What is a Bill of Lading (BOL/BL) in freight shipping?

What is a Bill of Lading (BOL/BL) in freight shipping?
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If you’re involved in shipping and receiving goods, you most certainly have seen one, created one, or even signed one. But what exactly is a BOL?

Moving goods around the world can get complicated. To make sense of it all, supply chain professionals rely on a common language and quite a few acronyms.

BOL or B/L is one acronym used often in shipping, which stands for Bill of Lading. In the world of freight shipping, a BOL or waybill is a legal document serving as proof goods have been received by a carrier from the shipper and acknowledgment of receipt.  

If you’re involved in shipping and receiving goods, you most certainly have seen one, created one, or even signed one. But what exactly is a BOL? How many types are there? And why are they so important?  

What’s a Bill of Lading (BOL) 

A Bill, something we are all familiar with, is an invoice or an amount of money owed for goods supplied or services rendered. It serves to record the total cost involved in the transaction.  

Lading, on the other hand, is the action or process of loading cargo onto a ship or other vessel in preparation for transport, including all necessary safety precautions and protocols. This involves allocating suitable stowage space for the items and securing them safely, along with any additional services that may be necessary, such as packing and labeling boxes according to their contents.  

Combining these two elements, the Bill of Lading creates a binding legal contract between the shipper and carrier that outlines the agreed terms and conditions for transportation.  

Furthermore, BOL defines and cargo in the shipment and gives ownership of that shipment to the party specified on the document, serving also as proof of delivery as the recipient signs it. 

In sum, the main functions of a BOL are to serve as a: 

  • Proof of contract 
  • Proof of receipt 
  • Proof of title 

What’s in Bill of Lading? 

The BOL is part of any shipment or shipment contract. The document includes information such as: 

  • Origin; 
  • Destination; 
  • Shipper and receiver names; 
  • Special freight instructions; 
  • Cargo dimension, weight, and descriptions; 
  • Number of packages shipped; 
  • Freight classification by type; 
  • Freight charges terms; and 
  • Transportation method used. 

The document contains all the details required for shipping freight, including the information required by customs and government agencies. It defines responsibilities of all parties involved in the shipment. The BOL is a legally binding document, so all parties involved must adhere to the terms of the agreement.  

A BOL lists special instructions regarding cargo shipment, including who is responsible for transporting it, any specific requirements, and what happens if there are complications along the way. The BOL provides proof and security that both shippers and carriers clearly understand how to transport goods responsibly. While both sides typically agree upon a BOL before shipment, carriers can create the document if needed.  

How many types of Bills of Lading are there? 

The good news for small and medium-sized business (SMB) owners is you don’t need to know every type of BOL. The most common BOLs for SMBs are the straight bill of lading and the order bill of lading but depending on your line of business, and where you operate, you may run across some of the other types of BOLs, such as Master BOL and House BOL. 

  • Straight BOL or Non-negotiable BOL: Carriers issue this type of BOL to shippers as proof that goods have been received and accepted for shipment under the contract terms, to the denominated location. Because it’s a non-negotiable bill, the designated consignee, or buyer, cannot be changed. It’s usually used to deliver shipment to buyers who have already paid for an order. 
  • Order BOL or Negotiable BOL: This negotiable document transfers commodity ownership from one party to another. The title of goods is transferred from the original consignee to another party. The carrier should release the cargo to the party that presents an endorsed bill, with proper authorization.  
  • Master BOL  VS. House BOL: The difference between a Master BOL and a House BOL is based on who issues each. A vessel owner issues a Master BOL while a House BOL is issued by a non-vessel-operating common carrier, such as an airline or freight forwarder.  

Depending on the mode of transport, there are four traditional types of BOLs, including 

  • Ocean Bill of Lading (OBL) – for international shipments by sea. 
  • Airway Bill (AWB) – for air freight transport. 
  • Motor Carrier Bill of Lading (MCBL) – for trucking and other land transportation services. 
  • Rail Bill of Lading (RBL) – for rail freight. 

A Switch BOL is a particular type of BOL often used to replace the shipper and the consignee details from the Original Bill of Lading. It’s used as a replacement for the Original Bill of Lading.   

All of these different types of BOLs and acronyms can be overwhelming. More important than remembering each type of BOL is understanding what must be included in each BOL and the purpose the BOL serves. 

Why is a Bill of Lading important in shipping goods? 

The details and accuracy of a Bill of Lading are essential for the efficient, secure, and legal shipping of goods. Without the details outlined in a BOL, many aspects of successfully shipping goods could be compromised. This document also transfers ownership rights from the seller to the buyer in an unbroken paper trail, with each transfer recorded; this records the chain of custody details and ensures a tight audit trail. 

Before signing BOL paperwork, you should always double-check that the freight matches the BOL and is free of damage. The signature on a BOL confirms that all the details – quantity, condition, etc. – are correct and, once signed, are legally binding.  

For example, if a shipment contains 300 boxes but the BOL states that there should be 400 boxes, this discrepancy or any damages must be addressed and noted on the BOL before signing the BOL.  

By double-checking all aspects of the shipment before signing off on it, shippers can ensure that they are not held liable for any discrepancies or damages that may have occurred during transit. A thorough check helps protect from costly legal disputes and ensures shipments arrive as intended. 

What is the format for a Bill of Lading number? 

A Bill of Lading (BOL) number is a unique combination of numbers that serves as the primary identification for shipment. It provides shippers, receivers, and other parties with proof of ownership. Businesses use the BOL number to track their shipments. 

Key Takeaways 

  • A BOL protects the interests of both the seller and buyer by providing a comprehensive paper trail of ownership rights and audit details.  
  • Different BOLs  accommodate other shipping methods, domestic or international.  
  • The BOL is a legally binding document containing all the essential details required for cargo transportation.  

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