Bill of Lading
Learning target:
• 1. What are B/L and its function?
• 2. Key classification of B/L.
• 3. What are AWB and its function?
• 4. What is the difference between B/L and AWB?
• 5. What is multi-modal transport and the main
document involved?
• Transport documents can be described as the
receipt evidence issued by carriers to the exporters
and acts as the documents of necessity for cargo
delivery, complaints as well as settlement or
negotiation to banks. According to different modes
of transportation, shipping documents mainly refer
to marine bill of lading, seaway bills, airway bills,
railway bills, multi-modal transport documents, etc.
This chapter will mainly illustrate marine bill of
lading, airway bill, airway bill and multi-modal
transport documents.
1 marine bill of lading
• 1.1 Definition and functions of marine bill of
lading
• Marine bill of lading or ocean bill of lading,
abbreviated as bill of lading (B/L), in
accordance with the regulations in Maritime
Law of People’s Republic of China, means a
document which evidences a contract of
carriage by sea and the taking over or loading
on board of the goods by the carrier, and by
which the carrier undertakes to release the
goods against surrendering of the document.
In accordance with the definition of marine B/L, its
functions are mentioned below:
• B/L is evidence of the contract of carriage between the
consignor and the shipping company. The rights and
obligations of the two parties are listed on the B/L.
• B/L is a receipt for the goods issued by the ship owner or
his agent evidencing the receipt of the goods mentioned in
B/L.
• B/L is a document of title to the goods. Any lawful holder of
B/L may take the delivery of the goods from the shipping
company against the B/L, or transfer the title to the goods
by transferring the B/L or secure loans against the B/L from
the bank before the arrival of the shipment.
1.2 Parties in marine bill of lading
Parties in marine bill of lading include carrier, shipper, consignee,
notify party, transferee and the bearer.
• Carrier. Carrier refers to such persons who sign the shipment
contract with shipper as shipping company or charterer without
shipping vessel.
• Shipper. Shipper is the party who reach the shipment contract
with carrier. Shipper could be the consignor or the consignee in
accordance with the trade terms.
• Consignee. Consignee may be the payee, bearer or the specified
person written in named B/L. Importer is often the consignee.
• Notify party. Notify party is the target one who is
informed by the shipping company the arrival of
shipment. Notify party could be importer or its
agent.
• Transferee. Transferee is the receiver of B/L after
the endorsement or transfer and could claim the
shipment to the carrier.
• Bearer. Bearer is defined as the legal holder of B/L.
The holder could be the consignee or the assignee.
• Assignee - a person appointed to act for another
1.3 Contents of bill of lading
The contents of a B/L consists of every liner company in the world has
its own B/L form and clauses, but the basic contents are stipulated
according to the International Convention for the Unification of
Certain Rules of Law Relating to Bill of Lading. See B/L sample (9-1)
for reference.
• On the face of the B/L, the following particulars are to be noted:
• Consignor /Consignee/Party to be notified/Name of the
vessel/Ship’s nationality/Voyage/Port of shipment and port of
destination/Freight
• Number of the copies of the B/L, date, signature
of the ship-owner or his agent or capital of the
steamer.
• Main particulars regarding the goods loaded on
the steamer: description, marks, number of
package, weight or measurement.
• Declaration shall be made that the goods have
been loaded on board in apparent good order
and should be discharged at the port of
destination or the port as near as the vessel may
safely get and be always afloat.
1.3.2 Clauses on the back of B/L
• Clauses on the back of B/L can be classified into compulsory and
non-compulsory. Compulsory clause restrains parties in B/L from
breach maritime laws, international convention and harbors
practices related. Non-compulsory clause is regulated by the carrier
to define those which are not concluded adequately in compulsory
clause. Clause on the back of B/L constitutes the evidence of
liabilities and obligations and disputes settlement for parties
involved in B/L. The contents of back clause are various for every
signal carrier but normal contains the following items:
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Definition for merchant;
Paramount clause for dispute settlement;
Jurisdiction Clause
Carrier’s responsibility and period of responsibility clauses;
Exception and claim clauses;
Packing and mark clause; Freight clause; Lien clause
Transshipment clause; Discharging and delivery clause
Animals, plants and on deck cargo clause
Dangerous cargo clause
1.4 Key classification of B/L
9.1.4.1 shipped on board and received bill of lading
• Criteria vary and classification of B/L could be various. According to
whether the goods have been loaded on board the vessel, the B/L is
divided into shipped on board B/L and received for shipment B/L.
