What is Bill of Lading– Types, Importance, and Example

The logistics and supply chain business has grown tremendously in past years. It’s evolved as a more organized, automated, and efficient sector. As one might assume, multiple factors have contributed to this level of success. One such aspect is streamlined workflow. From booking to delivery, the shipping industry today has a well-organized structure in place to ensure that every cargo is delivered on time and without damage or delay.

Furthermore, among many components, one crucial instrument that ensures the shipment’s timely and secure delivery, or the document that provides the carrier and shipper with all of the necessary details to handle a shipment accurately, is known as a Bill of Lading(BoL).

But what exactly is a bill of lading, and what are the different types of bills of lading? This blog will provide us with all the answers. We will also learn about the importance of the bill of lading with an example to understand this subject better. Let’s start with a definition of a bill of lading.

Understanding Bill of Lading (BoL)

A bill of lading is a legal document that is used for the transportation of goods. It is essentially a contract between the shipper and the carrier for the safe and efficient transportation of goods to the recipient, who is also referred to as a consignee.

You must fill out various fields on the bill of lading, including the shipper address, consignee address, shipment details, carrier name, who is paying for the carrier, and tailgate. Once this is completed, create three copies of the bill of lading. Keep one for yourself, one for the shipment, and one for the driver.

The bill of lading serves three key purposes, which are stated below:

1. It is a title document for the items described in the bill of lading.
2. It is a receipt for the products that have been shipped.
3. The bill of lading represents the agreed-upon terms and conditions for the goods’ transportation.

Moreover, there are various types of bills of lading based on different parameters. The three main types of bills of lading are air waybills, rail waybills, and road waybills. Again, these types are subdivided into multiple subcategories, such as Master bill of lading, Order bill of lading, House bill of lading, and many more.

In the following section, we’ll look at the 3 primary types of bill of lading as well as 10 other important types.

Types of Bill of Lading (BoL)

Bill of Lading Based on Transportation Mode

Based on the mode of transportation, the three basic types of bills of lading are shown below. Let’s take a brief look at them all.

A. Air Waybill

As the name implies, an airway bill is a form of a bill of lading or a document that carries the details about the shipment and is accompanied by goods shipped by an international air courier.

Source: ytmng.com

Moreover, like all other bills of lading, an air waybill comprises the shipper’s and consignee’s names and addresses, the sender airport code, the destination airport code, the declared shipment customs value, the number of items, the net weight, a description of the goods, and so on.

B. Rail Waybill

As the name implies, a rail waybill is a receipt issued to the customer confirming that their goods have been received and forwarded on for transportation by railway.

In addition, rail waybills typically include tracking numbers, allowing the consumer to track the status of the consignment. The rail bill of lading (BoL), like the air waybill, contains all of the necessary details about the cargo, such as the shipper’s name and address, the consignee’s name and address, the declared shipment customs value, the number of items, net weight, a description of the cargo, and so on.

C. Road Waybill

A road waybill is a type of bill of lading or document that contains information about the shipment and is sent with cargo shipped by a road transport courier.

Source: pdffiller.com

The road bill of lading, like the air waybill and rail waybill, contains all of the necessary details about the shipment, such as the shipper’s name and address, the consignee’s name and address, the declared shipment customs value, the number of items, the net weight, a description of goods, and so on.

These are the three types of waybills based on the mode of transportation. Let’s look at some additional types of bills to understand this subject better.

Bill of Lading Based on Order Type

1. Master Bill of Lading (BoL)

The master bill of lading, also known as the ocean bill of lading, is issued by the shipping line and represents the transportation contract between the shipper and the carrier. The master bill of lading includes information such as the forwarder’s name, the consignee’s name, the shipping line’s local branch, and more. Since it is signed by the carrier, the Master Bill of Lading (MBL) is regarded as one of the most reliable documents in marine logistics.

There are two kinds of master bills of lading: 

1. Direct Master Bill of Lading is prepared by the carrier or carrier company and delivered directly to the exporter. 
2. Master Bill of Lading is prepared by carriers for freight forwarders along the delivery route.

2. Straight Bill of Lading

According to Wikipedia, a straight bill of lading is used when payment has been made in advance of shipment, and the product must be delivered to the relevant party by a carrier. In other terms, a straight bill of lading is a non-negotiable bill of lading used when the goods being delivered have already been paid for, are donations or gifts, and do not require payment.

