Logistics Know How

Bill of Lading – What is it and why is it important?

The Bill of Lading is the most important document in shipping and the key to unlocking your logistics – here we explore the what, why and how.

Curtis Doyle, Anna-Sophia Metzel, 30 November 2021

The logistics industry is like its own world, with its own language and customs that, to someone entering for the first time, can feel confusing or alienating. Among the language you may be encountering if you’re new to logistics is the term ‘Bill of Lading’. It is one of the many important shipping documents you’ll find as you begin to move your cargo around the world and enter international trade.

What is a Bill of Lading in shipping?

A Bill of Lading is a legal document that has a few important functions in shipping and logistics. It is firstly a contract between the shipper, carrier and consignee stating what goods are being shipped, where the shipment is coming from and where it’s headed to.

Now if you’re new to logistics, terms like shipper, carrier and consignee can be confusing – so let’s clear it up:

  • The shipper – Is responsible for packing and preparing the shipment for transportation. This might be your supplier, or your own warehouse/manufacturer.

  • The carrier – Is the party that moves the cargo. So, through Twill this would be our colleagues at Maersk – or any shipping line, haulage company or airline that carries your cargo.

  • Consignee – Is the party designated to receive the shipment. Again, depending on what you’re shipping this could be your company, or a manufacturer who uses parts you’re shipping.

The Bill of Lading is only issued after vessel departure from the Port of Loading and the customer has provided us with all the details, such as the shipper, consignee, notify party, commodity, weight, cargo description, etc. It also serves as a receipt, i.e., an acknowledgement that the goods have been loaded (not where the cargo is) and contains or evidences the terms of the contract of carriage.

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Why is the Bill of Lading important?

Because who has the Bill of Lading, owns the cargo. The Bill of Lading acts as the legal document of title which allows the person holding it to claim ownership of the cargo. This means that filling out your Bill of Lading accurately and completely is very important. The Bill of Lading also acts as a contract of carriage, it only details the responsibilities of the carrier with the parties involved in the transportation of the cargo. To know more about this check our guide for Incoterms.

How many types of Bill of Lading are there – and when is the Bill of Lading required?

The Bill of Lading is issued at the point when the container – the cargo you’re shipping – is loaded onto a vessel for international transport.

Much like Incoterms, there are many different types of Bill of Ladings, depending on where you are shipping to, what commodity you are shipping and what are your needs. The type of Bill of Lading you encounter might be based on who issued it, the mode of transport, or the relationship between yourself and the shipper – for example if you’ve paid for goods/transportation up front or on credit.

At Twill, our teams can give customers an understanding of what Bill of Lading their shipment might require. With us, you can choose between two types of Bill of Ladings:

  • Original Bill of Lading: The Bill of Lading is the primary document used in sea transport. It functions as a contract of carriage, transport goods receipt and a document of title affording ownership. In order to receive the cargo, the buyer (also referred to as “consignee” on the Bill of Lading) will need to present the Original Bill of Lading, or when we, as Twill receive the order from the supplier (also referred to as “shipper” on the Bill of Lading) to Telex Release the shipment to the consignee.

  • Seaway Bill: The Sea Waybill is another key document used in sea transport when the supplier (also referred to as ‘shipper’) decides to release ownership of the cargo to the buyer (also referred to as “consignee” on the Sea Waybill) immediately. This means that the cargo can be picked up by the party identified in the Sea Waybill without presenting a document of ownership. A Sea Waybill is proof of a contract of carriage and a transport goods receipt but does not give title to the goods.

What is a Telex Release?

It’s worth a quick note here on something else you might encounter in your shipping, a Telex Release. A Telex Release is a message that is sent by an agent or shipping line from the origin to the office at the customs destination. It can also be sent from an agent to signify that the shipper has already surrendered the OBL (Original Bill of Lading) issued to them.

As logistics enters the digital age, more is being done to digitise processes. The Telex Release is not a type of Bill of Lading, but a method of releasing a Bill of Lading electronically. A Telex Release is only relevant to shipments where an Original Bill of Lading had been issued. When a shipment is telex released, it means the Cargo Owner/ Transport Document Receiver had agreed and authorised the carrier to release the container/ cargo to a named Release to party, without the presence of the Original Bill of Lading.

So, the Bill of Lading is the key to unlocking international logistics, it’s the pass that gets you through the door, but it relies on being correctly issued and – most importantly – correctly filled out. Take your time getting to grips with the documentation before you book

Feel ready to tackle your logistics? Why not sign up to Twill today to explore the platform, browse routes and start booking. Our customer care team will be on hand to help you through the process or tackle any other logistics questions you might have!

For more insights and updates like this, take a look at our Knowledge Hub!

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