Functions of a Bill of Lading
A bill of lading (B/L or BOL) is a crucial document in international trade, especially in exporting. It serves multiple essential functions, acting as a receipt, a contract, and a document of title. Understanding its role is vital for exporters to ensure smooth and compliant transactions.
Receipt for Goods: The bill of lading confirms that the carrier has received the goods in the specified condition from the shipper. This is a crucial step, providing proof that the carrier has taken responsibility for the shipment.
Contract of Carriage: It serves as a legally binding agreement between the shipper (exporter) and the carrier, outlining the terms and conditions of transportation. This includes details like the destination, responsibilities, and obligations of each party.
A bill of lading contains detailed information about the shipment, including:
Key Information Contained in a Bill of Lading
Document of Title: The bill of lading represents ownership of the goods, allowing the holder to claim them upon delivery. This is particularly important in international trade, where goods may be sold multiple times while in transit.
Details of the shipper (exporter) and consignee (importer).
Details of the carrier, including their signature as a receipt.
Date the goods were loaded.
Port of origin and destination.
Overall condition of the goods.
Description of the goods, including weight, size, dimensions, and what they are.
The NMFC (National Motor Freight Classification) freight class.
The terms and conditions of the shipment, along with any special requirements.
Types of Bills of Lading
The bill of lading is essential in the exporting process because:
Importance of the Bill of Lading in Exporting
Straight Bill of Lading: This is a non-negotiable document, meaning the goods are consigned to a specific party and cannot be transferred to another. It's suitable for shipments where the buyer has already paid or for transactions not requiring payment.
Order Bill of Lading: This is a negotiable document that allows for the transfer of ownership of goods during transit. It typically includes the phrase "to the order of [name of a party]" and can be endorsed to transfer title. This is ideal for international trade where goods may be sold multiple times while in transit.
Bearer Bill of Lading: This is the most negotiable form, allowing for transfer of ownership simply by physically handing over the document. However, due to security risks, it's rarely used in modern trade.
Sea Waybill: This document is used in sea transport when the shipper decides to release ownership of the cargo to the buyer immediately. It is a key document used in sea transport when the supplier (shipper) decides to release ownership of the cargo to the buyer (consignee) immediately. This means that the cargo can be picked up by the party identified in the waybill without presenting a document of ownership.
How to Obtain a Bill of Lading
It is required for the transportation of goods.
It provides proof of the contract between the exporter and the carrier.
It serves as a receipt for the goods.
It determines ownership of the goods.
It is crucial in the letter of credit process.
It helps prevent delays and ensures the exporter gets paid.
Electronic Bills of Lading (eB/L)
The carrier (shipping line, freight forwarder, or Non-Vessel Operating Common Carrier - NVOCC) typically issues the bill of lading to the shipper.
With the advancement of technology, electronic bills of lading (eB/L) are becoming more common. An eB/L is the legal and functional equivalent of a paper bill of lading. They offer benefits such as faster processing times, reduced paperwork, and improved data accuracy.
In conclusion, the bill of lading is a fundamental document in exporting. Understanding its functions, the information it contains, and the different types is crucial for exporters to ensure smooth, compliant, and successful international trade transactions.