NDTO News Article

What to know about Bills of Lading

With the alphabet soup of everything an exporter needs to know and have at the ready, some export forms may be missed in the shuffle. So, let’s talk about Bills of Lading, often seen as “BL” or “BoL.” While these are not export-specific documents, they are very important when shipping goods.

This is a legal document used when transporting goods that the carrier/transportation company issues to the shipper. Essentially, if legal action needs to be taken, the BoL is a source of truth for proof of shipment.

The document requires the following:

  • Type of goods
  • Quantity
  • Origin and destination
  • Dates of delivery or tracking

Other items that may be added to the BoL include any special instructions for the carriers, packing notes, or information on hazardous materials. BoLs are required regardless of the transportation type and must be signed by the carrier, shipper, and receiver to be fully executed. They act as the title for who owns the goods, a receipt of the shipped product, and agreed upon terms and conditions for transportation.

What’s the Point of BoL?

Prevention of theft, for one. If executed properly, your goods will be tracked better, and each point in the process has to recognize what, how many, the whereabouts of the goods, and the rightful owners.

Exporters should maintain control of the original documents until they have proof of payment or assurances that their goods will be paid for before releasing the original BoL documents that allow the buyer to take ownership of goods from the carrier.

Based on execution, there are two types of BoL documents, negotiable and non-negotiable, which can show up in many different forms based on the mode of transport, and payment terms.

  • Negotiable Bill of Lading: Offer clear instructions for the delivery of the goods to anyone who possesses the original copy of the BoL. This possession indicates the right to control the goods and that the goods can be released to the document holder. Without the original bill, the cargo will not be released.
  • Non-negotiable bill of lading: Contrary to the negotiable form, a fixed receiver will be assigned for who can take possession of the freight. It does not itself serve as the ownership paperwork, and the receiver still needs to prove legitimacy.

To take it a step further, the type of travel also can lead to different types of BoL’s. Below are some of the more common BoLs.

  • Straight Bill of Lading: This document is used to ship the goods to a specific customer who has already paid for them. One of the easiest and most straightforward kinds of BoL.
  • To Order: These BoLs are negotiable and provide specific instructions on how the goods are to be distributed to another party based on the finalization of the documents. You will typically see these for items with terms of credit addressed to the consignee, which can be something like “to order” and include the name of the bank.
  • Inland Bill of Lading: Typically the first BoL for goods on the chain of international shipments, they are used for inland travel, not for ocean or air.
  • Ocean Bill of Lading: Used for shipping over the sea. This document can be negotiable, meaning the final terms and conditions may not be settled at the time of shipment. You may see these as either type for “Straight” or “To Order.”
  • Airway Bill: These BoLs are used solely for air travel. However, unlike Ocean BoLs, Airway Bills are never negotiable; they cannot be “To Order” freight.

A Bill of Lading is not Proof of Delivery. BoL is the contract between the owner and the shipper, it also serves as a receipt that the shipper took possession of the goods for transport. More documentation and verification of the shipper is typically needed to release your goods to the rightful owner once their identity and proof of ownership are verified through an agent. Keeping this record accurate is crucial to the success of maintaining a proper chain of ownership of your goods, also ensuring they are not delayed at customs or even lost in the process.

Examples of BoLs and other export documentation can be found on our members-only portal here, and the NDTO team is here to assist with questions on shipping documents or get you in touch with our network of contacts.