Bill of Lading Basics for International Shippers

Bill of Lading Basics for International Shippers

07/01/2021
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Although the bill of lading (BOL) plays a crucial role in the international shipping process alongside the commercial invoice and packing list, its importance is not always understood. Beyond reviewing Incoterms and terms of sale, the bill of lading is essential to include in discussions between the buyer and the seller. A bill of lading plays a vital role in the shipping process, as it can impact the timely release of cargo upon arrival to the destination country. 

What is a bill of lading?

Bills of lading serve as a contract between the goods’ owner and the carrier handling the goods’ transportation, with specific bills of lading to be used dependent upon the mode of transportation. Within the world of international freight forwarding, an ocean bill of lading is used for ocean cargo, while air waybills (AWB) are used for air cargo. 

Why are bills of lading important?

  • It is used as a receipt for the goods shipped.
  • It is evidence of a contract for carriage.
  • It serves as a document of title. 

How are international bills of lading completed?

The exporter or freight forwarder will send the ocean or air carrier a Shipper’s Letter of Instruction (SLI). The SLI details the parties involved, ship dates, vessel and voyage information or flight information, descriptions of the commodities and the respective classifications, weights, piece and pallet counts, shipment value, delivery instructions, tax IDs and other important shipment information.  

Bills of lading are also completed according to the consignee’s specific country requirements. For example, in Latin America, charges must appear on the bill of lading for customs purposes. Additionally, in Argentina, the consignee’s tax ID (CUIT) must be present on the bill of lading. Failure to comply with specific country requirements is likely to result in shipment delays with the potential for additional charges to be assessed. 

3 ways a bill of lading is surrendered to the consignee

  1. Original bill of lading
    Sometimes, original bills of lading are required for shipment release in the destination country. In these instances, the exporter will typically overnight the original bill of lading to the consignee after the vessel sails. Original bills of lading are usually sent with commercial documents to the consignee via courier, allowing the consignee to prepare the necessary documentation for the customs clearance.

    Furthermore, the shipper may consign the bill of lading to a bank instead of the importer, dependent upon the terms of sale. In this case, the original bill of lading must be endorsed by the bank prior to being endorsed by the importer. When proper endorsements have been secured, the original bill of lading will be surrendered to the steamship line or the freight forwarder for cargo release.
     
  2. Telex release bill of lading
    A telex release bill of lading can speed the process up. In this case, the shipper advises the carrier’s origin office when to surrender the bill of lading, and the origin carrier office then relays this message to the destination carrier’s office. Then, the freight is released to the consignee without an original bill of lading required at the destination. 

  3. Express release bill of lading
    The most common way a bill of lading is surrendered to a consignee is through an express release bill of lading, also known as a seaway bill, which is the quickest way to surrender the shipment to the consignee. Originals are not required in this case; the bill of lading will be released upon arrival at the destination, assuming all carrier charges are paid or the shipper has credit terms with the carrier. 

These three variations provide the importer or exporter with the degree of protection they choose based on the business relationship between the two parties. As an exporter, cargo is more secure when electing for originals to be required for cargo release. As an importer, the express release BOL is preferred as the freight is released as soon as it is available at the destination port. 

Who said logistics has to be complicated? We certainly didn’t. Contact our team to learn more about our International solutions


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