BILL OF LADING
If we search the meaning of the term “bill”, it is defined as a printed or written statement of the cost for the goods or services delivered or to be delivered. The term “ lade” means to put the cargo onto a ship or other form of goods carrier.
Thus, a bill of lading in shipping is a record of the traded goods which have been received on board. It is a document that establishes an agreement between a shipper and a transportation company for the transportation of goods. Transportation Company (carrier) issues these records to the shipper.
A bill of lading indicates a particular carrier through which the goods have been placed to their final destination and the conditions for transporting the shipment to its final destination. Land, ocean, and air are the means used for bills of lading.
The Importance of Bills of Lading
The carrier need not require all originals to be submitted before delivery. It is therefore essential that the exporter retains control over the full set of the originals until payment is effected or a bill of exchange is accepted or some other assurance for payment has been made to him.
A bill of lading, therefore, is a very an important issue when making shipments to move the cargo or freight from one point to the other. On one hand, it is a contract between a carrier and shipper for the transportation of goods and on the other hand, it serves as a receipt issued by a carrier to the shipper.
Hence, the bill of lading is considered a legal document which provides all the vital details to the shipper and the carrier to conveniently process the freight shipment through different maritime countries and invoice them correctly.
The original copy of the bill of lading is provided to the carrier and a copy of the same should also be ascribed to the packaged freight.
Negotiable and Non-negotiable bill of lading?
A negotiable bill of lading: In this type of bill, a clear instruction is provided to make the delivery of the goods to anyone having the possession of the original copy of the bill, which itself signifies the title and control of the freight. In this type of bill, the buyer/ receiver or his/her agent has to acquire and present an original copy of the bill of lading at the discharge port. In the absence of original bill copy, the freight will not be released.
Non-negotiable bill: This type of bill of lading fixes a specific consignee/name of the receiver to whom the freights will be shipped and delivered. It, however, does not itself serve the owner of the goods. Under this type of bill, the assigned receiver/ buyers can claim the cargo by confirming their identity.
Purpose of Bill of Lading:
The bill of lading document is meant to act as a transport document enacting as the evidence of the contract of carriage of the goods. A negotiable bill of lading has the following legal qualities:
It acts as a piece of evidence for the carriage contract containing the terms and condition under which the goods transportation will be carried out
It represents as a receipt which endorses that the carrier has received the cargo as per the contract and the goods are received in good condition.
It is a document of title, permitting the sale of goods in transit and the raising of financial credit.
Most of the local and international system does not consider a bill of lading as a document of title. It provides the right for the delivery to be made to the possessor
Sets of Bill of Lading:
This is an old practice where the bills are signed in the sets of three originals to facilitate the goods are timely delivered even when the original is lost. They are stated as the first original, second original, third original on top of the bill. A duplicate copy with a stamp – “Non-negotiable” may also be distributed.
The master will sign the original bill of lading, and when the master of agent signs the three-bill of lading, all other copies are considered void. This clause is clearly written on the bill of lading which is supplied in sets.
This is a reason why the bank, negotiating a letter of credit that covers the cargo, will always ask for the full set of B/Ls. This is to prevent other B/L holders from legally claiming the cargo before the bank does.
Bill of lading as Contract Of Carriage:
The contract between the carrier and the shipper is already created before issuing the bill of lading when the cargo is loaded on the ship. This is done to safeguard the shipper in case the cargo is damaged before loading it on board the vessel and to help the shipper in the claim process. For the carrier and the consignee, the bill of lading will act as the actual contract of carriage.
The popularly used conventions and rules which covers the contract of carriage for carrying goods by sea :
– Hamburg Rules
– Rotterdam Rules
– Hague Rules
– US COGSA
– Hague – Visby Rules
The convention which governs the contract of the carriage is usually stated in the first page of the bill of lading. Upon booking space for shipment by the consignee the carrier sends a booking confirmation which states Clauses sent by the carrier, it will indicate the terms and conditions that will govern the booking and contract of carriage.
Contents of Freight Bill of Lading:
The bill of lading comprises of the following details:
The complete name and official address of the receiver and the shipper.
The Purchase orders or special reference/ invoice numbers which helps the shipper and the consignee to release the goods for pickup or accepted at delivery
The date of the pickup which acts as a reference to track the freight
The details of the item including the number of unit being shipper, weight and dimension of the product, along with the nature of the cargo being carried, i.e. dangerous goods etc.
