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Guide on bill of lading: Meaning and its role in international shipping
Bill of lading is a legal document that works as proof of shipment when the cargo is shipped overseas. Here’s a complete guide for exporters on BOL and how to obtain it.
Documentation is an important step in the process of international shipping, which ensures smooth export of goods and seamless payments. With every shipment that is exported from India, a few export documents are required.
Based on the type of document, authorities are required to approve it before it is sent to the importer or customer. These documents depend on origin and destination countries and the products being exported. Among the list of documents, bill of lading is one such important export document that works as a proof of shipment. It states what products are being shipped, where is the shipment from (origin country) and what is the destination of the shipment (destination country).
Based on the type of document, authorities are required to approve it before it is sent to the importer or customer. These documents depend on origin and destination countries and the products being exported. Among the list of documents, bill of lading is one such important export document that works as a proof of shipment. It states what products are being shipped, where is the shipment from (origin country) and what is the destination of the shipment (destination country).
What is the purpose and importance of
bill of lading?
Bill of lading is a legal document that plays a crucial role when the cargo (goods) is shipped from India. Here’s why bill of lading is necessary1:
• Bill of lading acts as the ‘Evidence of Contract’ between the shipper and the carrier, as a proof that there is an agreement between the parties.
• It acts as a ‘Receipt’ handed over by the carrier to the receiver of the products. This states that the goods have been loaded.
• It acts as the ‘Document of the list of goods’, where the importer receives the goods and verifies them using this document.
When your products are shipped, the possession of the shipment is transferred from you – an exporter – to the carrier. To ensure this is done smoothly, BOL is obtained with information on export products, number of products, billing details, payment details, special instructions to be taken care of while storing or during the transit of the products, etc.
• Bill of lading acts as the ‘Evidence of Contract’ between the shipper and the carrier, as a proof that there is an agreement between the parties.
• It acts as a ‘Receipt’ handed over by the carrier to the receiver of the products. This states that the goods have been loaded.
• It acts as the ‘Document of the list of goods’, where the importer receives the goods and verifies them using this document.
When your products are shipped, the possession of the shipment is transferred from you – an exporter – to the carrier. To ensure this is done smoothly, BOL is obtained with information on export products, number of products, billing details, payment details, special instructions to be taken care of while storing or during the transit of the products, etc.
What are the contents of a bill of lading document and how to fill it?
A bill of lading may vary depending on the type of contract between the buying and selling parties and depending on the business terms of the buyer and exporter. A few details that remains constant in Bill of Lading is2:
• Name and details of the shipping line/shipping partner
• Shipping bill number and date
• Hazardous products, if any, and necessary certification for it
• Name and address of the shipper (consigner), receiver (consignee) along with other contact details and date of dispatch
• Purchase order number to cross-check terms and conditions agreed upon by the buyer and seller
• Any specific instructions or reminders for the carrier about the shipment
• Complete details about consignment like the number of units, weight, dimensions of the products, etc.
• Information about packaging used in the shipment like cartons, crates, pallets, drums, etc
• Freight classification
• Signature of the concerned officer
Before signing the Bill of Lading, one must ensure that the details mentioned in the documents are not ambiguous. The terms and conditions must be carefully checked before confirming the document.
• Name and details of the shipping line/shipping partner
• Shipping bill number and date
• Hazardous products, if any, and necessary certification for it
• Name and address of the shipper (consigner), receiver (consignee) along with other contact details and date of dispatch
• Purchase order number to cross-check terms and conditions agreed upon by the buyer and seller
• Any specific instructions or reminders for the carrier about the shipment
• Complete details about consignment like the number of units, weight, dimensions of the products, etc.
• Information about packaging used in the shipment like cartons, crates, pallets, drums, etc
• Freight classification
• Signature of the concerned officer
Before signing the Bill of Lading, one must ensure that the details mentioned in the documents are not ambiguous. The terms and conditions must be carefully checked before confirming the document.
Types of bills of lading
To export, following are the different types of bill of lading3:
On the basis of carrier
House bill of lading:
This BOL is issued when the consignor is the actual seller of the product and the consignee is the actual buyer of the product. For example, a buyer from the US receiving a consignment of leather bags purchased from a seller from India. The rest of the details in the documents remain the same.
Master bill of lading
This document is issued by the shipping company and is also known as the carrier bill of lading. In this case, the consignor is the agent of the seller and the consignee is the agent of the importer.
On the basis of payment and consignee
Straight bill of lading:
This bill is issued when the buyer has made complete payment of the shipment in advance. In this case, the importer will receive the consignment directly.
Order bill of lading:
With this type of BOL, the buyer can nominate someone else (say third party or a nominee) to receive the goods.
Bearer bill of lading:
In this type of BOL, the name of the consignee is ‘bearer’. This bill allows the delivery of the consignment to whoever holds the document.
Clean bill of lading:
The carrier inspects the export consignment and then issues a clean bill of lading to state that the shipment received was in good condition without any damage.
Foul/ claused bill of lading:
This document contains clauses about the quality and defects of the consignment. It mentions that the bill of lading did not provide delivery as stated in the contract. This bill allows the consignee to reject the consignment and the bank to refuse to release the payment.
On the basis of transportation
Inland bill of lading:
BOL for domestic shipments.
Ocean bill of lading:
BOL for international shipments.
Through bill of lading:
This document is issued when the shipment travels through multiple destinations using different modes of transportation.
Multimodal bill of lading:
When the goods move across more than 2 modes of transport.
Implications of filing a bill of lading incorrectly
If the bill of lading is not filed as per the requirements, shipping of the goods can be impacted. This is one of the reasons why it is suggested that exporters take assistance from an expert or freight forwarder to complete the paperwork of bill of lading. Shipping and forwarding agents have adequate knowledge about export documents and procedures, thus helping exporters avoid delays in delivery of shipment.
A few points to remember while filing BOL are:
• If the document is inaccurate with information, then the receiver will be able to claim it as damaged or incomplete. In this case, you are liable to compensate the receiver.
• Loss of protection and indemnity insurance
• Possibility of criminal prosecution
Once you have obtained bill of lading and other required documents for your export business, you can sell internationally from India using e-commerce.
A few points to remember while filing BOL are:
• If the document is inaccurate with information, then the receiver will be able to claim it as damaged or incomplete. In this case, you are liable to compensate the receiver.
• Loss of protection and indemnity insurance
• Possibility of criminal prosecution
Once you have obtained bill of lading and other required documents for your export business, you can sell internationally from India using e-commerce.
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More blogs on bills of lading
Frequently Asked Questions
Who issues a bill of lading?
A bill of lading is a legal document issued by a carrier to a shipper that contains all the details like the type, quantity, and destination of the goods being carried.
Published on May 20, 2022.
Sources:
1. https://www.investopedia.com/terms/b/billoflading.asp
2. https://www.cbic.gov.in/resources/htdocs-cbec/customs/cs-circulars/cs-circulars-2021/Circular-No-08-2021.pdf
3. https://www.investopedia.com/terms/b/billoflading.asp#:~:text=A%20bill%20of%20lading%20
Sources:
1. https://www.investopedia.com/terms/b/billoflading.asp
2. https://www.cbic.gov.in/resources/htdocs-cbec/customs/cs-circulars/cs-circulars-2021/Circular-No-08-2021.pdf
3. https://www.investopedia.com/terms/b/billoflading.asp#:~:text=A%20bill%20of%20lading%20
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*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.
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