Bill Of Lading | HighRadius™ | Autonomous Finance | A/R Management Software (2024)

What is a bill of lading?

A bill of lading is a legally binding document that is issued by a carrier (usually a transport company like a shipping line, trucking company, railroad, or air freight company) to a shipper of goods. It serves as a contract of carriage and evidence of title to goods.

The bill of lading facilitates international trade by allowing sellers to ship goods to buyers without prepayment while still allowing buyers to obtain the goods by presenting the document. It can also be used by buyers to secure payment from banks under letters of credit. In summary, a bill of lading is one of the most important documents in shipping and international trade. It connects sellers, buyers, carriers, banks, insurers, and other parties to ensure the smooth transportation and delivery of traded goods.

3 Significance of the bill of lading?

A bill of lading serves three main purposes:

1. It is a receipt that confirms the carrier has received the goods for shipment. It provides details about the shipment such as a description of the goods, quantity, weight, destination, shipper/consignee information, etc.
2. It is a document of title that establishes ownership of the goods. The bill of lading allows the shipper to transfer ownership of the goods in-transit by endorsing the bill of lading over to the buyer. Whoever holds the original bill of lading can take possession of the goods upon arrival.
3. It defines the terms of carriage or sets forth the contractual agreement between the shipper and the carrier. This includes things like shipment routes, liability terms, freight charges, etc. The bill of lading acts as the contract of carriage for the shipment.

11 components of bill of lading

A bill of lading contains a range of details about the shipped goods and the logistics of the shipment. The key information typically included is:

1. Shipper and Consignee - The shipper is the party sending the goods and the consignee is the party receiving them. The bill of lading identifies the shipper, consignee, and their addresses.
2. Carrier - This identifies the party transporting the goods (shipping line, railroad, trucker, etc).
3. Date of Shipment - The date the carrier received the goods for shipment.
4. Ports of Loading and Discharge - The starting point and ending destination of the cargo.
5. Description of Goods - Details the type of commodities being shipped and how they are packaged (boxes, drums, pallets etc).
6. Quantity - The number of units, weight, or volume of the cargo as applicable.
7. Freight Charges - The cost for transportation agreed between the shipper and carrier.
8. Terms and Conditions - Standard liability limits and terms to govern the shipment.
9. Title and Risk - Indicates when responsibility and risk for the cargo transfers between the shipper to the carrier.
10. Other Instructions - Any special shipping instructions such as temperature control, hazardous cargo declarations, etc.
11. Signature - Signed and dated by an authorized representative of the carrier acknowledging receipt of the goods.

The 9 types of bills of lading

There are several different types of bills of lading commonly used in shipping:

1. Straight Bill of Lading - This is a non-negotiable bill indicating that the goods are consigned to a specific person. It does not allow the title to the goods to be transferred.
2. To Order Bill of Lading - This bill makes the goods negotiable by consigning them "to the order of" a specific person, rather than directly to them. It allows the title to be transferred multiple times by endorsing the bill of lading.
3. Clean Bill of Lading - Indicates the goods were received by the carrier in apparent good order and condition. It confirms no defects were noticed at the time of shipment.
4. Claused Bill of Lading - Notes any defects, irregularities or discrepancies discovered when the carrier receives the goods.
5. Through Bill of Lading - Covers transport from the point of origin to final destination, even though multiple carriers may be involved.
6. Multimodal or Combined Transport Bill of Lading - Applies when multiple modes are used such as road, sea and rail to transport the goods.
7. House Bill of Lading - A bill issued by a freight forwarder who arranges the transport rather than actually carrying the goods.
8. Ocean Bill of Lading - Document for sea freight issued by the shipping line or ocean carrier.
9. Charter Party Bill of Lading - Issued when a ship or vessel is chartered for a specific voyage.

Is a bill of lading proof of delivery?

No, it only evidences receipt of goods. The seller retains ownership until title transfers as specified, such as delivery to the buyer upon payment. The bill of lading can help prove the goods were shipped.

Learn the 7 major O2C process steps and how they help increase a company’s revenue growth and build customer relationships.