bill of lading is a versatile document. Here are the main types of bills of lading.

Charter Party Bill of Lading

This type of BOL is used when a ship is chartered for the transportation of goods. It is governed by the terms of the charter party agreement between the shipowner and the charterer. The charter party bill of lading is often used for bulk cargo shipments and details the specific arrangements and responsibilities as agreed in the charter party contract.

Straight Bill of Lading

A straight bill of lading is a non-negotiable document issued to a named consignee that does not allow for the transfer of cargo ownership by transferring the bill. It is used primarily in shipments where the goods are paid for in advance and do not need to be sold in transit. This document requires the carrier to deliver the goods directly to the consignee listed on the bill.

Blind Bill of Lading

A blind bill of lading is used for shipments where the shipper wishes to conceal the consignee’s identity from the carrier or other third parties. The details of the consignee are not listed on the document, providing privacy and security in certain shipping situations. This type of bill is less common and requires careful handling to ensure proper delivery.

Consignee Bill of Lading

The consignee bill of lading specifies the person or entity to whom the goods are to be delivered by the carrier. It ensures that the shipment is delivered to the correct party, as the carrier is obligated to verify the identity of the consignee before handing over the cargo.

Ocean Bill of Lading

This document is used for international shipments over water. The ocean bill of lading serves as a contract for the carriage of goods, a receipt for the shipper, and sometimes as a document of title. It allows for the transfer of ownership of the goods.

Inland Bill of Lading

An inland bill of lading is used for the transportation of goods within a country’s borders, typically by land or inland waterways. It is often the first step in an international shipment.

Claused Bill of Lading

Also known as a “dirty” bill of lading, this document notes any defects or damages to the cargo at the time of loading. The presence of clauses can affect the receiver’s ability to obtain payment under a letter of credit. This indicates the goods were not in perfect condition when loaded.

Uniform Bill of Lading

The uniform bill of lading is a standardized document used primarily in the United States for rail and truck shipments. It adheres to regulations and standards set forth by transportation authorities. This ensures consistency in domestic trade.

Clean Bill of Lading

A clean bill of lading indicates that the goods were loaded on board in apparent good condition and without any visible defects or damages. This type of bill is preferred by banks when documents are presented under letters of credit. The reason is because it suggests the goods are likely to be in saleable condition upon arrival.

Negotiable Bill of Lading

A negotiable bill of lading allows the ownership of the goods to be transferred while they are in transit. By endorsing the document, the shipper can sell the goods to another party, who then has the right to claim the shipment upon arrival. This flexibility makes it valuable for international trade.

Non-Negotiable Bill of Lading

The non-negotiable bill of lading, or straight bill of lading, specifies that the goods must be delivered to a specific consignee and cannot be transferred to others. It is used when the goods have been paid for or do not need to be sold during transit.

Bill of Lading vs. Invoice

The bill of lading and the invoice are fundamental documents in trade and shipping, each serving distinct roles.

While a BOL navigates the logistics of shipping, the invoice focuses on the transaction’s commercial aspects. Each plays a crucial role in their respective domains of the shipping process.

The bill of lading, issued by the carrier, acts as a contract for the carriage of goods, a receipt upon their delivery, and occasionally as a title document. It details the shipment’s journey, including the shipper and consignee’s information, the description of goods, and transport terms.

The invoice, on the other hand, is a financial document issued by the seller. It outlines the sale transaction, listing the goods or services provided, their prices, and the total amount due. Its primary purpose is for payment and accounting, marking the financial agreement between the seller and the buyer.

Bill of Lading FAQs

What is a consignee on a bill of lading?

The consignee is the individual or company to whom the goods are shipped and who has the authority to claim the shipment at the destination. The consignee’s name and address are specified on the bill of lading.

What is a bill of lading number?

A BOL number is a unique identifier assigned to a specific bill of lading. It’s used for tracking and managing shipments, which allows shippers and consignees to access information about the transport status of their goods.

What is the difference between a negotiable bill of lading vs. non-negotiable?

A negotiable bill of lading can be transferred to another party through endorsement, facilitating the transfer of goods ownership while in transit. A non-negotiable bill of lading, or straight bill, specifies a named consignee who cannot transfer the document’s title to others.

What is the difference between a house bill of lading vs. master bill of lading?

A house bill of lading is issued by a freight forwarder for a consignment, consolidating shipments from various shippers. A master bill of lading is issued by the main carrier of the goods and covers the entire journey of the shipment, including those under house bills.

What is the difference between a bill of lading vs. bill of entry?

A bill of lading is a shipping document issued by the carrier, detailing the goods being transported. A bill of entry is a customs document filed at the destination, declaring the details of the goods imported, for customs clearance purposes.

What is the difference between a bill of lading vs. bill of exchange?

A bill of lading is a shipping document that serves as a receipt for shipped goods. A bill of exchange is a financial document that orders a party to pay a specified sum to another party on a set date or on demand.

What is the difference between a bill of lading vs. waybill?

A bill of lading can serve as a document of title, allowing for the transfer of goods ownership. A waybill, on the other hand, is a receipt of goods for shipment that does not confer title, primarily used for tracking and managing shipments.

What is a Himalaya clause in a bill of lading?

A Himalaya clause extends the carrier’s liability limitations to their agents and subcontractors. It protects them from direct claims by the shipper or consignee.

What is a liberty clause in a bill of lading?

A liberty clause allows the carrier to adjust the shipping route or methods as necessary without prior notice to the shipper. Reasons often include avoiding danger or improving the efficiency of the route.

What is a deviation clause in a bill of lading?

A deviation clause permits the carrier to deviate from the agreed route or normal practices for specific reasons—such as saving life or property at sea—without being held liable for breach of contract.