Bill of Lading what is it and why is it important..??

What is a Bill of Lading..??

Bill of Lading (abbreviated to B/L) is one of the MOST important documents in the whole
shipping and freight chain and although I have written several articles under the category of
Bill of Lading, I thought it would be a good idea to dedicate an (rather lengthy) entire post to
this document, so here goes.. Grab a cuppa coffee and read on..
A Bill of Lading has 3 basic purposes or roles..
1. Evidence of Contract of Carriage
2. Receipt of Goods and
3. Document of Title to the goods
Lets examine these roles in more detail..
1) Evidence of Contract of Carriage emphasis on the term Evidence..
Many people think that a B/L is a Contract between the Seller and the Buyer and many also
think that a B/L is a Contract of Carriage between the Carrier and Shipper..
Both notions are wrong..
The contract between a buyer and seller was already established when the buyer placed the
order with the seller and they both discussed and agreed (verbally or in writing) the what,
where, when, how and how much of the transaction in detail..
The contract between a shipper and the carrier was already established when the shipper or
his agent made a booking with the carrier (shipping line) to carry the cargo from A to B..
The B/L is the EVIDENCE of the contract of carriage entered into between the Carrier and
the Shipper or Cargo Owner in order to carry out the transportation of the cargo as per the
contract between the buyer and the seller..
2) Receipt of Goods emphasis on the term Receipt..
A B/L is issued by the carrier or their agent to the shipper or their agent in exchange for the
receipt of the cargo.. The issuance of the B/L is proof that the carrier has received the goods
from the shipper or their agent in apparent good order and condition, as handed over by the
shipper..
3) Document of Title to the goods emphasis on the term Title..
It means that the goods may be transferred to the holder of the bill of lading which then gives
the holder of the bill of lading, the rights to claim the goods or further transfer it to someone
else..

Based on the above roles, there are several variations of the Bill of Lading (lets call it
Types), important among which are as below..
1) Straight Bill of Lading is a B/L issued in Original(s) to a named consignee and
therefore is a NON-NEGOTIABLE & NON-TRANSFERABLE DOCUMENT.. Release of
cargo at destination must be issued ONLY to the named consignee and ONLY upon surrender
of all the original bills issued..
This bill of lading satisfies roles 1 & 2 above fully and satisfies role 3 (Document of Title)
ONLY for the named consignee and no one else, as this document is non-negotiable or
transferable.. This means that no one other than the named consignee can claim the title of
ownership of the cargo..
2) Seaway Bill of Lading is a B/L similar to a Straight Bill of Lading and is also a NONNEGOTIABLE DOCUMENT.. But the similarity ends there..
A Seaway B/L is usually issued
1. for inter company shipments like from ACME Company Hollywood to ACME
Company in the Middle of the Australian Outback or
2. where the shipment takes place between two different companies but there are no
negotiations required between the two either directly or via bank for release of the
cargo and
3. the shipper doesnt need to submit an original bill of lading to anyone to secure his
payment
No originals are issued in the case of a Seaway B/L and therefore no surrender is required..
This bill of lading satisfies roles 1 & 2 above and does not satisfy role 3 (Document of Title)
as the document is not negotiable or transferable.. As there are no originals issued for this
type of bill, the release is termed as an Express Release and is mentioned as such on the body
of the bill of lading and manifest..
3) Negotiable Bill of Lading is a B/L issued in Original(s) and maybe consigned TO
ORDER or TO ORDER OF SHIPPER or TO ORDER OF XYZ BANK (where Letter
of Credit maybe involved).. Also known as an Order Bill..
One of the most important aspects of a bill of lading is that it can be used as a negotiable
instrument for payments between a buyer and seller using Letter of Credits.. You can read
how a Letter of Credit works here..
A negotiable bill of lading must be treated like gold and due care must be taken not to lose it..
There are several cumbersome procedures to be followed if an original bill of lading is lost..
Another notable feature of this type of B/L is that it contains the Terms and Conditions of the
Carrier on the 1st Page of the B/L.. The 1st page is what we all commonly refer to as the
back of the bill of lading.. Seaway bills issued by some carriers do not have these Terms
and Conditions on the back (also known as blank back short form bill of lading)..

