What is a bill of lading?
The bill of lading (B/L) is the core document of sea transport. It has three functions:
- Receipt: It shows that the carrier received the cargo in the stated quantity and apparent condition.
- Evidence of the contract of carriage: The terms of carriage are usually printed on the back of the bill.
- Document of title: A bill made out to order can be transferred by endorsement, and whoever lawfully holds it is entitled to take delivery of the goods. That is why goods can be sold in transit and why banks can hold the bill as security under a letter of credit.
A bill of lading is usually issued as a set of three originals (3/3, the "full set"). Delivery against one original voids the others, which is why banks ask for the full set under a letter of credit.
A sample bill of lading, field by field
Click a field to see what it means and the most common mistake made with it.
BILL OF LADING sample — not a real document
All fields (table)
| Field | What it means | Common mistake |
|---|---|---|
| Shipper | The party handing the cargo to the carrier under the contract of carriage. | Not matching the name required by the letter of credit exactly. |
| B/L No. | The carrier's unique number for the document, used for tracking and release. | Being written differently on the invoice and other documents. |
| Consignee | The party entitled to take delivery. If made out "to order", the bill is transferred by endorsement. | Naming the buyer when the credit requires "to order of the bank". |
| Carrier and signature | Shows the document was issued by the carrier, the master or their agent. An agent must state on whose behalf it signs. | Not stating the capacity of the signatory (UCP 600 art. 20). |
| Notify party | The party informed on arrival. Gives no right to take delivery. | The arrival notice not reaching anyone because of missing contact details. |
| Vessel / voyage | The vessel and voyage the cargo was loaded on. | Confusing the feeder with the mother vessel after transshipment. |
| Port of loading | The port where the cargo is loaded on board. | Not matching the port in the letter of credit. |
| Port of discharge | The port where the cargo will be discharged. | Entering the transshipment port as the port of discharge. |
| Container / seal no. | Container and seal numbers, checked at destination. | A wrong seal number, which weakens the evidence in a claim. |
| Description of goods | Description of the goods and number of packages. In FCL, "said to contain" states that the carrier did not see the contents. | A description different from the invoice; not stating the number of packages (lowers the liability limit). |
| Gross weight / measurement | Weight and volume as declared by the shipper. | Contradicting the VGM and the invoice weight. |
| Freight payable | Whether freight is paid at origin (prepaid) or destination (collect). | Contradicting the Incoterms rule (e.g. "collect" on a CIF sale). |
| Number of originals | How many originals were issued; banks require the full set. | Presenting an incomplete set to the bank. |
| Shipped on board date | The date the goods were loaded on board; treated as the shipment date under a letter of credit. | Being later than the latest shipment date in the letter of credit. |
Types of bill of lading
By whom it is made out to
- Straight (named) B/L: Made out to a named consignee and cannot be transferred by endorsement. In many countries it cannot be released without an original; practice differs from country to country.
- Order B/L: Made out "to order" or "to the order of [bank]" and transferred by endorsement. Used in letter of credit transactions and when goods will be sold in transit.
- Bearer B/L: Whoever holds it takes delivery. Losing it is very risky; rarely used.
By loading status
- Shipped on board: Shows that the goods were loaded on a named vessel. Under a letter of credit, banks look for an on-board notation as required by UCP 600 art. 20.
- Received for shipment: Shows that the goods were handed to the carrier but not yet loaded. It can be turned into an on-board bill with a dated notation after loading.
By remarks
- Clean: Carries no clause declaring the goods or packaging defective.
- Claused ("dirty"): Contains remarks such as "packaging torn" or "wet". Banks as a rule do not accept claused bills (UCP 600 art. 27).
By issuer
- MBL (master B/L): Issued by the shipping line. Often the shipper is the forwarder and the consignee is the forwarder's agent at destination.
- HBL (house B/L): Issued by a forwarder or NVOCC to its own customer. In LCL each customer in the same container gets its own HBL.
- Through / multimodal B/L (FBL): A single document covering more than one mode of transport. The FIATA multimodal bill of lading (FBL) is widely used by forwarders.
What does "said to contain" mean in FCL?
In FCL the shipper loads and seals the container, and the carrier never sees the contents. That is why the bill carries clauses such as SLAC (shipper's load, stow and count) and STC (said to contain). These do not make the bill claused, but they limit the carrier's responsibility for the contents and quantity.
How is the cargo released? Originals, telex release, sea waybill
There are three main ways to take delivery at destination:
- Original bill of lading: The consignee (or the last endorsee) presents an original to the carrier's agent at destination and receives a delivery order in return. This gives the strongest payment security; because the documents travel by courier, there is a risk of delay.
- Telex release (surrender): Originals are issued but surrendered to the carrier at the port of loading. The carrier instructs its agent at destination to release without originals.
- Sea waybill: A non-negotiable document without originals is issued from the start. The cargo is delivered to the named consignee.
Which one fits depends on the payment method and whether the goods will be sold in transit:
Decision table
| Payment method | Sold in transit? | Suitable release method |
|---|---|---|
| Letter of credit or documentary collection | Either | Original bill of lading (usually to order) |
| Any | Yes, goods sold in transit | Original order bill of lading |
| Paid in advance / trusted open account | No | Sea waybill (fastest) or telex release |
When the cargo arrives before the original bill
On short transit times the cargo can arrive before the original bill of lading. Carriers sometimes release the cargo against a letter of indemnity (LOI), an undertaking to cover the carrier's loss if it delivers to the wrong party, usually backed by a bank guarantee. Because this is a serious risk for the carrier, many carriers refuse LOIs, so the document flow should be planned when the shipment is planned.
The most common bill of lading mistakes
- The description of the goods does not match the invoice and the letter of credit exactly
- The on-board date is later than the latest shipment date in the letter of credit
- The "freight prepaid / collect" remark contradicts the Incoterms rule (for example "freight collect" on a CFR sale)
- The consignee or notify party is wrong or incomplete
- An original is lost: replacing a lost bill usually takes security and a long process
Test yourself
- Which type of bill of lading should you ask for in an export under a letter of credit? (Answer: Whatever the credit requires; usually a clean, on-board, full set of original bills made out to the order of the bank.)
- What is the fastest release method for a prepaid shipment to a group company? (Answer: A sea waybill. No original document needs to travel.)
- Does a "said to contain" clause on an FCL bill make it claused? (Answer: No. It states that the carrier did not see the contents; it is not a remark about defects.)