If you are involved in shipping or logistics, you've probably heard of a master bill of lading and a house bill of lading. But if you're like many of us, you might not understand the difference between the two.
Before we unpack the difference between these two types of bill of lading, it is important to understand what a bill of lading is in general.A bill of lading is a document that serves three primary purposes:
- A bill of lading is always a receipt that acknowledges the transfer of cargo from one party to another.
- A bill of lading is sometimes a contract for carriage. A contract for carriage is a written agreement that one party will move cargo to a particular destination on behalf of another party. In the absence of a separate contract, the bill of lading assumes the role of a contract of carriage by default.
- A bill of lading sometimes serves as evidence of title. In the context of law, title means ownership. A bill of lading marked "negotiable" indicates evidence of title and can be sold from one party to another any number of times; this enables cargo to be transferred from one transportation company to another during its journey to its destination. A bill of lading marked "non-negotiable" does not indicate evidence of title and thus it cannot be sold.
For a more in-depth overview of bills of lading in general, see the article, What is a Bill of Lading?
As you can see, a bill of lading can serve multiple functions, and there are different types of bills of lading. So, what is the difference between a house bill of lading and a master bill of lading?
House Bill of Lading
A house bill of lading is a document issued by a freight forwarder to a shipper to acknowledge receipt of their items for shipment.
The shipper is the exporting company, and the freight forwarder (which can also be referred to as a forwarding agent) is the company they’ve hired in order to arrange transportation of their goods to a foreign destination. The freight forwarder then books cargo space with carriers.
Carriers are the transportation providers—the trucking companies, shipping lines, and airlines that physically move the shipment. Some freight forwarders have in-house carrier services, while others contract with third-party carriers.
Master Bill of Lading
A master bill of lading is a document issued by a carrier to a freight forwarder to acknowledge receipt of items for shipment.
Here's how both types of bills of lading might be used in an international shipment:
Exporting Company A needs to ship four crates of solid gold from the United States to Zimbabwe. Exporting Company A submits a request to Freight Forwarding Company to arrange the shipment. Freight Forwarding Company picks up the crates from Exporting Company A’s warehouse. At this point, Freight Forwarding Company issues a house bill of lading to Exporting Company A. The house bill of lading serves as a receipt to confirm they’ve picked up the goods.
Freight Forwarding Company compares rates and availability of potential carriers and identifies Carrier Company as the right choice to move the shipment of gold to Zimbabwe. But they also identify this same company as the right choice to move other shipments from other exporters to Zimbabwe, like six boxes of school supplies from Exporting Company B and eight pallets of hemp fiber textiles from Exporting Company C.
Since all three shipments are destined for Zimbabwe, Carrier Company picks them up from Freight Forwarding Company and consolidates them. Instead of issuing three separate bills of lading, Carrier Company issues a single master bill of lading to Freight Forwarding Company which serves as a receipt to confirm they’ve picked up all the goods for delivery to their destination.
A house bill of lading is always a receipt for a shipment from one exporter, while a master bill of lading is a receipt that could potentially cover the shipments of many exporters, as they are consolidated by the carrier into a larger shipment.
A house BOL is issued by the freight forwarder to a single exporter; whereas the master BOL is issued by a carrier to a forwarding agent. The master BOL represents the transfer of cargo from the forwarder to the carrier, and this cargo could be coming from several different exporters.