A label is essential to streamline every process and optimally represent any commodity. Similarly, you need a document that represents the contents and details of your shipments. This makes it easy for the customs authorities to verify the shipment's contents and serve as an official document of record. A Bill of Lading serves the same purpose. Therefore, you will have to create and maintain a BOL for almost every shipment.
To ensure that you do not make mistakes in such an important document, the following blog will help you understand the concept of BOL.
2) What is a Bill of Lading (BOL)?
A Bill of Lading or BOL is a legal document containing the details of the type, quantity, and destination of the shipped cargo. The BOL is generated by the carrier representing the agreed terms and conditions for the shipping process. Since the carrier handles the generation of the BOL, all you need to do is submit accurate details about the contents of your shipment. It is essential to accurately provide details as the BOL may be used for official purposes, including insurance claims, customs inspections, etc.
A more straightforward way to define the BOL is that it represents the contract between a shipper and a carrier that outlines the title/ownership of the goods in transit. The document has also been used as a receipt for the shipped goods and can be used to represent the shipment in case of losses or damages.
3) Required Information on the Bill of Lading
Since the document will be the official title document for your shipment during the transit process, you will have to ensure that you do not miss any of the essential details. A standard BOL must have all the information listed below:
- Number of Units Shipped
- Accurate Total weight of the shipment
- Sender’s name and Address
- Receiver’s Name and Address
- Date of Shipping
- Special Instructions for the carrier, if any
- Type of packaging used
- Declared Monetary value of the shipment
- Description of the item/s in the shipment
- Freight Classification
- Order Tracking Number/ Tracking Information
While you should not miss any of the details on the BOL, it is also important to ensure that the information submitted is accurate. If any discrepancies are found, you may have to face trouble with customs or insurance officials.
4) What is the purpose of a Bill of Lading?
The Bill of Lading is crucial to ensure a seamless shipping process. It serves three primary purposes:
4.1) Title Document
The Bill of Lading is considered the official title document of your shipment and its content. This grants the carrier temporary and the receiver permanent ownership of the goods post-delivery. These entities can use this bill as proof of ownership for various official purposes, including insurance claims and customs duties.
4.2) Receipt for the Shipped Goods
The commercial value of the shipment is an essential component while figuring out the customs duties and the insurance process. The BOL can act as an official receipt of the goods in transit for these purposes. The commercial value of the products is already declared on the document, making the entire process easier. In case the shipment is lost or damaged, the BOL can be used as an official document to determine the losses.
4.3) Shipping Contract
As mentioned above, you need to declare the requirements and precautions necessary in the shipping process on the document. Therefore, the BOL acts as a contract between the shipper and the carrier. The document can be referred to as the official declaration in case of breaches from either side.
5) 7 Different Types of Bill of Lading
Depending upon the status of the shipment as well as the contents of the Bill of Lading, it can be classified into the following categories:
Straight bill of lading: This type of document states that the cargo is delivered to a specific consignee and cannot be transferred. It is also known as a non-negotiable bill of lading.
Open bill of Lading: This document is negotiable where the rights can be transferred with the signature from the consignee, which can be done multiple times.
Bearer bill of lading: This document states that anyone who holds the bill of lading can receive the delivery. This type of bill of lading can be created explicitly and may be used for bulk cargo that is turned over in small amounts.
Order bill of lading: This document contains express words like “delivery to X” to designate the consignee. With this bill of lading, the cargo is delivered only to the bona fide holder of the bill, which is approved by a field agent.
There are different formats for the document based on the mode of transportation defined in the contract.
Inland Bill of Lading
The Inland Bill of Lading is used to refer to shipments that are sent through overland modes of transport. This BOL contains the receipt for the carrier and the shipper, along with the carriage contract. This BOL covers shipments through rail, road, or inland waterways.
Ocean Bill of Lading
As the name suggests, this document is used for shipments sent across international waters. This Bill of Lading serves as a receipt to the shipper and is also considered as an invoice. It also represents a legally binding contract between the two parties along with required stipulations for the safety of the goods during transit.
Through Bill of Lading
This BOL is used in cases where the shipment has to travel both the domestic and international shipping networks. In some cases, it is often used as a cargo receipt and as the title of products. The document also represents the legal contract between the sender and the carrier that states the required conditions for successfully completing the delivery/shipping process.
6) What is the importance of BOL?
The Bill of Lading may have multiple purposes based on the stage of the shipping process. The BOL holds an essential place in the shipping process as it can fulfill the following purposes:-
- It acts as proof to acknowledge that the goods have been loaded onto the shipping vessel.
- The shipper can hold the carrier responsible for any mishap during the shipment.
- The shipping company can be protected from false damage claims during loading, which can be put forward either by the shipper or the buyer.
- BOL acts as a document for the importer to collect the cargo from customs.
- Incentives like duties paid can be claimed with the presentation of BOL.
- It enables the shipper to provide guidance to the importer regarding the cargo.
The Bill of Lading will essentially represent your shipments, their contents, and their value on multiple official platforms. Therefore, you must ensure that you have followed the required BOL format thoroughly and the information entered is accurate. This will ensure a seamless cross-border shipping and hassle-free insurance claim process. The BOL can also help transfer the goods' ownership seamlessly with the delivery process.
8.1) Who prepares the Bill of Lading?
BOL can be generated by the shipper, carrier, or third-party logistics partner working on behalf of the shipper.
If you work directly with a carrier, they will generate the BOL. In that case, the carrier might have basic information on the BOL for completing the shipping.
A 3PL partner will also generate a BOL which can be customized for the purpose of the shipper to add in reference numbers for shipping.
The primary generator of the BOL will be the shipper, who will put in all the specific information covering all the required details.
8.2) What is the difference between BOL and Manifest?
BOL is a legal document capable of transferring ownership between parties. In contrast, the Manifest is a non-legal document that represents the contents of the cargo with details of the type, dimensions, quantity, operator name, and shipping route. In no case are the documents interchangeable, but officials review these BOL and Manifest documents for cargo release. In case of liability issues, BOL is the de facto document referred to, not the manifest document. Furthermore, a Manifest cannot represent a receipt that the goods have been loaded or unloaded on and from respectively from the shipping vessel. Further, the Manifest contains essential details to make shipping operations more precise and straightforward.
8.3) Why is BOL quasi-negotiable?
Bill Of Lading is quasi-negotiable precisely because it is transferable as a document of title. This makes BOL one of the most versatile instruments that can be used in international commerce transactions. Moreover, BOL cannot give the transferee a better title than the transferor holds, thereby making BOL a quasi-negotiable instrument.