Glossary

Bill of Lading (B/L)

Related Glossary

BCO (Beneficial Cargo Owner)

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What is a Bill of Lading?

A Bill of Lading (B/L) is a legal document issued by a carrier, such as a shipping line, airline, or transporter to the shipper after accepting cargo for transport. It serves three critical purposes:

  • A receipt confirming that the goods have been handed over.

  • A contract of carriage that defines the terms and responsibilities for moving the goods.

  • A document of title grants the holder the legal right to claim the goods at the destination..

Key Points

  • Issued by the Carrier – After goods are loaded on board or received for shipment.

  • Acts as Evidence – Proof that the carrier has received the cargo in good condition.

  • Transferable Document – Can be endorsed and transferred to another party. It is commonly used in letter of credit (LC) transactions.

  • Types of B/L –

    1. Straight B/L: Non-transferable.Non-transferable. Goods are released only to the named consignee.

    2. Order B/L: Transferable by endorsement. Common in international trade, where ownership may change during transit.

    3. Seaway Bill: Non-negotiable. Acts as a receipt and contract, but does not transfer title. Enables faster release of goods, as no original document is required at the destination.

  • Essential Details Included – Shipper’s name, consignee’s name, cargo description, quantity, weight, vessel/flight details, loading and discharge ports.

Example Scenario

An exporter in India ships 1,000 cartons of garments to a buyer in the USA. Once the shipping line accepts the cargo at the port, they issue a Bill of Lading. This document confirms:

  • The cargo has been loaded on the vessel.

  • The exporter has proof of shipment (useful for getting paid under a Letter of Credit).

  • At the destination, the buyer or whoever holds the endorsed B/L can claim the goods from the carrier.

Frequently Asked Questions (FAQs)

1. Why is a Bill of Lading so important in shipping?

Because it’s not just a receipt—it’s also a contract and a proof of ownership of goods. Without it, the consignee cannot take delivery of the cargo.

2. What happens if the Bill of Lading is lost?

The consignee must provide a letter of indemnity and sometimes a bank guarantee to the carrier before cargo is released, since the B/L represents ownership.

3. Is a Bill of Lading always required?

Yes, in international sea shipments, it is mandatory. For domestic transport or courier shipments, simpler documents like waybills may suffice.

4. What is the difference between a Bill of Lading and a Seaway Bill?

A Seaway Bill is non-negotiable and only acts as a receipt and contract. It cannot transfer ownership of goods, making it faster but less flexible in trade finance.

5. Who prepares the Bill of Lading?

The bill of lading is usually prepared by the carrier or its agent based on details given by the shipper. The shipper should review all details carefully before the document is finalized and released.

Additional Insights

  • Role in Trade Finance – Banks often require an original, negotiable Bill of Lading when processing Letters of Credit.

  • Digital B/L – Increasingly used in modern shipping for faster and safer document handling.

  • Common Mistakes to Avoid – Wrong consignee name, incorrect cargo details, or a mismatch with the commercial invoice can cause customs or delivery delays.

  • Related Terms – House Bill of Lading (HBL), Master Bill of Lading (MBL), Waybill, Consignment Note.