Source: container-xchange.com

The primary benefit of a straight bill of lading is that the buyer or importer is not required to show the original bill of lading. Instead, they can obtain the products straight from the carrier, thereby eliminating demurrage and detention charges.

3. House Bill of Lading (BoL)

A house bill of lading is a document issued to a shipper by a freight forwarder or a Non-Vessel Operating Common Carrier (NVOCC) to acknowledge receipt of their cargo for shipment. It specifies the actual shippers and consignees. Moreover, the house bill of lading might be both negotiable and non-negotiable.

The “consignor” in this document is the actual seller/sender/exporter, and the “consignee” is the actual buyer/receiver/importer. Moreover, like other bills of lading, it includes information such as the sender, receiver, cargo type, quantity of products, customs value, and so on.

4. Order Bill of Lading

An order bill of lading is a bill of lading that is issued to the order of a shipper or consignee for the delivery of goods, and that can be transferred to third parties by endorsement. That is, the named consignee or shipper will be the owner of the cargo, or he can order the shipment to be delivered to another party by endorsing the bill of lading to that party.

Order bill of lading is a negotiable type of bill of lading because the (ownership) of the bill of lading can be transferred. It’s one of the most common types of bills of lading.

5. Clean Bill of Lading

A clean bill of lading, as the name implies, is a document that declares there was no damage or loss of goods during shipment. It is provided by the importer after a thorough inspection of all shipments for damage, missing quantities, or quality variations.

A clean bill of lading is simply a document that certifies that the items being transported and their containers are in good condition. Nonetheless, there is no positive affirmation or indication of the effect on a clean bill of lading. If a bill of lading contains a note of the damage or missing merchandise, it is referred to as the claused, foul, or dirty bill of lading.

6. Bearer Bill of Lading

A bearer bill of lading, as the name implies, is a document that specifies that delivery will be given to whoever holds the bill. In other words, this document authorizes the delivery of goods to the document’s holder. The name of the consignee, to whom the items have been transferred, is stated as “bearer.”

Such a bill may be created intentionally, or it may be an order bill that fails to specify the consignee, either in its original form or through a blank endorsement. A bearer bill of lading is a negotiable document that allows a third party to accept goods upon arrival.

7. Claused/Foul Bill of Lading

A claused bill of lading, also known as a dirty bill or a foul bill of lading, indicates a shortage or damage to the delivered goods. This document suggests a deficit or damaged products in the delivery. In other words, a claused bill of lading is used only when the delivered goods differ from the purchase order (PO), delivery specification, or expected quality specified in the original bill of lading (BoL).

Suppose the receiver issues the claused bill of lading. In that case, the exporter may be in trouble because it is the exporter’s responsibility to deliver the goods undamaged and in full quantity as specified in the original bill of lading.

8. Through Bill of Lading

Through bill of lading is a document that authorizes the carrier to carry the shipment across different distribution locations – from the place of origin to the last point of destination – using one or more modes of transportation.

Moreover, this bill of lading permits cargo transfer both within and outside of the country. In addition, if the shipper wishes to relocate the consignment within the country’s borders, an “inland bill of lading” will be required. However, if the shipper needs to transport the products across the ocean, they will need an “Ocean bill of lading.”

9. Surrender Bill of Lading

A surrender bill of lading, as the name implies, is a document issued by exporters that permits importers to legally own the goods transported by the exporter. The exporter can keep the bill of lading and legally own the goods until the importer pays.

Source: dripcapital.com

In other terms, a surrender bill of lading serves as exporters’ insurance. They can keep the shipment on hold until they receive full payment from the importer. The document is usually accompanied by a payment method for documentary collection. When importers pay, they receive the bill of lading (BoL), as well as the shipment. 

10. Received For Shipment Bill of Lading

Received for shipment bill of lading is a document issued by a carrier as proof of receipt of goods for shipment. This type of document is produced prior to vessel loading and is not an onboard bill of lading.

The carrier issues the Received for Shipment Bill of Lading to confirm the container’s arrival at the port for loading. When the cargo is loaded into the ship, this document is replaced by a Shipped on Board Bill of Lading. Carriers issue this bill to give the exporter more time to deliver the document to the consignee. Use shipping software that have module of billimg and invoice.