If the goods are hazardous, Department of Transportation hazardous material designation is tagged, and it is cited on the bill to follow special rules and requirements when shipping
The details of the packaging used such as crates, palates, cartons, pills, drums etc.
Any special notes or instruction for the carrier
Bill of Lading Tracking:
Different companies use different forms of bill of lading which makes it difficult to track them unless a specific tracking service is provided by the carrier. There are few companies which tie-up with the shipping carriers to track the bill of lading for easy trade.
However, these precautions must be taken before signing the bill of lading.
Electronic Bill of Lading:
With the modernization of the shipping industry as a whole, the bill of lading is also modernized to the electronic bill of lading to solve the issues occurring while using a paper bill of lading under the latest iteration of the International Group of P&I Clubs. The problem faced when using a paper bill of ladings are:
The paper bill uses printed bills of lading which are both costly. The bill has to be couriered which is an additional cost
– The slow movement of the paper-based bill of lading.
– Carriers are obligated to release the goods only on the production of an original bill of lading, which if not received in time will slow the process.
– The paper bill can be forged, and the delivery of goods against a forged bill of lading will lead to a huge loss.
Electronic bill of lading
Advantages of Electronic Bill of Lading:
As there are no papers involved, it saves paper cost as well the cost involved in sending the paper to a different destination by courier
The electronic bill of lading can be transmitted instantaneously around the word in the presence of an internet connection, enabling a quick trade and ease of multiple transfers of ownership during the carriage of the cargo.
If there are any modifications required in the bill, it can be made quickly and cost-effectively as compared to the paper system of the bill of lading.
If the electronic bill of lading system is drawn correctly, such as introducing audit trials, PIN, electronic signature etc., it will be difficult to commit any type of fraud.
Problems with the Electronic Bill of Lading
It is possible to negotiate and transfer the possession of the paper bill as it is the evidence of the title of the goods. However, this is not automatically the case with e-bill.
(Source – A paper bill of lading is a document of title, enabling it to be negotiated and transferred as possession of the bill is evidence of title to the goods. This is not automatically the case at law with an e-bill)
If the electronic bill system is not secured, it can be hacked, and the details can be manipulated as per the convenience of the hacker, leading to fraud and loss of cargo
Implementation of an electronic bill system across the industry needs consent from all the stakeholders, which will take time.
Click here to know about the types in BL
If we search the meaning of the term “bill”, it is defined as a printed or written statement of the cost for the goods or services delivered or to be delivered. The term “ lade” means to put the cargo onto a ship or other form of goods carrier.
Thus, a bill of lading in shipping is a record of the traded goods which have been received on board. It is a document that establishes an agreement between a shipper and a transportation company for the transportation of goods. Transportation Company (carrier) issues these records to the shipper.
A bill of lading indicates a particular carrier through which the goods have been placed to their final destination and the conditions for transporting the shipment to its final destination. Land, ocean, and air are the means used for bills of lading.
The Importance of Bills of Lading
The carrier need not require all originals to be submitted before delivery. It is therefore essential that the exporter retains control over the full set of the originals until payment is effected or a bill of exchange is accepted or some other assurance for payment has been made to him.
A bill of lading, therefore, is a very an important issue when making shipments to move the cargo or freight from one point to the other. On one hand, it is a contract between a carrier and shipper for the transportation of goods and on the other hand, it serves as a receipt issued by a carrier to the shipper.
Hence, the bill of lading is considered a legal document which provides all the vital details to the shipper and the carrier to conveniently process the freight shipment through different maritime countries and invoice them correctly.
The original copy of the bill of lading is provided to the carrier and a copy of the same should also be ascribed to the packaged freight.
Negotiable and Non-negotiable bill of lading?
A negotiable bill of lading: In this type of bill, a clear instruction is provided to make the delivery of the goods to anyone having the possession of the original copy of the bill, which itself signifies the title and control of the freight. In this type of bill, the buyer/ receiver or his/her agent has to acquire and present an original copy of the bill of lading at the discharge port. In the absence of original bill copy, the freight will not be released.
Non-negotiable bill: This type of bill of lading fixes a specific consignee/name of the receiver to whom the freights will be shipped and delivered. It, however, does not itself serve the owner of the goods. Under this type of bill, the assigned receiver/ buyers can claim the cargo by confirming their identity.
Purpose of Bill of Lading:
The bill of lading document is meant to act as a transport document enacting as the evidence of the contract of carriage of the goods. A negotiable bill of lading has the following legal qualities:
It acts as a piece of evidence for the carriage contract containing the terms and condition under which the goods transportation will be carried out
It represents as a receipt which endorses that the carrier has received the cargo as per the contract and the goods are received in good condition.