• A shipped on board B/L is evidence that the goods have been
loaded on board a certain steamer. According to general trade
practices, only the shipped on board bill of lading is accepted by
banks for payment under a letter of credit.
• A received for shipment B/L is evidence given by the ship owner
that the goods have been received for shipment but have not yet
been actually loaded on a particular ship. It is therefore uncertain
whether the goods would be shipped or loaded on board a vessel
within a short period of time.
1.4.2 clean B/L and unclean B/L.
• According to whether there are notes on the bill of loading, it falls
into two kinds: clean B/L and unclean B/L.
• A clean B/L shows that the goods have been shipped on board a
vessel in apparent good order or condition. A clean B/L is issued to
the shipper when the goods do not have any exterior defects at the
port of shipment. Actually on every B/L, there are words “shipped
in apparent good order and condition”. The carrier will not modify
this statement if the goods are in good order, therefore making the
bill of lading clean. The carrier undertakes full liability for the goods
and will carry and deliver them in the same good order as he
received them. The carrier will be liable if the goods are found
damaged.
• Unclean bills of lading are generally marked “insufficiently packed”,
“carton old and stained”, “---packed in damaged condition” etc. But
not all bills of lading which are noted are unclean bills of lading. The
following kinds are not regarded as unclean bills of lading.
• The notes do not indicate clearly that the goods or packing are
unsatisfactory, e.g., “old packing” or “old carton” etc.
• The purpose of the note is to emphasize that the carrier shall not
be responsible for the risks resulting from the quality of the goods
or packing.
• The bank will not accept the unclean B/L until the buyer agrees
accordingly.
1.4.3 named, order and blank bill of lading
• According to whether the B/L is transferable, it is divided into 3
kinds: straight B/L, order B/L, and blank B/L
• A named B/L is made out so that only the named consignee at the
destination is entitled to take delivery of the goods under the bill.
The consignee is designated the shipper. The carrier has to hand
over the cargo to the named consignee, not to any third party in
possession of the bill. This kind bill of lading is not transferable. The
shipper cannot pass the bill to a third party by endorsement. So the
bill is of very restricted application. When the goods are shipped on
a non-commercial basis, such as samples or exhibits, or when the
goods are extremely valuable, a straight bill of lading is generally
issued.
• An order bill of lading indicates that the bill is made out to the
order of any person named in such a bill. This kind of bill may be
transferred after endorsement. When the bill is made out “to order
of shipper” it is necessary for the shipper to endorse the bill either
in blank or in full, to the consignee to whom he wishes the delivery
of the goods is to be made. If the shipper does not endorse such a
bill, he reserves the right to dispose of the goods to himself.
• A blank bill of lading is also called open B/L or bearer B/L. It refers
to the bill in which the name of a definite consignee is not
mentioned. There usually appear in the box of consignee words like
“to bearer” and the holder of the B/L can take delivery of the goods
against the surrender of B/L.
1.4.4 long form and short form of bill of lading
• According to the contents of the B/L, it can be divided into 2 forms.
• A Long Form B/L refers to the bill of lading on the back of which all
the detailed terms and conditions about the rights and obligations
of the carrier and the consignor are listed as an integral part of the
bill. A long form B/L is applicable for all countries.
• A short form B/L is a document which omits the terms and
conditions on the back of the B/L. Only America accepts short form
B/L.
1.4.5 freight prepaid and freight to be collected bill
of lading
• According to the time for payment of freight, it
can be divided into 2 types.
• A freight prepaid B/L means that all the freight is
paid by the consignor when the B/L is issued by
the carrier.
• A freight to be collected B/L refers to the B/L on
which “freight payable at destination” is indicated.
1.4.6 Master and house bill of lading
• According to the issuance party of B/L, it can
be divided into 2 categories.
• A Master B/L means the B/L is issued by the
actual carrier directly to the consignor.
• A House B/L is issued by NVOCC （Non-vessel
Operating Common Carrier）to the consignor
under the authorization of the shipping
company.
