Understanding the Bill of Lading

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<Understanding the Bill of Lading>

A marine storage terminal and refinery is a complex living system and interaction with all stakeholders is a huge challenge. Complying to an ever-growing number of rules, regulations and guidelines, most processes need a control system which is manageable. This is because there are countless documents involved in these processes since there are many stakeholders present with differing interests. There are different types of Bill of Lading. 

The Bill of Lading is a legal document that is issued by a carrier to a shipper that carries all the necessary details of the shipment such as type, quantity, and destination of the goods. The Bill of Lading acts as a shipment receipt. And it must be signed by an authorized representative from the carrier, shipper, and receiver. However, the Bill of Lading will always be issued by the carrier or their agent.

When Should a specific Bill of Lading be used?

Since Bill of Ladings can also serve as a document of title, which allows the person holding it to claim possession of your shipment. There are several type of  bills of lading, which companies can use and their decision should be based on the chosen method for transporting goods. Here are a few common examples:

1. Straight bill of lading
2. “To order” bill of lading
3. Inland bill of lading
4. Ocean bill of lading
5. Air waybill
6. Multimodal bill of lading

Straight bill of lading

This bill of lading is typically used to ship goods to a customer who has already paid for them. Straight bill of lading is a non-negotiable bill of lading. It is used where the goods have been paid for or do not require payment such as donations or gifts. Under this bill of lading, the shipping company will deliver the shipment to its consignee on presentation of identification. It is also called consignment bill of lading.

A straight bill of lading is a document in which a seller agrees to use a specific mode of transportation to deliver goods to a certain location, and the bill is assigned to a specific party. The straight bill of lading details the type, quality, and quantity of the good. It also serves as the receipt upon arrival at the destination. Because it is assigned to a specific party, it is not negotiable and may not be re-assigned to another party.

“To order” bill of lading

To order bills of lading are typically negotiable documents and allow the transfer of ownership of the goods outlined in the bill of lading to another party upon endorsement by the party listed as the ultimate consignee on the document. Often under the terms of a letter of credit, the bill of lading is consigned “to order”. If Bill of Lading is consigned ‘To Order’ and banks address as consignee in Bill of lading, the title of cargo is with the said Bank and without the endorsement by the bank; the final consignee cannot take delivery of cargo.

Inland bill of lading

An inland bill of lading is a contract signed between a shipper and a transportation company for the overland transportation of goods. An inland bill of lading serves as both the carrier’s receipt to the shipper and the carriage contract. The document specifies the details of the goods being transported. Inland bills of lading are often the first transportation document issued for the international shipment. They are used for cargo shipments by rail or road, but not sea. Because it is concerned with domestic overland transportation, the inland bill of lading will not be consigned directly to the foreign buyer of the goods but to a third party. This is usually the international carrier of the goods, but consignment to another third party before it reaches the international carrier is possible. If consigned to a third party, they would in turn, need to consign it to the international carrier.

Air Waybill

An air waybill (AWB) is a document that accompanies goods shipped by an international air courier to provide detailed information about the shipment and allow it to be tracked. The bill has multiple copies so that each party involved in the shipment can document it. An AWB serves a similar function to ocean bills of lading, but an AWB is issued in non-negotiable form, meaning there’s less protection with an AWB versus the bill of lading. The air waybill (AWB) is the equivalent of an ocean bill of lading used in air transport. However, unlike the ocean bill of lading, it cannot be negotiable; in other words, it may not be consigned “to order.”

Multimodal Bill of Lading

Multimodal bill of lading is a transport document that is evidencing more than one mode of transport, one of which is typically by sea shipment, although it is not required. You’ll use this type when you combine shipping methods. For example, goods flown from Omaha, Nebraska, to New York City and then shipped to Europe qualify for a multimodal bill of lading.  In the case of a multimodal bill of lading, the principal carrier or the freight forwarder who issued the multimodal Bill of Lading takes on full liability under a contract of carriage for the entire journey and over all modes of transportation.

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