Ocean Bill of Lading: All you need to know about its types and format

While shipping goods internationally, it is important to obtain an Ocean Bill of Lading (OBOL). In this blog, learn about its types, purpose, functions and examples.
ocean bill of lading
As one of the top exporters in the world, India’s merchandise exports is booming. Government policies and initiatives to smoothen and simplify export procedures and documentation have helped many Indian exporters. Understanding exports logistics process and choosing the right mode of shipping is a crucial step. An important document in this process is a Bill of Lading – issued by the carrier company to the shipper, which acts as proof of contract for the goods being shipped. When the shipment is transported via ocean, the legal document required is the Ocean Bill of Lading.

What is an Ocean Bill of Lading?

An Ocean Bill of Lading (OBOL) is a type of legal document between the consignor and the carrier of goods. An OBOL acts as a carrier’s receipt to the consignor defining various details including1:
• Associations or parties engaged in the ocean shipment process
• Category of products
• Quantity of products
• Condition/description of products
• Destination details where the products need to be shipped
• Routing details

How does an Ocean Bill of Lading work?

To carry a consignment of goods globally, exporters approach the shipping company for a legal document – an Ocean Bill of Lading. The ocean carrier signs an Ocean Bill of Lading form and declares the responsibility of shipping goods from port of receipt to port of destination. The bill can be issued in either of the two ways:
• Post-paid basis: Shipping charges are paid by the consignee.
• Pre-paid basis: Responsibility of shipping charges is on the shipper.

There are three copies of the bill issued and is kept by each of the member4:
• Shipper
• Consignee
• Third party (such as bank, freight forwarders or broker)
• Shipper and the ocean carrier sign the Ocean Bill of Lading form at the time of shipment.
• Consignee signs the document on the time of receiving goods.

What is the purpose of an Ocean Bill of lading?

An Ocean Bill of Lading serves three main purposes2:

Authority of title

An OBOL grants legal ownership title to the cargo (products shipped via ships) mentioned in the bill.

Freight receipt

It functions as a rightful legal receipt for the goods boarded on the shipping vessel. It acts as a confirmation letter between shipper and carrier as proof of shipment.

Shipping contract

Ocean BOL is a proof of settlement between a shipper and a carrier. The legal document is issued at the time of loading goods.

When is an ocean bill of lading issued?

The shipping company issues the ocean bill of lading document to facilitate the transportation of the consignment from the port of receipt to the port of discharge2. It is signed by the carrier. The bill can be issued on a "freight collect" basis, where the receiver or consignee is responsible for the shipping charges, or on a "prepaid basis," where the shipper or consignor covers the shipping charges. Generally, three bills are generated: one for the shipper, one for the consignee, and one for a banker, broker, or third party involved in the transaction. Moreover, it can be issued by freight forwarders and banks, serving as a negotiable instrument in accordance with Article 30 of the Uniform Customs and Practice for Documentary Credits (UCPDC).

Terms and conditions of an ocean bill of lading

Some of the terms and conditions commonly followed when using an ocean bill of lading are3:

• Ocean Bill of Lading (BOL) serves as a comprehensive document outlining various terms and responsibilities in shipping. It provides clear definitions for key entities like the carrier, merchant, subcontractor, goods, container, carriage, and more. Additionally, it details the tariff applicable to the carrier, covering container and vehicle demurrage.
• The document delves into crucial aspects such as warranties, subcontracting processes, and the carrier's responsibilities. Responsibilities related to port-to-port shipments, combined transport scenarios, and general provisions are explicitly outlined.
• Important details concerning package weight, limitations, notices of loss, time bars, shipper-packed containers, carrier's containers, inspection of goods, and goods' descriptions are specified. The Ocean BOL also addresses freight charges, liens, optional stowage, deck cargo, and conditions for methods and routes of transportation.
• Furthermore, the Ocean BOL covers the shipment of dangerous, hazardous, or noxious goods, providing guidance on various scenarios, including temperature-controlled articles, delivery, blame-to-blame collision, war risks, government orders, transshipment bills of lading, variation of contract, validity, law, and jurisdiction.
• To ensure a smooth shipping process, it is strongly recommended to thoroughly review the terms and conditions outlined in the Ocean BOL to avoid any disputes or difficulties.

Types of Ocean Bill of Lading

Below are a few types of Ocean Bill of Lading on the basis of terms and conditions of a contract3.

Straight Bill of Lading

Straight BOL is typically used to describe a non-negotiable bill of lading. It is a contract in which a seller promises to ship goods to a specified location using a certain mode of transportation and assigns the bill to a specific consignee.

Shipper’s Order Bill of Lading

It is first approved by the consignee and then a signed copy of the document is sent to the importer’s bank. The document remains with the bank till the transaction is completed. After receiving the record, the bank transfers it to the buyer.

Clean Bill of Lading

When the shipper receives the shipment, a quality check of the goods is carried out. After the goods pass inspections successfully, a Clean BOL is passed which allows the buyer to receive the goods.

On Board Bill of Lading

An On Board BOL is issued at the time of loading goods onto a shipping vessel. It is signed by the owner of that vessel.

Ocean Bill of Lading example

Let’s consider this example. When an automobile manufacturer from Germany needs to transport vehicles globally to an importer in the USA, it will require an ocean BOL. Thus, a US-based dealership will sign an Ocean Bill of Lading with the manufacturer in Germany for the transport of vehicles to the United States.

Difference between an ocean bill of lading and a seaway bill

An ocean bill of lading is essential for shipping goods across international waters. It acts as a receipt from the carrier to the shipper and also functions as a collection document or an invoice. This document forms a legally binding contract between the shipper and the carrier, outlining the terms of transportation for the shipment3.

On the other hand, a seaway bill is an agreement between a shipper and a carrier (cargo company) for transportation. Unlike a Bill of Lading, which confirms ownership, the Seaway Bill serves as a transport document and a receipt for the shipment. It's provided by an ocean carrier to the shipper (consignor).

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Frequently Asked Questions

What is the difference between Bill of Lading and Ocean Bill of Lading?
BOL is a standard trade document required for the transit of a freight shipment. An OBOL is a type of Bill of Lading required exclusively for ocean shipment.
What is the difference between Seaway Bill and Ocean BOL?
An Ocean Bill of Lading (OBOL) is a type of legal document between the consignor and the carrier of goods. A Seaway Bill is a non-negotiable document that serves as a proof of agreement between the consigner and the carrier without any ownership of goods.
Who issues Ocean Bill of Lading?
It is issued by the consignment line/carrier to the shipper after clearance of all the shipping charges and verification of all trading documents.
What is the Ocean Bill of Lading Tracking?
The Ocean Bill of Lading Tracking is a method to track the delivery status of the freight. The shipping company provides tracking facility through their website. The tracking system is usually of two types:
• Standard Container Tracking System: In this, the website provides information of the ports through which the vessel travels by.
• GPS Container Tracking System: In this, the online portal provides real-time data and updates it.
Published on September 19, 2022.


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