What is a Bill of Lading (BOL)?
The Bill of Lading is the proof of ownership of carriage and a legally binding contract that acts as an acknowledgment of the receipts of the shipment and establishes terms & conditions and legal obligations pertaining to various aspects of the shipment.
Many businesses across the world use ERP Software to streamline the generation of BOL, accelerate their shipping operations, and minimize potential errors. It provides robust integration across different business functions, and enhances efficiency & supply chain visibility to enable faster responding to new challenges.
What are the Contents of a Bill of Lading?
1. Shipment Details
a. Shipper’s Details
This includes the name, office address, phone number, and email address of the exporter
b. Receiver’s Details
This includes the name, office address, phone number, and email address of the receiver
c. Port Details
This includes the name and complete address of the shipping ports that are responsible for loading and discharging the shipment
d. Vessel Details
This includes the name of the vessel and its voyage number
2. Description of Goods
a. Type of Goods
Nature of the goods shipped such as electronics, home appliances, personal care, foods, clothing, etc.
b. Quantity of Goods
For example, the number of units, boxes, or bundles
c. Weight
Weight per unit, box, or bundle, as well as the collective weight of the entire shipment
d. Batch Number
The unique Batch Number that is linked to each product being shipped
3. Legal Information
a. Terms & Conditions
Contractual terms and conditions signed between both parties pertaining to various clauses
b. Service Details
Description of the service being provided
c. Carrier’s Liability
The liability of the carrier in the event of loss or damage of a part of the shipment or the entire shipment
d. Handling Instructions
Any special instructions to ensure the safe and secure handling of the carriage
e. Legal Acceptance
Signatures of the concerned parties (exporter, shipping line, and consignee) signifying their acceptance.
Bill of Lading Example
Let’s take a hypothetical Bill of Lading example of ABC Ltd which is a Germany-based electronic company. It decides to purchase electronic equipment from an Indian vendor and generates a Purchase Order (PO). The Indian vendor hands over the products to the carrier company, and signs a BOL. According to the contents of the BOL, the carrier company hands over the products to the German company and hands over a signed copy of the Bill of Lading. The store manager uses Supply Chain Management Tools to bring efficiency throughout the operation. He verifies the information in the bill with the Purchase Order and accordingly makes final payment to the vendor.
What are the Different Types of Bill of Lading (BOL)?
1. Clean Bill of Lading
Used for goods that have already been checked with no discrepancies detected pertaining to their description. It signifies that the goods are meeting the standards described in the document.
2. Claused Bill of Lading
Used mostly when the goods are damaged during transit. It gives the consignee the right to reject the shipment.
3. Straight Bill of Lading
This type of BOL template available in the Best ERP Software in India is used only when the shipments are transferred directly to the buyer. The destination and ownership details of this bill cannot be amended later.
4. Onboard Bill of Lading
This type of BOL is specifically meant to meet the standards of the insurance company or banking & financial institutions. It signifies that the goods are on board the ship.
5. Bearer Bill of Lading
In this type, no specific name of the consignee is specified. Any person who holds the document can ask for the delivery of the shipment.
6. Order Bill of Lading
Order BOL specifically mentions the name of the party in the consignee box to whom the shipment needs to be handed over.
7. Open Bill of Lading
Open BOL, as the name describes, is open to change in the transfer of ownership of the consignee. It allows modification in the name of the consignee.
Steps for Generating a Bill of Lading
1. Data Collection
Collect all the data pertaining to the shipment such as the name and contact details of both the exporter and consignee, shipment date & time, shipment destination, and complete details about the shipment.
2. Form Fill-up
The next step is to fill up the BOL form. Make sure to provide the most accurate and complete information. Keep in mind that entering incorrect or incomplete details can lead to serious legal or financial consequences. That’s why, many businesses use an ERP Application to streamline labor-intensive & error-prone tasks.
3. Submit Your Consent
A document becomes a legally binding contract only after it is signed by two or more parties involved. Sign the document to acknowledge your acceptance of the terms and conditions, and proceed ahead.
4. Document Distribution
Last but not least, distribute multiple copies of the document to the parties involved — exporter, shipping carrier, and consignee. Be mindful that if the document gets lost or stolen, it can lead to serious legal or financial consequences.
Benefits of Bill of Lading in International Shipment
1. Receipt for Shipment
As we’ve already discussed in the bill of lading meaning, it serves as a formal receipt for the shipment of goods. It provides a description of what is being shipped, where it is being shipped, who will be responsible for any damages, and so on.
2. Legal Contract
The document serves as a legal contract between both the parties — the exporter and the carrier. It lays down clear terms and conditions, and legal consequences of breaching the contract.
3. On-time Shipment Delivery
This document, alongside ERP implementation, plays an important role in ensuring on-time delivery of the shipment in the due course. It provides clear shipment instructions for optimum delivery time.
4. Receive Compensation
It’s common for shipments to get lost, damaged, or stolen during transit. Bill of Lading is a prerequisite to apply for insurance coverage for any damages arising from unexpected transit risks.
5. Customs Clearance
BOL is widely accepted for customs clearance. If the document is not available, it may cause hurdles in customs clearance.
6. Ownership of Goods
According to the bill of lading meaning, it confirms ownership of the goods. It helps understand the owner of the goods, along with the buyer and banks associated with the shipment.
