The bill of lading is one of the most important documents in the shipping and freight process. It is a legal document that provides a record of the transport of goods from one place to another and ensures a convenient and safe logistics process. Bills of lading can be issued by
- Shipping agent
- Carrier or
- Logistics company to shipper
The bill of lading also has three main functions:
1. Proof of the contract of carriage
A bill of lading is evidence of a contract of carriage between the "carrier" and the "shipper or owner" for the purpose of carrying the goods (not to be confused with a contract of sale between the buyer and the seller).
2. It acts as a receipt
When the carrier issues the bill of lading to the shipper, it confirms that the goods have been loaded onto the transport vessel. The shipper usually issues several original bills of lading which can be passed on to different parties along the way, essentially taking control of the cargo.
3. Ownership as a commodity (representing ownership)
The bill of lading usually includes details of the consignee (buyer/consignee) to which the carrier ships the goods. However, title does not pass until the bill of lading is passed on to the receiver. The shipper may forward a copy of the bill of lading to the consignee as proof of transport, but the person holding the original bill of lading retains title to the goods. Bills of lading are usually delivered to the consignee only after full payment.
The information listed on the bill of lading can include:
- Shipper Details
- Recipient (Consignee) Details
- Carrier details and signature to confirm receipt
- Loading date
- Port of loading
- Destination port
- Details of the shipment
- Shipping terms and conditions
- Any special shipping requirements (for example, if the cargo is dangerous)
Shipping terms and conditions are especially important because they detail who is responsible for the goods at what stage, and who is responsible for paying the freight (Incoterm for the goods). Note that the bill of lading may not detail all the terms and conditions of carriage, but at least they should be mentioned.
So among these three functions, which is the most important function of the bill of lading..??
In the container business, the following are the most common types/methods of issuing bills of lading:
- Direct bill of lading
- Order bill of lading
- Bill of Lading
All of the above types of bills of lading satisfy Functions 1 and 2 – Evidence of Contract of Carriage and Goods Receipt, but only the Order Bill of Lading satisfies Function 3 – Document of Title..
Why the other two types do not satisfy function 3..?? Let me explain..
1) When a bill of lading is issued in original form to the "appointed" consignee, it is called a "direct bill of lading", and a direct bill of lading is a non-negotiable and non-negotiable document. The bill of lading stationery will not have the words Straight Bill of Lading, but may have Ocean Bill of Lading or Port to Port Bill of Lading written at the top.
Release of goods at destination can only be made to the named consignee and only after surrender of at least one original issued bill of lading. This release condition is governed by the COGSA (Carriage of Goods by Sea Act) of the relevant country and jurisdiction. .
A direct bill of lading does not satisfy function 3 (document of title) because the document is neither transferable nor transferable.
2) When the bill of lading is issued to the "designated" consignee but without any original and using sea waybill or waybill stationery, it may be regarded as a "sea waybill".. this bill of lading is also a non-negotiable & non-negotiable document..
Since the sea waybill is not issued the original, it does not need to be returned.
The ocean bill of lading does not satisfy function 3 (document of title) because the document is neither negotiable nor negotiable.
Given below are ready-made estimators as to which type of bill of lading fulfills which role (in the context of container shipping).
So what is the most important function of the bill of lading? ?
The answer is: no one feature is more important than the other, because each feature has its own purpose and needs.
