Bill of lading: Definition, key elements & more

When shipping goods, you must have paperwork detailing legal information between the carrier and transporter. One such document is a bill of lading, which you have to produce once your goods arrive at their destination. 

Also, it must be signed by an accredited figure from the receiver, carrier, and transporter.  It's utilized to confirm that all parties agree to the terms of the cargo and the courier acknowledges receipt of the goods.

Let's take a look at the definition and use of this document. 

Definition, functions, and who issues the bill of lading

A bill of lading (BOL) is an official document allotted by a carrier outlining the location, category, and quantity of goods a carrier is transporting. It is safeguarded by austere laws, including the Pomerene Act, to ensure transportation companies operate within the regulation. 

Predominantly, a BOL indicates that the carrier has received goods and is en route to delivering them to the recipient. Key players involved in a BOL, include:

• Consignee: the individual set to receive the cargo, either a manufacturer or a corporation.
• ‍Shipper: the merchant of goods accountable for preparing and packing the load.

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5 Types of bill of lading

Historically, the bill of lading was used for sea shipments as it was the chief mode of transport. But currently, you can use it for inland freight or rail. There are different types of BOL, and the one you choose depends on various factors, including:

• Mode of transmission
• Purpose of BOL
• Relationship between seller and buyer
• Any laws that protect the buyer

Type 1. Straight bill of lading

SBOL is non-negotiable and is used to ship goods for a client who has completed payment.

Type 2. To order a bill of lading

To order a bill of lading is paperwork that denotes the transfer of goods ownership to another party by the official consignee. 

Type 3. Ocean bill of lading

Ocean bill of lading is used for overseas shipments and allows a third party to collect the goods.

Type 4. Air waybill

The air waybill is akin to the ocean bill of lading.

The only difference is that it is non-negotiable, and you cannot change it "to order".

Type 5. Multimodal bill of lading

Multimodal is used for different shipping modes.

For instance, if you are shipping your goods from Texas and to Australia, you can apply for a multimodal bill of lading.

Benefits of using the bill of lading

1. Insures your goods

You should keep a detailed record of all information related to your goods.. The bill of lading provides critical information about the goods, including their location, address, quality, and quantity. 

Whoever picks the consignment signs at the bottom to verify that everything included in the bill is factual. Additionally, it is a form of insurance in case your goods are damaged.

2. Acts as the official receipt for goods

A BOL acts as a formal receipt from the transporter to the shipper, indicating that all the goods are in stable condition, as highlighted.

Such an acknowledgment is crucial for inventory and tracking your goods. 

3. Contract of the carriage

A BOL outlines the terms and conditions of shipping the goods to the consignee. The contract includes essential information about the destination, origin, and the agreed mode of transport.

These details help to avert any disputes once the consignment reaches its intended destination.

You should also be aware of Incoterms (International Commercial Terms) rules by the International Chamber of Commerce (ICC) for shipping.

See also the list of Incoterms: The 11 rules explained

4. Proof of shipment

A BOL proves that your goods are in acceptable health before shipping and their quality matches what is denoted.

Once delivered, the beneficiary signs the receipt to certify that the consignment is in ideal condition.

Why is BOL processing crucial?

1. Accuracy rates with BOL 

Your BOL must include the right information about the transporter, consignment, and the dates when the goods were loaded.

Wrong information can lead to detrimental consequences, including cargo interests.

Moreover, inaccuracy can cause run-ins with the law in freight claims.

2. BOL helps the turnaround times

As a shipping company, you must have competitive turnaround times to bolster your position in the market.

If you are struggling to process your BOL paperwork, it may obstruct the ease at which the goods reach their consignee.

For such, it is imperative to outsource individuals who provide accurate BOL data entry.

3. BOL aids in customer satisfaction

Nowadays, customers prefer working with transparent shipping companies who notify them about their goods while in transit.

For instance, you can increase regular shipping costs for clients who want their goods delivered in less than two days.

Quality assurance for your BOL

If you own a shipping company, it's imperative that you invest in quality assurance in case of costly errors in the paperwork.

To avoid common mistakes, make sure you:

• Confirm the authenticity of the carrier’s stamp
• Ensure that the goods are correct and of the right quality
• Check if the BOL has any missing information
• Authenticate the quantity of the consignment

Additionally, you can couple this process with an audit from any accounting company so that you only pay for your consignment.

How do we help international trade business? 

A bill of lading is a document allotted by a transport company to a shipper. It indicated the terminus, quantity, and category of goods set to be delivered.

Due to this, it serves as the official receipt of the goods and shields them from theft.

You must understand the types of BOL available to know which one suits your consignment in import and export business.

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Require a seamless cashflow for your trade? Learn more about our invoice financing and what it can unlock for your business.