Table of Contents
What is the bill of lading used for?
The bill of lading or B/L, serves as a maritime transport contract. It is a document of proof that the required goods have been shipped from the origin site. In a way, it also defines the responsibilities of the contracting parties.
The B/L is not issued by government authorities, however, it is an extremely important document!
Who issues the bill of lading?
The agent of the shipping company carrying out the transport.
Who is it meant for?
The exporter, the shipping company through the agent, and the importer. If documentary credit is used, the bank may also be interested in it.
Understanding the B/L
The document is issued with three originals that confer the title of ownership on the person who holds them (if it has been made in the negotiable mode). With a single original document, it is possible to collect the cargo so it is recommended to at all times know where the complete set of documents are located.
Copies of B/Ls are non-negotiable, so in case the buyer needs to be informed in advance of shipping details it is advisable to send these and keep the originals.
The bill of lading will sometimes show the amount of freight. It is necessary to indicate whether the freight is prepaid or is a freight payable (collect) at the destination. This highly depends on the Incoterm of sale.
The B/L document will show the actual dates on which the shipment is made. This is usually referred to as the onboarding date. These can sometimes be modified and backdated, which allows changing the boarding date to an earlier one provided that the contractor of the transport is agreeable. This date change can be required due to the challenge of specifying the day of boarding on a mode of sea transport. It is important for the exporter to obtain this document as soon as possible so that it is in the possession of the importer before the goods arrive at the port of destination.
Another aspect to consider is the importance of the bill of lading on the ownership of the goods. In cases where the cost of transport is settled at destination (i.e freight collect), the shipping company will not release the goods without the collection of freight charges and in fact, be able to retain those goods until there is payment of transport fees. In this situation, there is no legal possibility of dispatching the goods without the settlement of the cost of transport.
What happens if the B/L is lost?
The loss of the original documentation of a B/L does not usually cause problems as long as there is at least one original of the same. However, if the original three are lost it is a serious problem since the shipping company, is not supposed to accept the verbal confirmation of the participants in the operation, without requesting the following documents: letters sent by Consignee (buyer) and Shipper (seller), accepting the release of the goods and exonerating the shipping company of any claim that this release could produce. This is known as a Letter of Indemnity.
In addition, the buyer may need to submit a bond to the shipping company for the amount corresponding to that of the purchase, which the latter may invoke in order to compensate the owner of the goods, in the event that the originals are presented to him subsequently and it is determined that a fraud has occurred.
There are different B/L bills of lading formats to take note of, such as (but not limited to):
Nominative B/L: This B/L issued in the name of a particular person or company, who may collect the goods upon identification and presentation of at least one original of the B/L. In case of processing by the freight forwarder or agent designated for the collection of the goods must be delivered to the townhouse (signed on its back by the person who is nominative) for the purposes of transfer of rights for such operation, although it does not confer transfer for negotiation, so in transit sales operations it is not operational, since it cannot be freely negotiated.
B/L to carrier: This is issued as “carrier”, i.e. without identifying the owner of the goods who will be the owner of the original documentation. It is not highly advisable as the loss of the document can cause serious problems so importers and banks do not accept deliveries with this type of B/L, which is not common in international operations.
House B/L : This is a document issued by the freight forwarding and negotiable agent. Acceptable in banking operations. It is usually accepted in shipments in which either the exporter or importer assumes the entire operation of the international operation.
B/L Express Release: This issued by the freight forwarding agent, allows the release of the goods at destination with simple photocopies, that is, no original document is required for any procedure. It is useful in cases of full trust between seller and buyer as well as in fast-traffic maritime operations. The issuance of the document is done through electronic format, EDI language, from the terminal to the agent at source and is received in the terminal of the Agent at the destination.
You can learn more about the different types of bills of lading in our other article.
The responsibility of the transport contractor is established in relation to the space occupied by the goods on the ship. The specific clauses relevant to damage and loss are usually described on the B/L.
In cases where the goods arrive with defects, two situations must be considered when claiming for claims:
Apparent damage: In this case, observations must be made indicative of the defect or damage assessed in the same document that identifies the delivery of the goods (container or grouping).
Non-apparent damages: In this situation, the document should be marked as “Pending Examination” but do note the allowable time period for making a claim.
In the bill of lading, it is common to find a variety of concepts abbreviated by acronyms that refer to information about weights, dimensions, costs, surcharges, services, etc., which can be requested by the buyer himself or introduced by the shipping company itself as identification of the characteristics of the shipment.
A final note
In this article, we have looked at who issues the bill of lading and various other aspects of the document that are important. However, there are many more points to cover! The exporter must request the document and will require its issuance for a sale with maritime transport from the Incoterm CFR and up to DDP including, among these, all Incoterms for maritime use. In sales whose conditions of delivery are EXW, FCA, FAS, and FOB it is the importer who has to contract the maritime transport, so it will be the one who processes his request to the freight forwarding agent for the realization of the maritime shipment. Bills of lading is a big topic and many questions about bills of lading arise on this document in the course of international trade. If you are unsure, seek professional guidance as the document is very important for payment and release of cargo.
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