Understanding Bills of Lading (BLs) A Comprehensive Guide
Understanding Bills of Lading (BLs) A Comprehensive Guide. Bills of Lading (BLs) are crucial documents in international trade. They serve as contracts of carriage between shippers and carriers. They acknowledge receipt of goods, outline the terms of transportation, and function as title documents for the goods. Understanding BLs is essential for exporters, importers, freight forwarders, and customs brokers involved in global trade.
Types of Bills of Lading
There are primarily three types of BLs:
Clean Bill of Lading:This type is the most desirable, indicating that the recipient received the goods in good condition. It is essential to obtain bank payment under a letter of credit.
Dirty Bill of Lading: This type notes specific damages or deficiencies in the goods at the time of shipment. It can delay or prevent payment under a letter of credit.
Received for Shipment (RFS) Bill of Lading: The carrier issues this before the goods are loaded onto the ship. The airline typically uses it for inland transportation or when it needs to verify the condition of the goods.
Key Clauses in a Bill of Lading
A typical BL contains several essential clauses:
Consignee: The party to whom the goods are to be delivered.
Notify Party: A person or company to be notified of the arrival of the goods.
Place of Delivery: The port or location where the goods will be delivered.
Freight: The charges for transporting the goods.
Marks and Numbers: The identification marks and numbers on the shipping containers or packages.
Description of Goods: A detailed description of the shipped goods, including quantity, weight, and value.
Terms of Delivery: The Incoterms (International Commercial Terms) define the responsibilities of the buyer and seller.
Governing Law: The legal jurisdiction that will apply to any disputes arising from the contract.
Importance of Bills of Lading
BLs serve several critical functions in international trade:
Contract of Carriage: The BL outlines the terms and conditions of the transportation agreement between the shipper and carrier.
Title Document: The BL shows that the owner possesses the goods and can use it as collateral for financing.
Document of Receipt: The BL acknowledges receipt of the goods by the carrier.
Evidence of Delivery: The carrier received the goods in good condition, as evidenced by a clean BL.
Tips for Handling Bills of Lading
Scrutinize Goods: Before signing the BL, ensure that the goods are correctly loaded onto the ship and are in good condition.
Verify Details: Double-check all details on the BL, including the consignee, notify party, place of delivery, and description of goods.
Obtain a Clean BL: Whenever possible, insist on facilitating a clean BL to enable payment under a letter of credit.
Keep Copies: Retain copies of the BL for your records.
Understand Incoterms: Familiarize yourself with the Incoterms applicable to your transaction to avoid misunderstandings.
