Are you a new exporter looking for a primer on bills of lading? Or maybe you’re at the opposite end of the spectrum—a seasoned professional seeking a reference or training tool.
Either way, this article is for you! We’ll explain, in simple terms, three things you need to know about the bill of lading form.
1. What Is a Bill of Lading?
A bill of lading is a contract between you, the owner of the goods, and the carrier stating what goods you’re shipping, where the shipment is coming from, and where it’s headed. It also serves as a receipt issued by the carrier once your shipment is picked up.
A bill of lading (or a waybill) can also serve as a document of title, which allows the person holding it to claim possession of your shipment. There are several specific bills of lading, which we’ll discuss in detail below.
2. When and Where Do I Use a Specific Bill of Lading Form?
Specific bills of lading forms should be used based on which method you’re using to transport goods. Here are a few common examples:
- Straight bill of lading: This bill of lading is typically used to ship goods to a customer who has already paid for them.
- “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" or "to order of [named] bank."
- Inland bill of lading: 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.
- Ocean bill of lading: This bill of lading is used for shipping goods overseas. It authorizes the holder or another party to take possession of the goods. Ocean bills of lading can be straight bills of lading or consigned "to order" bills of lading.
- Air waybill: 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: 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.
3. Why Do I Need a Bill of Lading?
There are three significant reasons to use a bill of lading form:
- Bills of lading are a receipt for the goods shipped;
- Bills of lading are evidence of a contract for carriage between the exporter and carrier; and
- Bills of lading serve as a document of title.
The key here is correctly completing the document; a mistake could delay a shipment or, worse yet, delay getting paid for a shipment.
In addition, consider this:
More than 10,000 shipping containers are lost annually. Without a correctly completed bill of lading, that could mean a major headache trying to get compensated for your loss.
This article was originally published in May 2014. It has been updated to include current information, links and formatting.