1.4.7 Other Types of B/L：Ante-dated, On Deck
and advanced bill of lading
1.4.7.1 Ante-dated B/L
• When the actual loading date is slightly later than
the date of shipment stipulated in the L/C, the
carrier sometimes, at the request of the shipper,
will issue the bill of lading to the shipper an antedated B/L so as to meet the requirement of the
L/C. The shipping carrier does not issue antedated bill of lading.
1.4.7.2 On Deck B/L
• On Deck B/L is issued when the goods are
stowed on deck. The carrier shall not be
responsible for the damage to and losses of
the deck goods. In accordance with UCP600,
the on deck B/L is not be accepted by the
bank provided that specified in L/C.
1.4.7.3 advanced bill of lading
• Advanced bill of lading is issued at the date
which is prior to the shipped on board date.
Similar to anti-dated bill of lading, the
advanced bill of lading is required by the
shipper for meeting requirement specified in
L/C. The shipping carrier does not issue antedated bill of lading.
1.5 B/L Maritime Laws and Rules
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International laws and rules critical to B/L are: General Rules of
Law Relating to Bills of Lading (The Hague Rules) , Protocol to
Amend the International Convention for the Unification of Certain
Rules of Law Relating to Bills of Lading (The Visby Rules) and
United Nations Convention on the Carriage of Goods by Sea, 1978
(The Hamburg Rules).
In China, Maritime Law in 1993 was the first law with regard to
maritime transport and carriers. This law follows the belief of The
Visby Rules and introduces some rational parts in The Hamburg
Rules.
1.6 Copies and disposal in case of loss
• Every B/L has its original and negotiable forms in triplicate and nonnegotiable copies. After one of the original B/L has accomplished
the formality of taking delivery, the others stand null and void. The
non-negotiable copies are only for kind reference.
• Provided that the B/L is lost, when claiming cargo to the carrier, the
consignee cannot deliver the goods until the shipper agrees the
consignee with a bank’s letter of guarantee at hand to certify. The
carrier requires publicly loss of B/L without any dissent for a certain
period of and then releases the cargo to the consignee.
• It is usual for a "full set" of bills of lading to be comprised of three
originals, but that is not to say, it cannot be more or less than this
number, including perhaps just one sole original.
• The reason why B/Ls are generally issued in more than one
original, is that theoretically B/Ls are considered "documents of
title". That is to say, (in theory) possession and presentation of an
original is generally required to release the underlying cargo from
the carrier.
• If one original is inadvertently lost, any of the other originals
(depending on how the consignee has been defined) may be used
for release. This is why it is important that when dealing with LCs,
the full set of original B/Ls should be presented via the banking
channels, so that a stray original does not fall into the wrong
hands.
1.8 Essentials of B/L review
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(1) B/L must be clear and shipped on board B/L.
(2) B/L must not show “on deck shipment”.
(3) The head and the endorsement should be in completed correct.
（4）Loading date, port of loading, port of discharge and port of
destination should be typed in accordance with L/C regulations. If port of
discharge is overlapping, the country’s name should be added thereafter.
And if the port of discharge is optimal, all port names should be listed as
“OPTION LONDON/ROTTERDAM/HAMBURG" in this item. The optional
ports should not be more than three in number and be on the same line.
Provided that the shipment is transshipped during the cruise, the port of
discharge should be transshipment port and the final port of destination
should be shown in item “FINAL DESTINATION”.
• (5) Shipment cargo should be the same with
cargo description of invoice.
• (6) Marking should be in conformity with that of
invoice.
• (7) "Freight paid”,” freight prepaid”,” freight to
be collected" must appear on B/L in accordance
with price term specified in the credit.
• (8) The full set of B/L is a must in case of ordered
B/L.
2 airway bill and railway bill
• 9.2.1 Definition and function of an Air Waybill
• Air waybill (AWB) is a receipt from the airline acknowledging the
receipt of the consignment from the shipper and a contract of
carriage between the airline and the shipper. An air waybill is
equivalent to an ocean B/L, but it is not a document of title or
negotiable instrument as a bill of lading, as the consignee takes the
delivery of the cargo against of arrival notice given by the carrier.
