What is Bill of Lading and How It Works?
Bill of lading (B/L), is the document used to prove the shipping and the delivery of cargo by the carrier. There are two types of bill of lading: bill of lading (B/L) and air waybill.
1. What is Bill of Lading (B/L)?
- 1.1 Roles and purposes of bill of lading
- 1.2 Types of bills of lading
- 1.3 Contents of bill of lading
- 2.1 Functions of air waybill
- 2.3 Air Waybill vs Bill of Lading
3. Amendment of bill of lading
1. What is Bill of Lading (B/L)
Bill of lading (B/L) is the written voucher issued by the shipping company or its agent to the shipper, proving that the shipping company has received the cargo with the shipper's permission to deliver the cargo to the destination. It is a proof of contract between the carrier and the shipper, with the effect of the document of title in law. You may be relieved that preparing and checking Bill of Lading is part of freight forwrder's responsibilities if you are looking for one to help arrange your shipment.
- 1.1 Roles and purposes of bill of lading
● As cargo receipt
The bill of lading is a receipt issued by the carrier once the cargo has been delivered and loaded onto the vessel.
● As proof of the contract for carriage
The bill of lading is the proof of the contract for carriage between the carrier and shipper.
The carrier transports the cargo for the shipper, so there are certain rights and obligations between the carrier and the shipper. The bill of lading is as evidence of this contractual relationship.
● As document of title
The function of bill of lading as a document of title shows who owns the cargo. Whoever has the bill of lading has the right to request the carrier to deliver the cargo and enjoy the right to possess and handle the cargo.
- 1.2 Types of bills of lading
Original bill of lading (original B/L)
The original bill of lading refers to the "bill of lading" issued by the carrier or the agent to take the delivery of the cargo and claim the rights from the carrier. If the carrier issues more than one original bill of lading, it should be written in the terms of an issue that when one of the original bills of lading is used to take the delivery of the cargo, the rest expire on their own. The original bill of lading is often in the bill of lading prominently marked with the word "original" to show the difference.
The original bill of lading must be signed by the carrier (or its agent, the captain) handwritten or stamped. The original bill of lading is usually in triplicate, each with the same legal effect. In the port of discharge, after one of them is used to take the delivery of the cargo, the other copies automatically expire to prevent the loss during the circulation process, which will make the bank or consignee unable to receive the bill of lading in time.
Telex release bill of lading (TLX B/L)
Telex Release is to send the information of bill of lading to the shipping company at the destination port in the form of electronic message. Telex Release bill of lading means a bill of lading and a copy marked "Telex Release" issued by the shipping company or its agent.
Telex Release means that after the shipper applies to the shipping company and provides the letter of guarantee, the shipping company notifies the destination port agent that this shipment is not required to release the cargo with the original bill of lading. The consignee can take the delivery of the cargo with the fax copy of the TLX B/L stamped by the shipping company.
- 1.3 Contents of bill of lading
The bill of lading records items relating to the cargo and the carriage. Some of them are the domestic legislation or international conventions of B/L, which must be recorded for the contract of carriage. If they are omitted or wrongly recorded, the validity of the bill of lading may be affected. Some are recorded on the bill of lading for the needs of the forwarding.
Contents provided by the shipper：
● Cargo's name, label, number of packages, weight and volume
● Indication of hazardous cargo
● Carrier's name and principal place of business
● Shipper and consignee's name, address and contact details
<p class="secondary-title" "> Contents to be filled in by the carrier：
● Container No. , seal No. , vessel voyage No. , and shipping route
● Port of loading, port of discharge, and the date receiving cargo at the port of loading
● Where and when the B/L is issued, and number of copies
● Signature of the carrier or carrier's agent
2. What is Air Waybill
An air waybill is a cargo receipt issued to the shipper by the carrier, namely an airline or agent, after accepting the shipper's request for air cargo. Unlike the bill of lading, air waybill does not represent the ownership of the cargo and is non-negotiable.
- 2.1 Functions of air waybill
● Contract of carriage
The air waybill is equivalent to the contract of carriage of cargo concluded between the shipper and the air freight carrier, which is effective after both parties sign together and expires after the cargo arrive at the destination and delivered to the consignee as recorded on the air waybill.
● Receipt of the cargo
The air waybill is the receipt of the cargo. After the shipper delivered his cargo to the carrier, he will get a receipt as evidence of the acceptance of goods. Unless otherwise noted, the air waybill is proof that the shipment was handed over in good order and condition.
● Freight bill
The air waybill indicates respectively charges to be paid by the consignee, charges due to the agent or the carrier and details of the type and amount of charges. Therefore, the air waybill can be used as a freight bill or invoice.
● Customs declaration
Air waybill is one of the documents for customs declaration when exporting. When the cargo arrives at the destination airport for import customs clearance, the air waybill is also the basic document for customs inspection and release.
● Certificate of insurance
The air waybill may also serve as a certificate of insurance if the carrier undertakes insurance or the shipper requires the carrier to provide insurance.
- 2.2 Contents of air waybill
The following items are included in the air waybill:
● 3-digit airline prefix
● Serial number of the master bill
● Information of the shipper and consignee
● Airline's name, logo and brief information
● Port of departure
● Port of arrival's code for direct cargo or first port of transshipment's code for transshipment cargo
● Name of the first carrier
● Names of second, third carrier and codes of second, third port of transshipment
● Full name of destination port
● Information of first flight
● Currency of the freight calculation
● Code of payment
● Freight prepaid/freight collect
● Charges other than freight prepaid/freight collect
● Declared Value of cargo in transportation
● Declared Value of cargo in customs declaration
● Insured amount of the cargo
● Cargo's name, label, number of packages or pieces, weight and volume
● Chargeable weight
● Freight per kilogram
● Total amount of freight
- 2.3 Air Waybill vs Bill of Lading
Both are legal documents between the shipper of the cargo and the carrier, and the two documents provide details of the cargo, origin and destination, etc.
The main difference between the air waybill and bill of lading is that a bill of lading is a document of title to cargo and a receipt for the arrival of the cargo at their intended destination.
But an air waybill is a non-negotiable instrument, which is an important cargo shipping document issued by the carrier or its agent. It is the contract of carriage between the two parties, and its content is binding on both sides. Air waybill is non-negotiable, and possessing the air waybill does not represent the ownership of the cargo.
3. Amendment of Bill of Lading
The shipper needs to provide the carrier with the details of the cargo, which are the information required on the bill of lading, such as the shipper and consignee's information, name of cargo, total gross weight, total volume, container number, seal number and so on.
After the shipper provided complete information, the carrier will send a bill of lading draft to the shipper for verification. If the shipper finds any errors on the bill of lading before departure, it can be amended without incurring charges. However, if the amendment occurs after departure, the carrier will need to verify if it can be amended first, and will charge an amendment fee for the amendment.
Key Takeaways
● Bill of lading (B/L) is the document used to prove the shipping and the delivery of cargo by the carrier.
● Bill of lading is a proof of contract between the carrier and the shipper, with the effect of the document of title in law.
● Air waybill is a cargo receipt issued to the shipper by the carrier, namely an airline or agent. Unlike the bill of lading, air waybill can not be used as the document of title.
● If the shipper finds any errors on the bill of lading before departure, it can be amended without incurring charges. However, if the amendment occurs after departure, the carrier will need to verify if it can be amended first, and will charge an amendment fee for the amendment.
