Bill of Lading Defined: How Bill of Lading Forms Work in Shipping

A bill of lading (also known as a bill of ladings, BoL, or B/L) is a contract of carriage between the shipper and carrier detailing the type and number of units of goods within a purchase order. A bill of lading is an essential legal document within supply chain operations, including international trade.

An original bill of lading typically features special instructions for the carrier, notes on hazardous materials, and other clauses that might specify maintaining good conditions for the products. This document requires signatures from consignors (the company shipping the product) and consignees (the customer receiving the product). The BoL serves as a receipt, contract, and document of title.

A bill of lading lists the necessary transportation information. Consider the following steps in the transportation and delivery process:

1. 1. A product producer receives an order. After a shipper receives a prepaid order, they package the goods in boxes or pallets and then communicate with the carrier how to transport them properly.
2. 2. The carrier issues a bill of lading. Next, the carrier sends the bill of lading to the shipper detailing the products’ quantity, kind, and destination. An authorized representative from the shipper will sign this document confirming the number of goods, order number, and other reference numbers. The carrier also signs the BoL, which now acts as a receipt.
3. 3. The carrier transports the goods. When the goods arrive at the recipient’s address, the customer signs the BoL confirming the delivery of the goods.

A bill of lading form plays an essential role in ensuring shippers and carriers execute the transportation of goods successfully. This legally binding document helps assert quality assurance, prevents asset theft, and streamlines shipment processes. Poor carriage of goods in domestic or international shipment can ruin a client-supplier relationship.

A BoL also helps to ensure safety. Suppose an order contains materials the Department of Transportation lists as hazardous. In that case, the carrier should note that on the BoL to inform the many people handling the products before they arrive at the customer’s doorstep. This transport document can also list other specific notes or needs to better inform all who play a role in the shipped goods’ transportation.

There are many different types of bills of lading. Some frequently used ones include:

1. 1. Claused bill of lading: If carriers lose goods in transport, they must write a claused bill of lading. This document details the shortfalls or damages to the shipped goods, which can result in financial loss for the exporter and the firing of the freight company.
2. 2. Clean bill of lading: This document declares a successful transportation of goods. The carrier will inspect the goods to ensure everything is in good condition. The opposite of a clean bill of lading is a dirty or foul bill of lading, which denotes lost or stolen products and necessitates a claused bill of lading.
3. 3. Inland bill of lading: Carriers use an inland bill of lading when transporting goods domestically and by land only, via road or railway.
4. 4. Master bill of lading: A master BoL (MBL) is a unique document for when the trucking, railway, or airline company owns the specific transport vessels to ship the products. The shipping line will issue an MBL when it receives transportation confirmation from the freight forwarder.
5. 5. Negotiable bill of lading: This BoL is a contract of carriage that carriers can transfer to a third party. This transference can happen when the consignee (the payer or customer) signs the document and delivers it to the new consignee (the third party).
6. 6. Nonnegotiable bill of lading: With this BoL, carriers must deliver goods in a certain way only to the designated receiver and cannot alter information. The BoL is complete when the carrier delivers the goods successfully.
7. 7. Ocean bill of lading: Producers require these bills when ships transport goods overseas and through international waters to another country.
8. 8. Order bill of lading: This BoL is common when carriers ship goods before receiving payment. An order bill of lading is a negotiable document.
9. 9. Straight bill of lading: Carriers cannot change any of the information on the document in a straight bill of lading. These BoLs often specify a particular kind of shipment.

Get the MasterClass Annual Membership for exclusive access to video lessons taught by business luminaries, including Howard Schultz, Chris Voss, Robin Roberts, Sara Blakely, Daniel Pink, Bob Iger, Anna Wintour, and more.