What is a bill of lading?

If you sell products across borders, the bill of lading is the paper that follows the cargo. The buyer often needs it to collect the goods, and the bank may need it to release payment.

This is a general explanation, not legal or customs advice. Rules differ by country and by carrier, so check the details with your forwarder.

Why a bill of lading matters

The document does three jobs at once.

• Receipt: it confirms the carrier took the goods, and lists what was described, such as packages, weight and marks.
• Evidence of the contract of carriage: it records the terms under which the carrier moves the goods.
• Document of title (some types): whoever holds the right original can claim the goods at destination, and can pass that right on.

Because of the third job, the bill of lading is often tied to payment terms. Under a letter of credit, for example, the bank usually checks the bill of lading against the credit's conditions before paying.

Common types

• Straight bill of lading: names one consignee and is not meant to be passed on to someone else.
• Order (negotiable) bill of lading: made out "to order", so it can be endorsed and transferred. The original is needed to collect the cargo.
• Sea waybill: a receipt and contract, but not a document of title. The goods go to the named consignee, so no original is needed.
• Clean or claused: a clean bill says the goods were received in good order. A claused bill notes damage or a shortfall.
• House and master: a forwarder may issue its own (house) bill to you, while the carrier issues a master bill to the forwarder.

Air freight uses a similar document called an air waybill.

What is on it

Layouts vary, but most bills of lading show:

1. The shipper, the consignee and a notify party.
2. The vessel and voyage, the port of loading and the port of discharge.
3. A description of the goods, the number of packages and the weight.
4. Container and seal numbers, where relevant.
5. The freight terms, such as freight prepaid or freight collect, which link back to the Incoterm you agreed.
6. The date and place of issue.

The goods description must match the commercial paperwork. A mismatch between the bill of lading, the invoice and the order is a common reason for delays at the bank or at customs.

An example from product sales

Say a coatings manufacturer sells 12 pallets of resin to a buyer overseas. The terms are FOB, and payment is documents against payment: the buyer gets the original documents only once it has paid. The carrier issues an order bill of lading, and the manufacturer sends the originals through its bank to the buyer's bank. The buyer pays, receives the originals and collects the pallets at the destination port.

If the invoice had shown a different pallet count from the bill, the buyer could have held back payment while it queried the documents. Under a letter of credit, the bank could refuse them. That is why the order, the invoice and the bill of lading should say the same thing.

Related terms

• Incoterms: decide who arranges and pays for the carriage.
• Letter of credit: the bank payment promise that often depends on the bill of lading.
• Pro forma invoice: an early document that states the goods and price.
• Sales order: the record the shipment should match.

How PromptLab handles it

The carrier or forwarder issues the bill of lading. PromptLab keeps the commercial side of the shipment in one place: the quote, the sales order on the account, the invoice created from that order, and the Files tab on the account where you can store the shipping documents.

Frequently asked questions

What is the difference between a bill of lading and a sea waybill?

A bill of lading can be a document of title, so the original may be needed to collect the goods. A sea waybill is a receipt and contract only, and the cargo is released to the named consignee.

Who issues a bill of lading?

The carrier or its agent issues it to the shipper. If a freight forwarder is involved, the forwarder may issue its own house bill as well.

What is a clean bill of lading?

It is a bill that records no damage or shortage when the goods were received. A claused bill has a remark about the condition of the goods or packaging, and banks often treat it with caution.

Is a bill of lading the same as an invoice?

No. An invoice asks for payment. A bill of lading proves the carrier took the goods and records the terms of carriage. Both describe the same goods and should agree.

Can I store bills of lading in PromptLab?

You can add files to the Files tab on an account, so a copy of the document can sit next to the quote, the sales order and the email thread for that customer.