bill of lading
Bill of lading is a written legal document issued by the shipper (or their representative) to the carrier (or their representative), containing the details of the goods being transported. There are three characteristics of the bill of lading:
  • It serves as the proof of the contract of freight.
  • It serves as a receipt of shipment.
  • It serves as a document of title
Bill of lading is one of the most important documents in the transportation industry. Further clarification of these characteristics are as follows:

Proof of the Contract of Freight

There is a misconception that the bill of lading is a contractually binding agreement between the buyer and the seller. There is also a misconception that the BoL is a contractual agreement between the carrier and the Shipper.

What really is a bill of lading?

The contract was already put in motion between the buyer and the seller when both of them comes to legal terms and conditions about the transaction.
The contract was bounded by the shipper and the carrier when the shipper (or their representative) hired a carrier to carry the freight from one point to another.
The proof of the contract of freight made by a carrier and the shipper is the Bill of Lading. B/L thus provides the go-ahead to transport the freight as it was decided under the contractual agreement amid the buyer and the seller.

Receipt of Shipment

A Bill of Lading that is authorized by the carrier (or their representative) for the exchange of the shipment to the shipper (or their representative). This BoL is the evidence that the carrier obtained the shipment from the shipper (or their representative) in good condition or in good order.

Document of Title

It serves the holder of the bill of lading to receive the freight from the shipment carrier. It is now up to the holder of the bill of lading to either claim the shipment goods or transfer the shipment goods to somebody else for further process of shipment.
All in all, Bill of Lading is a written document which is the evidence of the freight shipment. It outlines the path and route of the shipment process, whether it may be by land, sea or by air. It is the document of freight forwarding made by the carrier or their representative, to the shipper or their representative. Bill of Lading is the document in exchange for the shipment of the good. The end purpose of B/L is to transfer the goods to the owner of the goods.

Pros and cons of Original Bill of Lading

There are several kinds of bill of lading and each of them is important in their own rights and purposes. Their types are defined below
           1) Straight Bill of Lading   This type of BoL cannot be transferred and negotiated, which means that it will be issued to the consigned party. The submission of freight will only be allowed when the consigned party submits all the original bills owed by the consigned party
The straight bill of lading generally issued when the consignee has unpaid dues. Since, this document is non-transferable, which means no one except the consignee can be the owner of the freight title.
       2) Sea Waybil Sea waybill is one of the form of BoL that is being used constantly. Sea waybill provides a quick way to deliver the shipment to the buying party without much any paperwork. Even though these sea waybills are non-negotiable, this bill surrenders the goods without the presence of the original title of the documents. Due to this advantage, this has made the operations of import and export much easier and faster.
     3) Order Bill of Lading This type of BoL is the most delicate document. It should be well-taken care of and carefully handled. This BoL works like a bearer cheque, whoever has this BoL is liable to get the goods mentioned under the documents. This BoL does not belong to the “named” consignee, instead, it is addressed “to order”. Therefore, whoever holds this BoL will be considered to be the owner of the shipment. This type of bill of lading is usually used when the letter of credit involved with the buying of the goods. Sometimes, there is also a clause that the port agents will only surrender the goods if presented with one original document. This type of BoL can be endorsed or transferred to another enterprise if the examination of such endorsements on the first page or on the back of BoL checks out. This bill of lading qualifies all of the three above mentioned characteristics of bill of lading.
   4)  Telex Release This type of bill of lading is used when the original bill of lading cannot be reached to the destination port agent. So, the shipper issues the original bill of lading to the origin port agent and the origin port agent first confirms the presented document. After confirmation, the origin port agent sends an electronic message or telexto the destination port agent. In that message the origin port agent also sends the copy of the original and inform about the submission of original documents. The destination port agent will release the goods after confirming the message and the copy of the same. Hence, with this type of BoL, a consignee may receive the goods without having to show the original documents to the destination port agent. 
5) Express Release This type of Bill of lading requires no original documentation of any kind whatsoever to be issued to the destination port by the origin port. The release of the shipment cargo is not dependant on the issuance of the original bill of lading in an express release. Hence, it is named express release. There could be a number of reasons for issuing the original BoL to the destination port by the shipper. Some of the main reasons for using express release are:
  • Lowest cost incur in shipping
  • The fastest way to release the freight
  • Enterprises are related or have confidence.

What is the Role of Bill of Lading in Purchasing System?

Every business enterprise uses some sort of bill of lading when acquiring the merchandise. Bill of Lading saves and protects assets of these business enterprises from theft or missed items. For instance, if a grocery store receives the freight of canned foods four times a week. The grocery store owner makes a list of grocery items required for the week and makes a Purchase Order or a PO. The grocery store owner reverifies each PO before submitting the email to the vendor. The vendor will then gather all the listed items and signs off on the bill of lading or purchase receipt to the carrier. On the day of delivery, the carrier will hand over the bill of lading to the grocery owner. The grocery owner will verify the bill of lading with the PO made for the items. When the PO and bill of lading check out, the grocery owner will make the payment mentioned on the purchase receipt.

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