Bill of lading – what is it, what it should contain, its types + advice from our experts
Continuing our series of “Practical advice from our experts,” we present to you the most important document in maritime transportation, necessary for the transport to run smoothly – BILL OF LADING.
A Bill of Lading/BL is a maritime document, issued by a shipowner or freight forwarder, confirming the receipt of goods on board. It is also sent to the consignee, who becomes authorized to take possession of the goods at the port of destination. A bill of lading is a type of security through which it is possible to transfer ownership of the cargo being transported. The person acquiring the bill of lading has the right to receive the cargo and dispose of it. A bill of lading is not a contract of carriage, but only a confirmation of acceptance of the cargo for carriage along the route described in the bill of lading and an obligation to deliver the cargo to the authorized consignee at the port of destination.
There are a myriad of types of bills of lading, depending on their form (printed or electronic), how they are issued (registered, to order, bearer), who issues them (shipowner or forwarder), or their type (loaded, blank/classified, liner/charter, electronic, direct, ordinary/transfer).
Basic types of bills of lading by the way they are issued:
– straight B/L – authorizes receipt by the person indicated on the document. One original BL is sufficient to release cargo at the port of destination,
– order B/L – authorizes receipt by the person named on the document or any person who has acquired it by legal right. A so-called “simple majority of bill of lading” (i.e., e.g., 2/3, 3/5, etc.) is required to release the cargo at the port of destination,
– bearer B/L – authorizes receipt by the person who is in possession of the document. The owner of the cargo described on the bill of lading is the holder of all originals.
There are 2 forms of bill of lading:
– original B/L – original printout with signature and stamp of the carrier
– sea waybill / telex release B/L – electronic waybill
Original B/L is issued in several numbered copies, and importantly, each is an original of the document. Usually there are 3 originals numbered sequentially 1/3, 2/3/ and 3/3. The number of originals is unlimited, it depends on the customer’s needs, but usually 3 originals are issued.
There are also different types of bills of lading: loaded, clean/classified, line/charter, electronic, direct, regular/transhipment.
The bill of lading can also be divided by the issuer:
– Master B/L – issued by the shipowner,
– House B/L – issued by the forwarder.
The first page of the bill of lading (obverse) should contain the so-called bill of lading conditions, specifying, among other things, the carrier’s liability, procedures and handling of the goods, and the shipper’s liability. This is the “small print” part, but we advise you to pay attention to it – it will reduce the risk of misunderstandings between the parties involved.
The content of the second side of the bill of lading (reverse) in Polish law is defined in the provision of Article 136 § 1 of the Maritime Code, and here we advise you to look, we briefly outline what it must contain:
- notify address,
- place of receipt,
- port of loading and port of discharge,
- description of goods,
- number and kind of packages.
- freight prepaid or freight collect.
We present you with additional advice from our experts on bills of lading.
A bill of lading is a security, and if it is lost, the release of the cargo is withheld by the carrier/shipowner, which later incurs the cost of holding the cargo at the port.
The loss/theft/loss of original bills of lading requires additional complicated, expensive and lengthy procedures to be undertaken by the shipper and the presentation of collateral or long-lasting bank guarantees to the carrier/armorer for the release of goods to the consignee without the presentation of original bills of lading. With some shipowners, a lost bill of lading is worth 200% or even 300% of the value of the goods blocked by the bank in the form of bank guarantees for 2/3 years. It is also worth being aware of the risk of losing the goods to a “new bearer” if a bearer bill of lading is lost.
In our experts’ experience, the bill of lading is most often lost by courier companies. If it is the courier company that lost the bill of lading, demand to find it. Unfortunately, courier companies do not have the option to insure the shipment as a security paper.
If another party is at fault, contact the ocean carrier and determine what the procedure is for releasing cargo at the destination port in case of lost bills of lading. As a rule, there are bank guarantees and a letter of indemnity (LOI), a document that is a guarantee against the consequences of losing a bill of lading. At the same time, be sure to inform your freight forwarder of the fact that the bill of lading has been lost/stolen/lost – industry expertise and experience can prove extremely helpful. Carriers use a variety of document templates, your freight forwarder will determine the details of further proceedings and help you obtain the correct forms.
As you can see above, losing a bill of lading leads to a situation where we have to prepare and obtain a lot of additional documents. This is an extremely time-consuming process, and can also cost a lot, so we advise what to do to prevent such situations:
- If possible, in the commercial contract establish the conditions under which an electronic bill of lading – sea waybill – is issued. This type of bill of lading cannot be lost, and the procedure for receiving goods is simpler in its case.
- Before issuing a bill of lading, carriers issue drafts of them to shippers to make any corrections. Although these are only drafts, keep them – it may help to recognize the cargo in a situation where the original bill of lading is lost.
- Our practice, which further secures the bills of lading we send to our clients, is to keep a scan of the original bill of lading and send it, along with the date and courier shipping number, to the client by email. In this way, the customer is informed of the upcoming delivery of the bill of lading, making it less likely to be lost.
- We advise you to use reliable courier companies that offer a tracking service – this will enable you to know the last location of the bill of lading in case it is lost.
- Remember that if the bill of lading is flooded with liquid or damaged, there is an option to replace the entire set of originals with the shipowner.
- If the terms of the contract allow, we encourage you to use Sea Waybill or Telex Release.
Don’t forget! The bill of lading is an important security paper, it is worth keeping it in a safe place!