•   Kemal KIRIKKANAT
  •  20/02/2024

What exactly is a bill of lading, and why does it significant?

The bill of lading stands out as a vital document in the realm of shipping, holding immense significance as you manage the global movement of your cargo. Delving into its essence and importance, this article sheds light on why it serves as the linchpin in international logistics.

Let’s Start…

In shipping, a bill of lading serves as a crucial legal document with multifaceted functions. It not only delineates the particulars of the goods being transported but also specifies the origin and destination of the shipment. Moreover, it encapsulates pertinent details about the shipper, carrier, and consignee, thus playing a pivotal role in facilitating smooth logistics operations.

The funny thing is that many individuals involved in foreign trade (exporters, importers, etc.) and shipping (line people, etc.) don't know how freight forwarders use it effectively.

For those new to logistics, terms such as shipper, carrier, and consignee might seem perplexing. 

Let me simplify it for clarity:

The shipper, whether it's your supplier or your own warehouse/manufacturer, is in charge of packing and preparing the shipment for transportation. Consider it as sender, seller, or exporter!

The carrier is the entity/company responsible for transporting the cargo. This could be a shipping line like “CMA CGM” or “Hapag-Lloyd”, or any other haulage company or airline handling your cargo.

The consignee is the recipient designated to receive the shipment. This could be your company or a manufacturer utilizing the parts you're shipping, depending on the nature of your cargo. Consider it as receiver, buyer, or importer!

You sell goods to a customer, ship the cargo, and show the customer as consignee on the document! The consignee who is your customer receives the cargo. The one who moves the cargo is a carrier. That's all, keep it simple.

The bill of lading serves three primary purposes:

1) It functions as a document of the title of goods.
2) It serves as evidence of a contract of carriage.
3) It acts as a receipt of goods, signifying the carrier's acknowledgment of receiving the freight.

If you inquire about the types of bill of lading to an individual in the shipping line, they might inform you that there are two types: original and sea waybill. It is not wrong either, but have missing information considering the all story.  The variety of bills of lading available depends on factors such as your destination, the type of commodity being shipped, and your specific requirements. The type of bill of lading you come across is determined by the issuing party, the mode of transport, or the relationship between you and the shipper. 

If you ask freight forwarders, they will mention the Master Bill of Lading (MBL) and House Bill of Lading (HBL). They can arrange it as Seawaybill, or make them telex release. MBL shows an Exporter (Shipper) and an Importer (Consignee). HBL shows the origin freight forwarder (Shipper side) and destination freight forwarder (consignee side). In most cases, they are prepared as I mentioned, and the rest of the information on the documents is mostly the same too. 

A helpful tip: Shipping lines cannot issue HBL (House Bill of Lading). It's worth noting that having an HBL in place can offer added protection for both exporters and importers.

Key Words: Freight Forwarder, Shipping Line, Exporter, Importer, Bill of Lading.