In shipping, there is various transportation mode such as Ocean (sea shipping), Air (by aeroplane), Land (truck and train). All of these modes have distinct tools of application at different times for different purposes. One such tool is the Bill of Lading.
Some of our clients who have come across a BOL for the first time have asked for clarity. We already have a post you should check if you need to know. In today’s post, you’d be acquainted with various transport mode and their respective types of bills.
What is A Bill of Lading?
In one word, a Bill of Lading is a ‘receipt’. It is a legal document or contract between the carrier and shipper. It carries details of the type, quantity, and destination of goods being carried. When a carrier receives a shipment, it is important he obtains a document which must state the details of the shipment, the Shipper, Carrier, Exporter, Consignee and Notify.
Bill of Lading by Transport Mode
We have three (3) major modes of transportation.
- Ocean Transportation
- Air Transportation and
- Land Transportation.
Ocean Transportation Mode
In sea shipping, there are several types of Bill of Lading. An Ocean Bill of Lading is issued whenever a carrier uses sea transportation. However, in some cases, it is not necessary to have a document of title supporting the ownership of goods. In such cases, the Bill of Lading may be replaced by another type of document, such as the Sea Waybill.
NB: Sea Waybill is issued on very strict condition bothering on trust between the shipper and the consignee or when the goods are paid for with an approved line of credit.
Types of Ocean Bill of Lading?
An ocean bill of lading is an agreement between the shipper and the ocean carrier. The document acts as a carrier receipt to the shipper. The bill contains every detail of goods that are being transported. This document is submitted to the shipper while picking up goods. The shipper later gives it to the receiver on the delivery of goods.
We limit our findings to 4 major BOL. They are as follows:
i. A Straight Bill of Lading: This type is used for shipping items that have already been paid for. Such shipments may be donations or gifts or don’t require payment. It is a non-negotiable form of BOL addressed to the buyer directly. Due to its non-negotiable nature, it cannot be assigned to anyone but that party. This helps in the correct delivery of the goods.
In this type of BOL, it is only the person whose name appears on the bill that can claim the goods.
ii. Shipper’s Order Bill of Lading: Used for shipments ordered but payment not made in advance. This can be shipping to one of your distributors or a customer on terms. In other words, the ‘Order BOL’ is used when the goods are sold on credit, to either a distributor or the customer. It is addressed “to order” or “to order of [a party]” instead of the buyer.
The shipper’s order bill of lading is commonly used when the purchase of goods is covered by a letter of credit or if the goods are expected to be traded on a mercantile exchange while the shipment is still in transit.
iii. Clean Bill of Lading: This type of bill is not issued unless the receiver receives the goods in good condition. In order words, if the goods received are confirmed to have been damaged or with flaws, the Clean BOL is never issued.
It is issued to the shipping carrier to indicate that at the time the packages were loaded they were in good condition. On the contrary, if the products or shipment are flawed, a “Soiled Bill of Lading” or a “Foul Bill of Lading” are issued instead.
iv. On-board Bill of Lading: As the name implies, this is one major Ocean Bill of Lading which is issued when the cargo is placed in a vessel. On this, the master of the vessel signs this bill of lading. In a nutshell, it verifies that goods have been placed on the cargo vessel.
Air Mode of Transportation
In Air shipping, a recognized name for Bill of Lading is Air Way Bill. There is a clear difference between an Air Way Bill and a Bill of Lading, even though they both serve similar purposes.
An Air Waybills or AWB, as implied, is issued when goods are transported by air. This document accompanies goods shipped by an international air courier. It provides detailed information about the shipment and allows the shipment to be tracked.
An Air Waybill is a type of Bill of Lading that serves, also, as a receipt of goods, but by Air (not Sea).
Just like some types of Ocean Bill of Lading, the Air Waybill is non-negotiable. When Cargoes arrives at the airport of destination, they are immediately handed over to the consignee or some times, the customs clearing agents for customs clearance and final delivery.
Air waybills, therefore, serve only as:
- A cargo receipt whose function is to show that the carrier has received the shipment
- A contract of carriage
- Delivery instructions, if special handling is necessary
However, based on some conditions, the airway bill may be consigned to a bank, if items or goods are shipped under a letter of credit or where the shipper chose to use his bank to collect payment for goods prior to release to the consignee.
In such cases, the consignee must pay the bank, who in turn provides a bank release to the airline to authorizing the carrier to release the goods. This process typically takes several days during which the goods will sit at the airline warehouse and possibly incur demurrage.
Land Mode of Transportation
A Waybill is issued for verification for the Land mode of transportation such as truck and train. It the same receipt as the Bill of Lading and Airway Bill. The difference is that it pertains to overland shipments. Just like an Air Waybill, a Waybill is never consigned “to order” and is never negotiable.
However, the shipment can be sent under “Collect on Delivery” terms with an additional carrier’s handling fee to protect the interests of both the buyer and the seller.
In essence, the importance of these three legal documents (bill of lading – Sea, Airway Bill – Air & Land – Waybill) can’t be further buttressed as the level of their high essentiality to freight forwarding can not be overemphasized. There are, however, many other types of bills related to different needs that are not included in this post.
Meanwhile, the need to become familiar with the various terms used in shipping becomes very imperative as they are required for ease of usage in the process of shipping to and from Nigeria, to anywhere in the world.
In a future post, we hope to bring them to fore, but meanwhile, you may wish to comment on them using the comment box below. Come, let’s reason together!
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