Limitations of Bill of Lading
1. Processing Delays
Some companies still rely on manual processing of the bill, which can lead to unnecessary delays throughout the process.
2. Ownership Disputes
If the bill gets stolen or lost, it can result in legal disputes over the ownership of goods or their unauthorized release. Businesses can avoid such scenarios with the help of a Cloud ERP.
3. Human Errors
Manual processing is often prone to human errors that can lead to disputes about the goods in transit, or result in a lack of legal protection in the event the goods are damaged during the transit.
4. Legal Complexities
Legal complexities may arise during international shipments such as jurisdiction issues or disputes over governance.
Difference Between Bill of Lading and Invoice
| Bill of Lading | Invoice | |
| Definition | A Bill of Lading is a legally signed contract that serves as a receipt of the goods for shipment, and its ownership. | An Invoice is a commercial document that serves as the payment request for the goods sold to the consumer. |
| Purpose |
|
|
| Document Type | Legally-binding contract | Financial document |
| Issuer | Freight forwarder | Supplier or seller |
| Receiver | Consignee | Consumer |
| Parties Involved |
|
|
| Document Contents |
|
|
| Transfers Ownership? | Yes | No |
Difference Between Bill of Lading and Sea Waybill
| Bill of Lading | Sea Way Bill | |
| Definition | A Bill of Lading is a document that signifies ownership of the cargo and acts as a receipt of the shipment. | A Sea Way Bill is a document that acts as a receipt of the carriage. |
| Requirement for Releasing Goods | Mandatory to show the original document to release goods | Not required for releasing goods |
| Speed of Releasing Documents | Slower | Typically, faster |
| Requirement for Original Document | Yes | No |
| Most Commonly Used For | Letters of Credit | Direct shipments to repeat customers |
| Negotiability | Negotiable | Non-negotiable |
| Transferability | Transferrable | Non-transferrable |
| Potential Risks | In the event the document is lost or stolen, it can cause significant legal or financial consequences | Typically, consequences are not severe in the case the document is lost |
Wrap Up
In today’s highly interconnected and globalized world, the Bill of Lading serves as a crucial document for the transportation of the carriage across different countries, or within domestic ports. It is also used for other purposes such as credit agreements, financing, and securing domestic or international payments.
Sage X3 is a highly customizable, flexible & adaptable solution that empowers businesses with end-to-end visibility across different functions, industry-specific capabilities, and exceptional user experience. It offers global support with multi-country & multi-currency features and fosters proactive decision-making & growth.
FAQs
1. What is the Bill of Lading Definition in Simple Words?
A simple Bill of Lading meaning is that it is a legally binding document that serves as the recipe for the shipped goods. Moreover, it also details additional information such as the shipment destination, and the type & quantity of the shipment. This document is signed by the exporter (carrier), the shipping company, and the receiver (buyer).
2. Who Issues the Bill of Lading?
The BOL is issued by the manufacturer while exporting the goods, typically using a Manufacturing ERP. During the entire shipment process, it serves as evidence of the shipping confirmation. It is signed by the exporter (carrier), the shipping company, and the buyer.
3. Is a Bill of Lading a Legally Binding Contract?
Yes, the BOL is a legally binding formal contract between the exporter and the carrier. According to our Bill of Lading definition, it specifically mentions the terms and conditions of the shipment process. If either party refuses to uphold this contract, they may be liable for legal consequences or severe damages.
4. Is a Bill of Lading Required for Every Freight Shipment?
The BOL is a crucial requirement for every freight shipment as it serves as a legally binding document signed by the shipper (exporter), shipping company, and consignee (buyer). It is also important for insurance coverage and customs process.
5. What Purpose Does a Bill of Lading Serves?
Bill of Lading is an important document that serves multiple purposes outlined below:
- It serves as a legally binding contract between both the exporter and the carrier
- It clearly specifies liabilities as to who will be responsible in the event of losses or damages arising during the transit of the shipment
- It serves as evidence of the shipment of the carriage
- It serves as a legal commitment for transportation of goods
- It is a required document for various purposes such as insurance coverage and customs process.
6. What is the OBL Number Mentioned in a Bill of Lading?
OBL stands for Original BOL, which is an important unique identification number assigned to each container shipped through a vessel. Typically, this number is 11 digits in length. It is used for shipment tracking throughout the shipping process.
7. Does the Bill of Lading Serve as Proof of Delivery?
No, the BOL does not serve as Proof of Delivery. It only serves as a shipment of the goods and the seller continues to serve as their owner during the entire shipment. In contrast, the Proof of Delivery is a receipt confirming the delivery of the goods to the final consumer.
8. What are the Consequences of Incorrectly Filing a Bill of Lading?
Here are the possible consequences of incorrectly filing a Bill of Lading:
- Claims for Damages: The exporter may become vulnerable to any claims arising from damaged or short delivery despite the shipment of goods being in proper condition.
- Rejection of Insurance Cover: The exporter may not be able to claim insurance cover in the event the goods are damaged during the shipment, leading to significant financial losses.
- Rejection of Indemnity Cover: The exporter may not be able to claim compensation in the event of shipment delays, or risks that are otherwise covered in the indemnity agreements.
- Loss of Liability: The exporter may not be able to claim for losses that are otherwise covered in the contractual liability clause, and become fully liable for significant financial exposure.