Destination port agent may issue release of cargo only after at least 1 of the issued originals
are surrendered and after checking the endorsements on the back of the bill of lading as it is
possible for this type of bill of lading to be endorsed or transferred to another company.. This
bill of lading satisfies all of the above 3 roles.. Read the permutation and combination
regarding the consignee in one of my previous articles..
There are also various ways in which the bill of lading is termed or titled, the purpose of
which is to identify the carriers responsibility in terms of the carriage..
Below are some of the ways in which a bill of lading is termed or titled..
1) Port to Port Bill of Lading When a B/L is issued as a Port to Port B/L (also known as
Ocean Bill of Lading), the carriers responsibility begins at the port of loading and ends at the
port of discharge and therefore the Place of Origin/Receipt or Place of Destination/Delivery
should not be mentioned in the B/L.. Read Parts of a Bill of Lading Part 2..
2) Combined Transport Bill of Lading When a B/L is issued as a Combined Transport
Bill of Lading, it involves multiple modes of transport from the Place of Receipt to Place of
Delivery and all these movements are carried out as a single contract by multiple service
providers under the employ of the carrier..
Carrier takes responsibility for any loss or damage for the entire transport including the sea
and other mode of transport..
Read Intermodal vs Multimodal what is the difference..??
3) Multimodal Transport Bill of Lading Same as Combined Transport Bill of Lading..
4) Through Bill of Lading Similar to Combined Transport Bill of Lading except that in the
case of the Through Bill of Lading, the carrier is directly responsible only for the sea leg and
for the inland movement they act as an agent in arranging the inland movement..
The terms on the Through Bill of Lading issued by the carrier will specifically state this, in
such a bill of lading..
When a bill of lading is released as a Through Bill of Lading, the boxes like Pre-Carriage
by, Place of receipt by pre-carrier, Place of delivery by on-carrier, On-Carriage by etc
will be filed in..

Charter Parties
Charter Parties can be classed as one of the following:

Time Charter Party

Voyage Charter Party

Booking Note

Bills of Lading
By signing the Bill of Lading, the carrier enters into a legally binding agreement to carry the
cargo after it has been loaded onboard the vessel. The Bill provides evidence that the goods
have been received for transportation and records the terms on which they are to be carried. It
entitles the holder of the Bill to delivery of the cargo, and is needed in order to clear goods at
the port of destination.

Advice and support

At RaetsMarine, we are always happy to advise you on Charter Parties, Bills of Lading and
other forms of contract. We place great emphasis on our active risk and loss prevention
policy, and as part of this service, our expert staff are always on hand to draft and recommend
specific clauses and Charter Parties.

Time Charter Party

A Time Charter Party typically has the following key characteristics:

The shipowner is responsible for providing a seaworthy ship with valid classification,
and a master and crew, so that the ship can be sailed safely to its final destination.
The charterer is responsible for loading, stowing, and discharging cargo safely.

The charterer is responsible for giving the master effective orders and instructions
with regard to when and where the cargo should be shipped.

The charterer is responsible for providing fuel for the vessel.

Various forms of Time Charter Party exist, but the two most commonly used for dry cargo are
the Baltime and the New York Produce Exchange (NYPE) Charter Parties. The Baltime is
often considered to favour shipowners, while the NYPE is considered more advantageous for
charterers. Charter Parties for tankers have the same main characteristics.

Voyage Charter Party

Voyage Charter Parties generally contain the following key agreements:

The type of cargo to be carried is agreed in advance.

The ports to be visited are agreed in advance.

It is the responsibility of the shipowner, not the charterer, to give instructions to the
master.

If liner terms (e.g., an inclusive freight rate) have been agreed, it is the shipowner who
takes responsibility for the loading, stowage and discharge of cargo.

If FIOS terms have been agreed, it is the charterer who takes responsibility for the
loading, stowage and discharge of cargo.

The standard Voyage Charter Party for dry cargo is the Gencon Charter Party. In the tanker
trade, however, Charter Parties are usually based on the Asbatankvoy Charter Party.

Booking Note
A Booking Note is a contract that has been drawn up between either a CIF seller or an FOB
buyer and a shipping company for the carriage of cargo. A Booking Note differs from other
forms of contract in that, once the cargo is shipped, its terms and conditions are superseded
by those in the Bill of Lading.
The standard model used for drawing up Booking Notes is the CONLINEBOOKING Liner
Booking Note. This is typically used in conjunction with the CONLINE Liner Bill of Lading.

Bills of Lading
Key functions
A Bill of Lading has a number of key functions:

It provides evidence that the cargo was received on board the ship at a certain date
and in a certain condition.
It records the terms on which the goods are to be carried.
It is a transferable document. It entitles the holder of the Bill to delivery of the cargo.
If the goods are sold during the voyage, the Bill of Lading therefore also changes
hands. Similarly, while it is usually the shipowner who signs the Bill of Lading and
agrees to act as a carrier, the Bill of Lading can be signed by a different party, who
then assumes responsibility for carriage.

