Bill of Lading : The Most Important Document for International Shipping

Bill of Lading :  The Most Important Document for International Shipping  

Bill of Lading (B/L)

Bill of Lading is a document issued by the carrier, sometimes freight forwarder (in case of HBL) to the shipper/exporter. Bill of lading contains the details of goods, consignee, notify parties, port of loading, port of discharge, details of vessel/vehicle, details of containers, number of packages, weight etc.

Important functions of Bill of Lading 

There are three main functions of Bill of Lading:

1. Receipt of the goods : Bill of Lading acts as a receipt of goods, where carrier confirms that the goods are loaded onto vessel/vehicle.

2. Contract of carriage between carrier and exporter/shipper: Bill of Lading acts as a contract between the carrier and the shipper, the contract says that the described goods will be shipped from one point to another.

3. Document of title to the goods: Bill of Lading is the document of title to the goods, which decides the ownership of the goods. That means the name of receiver mentioned in the Bill of Lading at the time of issuance and the goods are handed over to the same party at the destination after receipt of all receivables (if any).

Bill of lading also known as BOL, BL, or B/L.

Who are the Parties involved in Bill of Lading?

1. Shipper

2. Consignee

3. Notify party

4. Buyer (if other than consignee)

5. Carrier/ shipping line

6. Agent

Important information  on Bill of Lading 

Bill of Lading contains lots of information about the shipment; let us know what are those information.

Fields of Bill of Lading:

1. BL Number

2. Shipper

3. Consignee

4. Notify party

5. Vessel name & voyage number

6. Place of receipt (In case of multimodal transport BL)

7. Port of loading

8. Port of discharge

9. Place of delivery (In case of multimodal transport BL)

10. Description of goods

11. Marks and nos.

12. No of packages

13. Container numbers

14. Seal numbers

15. Gross weight

16. Measurement

17. Details of charges

18. Freight prepaid/ freight collect

19. Place and date of issue of BL

20. Date of issue

21. Shipped on Board date

21. Number of original BL

22. Carrier's signature

Bill of lading is the most important document for international shipments. Without it goods cannot be released the receiver.

Who is allowed to receive the goods at destination?

It’s consignee, who is always allowed to receive the goods from the carrier.

 

Who is Notify party?

Notify party is the person or the company that needs to be notified along with the consignee on arrival of the vessel. This information is shared by the carrier.

In most of the cases consignee or notify party is same but in few cases they are different, and in these cases notify party can be the buyer, consignee's clearing agent, trader or the agent or the broker who finalized the business.

Always consignee is only one but there can be multiple notify parties.

Types of consignee:

1. Consignee is same as Notify party: If consignee and Notify party are same, then the process is very simple, carrier will release the goods to the consignee after completion of formalities and receipt of local charges (THC and other charges).

2. Consignee and Notify party both are not same: If consignee and Notify party are different organizations there should be different reasons for that, we shall cover those cases one by one.

In this case, Notify party/parties may be the clearing agent, final buyer, agent (mediator), trader or financer.

If Notify party is one of these: clearing agent, agent (mediator), trader or financer, that means their name is mentioned in BL so that they get notification from the carrier or liner on vessel arrival so that they could be ready for the next step.

If Notify party is the final buyer, this is may be due to buyer is one time importer and they do not have import license (in this case consignee is buyer's agent) or the goods to be delivered to the third party (in case of resale).

In this case all documentation will be done in the name of consignee and in back side of BL consignee has to mention "Deliver the goods to ABC Limited", after that the consignee puts the seal and signature, by doing this consignee give their consent to Han over the goods to ABC Limited who is the final buyer.

3. Consignee is "To the order of Bank":

In case the Bill of lading is consigned to the bank and the consignee is shown as "TO THE ORDER OF XYZ BANK LIMITED" that means that particular bank is involved in the transaction, here XYZ BANK has to endorse on the back side of the BL and mention "Deliver the goods to ABC Limited", ABC Limited is final buyer. Without bank's instruction, cargo cannot be released to the buyer. This is mainly used when shipment is done under Letter of credit.

4. Consignee is "To order" or "To the order":

If "To order" or "To the order" is mentioned as consignee in BL, and BL is blank endorsed  by the shipper, that means the BL is consigned to the order of shipper and the shipper decides who will take delivery of the goods. Once shipper puts it's stamp and sign on the back side of the BL, that means whoever have the original BL can take delivery of the goods from shipping line by surrendering original BL at destination.

What are the Functions of Bill of Lading?

Bill of Lading is the most important document to execute an export or import shipments. Carrier (shipping line) issues Bill of Lading to the shipper at port of origin once customs formalities for export clearance are completed and vessel is sailed. Shipper collects the Bill of Lading from carrier and sends it along with other documents to the buyer as per the contracted terms.

Once buyer/consignee receive documents (from their bank or by courier as per the payment terms), they approach to the office of carrier or their agent at destination. Consignee submits one copy of original Bill of Lading at carrier’s office, pays the destination charges (Destination terminal handling Charges, Documentation charges, Detention / Demurrage if any etc.). Carrier issues a Delivery order (D.O.) to the consignee upon receipts of original Bill of Lading and the receivable charges. Once the consignee receive Delivery order, they can take delivery of the goods after completion of import custom clearance.