What Is the Bill of Lading and Its Role in Exports?

The world of exports needs a different type of management because it goes beyond borders and involves many formalities that will not apply to local businesses. In fact, all the parties involved in exports are aware of a whole new vocabulary.

You will come across terms like Bill of Lading, marine insurance, trade finance solutions, and inward remittance. In this article, the focus will be on the bill of lading, what it means, who issues the bill of lading, and other details. Those in exports must understand all aspects, including international logistics and export payment terms, to complete the transaction, from getting the order to receiving the payment.

What is the Bill of Lading?

The bill of lading is a legal document the transporter (road, rail, ship, air) or their agent will issue to the exporter (shipper). It confirms the goods have been received, establishes the contract or carriage, and serves as a title document. It forms the basis for the importer to check if the goods have been sent as discussed and agreed upon in the contract between the exporter and the importer.

Who issues the Bill of Lading?

When an exporter enters into a contract with a goods carrier, such as a shipping line, freight carrier, rail transport, or road transport, the carrier or its agent checks the goods and issues a Bill of Lading. The bill of lading is the acknowledgment of goods received, the carriage contract, and a title document.

What role does the Bill of Lading play in exports?

We have already established that the bill of lading is vital to the export business. Let’s examine its role in more detail.

Roles of a Bill of Lading in exports

Proof the goods have been shipped

The bill of lading proves that the exporter has handed the goods in acceptable condition to the transporter, who will send them to the importer's destination.

Carriage contract

When an exporter sends goods to be delivered to the importer’s destination, the expectation is that the goods will arrive in good condition. The bill of lading outlines the terms and conditions the carrier accepts while transporting the goods, the route to the destination, and the transporter's liabilities.

Goods title

The importer will require the original bill of lading to take ownership of the goods, and the bill of lading acts as the title document for this process.

Trading and payments

To prove to the banks that the goods have been shipped, you will need a bill of lading and a letter of credit or other payment commitments. Once the bank verifies these documents, it will release funds to the exporter.

Clearance at customs

The customs authorities at the export and import destinations consider the bill of lading an essential document for verifying the shipment and clearing it for export at the port of departure and import at the port of arrival.

Description of the goods

When various authorities are involved in export and the buyer wants to verify the goods, they refer to the bill of lading. It contains details such as a detailed description of the goods, quantity, weight, destination, and the shipper and consignee details.

Provides legal evidence

If the exporter and the importer have a dispute, the authorities will refer to the bill of lading as evidence to resolve legal issues.

What are the different types of Bill of Lading?

Here are the most common types of bill of lading:

• The straight bill of lading is issued when the goods are shipped directly to the buyer and is usually non-transferable
• The order bill of lading is used when payment is linked to the ownership transfer, and this can usually be negotiated and transferred
• The clean bill of lading shows the goods have been received by the buyer in good condition, and there were no damages or irregularities in the goods received
• The through bill of lading covers numerous modes of transport and can be issued when the goods are transported using more than one mode of transport

Why is the Bill of Lading crucial for exports?

Exporters need the bill of lading to prove that the goods have been shipped, and the importer needs the bill of lading to claim the shipment. The bill of lading clearly defines the responsibilities of the various parties involved in the export and provides legal protection to all the parties involved.

How many bills of lading are issued in a typical transaction?

In most cases, three bills of lading are issued. This includes one for the consignee, one for the shipper, and one for the broker, banker, or an involved third party.

In conclusion, the bill of lading is an essential document that will help you with various aspects, like receiving timely payments. The bill of lading is critical, whether for trade finance options, clearance with customs, or inward remittance. For help with the operational aspects, you can seek help from a platform like LeRemitt. Want to know how we help? Click here to get started.