Thursday, February 22, 2024
Thursday, February 22, 2024
HomeProcurement/Supply Chain ManagementBill of Lading, Its Purpose and Types

Bill of Lading, Its Purpose and Types

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A bill of lading is issued by the transportation company (carrier) and it is a legal document that serves as proof of shipment and receipt of goods. It is a vital document in international trade that outlines the details of the cargo being transported, including the type of goods, quantity, weight, and destination. This article will delve deeper into the concept of a bill of lading, its importance, and the different types of bills of lading. A bill of lading also serves as a shipment receipt when the carrier delivers the goods at a predetermined destination. This document must accompany the shipped products, no matter the form of transportation, and must be signed by an authorized representative from the carrier, shipper or the receiver.

Purpose of the Bill of Lading

The primary purpose of a bill of lading is to provide evidence that goods have been loaded onto a carrier for shipment. It acts as a contract between the shipper and the carrier and serves as proof of ownership of the cargo. It also serves as a receipt of goods, acknowledging the delivery of the cargo by the carrier. The bill of lading is an essential document as it is required to release the cargo at the destination port and to facilitate the payment process.

You can say that the bill of lading is a legally binding document issued by the carrier, that provides the carrier and the shipper with all the necessary details to accurately process a shipment.

The bill of lading has three main functions:

  • It is a document of title to the goods described in the bill of lading.
  • It is a receipt for the shipped products.
  • It represents the agreed terms and conditions for the transportation of the goods.

What the Bill of Lading Contains?

The bill of lading contains the following things:

Name and Address: In this section, the name and address of both the shipper and the receiver are mentioned.

Purchase Orders or Special Reference Number: This are the essential part of the bill of lading as this is also treated as the identification number of the shipment which is used during pick-up and release of the shipment.

Special Instruction: Under this section, all the instructions for carriers, not for extra service requests, like a lift gate or delivery notification, are taken down.

Date: The pickup date will be mentioned here to track the freight when shipping invoices are composed.

Description of Items: All shippers must note the number of shipping units, the dimensions and weight, and the description of the material and its makeup.

Packaging Type: Items such as cartons, crates, pallets, and drums used when shipping must be noted.

NMFC Freight Class: Freight classes impact the cost of the shipment. In general, freight shipments are divided into 18 categories based on weight, dimensions, density, storage capability, ease of handling, value, and liability.

Department of Transportation Hazardous Material Designation: In this section, hazardous shipments and special rules and requirements applicable while shipping are mentioned.

Types of Bills of Lading

There are different types of bills of lading, and each serves a specific purpose. The most common types of bills of lading are:

Straight Bill of Lading

This type of bill of lading is non-negotiable and is used when the goods are pre-paid, and the shipment has no intermediary parties.

Order Bill of Lading

This type of bill of lading is negotiable, meaning that the consignee can transfer ownership of the goods to a third party. The transfer is made by endorsing the bill of lading.

Bearer Bill of Lading

This type of bill of lading is also negotiable and allows the holder of the bill of lading to take delivery of the goods.

Clean Bill of Lading

This type of bill of lading indicates that the goods have been shipped in good condition and without any damages or defects.

Claused Bill of Lading

This type of bill of lading contains a clause indicating that the goods were not in good condition when they were shipped.

Container Bill of Lading

A container Bill of Lading is a document that gives information about goods delivered in a safe container or containers from one port to another.

House Bill of Lading

A House Bill of Lading is a document generated by an Ocean Transport Intermediary freight forwarder or non-vessel operating company. The paper is an acknowledgment of the receipt of shipped goods issued to the suppliers when the cargo is received. This Bill of Lading is also known as the Forwarder’s Bill of Lading.

Master Bill of Lading

A Master Bill of Lading is a document created for shipping companies by their carriers as a transfer receipt. The document specifies the terms required for transporting the freight, details of the consignor or the shipper, the consignee, and the respective person who possesses the goods.

Stale Bill of Lading

A stale Bill of Lading is presented for negotiation after 21 days from the date of shipment or any other date/ number of days stipulated in the documentary credit.

Importance of Bill of Lading

The bill of lading is a crucial document in international trade, and its importance cannot be overstated. It provides proof of shipment and receipt of goods, which is necessary for the payment process. Banks require a bill of lading to release payment to the seller, and customs officials require it to verify the cargo’s legality and authenticity. Moreover, the bill of lading serves as evidence in case of disputes between the buyer and the seller, carrier and the consignee, or the insurance company and the insured party.

Conclusion

A bill of lading is a vital document in international trade, serving as proof of shipment and receipt of goods. There are different types of bills of lading, and each serves a specific purpose. The importance of a bill of lading cannot be overstated, and it is required for the payment process, customs clearance, and to serve as evidence in case of disputes. As such, it is essential to ensure that the bill of lading accurately reflects the cargo’s details and that it is handled with care throughout the shipment process.

Also read: The transition from Supply Chain 4.0 to Supply Chain 5.0

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Rajesh Pant
Rajesh Panthttps://managemententhusiast.com
My name is Rajesh Pant. I am M. Tech. (Civil Engineering) and M. B. A. (Infrastructure Management). I have gained knowledge of contract management, procurement & project management while I handled various infrastructure projects as Executive Engineer/ Procurement & Contract Management Expert in Govt. Sector. I also have exposure of handling projects financed by multi-lateral organizations like the World Bank Projects. During my MBA studies I developed interest in management concepts.
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