Decoding Bill of Lading: Meaning, Example, Types & More

In business logistics, moving goods from their point of origin to the customer’s doorstep involves many complicated processes. One of them is establishing proof of ownership at every stage, for which the bill of lading is a crucial document. 

So, for entrepreneurs new to shipping, it is essential to understand the meaning of the bill of lading, its importance, types, and other details. Keep reading to learn more.    

What is a Bill of Lading: An Overview

A bill of lading (BoL) is a legal document the transportation company provides to the shipper when the latter avails of their services. It acts as proof of ownership of the goods being transported and a shipment receipt when the package is delivered to the customer. 

A BoL generally accompanies a shipment when the carrier picks it up. It contains details of the cargo and the party to receive the goods. This helps transfer the ownership of the goods in that shipment to the customer upon delivery.    

Now, to better understand the meaning of the bill of lading, let’s look at an example.   

Understand the Bill of Lading With an Example

Suppose a pharma company called DB Pharmaceuticals receives raw material shipments five times a month. In this regard, the process flow is as follows:

• The pharma company’s manager fills out a purchase order, gets it signed by the owner, and sends it to the supplier. 
• The supplier procures the materials, packs them, and hands the package over to the carrier company. 
• The carrier issues a bill of lading and delivers the raw materials to the pharma company. 
• During the delivery process, the pharmaceutical company can use bill of lading tracking to track the vessel in which the shipment is arriving and the container details.  
• The pharmaceutical company’s manager then tallies the delivered items with the bill of lading to confirm whether they received all the items they had ordered. 
• If all the details match, the manager forwards the BoL to the owner, who then initiates payment to the supplier.      

Checking Out the Different Types of Bills of Lading

Businesses usually have to deal with various types of lading bills when dealing with cross-border shipments. They are as follows:

1. Ocean BL: This bill of lading is issued for products that need to be shipped internationally via sea. It serves as the carrier’s receipt to the shipper and a contract of transportation.  
2. Inland BL: An inland BL is an agreement between a shipper and a transporter for the overland movement of goods. This BoL is generally issued for moving goods to ports for international shipping. 
3. Clean BL: Product carriers issue clean BLs to confirm that the packages are damage-free, contain the number of units as mentioned in the contract, and have no quality deviations. 
4. Uniform BL: This bill of lading denotes the agreement between the carrier and the exporter regarding the property, items, or products being exported. 
5. Claused BL: A claused BL describes a shortfall or damages in delivered goods and generally implies a financial loss for the exporter, who is penalised for non-adherence with the stated contract. 
6. Through BL: BLs allow the transportation of goods both locally and overseas. Additionally, they act as a carriage contract, cargo receipt, and (in some cases) the title for the products.  
7. Negotiable BL: This type of bill of lading allows the transfer of the contract of carriage to a third-party provider. 

Bill of Lading: Importance for Businesses

A bill of lading is one of the most important documents for businesses regarding shipping. Here are a few reasons why:

• Establishes the terms of the contract between the shipper and the carrier company
• Holds legal binding in case of disputes
• Creates a hierarchy of control within a company for order placements
• Effectively prevents misuse of company trust, theft, or pilferage
• Acts as a receipt of the shipped goods

Identifying the Details Contained in a Bill of Lading 

Here is a list of the details that are contained in a bill of lading:

• The shipper’s name and address
• Shipment date
• Recipient’s name and address
• Purchase order and/or account number
• Number of units being shipped
• Description of the items being shipped
• Notation in case the product in a shipment is a ‘Department of Transportation hazardous material,’ which has special requirements
• Declared value of goods being shipped
• The National Motor Freight Classification (NMFC) for items that are being shipped 
• Exact shipment weight
• Shipment packaging – cartons, crates, pallets, etc.
• Pickup or delivery specifications

Bill of Lading: Key Takeaways

• A bill of lading (BoL) is a legal document the carrier company provides to the shipper.
• It acts as proof of ownership and a shipment receipt for the transported goods.
• The BoL contains numerous details, such as the shipper’s information, the recipient’s details, the value and description of the goods being shipped, and more.
• It establishes the contract terms between the shipper and the carrier company.
• It facilitates the transfer of ownership of goods to the receiver upon delivery.
• The BoL enables receivers to tally the items shipped with that present in the BoL to identify discrepancies.
• Bill of lading tracking enables receivers to track their shipment when in transit.

You now clearly understand the bill of lading and its importance for business logistics. So, the only thing left for you to do is to partner with a reliable logistics company that can facilitate safe and reliable deliveries at cost-effective prices.         

In this regard, Porter Enterprise can be an ideal choice. You can choose vehicles according to your unique logistics requirements and pay only for the time and distance you use our service. 

Try out Porter today and make handling business logistics a breeze!