Bill of Lading (Bol)

What is BoL?

A bill of lading (BoL) is a legal document between shippers and carriers that details all the information required for a freight shipment to be processed. It ensures the movement of goods is accounted for every step of a shipping lifecycle and is an essential accompaniment of all bulk shipments via water, land, and air vessels. 

What is a Bill of Lading Used for?

A BoL is necessary to protect all the parties involved in a freight shipment, including the shippers, carriers, and recipients. If an issue arises along the shipping chain, the attending BoL can help identify where the problem occurred and who is responsible.

A BoL provides participating parties (shippers and carriers) with the following:

  • Evidence of goods – where goods are collected, what is being transported, and the destinations 
  • Receipt of goods – acknowledges goods are received in satisfactory condition 
  • Title of goods – who claims ownership of the cargo 

Who does the BoL Protect?

A BoL protects all participants in the shipment supply chain, from exporters, importers, shippers, and carriers, all the way to the recipients. It’s in everyone’s best interest that the BoL is properly filled with all the accurate information. Each party is protected in various ways: 

  • Exporters certify that all the entire cargo has been loaded on the shipment and charged accurately and, in case of damage, can hold the shipper responsible. 
  • For importers, the BoL functions as a title of goods. It is needed for collecting the goods from customs.
  • Shippers are protected from false claims by importers due to damage, changes, or theft of the goods during shipment.

How is a BoL Different from an Invoice?

While a BoL might seem like just an elaborate invoice, it actually functions much differently than a freight bill or invoice. It is an official, legally binding document between an issuer, usually the carriers, and a cosigner, usually the shippers, that reflects the title of goods throughout their partnership. Unlike an accounting document, a BoL can be used in litigation if a dispute between parties arises, so great effort is put into ensuring the accuracy of the document. Additionally, a BoL allows for the appointment of duties vital to the internal control structure to prevent theft, and shipments can be tracked with a bill of lading. 

How does a BoL Prevent Fraud and Other Criminal Activity? 

In trade finance, a BoL must be verified by banks. This is done to prevent criminal activities, such as illegal weapon trade, money laundering, illegal sale of drugs, and human trafficking. 

Different Types of Bills of Lading

There are five common types of BoLs and knowing which type to use for a certain shipment improves the accuracy of the document  and compliance

  1. To Order Bill of Lading – this BOL is used when shipment details are still negotiable, or when payment isn’t made in advance and is considered the original copy of the agreement. 
  2. Straight Bill of Lading – a document that is non-negotiable and referred to as a “Consignment BoL.” It’s used when goods have already been paid for and the bill is assigned to a specific cosigner. 
  3. Electronic Bill of Lading – a digitalization of the paper document that acts as a replacement for the original copy. It is highly preferred these days. 
  4. Clause Bill of Lading – nicknamed the “Dirty Bill of Lading,” this BoL is used when cargo is damaged or different from receiver expectations. It’s less preferred and usually avoided.
  5. Negotiable Bill of Lading – sometimes called a Transferable BoL,” this is used when the recipient has yet to be determined and allows for the shipment to be delivered to anyone who has an original endorsed negotiation bill. 

How Many BoL are needed for a Single Shipment? 

While there is no limit to the amount of BoLs issued for one shipment, usually there are three that occur: one for the shipper, cosigner, and bank. Sometimes multiple shipping entities are used for one shipment and that’s where a Combined Bills of Lading provides a single contract for at least two different modes of shipping. 

When is a Bill of Lading Signed? 

For the BoL to serve as a contract along the shipment lifecycle, it must be accounted for and signed at different times of transfer:  

  • At the start, by the shipper or seller of the goods
  • During the transfer of cargo by the carrier driver, that the goods were accepted and loaded onto their shipping vessel
  • At final transfer, by the recipient, when the goods are delivered. 

Each entity should always double check and confirm the freight containers are accurate before signing the BoL. A signature confirms that all the details in the BoL document are correct at the time of transfer and identifies who is to blame if goods are damaged, or different than the BoL. The final signature of the document serves as proof of delivery (PoD) . 

What Information is Included in a BoL? 

The importance of a BoL is reflected by all the required fields and complex paperwork. While the required fields might include more or less information, depending on the freight shipment, some information appears in all bills of lading: 

  • BoL identification (ID) number
  • Number of units shipped
  • Names and addresses of shippers and receivers 
  • Loading, shipping, and pickup dates 
  • Purchase order reference numbers 
  • Specific products details: weight, quantities, description 
  • Packaging type and instructions
  • Stated values of the shipment items 
  • Freight classification 
  • Account number for order tracking
  • Any unique or specific carrier instructions 

Who Regulates the BoL? 

The departments and ministries of transportation issue the rules regarding freight operations and the requirements of the BoL documentation. The government legislative rules prevent payment failures between cosigners of a BoL and block “double-brokering” tricks. Carriers cannot lease other carriers during a BoL transport. The guidelines set by the United States’ Federal Maritime Commision  outline the allowed and illegal actions in the partnership between carriers and shippers. and ensure that the same BoL is binding from the beginning to the end of a shipment lifecycle.