So there you have it– the top 10 types of bills of lading. As we can see, each one has a distinct role and significance. Each of these documents contributes to a seamless and quick shipping process. It ensures that shipments reach their destinations in good shape and on time.

However, in addition to these 13 types of bills of lading, there are several others, such as switch bills of lading, board bills of lading, multimodal bills of lading, and many more. If you work in the transportation industry or want to get into it, we suggest that you become well-versed with each of these bill types.

Let’s move on to the next section to better understand the importance of the bill of lading.

Importance of Bill of Lading (BoL)

We are confident that the information provided above has helped you comprehend why a bill of lading is so important in the shipping industry. Still, here are a few more reasons that underline the importance of the bill of lading.

The bill of lading is crucial in both domestic and international trade. It is a contract between the carrier and the shippers about the goods delivered under the terms and circumstances specified in the document. Furthermore, it legally binds both parties to their respective responsibilities.

The Bill of Lading (BoL) acts as, 

1. A document of title to the goods described in the bill of lading.
2. A receipt for the shipped products.
3. The bill of lading represents the agreed terms and conditions for the transportation of the goods.

For example, it makes the carrier responsible for shipping the items from source to destination in a safe and timely manner, while it also makes the shipper liable for paying the shipper with any necessary fees, charges, or commission.

Moreover, this document helps the receiver evaluate whether or not they have received complete or undamaged goods. For example, suppose the receiver receives fewer goods or damaged goods. In that case, they can issue a claused or foul bill of lading, which holds the carrier or exporter liable for paying the damages in accordance with the terms and conditions.

In a nutshell, a bill of lading is an extremely important tool that plays a critical part in making the shipping process more streamlined, safe, and efficient. For all of these reasons, the shipping industry needs bills of lading.

Now, let’s move on to the last leg of this blog and look at an example of a bill of lading. We will also look at the details that should be included in the bill of lading.

Example of Bill of Lading (BoL)

Let’s look at a bill of lading example to better comprehend it.

A New York restaurant requires fresh vegetables and fruits for a birthday party dinner. The restaurant manager will evaluate the types and quantities of fruits and vegetables required for the party’s meals. They then fill the Purchase Order (PO) and hand it over to the restaurant owner. The restaurant owner will review the order and mail it to a local vegetable vendor.

The vendor collects the vegetables and fruits as ordered and signs a bill of lading with a carrier agent. The items are delivered to the restaurant the next day by the carrier. The manager will then compare the items and quantities to the purchase order and the bill of lading. If the quantity on the PO and the quantity on the bill of lading match, the manager will submit the documents to the owner, who will evaluate them and sign the check payable to the supplier.

However, if the quantity mismatches or the item is missing, the manager will issue a claused or foul bill of lading and notify the owner, who will ultimately put the payment on hold until the shortfall products are delivered.

This example demonstrates how a bill of lading streamlines and secures the shipping process. For example, if the restaurant owner does not receive the entire shipment they ordered, they will not issue the vendor a check. 

Moreover, if the Purchase Order and Bill of Lading do not match, the manager will raise a flag and refuse the payment. This is how a bill of lading ensures that the receiver receives the complete shipment with no damage or shortfall.

Now, let’s wrap up the blog with the final section– what information must be included on a bill of lading form?

What Information Required on a Bill of Lading Form?

• Shipper’s and consignee’s full name and address
• Bill of lading number
• Shipping line details
• Carrier details
• PO or special account number used between businesses for order tracking
• The date of shipment
• The number of items/units
• Type of packaging– cartons, pallets, skids, and drums.
• The gross weight of the package
• Specific instructions
• Declared customs values of the goods
• The NMFC freight classification for the items being shipped.

These are some of the most important details that should be included on a bill of lading form. However, note that the details vary based on the type of bill of lading.

That’s all about the bill of lading. We are confident that this article has helped you gain a better understanding of a bill of lading, different types of bill of lading, the importance of bill of lading, and more. Also, the example at the end must have provided you with a better understanding of how a bill of lading works and why it is so important.

The Bottom Line

A bill of lading is a crucial document in the shipping sector because it secures and streamlines the process for all parties involved – exporter, importer, and courier. However, since there are multiple types of bills of lading, it is essential that you gain a basic understanding of each before entering the shipping sector. Also, make sure you include all of the required information in the documents listed above.