Bill of Lading: Its Importance in Shipping and How to Protect Your Goods
In this time and age of technology, when everything seems to be reachable to everyone, making this world smaller for everyone to connect, not to mention the impact of COVID-19, almost everything is already done online. We now tend to do online calls, messages, and even shopping.
Do you tend to have items delivered to your doorstep for convenience or safety from viruses roaming outside your home? Whenever we want to buy something online, even drinks like premium green tea from Japan, or have something delivered instead of buying in shops, usually, shipment of goods is done from one country to another. In other words, international trading is generally involved in these transactions. With this, have you ever wondered how to secure the item that you bought from your favorite website is assured to be delivered to the exact addressee?
What is a Bill of Lading? Is it a receipt?
Like purchasing an item in a physical store, there is a document, usually a receipt, to serve as a purpose that an item has already been handed over to the buyer. In shipping, it is called a Bill of Lading. The Bill of Lading, sometimes called “BL” or “BOL”, is a legal document that serves as an acknowledgment receipt that the purchased item has already been released to the predetermined destination. The Bill of Lading before is used only for maritime shipment. Lading refers to the term “loading”, meaning loading the parcel into the ship. However, it is already used in any kind of transportation of goods. On the other hand, a “bill” is defined as a printed or written statement for the cost of delivered, or to be delivered goods or services.
The Main Parties. Who is involved in the shipment?
Before anything else, there are usually 3 main parties in a shipment. The one who is typically the seller is called the shipper and packs the item to be delivered and ordered. The one who orders and sets the destination for delivery, usually the buyer, is called the recipient or consignee. Finally, the one who picks up the items or parcels bought by the buyer or recipient from the seller or shipper is called the carrier.
How Does Bill of Lading Work?
The Bill of Lading is both a contract and a receipt between the carrier and the shipper to prove that the carrier has indeed received the item or parcel to be delivered from the shipper. The carrier will issue or give the Bill of Lading to the shipper. The item or parcel is then picked up by the carrier, together with the signed Bill of Lading, and upon delivery of the goods to the destination, as proof of delivery, the recipient of the item must sign this, and be given to the shipper once delivery is done, a copy receipt of such to be given to the carrier as proof on the carrier’s part that it has already delivered the item to the recipient and the shipper already acknowledged this.
An example would be that XYZ Green Tea Company wants its products to be delivered from Vancouver to Virginia upon purchase of ABC Reseller Company in Virginia. XYZ Green Tea Company would then hire 123 Transportation Company to deliver the products. 123 Transportation Company will issue the Bill of Lading then this will be signed by both the representative of XYZ Green Tea Company and 123 Transportation Company. 123 Transportation Company then gets the products to be delivered from XYZ Green Tea Company, together with the Bill of Lading. Once 123 Transportation Company delivers the green tea products to ABC Reseller Company in Virginia, a representative of ABC Reseller Company shall also sign the Bill of Lading to prove that it has already taken possession of the green tea products.
What is written on the Bill of Lading?
The contents of the Bill of Lading, state there the type of goods to be shipped, the quantity or how many should be delivered, and the destination of the delivery. It also states how the item as well as the delivery should be paid for. If the item has already been paid before delivery, the Bill of Lading to be issued is called the “straight” Bill of Lading. In a straight Bill of Lading, such document is non-negotiable as it is stated clearly therein to whom the items or parcels should be delivered. An “order” Bill of Lading is the other way around, meaning, the items must be delivered first before payment is received.
There is also an “endorsed” Bill of Lading, with statements “to the order of” in the document. This “endorsed” Bill of Lading is a negotiable instrument where the title of goods can be transferred from one party to another. This means that the buyer of the goods is not the ultimate recipient, and the ownership of the items or parcels to be delivered may be transferred to another party by endorsing a Bill of Lading with proper documentation. Thus, a Bill of Lading could also serve as a title to the ownership of the goods described therein.
For example, if XYZ buys an item from ABC shipper or seller, but wants the item to be shipped instead to DEF, either because XYZ is a re-seller, giving such item or parcel as a gift, or for whatever purpose, XYZ would instruct to ABC to mention in the consignee column in Bill of Lading as “To the order of XYZ’ or ‘TO ORDER’. In this case, once the items or parcels have arrived at the destination if XYZ wants to transfer the goods to DEF, XYZ endorses the Bill of Lading by signing the back side of the original bill of Lading mentioning “Please deliver the items to DEF….” or equivalent words with other documentation if any.
Ultimately, the Bill of Lading is strong proof of the shipment, the items to be delivered, and if there is an unreasonable delay, if any. It is also proof of how much should really be purchased and ultimately paid to the seller or shipper.
Bill of Lading — Frequently Asked Questions
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About the author
Kei Nishida
Author, CEO Dream of Japan
Certification: PMP, BS in Computer Science
Education: Western Washington University