A Bill of Lading (BOL or B/L) is one of the oldest and most common forms of transportation documents in use today. It is a document that establishes the terms of a contract between a shipping company (or its agent) and the exporter/shipper (or agent, such as a freight forwarder). Within this contract, it is agreed that freight is to be moved between specified points for a specified charge.
[In the world of export documentation, the term commonly used to describe the individual or firm that contracts the transportation company to send goods to a foreign destination – generally the exporter – is referred as the “shipper”, even in the case of air freight]
Some more detail
The BOL is normally completed by the exporter on forms issued by the shipping carrier. The BOL serves as a document of title, a contract of carriage, and a receipt for goods. The BOL also describes the kind and quantity of goods being shipped (such as the number of packages, the weight and consignment dimensions), the shipper (or exporter), the consignee (the person or firm to whom the goods are being shipped), the ports of loading and discharge, and the carrying vessel.
As the BOL serves as a freight receipt, it will indicate if the freight costs of have been prepaid or are to be paid by the consignee (referred to as “freight collect”). Neither the form nor the usage of the BOL is standardised at present. With the development of containerisation and the use of different means of transport (land and sea) under one contract of carriage, the traditional marine or ocean BOL is being used less often in international trade. Goods cannot be released at the port of discharge until the consignee or their agent produces the original BOL
BOLs may come in both short and long forms. The short form simply refers to the main contract as an existing document, whereas the long form (connaissement intégral) issued by the carrier sets out all the terms of the contract of carriage.
Key points of BOLs
The key points that you should take note of, are:
- The BOL is a legal contract between the shipper (normally the exporter) and carrier (the shipping line represented by the ship’s master or shipping line representative)
- As a legal document, the BOL plays an important role in releasing payment from the bank in conjunction with the Letter of Credit
- A BOL is a document issued by a carrier, e.g. a ship’s master or by the carrier’s shipping department, or a representative of either of these two
- The BOL must be signed or authenticated by the person issuing the document
- The BOL must name the ship/vessel carrying the goods
- The BOL does not afford the holder of the document any ownership of the goods listed in the document (it is not a negotiable document)
- The BOL acknowledges that specified goods have been received on board as cargo for conveyance
- The BOL specifies both the ports of loading and discharge
- The BOL normally has a named consignee
- The BOL will specify the goods to be conveyed, their number, weight and volume
- BOLs are usually issued in three originals; one for the exporter/shipper, one for the shipping line and one for receiver/consignee of the goods.
Types of BOLs
‘Inland’, ‘ocean’, ‘through’, and “air waybill” are common names given to certain types of BOLs. An inland BOL, for example, is a document that establishes an agreement between an exporter/shipper and a transportation company (such as a road hauler/trucking company or railroad company like Spoornet in South Africa) for the transportation of goods overland. Inland BOLs are used to specify the terms for transporting items from the exporter’s premises to the exporter’s international transportation company (usually a shipping line). In South Africa, if the exporter intends using a road hauler, the inland BOL is referred to as a road consignment note, while if the rail network is to be used, then the inland BOL is referred to as a freight transit order.
An ocean bill of lading is the traditional BOL used wihen shipping goods with shipping lines. The ocean (also referred to as a marine) BOL is a document that outlines the terms between an exporter/shipper and the international ocean or marine carrier (i.e. shipping line) for the shipment of goods to a foreign location overseas. The description of a BOL that was provided earlier in this section pertains mainly to an ocean BOL.
A through BOL is a contract that covers the specific terms agreed to by an exporter/shipper and carrier. This document covers the domestic and international transportation of export merchandise. It provides the details of the agreed upon transportation between specific locations (usually the exporter’s premises and the exporter’s customer’s premises in a foreign destination) for a set monetary amount.
An air waybill is a BOL that establishes terms of flights for the transportation of goods both domestically and internationally. This document also serves as a receipt for the exporter, proving the carrier’s acceptance of the exporter’s goods and agreement to carry those goods to a specific airport. Essentially, an air waybill is a type of through bill of lading – click here to learn more about air waybills. This is because air waybills may cover both international and domestic transportation of goods. By contrast, ocean shipments require both inland and ocean bills of lading. Inland bills of lading are necessary for the domestic transportation of goods and ocean bills of lading are necessary for the international carriage of goods. Therefore, through bills of lading may not be used for ocean shipments.
Inland and ocean BOL may be negotiable or non-negotiable. If the BOL is non-negotiable, the transportation carrier is required to provide delivery only to the consignee named in the document. If the bill of lading is negotiable, the person with ownership of the bill of lading has the right of ownership of the goods and the right to re-route the shipment
Other types of bills of lading
In addition to the above types of BOLs, there are two additional categories of BOLs, namely:
Straight bill of lading
This bill states that the goods are consigned to a specified person and it is not negotiable free from existing equities, i.e. any endorsee acquires no better rights than those held by the endorsor. So, for example, if the carrier or another holds a lien over the goods as security for unpaid debts, the endorsee is bound by the lien although, if the endorsor wrongfully failed to disclose the charge, the endorsee will have a right to claim damages for failing to transfer an unencumbered title. Also known as a non-negotiable BOL.
Order bill of lading
This bill uses express words to make the bill negotiable, e.g. it states that delivery is to be made to the further order of the consignee using words such as “delivery to Company Name Ltd. or to order or assigns”. Consequently, it can be endorsed by Company Name Ltd. or the right to take delivery can be transferred by physical delivery of the bill accompanied by adequate evidence of Company Name Ltd.’s intention to transfer. Also known as a negotiable bill of lading.
If a BOL incorporates a clause stating that the carrier reserves the right to tranship, then the transhipment is allowed even if an accompanying Letter of Credit (L/C) prohibits transhipment.
Loading on deck
Unless otherwise required by the Letter of Credit (L/C), the BOL should not indicate that the goods are to be stored on deck. Modern container ships carry about one-third of the containers on deck. Consequently, the BOL may contain a provision that the goods may be carried on deck. If such a provision is contained in the BOL, then the loading on deck is acceptable even if the Letter of Credit (L/C) stipulates otherwise, provided that the BOL does not specifically state that the goods are or to be stored on deck.