It is needed in order to clear goods at the port of destination.

Types of Bills of Lading

Bills of Lading typically fall into one of four basic categories:

Congen Bill of Lading used in combination with Charter Parties

Conline Bill of Lading used by liners

Through Bill of Lading used for trading cargo that will remain on board the vessel
until its final destination

Combined transport Bill of Lading used when traded cargo is carried by multiple
means of transport (e.g., it is transferred from one ship to another, or from ship to rail
and then road).

Although many liner companies use their own Bills of Lading, with their own content or
layout, their Bills of Lading are largely based on the standard Conline Bill of Lading.

Maximum clarity
The liabilities that flow from Bills of Lading can be extremely complex. We therefore need
maximum clarity about your liabilities from the outset, so that we can determine the
insurance cover and premium that will accurately reflect the level of risk involved.
That is why, for our standard cover, we require a warranty that all Bills of Lading are issued
and signed by, or on behalf of, the master. Naturally, we can still provide insurance if a
charterer chooses to sign the Bill of Lading himself, but in such cases, the premium will be
higher, reflecting the higher level of risk borne by the insurer.
For the same reasons of clarity, our standard cover also requires that charterers do not
voluntarily take on the role of carrier in a Bill of Lading. This is because as a carrier, your
liabilities include matters over which you have no direct control (e.g., navigation, safety,
compliance with ISM and ISPS and seaworthiness, which remain the responsibility of the
master and the shipowner at all times).

Common Export Documents for Air Freight

The following documents are commonly used in exporting; but which of them are necessary
in a particular transaction depends on the requirements of the U.S. government and the
government of the importing country.
Shippers Export Declaration (SED or form 7525-V) The SED is available through the
Government Printing Office and a number of other commercial outlets. It can be
electronically filed using AESDirect.
A NAFTA Certificate of Origin is needed for shipments to Mexico and Canada. This tool
can help you through the process of filing this certification.
CE Mark requirements must be met to market goods in the European Union. Once a
manufacturer has earned a CE mark for its product, it may affix the CE Mark to its product,
and then the product may be marketed thoughout the EU without having to undergo further
modifications in each EU member country.
Export license a U.S. Government document required for dual use exports (commercial
items which could have military applications), or exports to embargoed countries. Most
export transactions do not require specific approval from the U.S. Government. Before
shipping your product, make sure you understand the concept of dual use and the basic export
control regulations.
Commercial invoice a bill for the goods from the seller to the buyer. These invoices are
often used by governments to determine the true value of goods when assessing customs
duties. Governments that use the commercial invoice to control imports will often specify its
form, content, number of copies, language to be used, and other characteristics.
Certificate of origin The Certificate of Origin is only required by some countries. In many
cases, a statement of origin printed on company letterhead will suffice. Special certificates are
needed for countries with which the United States has special trade agreements, such as
Mexico, Canada and Israel. More information about filling out these special certificates is
available from the TIC.
Bill of lading is a contract between the owner of the goods and the carrier (as with domestic
shipments). For vessels, there are two types: a straight bill of lading which is non-negotiable
and a negotiable or shippers order bill of lading. The latter can be bought, sold, or traded
while the goods are in transit. The customer usually needs an original as proof of ownership
to take possession of the goods.
Insurance certificate is used to assure the consignee that insurance will cover the loss of or
damage to the cargo during transit. These can be obtained from your freight forwarder.
Export packing list considerably more detailed and informative than a standard domestic
packing list, it itemizes the material in each individual package and indicates the type of
package, such as a box, crate, drum, or carton. Both commercial stationers and freight
forwarders carry packing list forms.

Import License Import licenses are the responsibility of the importer. Including a copy
with the rest of your documentation, however, can sometimes help avoid problems with
customs in the destination country.
Consular invoice Required in some countries, it describes the shipment of goods and
shows information such as the consignor, consignee, and value of the shipment. If required,
copies are available from the destination countrys Embassy or Consulate in the U.S.
Air way bills Air freight shipments are handled by air waybills, which can never be made
in negotiable form.
Inspection certification is required by some purchasers and countries in order to attest to the
specifications of the goods shipped. This is usually performed by a third party and often
obtained from independent testing organizations.
A dock receipt and a warehouse receipt are used to transfer accountability when the export
item is moved by the domestic carrier to the port of embarkation and left with the ship line
for export.
A destination control statement appears on the commercial invoice, and ocean or air
waybill of lading to notify the carrier and all foreign parties that the item can be exported
only to certain destinations.