It is a document of title, permitting the sale of goods in transit and the raising of financial credit.
Most of the local and international system does not consider a bill of lading as a document of title. It provides the right for the delivery to be made to the possessor
Sets of Bill of Lading:
This is an old practice where the bills are signed in the sets of three originals to facilitate the goods are timely delivered even when the original is lost. They are stated as the first original, second original, third original on top of the bill. A duplicate copy with a stamp – “Non-negotiable” may also be distributed.
The master will sign the original bill of lading, and when the master of agent signs the three-bill of lading, all other copies are considered void. This clause is clearly written on the bill of lading which is supplied in sets.
This is a reason why the bank, negotiating a letter of credit that covers the cargo, will always ask for the full set of B/Ls. This is to prevent other B/L holders from legally claiming the cargo before the bank does.
Bill of lading as Contract Of Carriage:
The contract between the carrier and the shipper is already created before issuing the bill of lading when the cargo is loaded on the ship. This is done to safeguard the shipper in case the cargo is damaged before loading it on board the vessel and to help the shipper in the claim process. For the carrier and the consignee, the bill of lading will act as the actual contract of carriage.
The popularly used conventions and rules which covers the contract of carriage for carrying goods by sea :
– Hamburg Rules
– Rotterdam Rules
– Hague Rules
– US COGSA
– Hague – Visby Rules
The convention which governs the contract of the carriage is usually stated in the first page of the bill of lading. Upon booking space for shipment by the consignee the carrier sends a booking confirmation which states Clauses sent by the carrier, it will indicate the terms and conditions that will govern the booking and contract of carriage.
Contents of Freight Bill of Lading:
The bill of lading comprises of the following details:
The complete name and official address of the receiver and the shipper.
The Purchase orders or special reference/ invoice numbers which helps the shipper and the consignee to release the goods for pickup or accepted at delivery
The date of the pickup which acts as a reference to track the freight
The details of the item including the number of unit being shipper, weight and dimension of the product, along with the nature of the cargo being carried, i.e. dangerous goods etc.
If the goods are hazardous, Department of Transportation hazardous material designation is tagged, and it is cited on the bill to follow special rules and requirements when shipping
The details of the packaging used such as crates, palates, cartons, pills, drums etc.
Any special notes or instruction for the carrier
Bill of Lading Tracking:
Different companies use different forms of bill of lading which makes it difficult to track them unless a specific tracking service is provided by the carrier. There are few companies which tie-up with the shipping carriers to track the bill of lading for easy trade.
However, these precautions must be taken before signing the bill of lading.
Electronic Bill of Lading:
With the modernization of the shipping industry as a whole, the bill of lading is also modernized to the electronic bill of lading to solve the issues occurring while using a paper bill of lading under the latest iteration of the International Group of P&I Clubs. The problem faced when using a paper bill of ladings are:
The paper bill uses printed bills of lading which are both costly. The bill has to be couriered which is an additional cost
– The slow movement of the paper-based bill of lading.
– Carriers are obligated to release the goods only on the production of an original bill of lading, which if not received in time will slow the process.
– The paper bill can be forged, and the delivery of goods against a forged bill of lading will lead to a huge loss.
Electronic bill of lading
Advantages of Electronic Bill of Lading:
As there are no papers involved, it saves paper cost as well the cost involved in sending the paper to a different destination by courier
The electronic bill of lading can be transmitted instantaneously around the word in the presence of an internet connection, enabling a quick trade and ease of multiple transfers of ownership during the carriage of the cargo.
If there are any modifications required in the bill, it can be made quickly and cost-effectively as compared to the paper system of the bill of lading.
If the electronic bill of lading system is drawn correctly, such as introducing audit trials, PIN, electronic signature etc., it will be difficult to commit any type of fraud.
Problems with the Electronic Bill of Lading
It is possible to negotiate and transfer the possession of the paper bill as it is the evidence of the title of the goods. However, this is not automatically the case with e-bill.
(Source – A paper bill of lading is a document of title, enabling it to be negotiated and transferred as possession of the bill is evidence of title to the goods. This is not automatically the case at law with an e-bill)
If the electronic bill system is not secured, it can be hacked, and the details can be manipulated as per the convenience of the hacker, leading to fraud and loss of cargo
Implementation of an electronic bill system across the industry needs consent from all the stakeholders, which will take time.
Click here to know about the types in BL
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