Hence collection cannot be used for the payment of the goods to
be transported by air. AWB function can be read as followed:
• AWB is a receipt for the goods issued by
airline’s agent evidencing the receipt of the
goods mentioned in AWB.
• AWB is evidence of the contract of carriage
between the consignor and the airline
company.
• AWB is the bill reference charged by the
airline company.
• AWB can be regarded as insurance policy.
• AWB is a must for customs declaration.
• AWB is the reference （Original 2） for air
carrier business operation.
2.2 Types of Air Waybill
• According to the issuer, AWB can be divided into
the two kinds:
• Master Air Waybill (MAWB) means its issuer is air
carrier and the shipping contract between the air
carrier and air freight forwarding authorized
agent.
• House Air Waybill (HAWB) is issued by the
authorized forwarding agent and constituents the
contract between the forwarder and the
consignor.
• 2.3 Contents of an AWB and its key points
• 2.3.1 Contents of an AWB
• Unlike B/L, the contents of an AWB is tiny in difference in forms, since
most airlines take the IATA (International Air Transport Association ) AWB
known as neutral AWB to regulate the contents of an AWB, which
concludes the following items:
• First departure airport IATA code;
• Name，address and account No. if necessary of the shipper and
consignee;
• Issuing carrier’s agent name, city, IATA code and account No. if necessary;
• Dispatching dates and cruises including transshipment information;
• Cargo description of; freight and rates;
• Others for Customs, insurance and handling.
• 2.3.2 Key points for attention in an AWB
• Issuer of an AWB. Provided otherwise stipulated in L/C, the bank
rejects an AWB issued by transport agencies.
• Numbers of an AWB. An AWB has its triplicate originals, in which
original 1 is for issuing carrier, original 2 is transferred to the
consignee accompanying the flight and original 3 delivers to the
shipper for Bill Purchased (B P).
• The consignee indicated in an AWB. Only the consignee typed in an
AWB has the right for cargo delivery, which should in strict
conformity with regulations in L/C. The right can dully be
transferred to the bank in case of blank indication of consignee in
L/C.
2.3.3 Essentials of Airway Bill
• The bank will check the airway bill in
accordance with the commercial invoice or
the packing list related in the following
essential aspects:
• 1) The consignor, which should be in strict
conformity with the drawer of the commercial
invoice;
• 2) The consignee, which should be the same with the buyer in
the commercial invoice in terms of name and address in case
no description of the consignee in the airway bill;
• 3) Marks, description of goods, quantity, gross weight and
measurement should agree with those in the commercial
invoice and other documents;
• 4) The air freight and the its payment ( prepaid or to be
collected)；
• 5) The signature of the carrier or the carrier’s agent and the
signature’s compliance.
2.4 Definition of a Railway Bill
• A Railway Bill ( RWB) or cargo receipt will be
issued when the cargo are transported by rail,
which acts as a contract between railway
carrier at the place of cargo receipt and the
related consignee and the evidence of
liabilities and obligations of parties involved.
• 2.5 Functions of a Railway Bill
• A Railway Bill is in duplicate and only
functions for transport contract and cargo
receipt.
• 2.6 Essentials of a Railway Bill
• The bank will check the railway bill in
accordance with the commercial invoice
related in the following essential aspects:
• the consignor, which should be the drawer of
the commercial invoice;
• the consignee, which should be the applicant of
the L/C, the consignee designated by the L/C or
the buyer in the contract, provided that the
consignee dose not been specified in the L/C and
other documents involved;
• Marks, description of goods, numbers of items,
packing and the total items should agree with
those in the commercial invoice;
• The confirmed weight and the total weight
should be the same with gross weight in the
commercial invoice.
3 Multimodal transport documents
• International Multimodal Transport derives from
the booming development of international
containerization since 1950.
• 3.1 Multi-modal Transport and characteristics
• International Multi-modal Transport is the
transportation of unit loads in such a way that
they can be transferred between two or more
modes successively with the minimum of
remanding by International Multi-modal
Transport Operator （MTO）.
3 Multimodal transport documents
• The characteristics associated with
International Multi-modal Transport can be
found as the followings:
• Two or more modes of transport must be
adopted, in which maritime shipping is a
necessity.
• MTO is liability for the whole voyage upon
issuing the international Multimodal Transport
Document.
3 Multimodal transport documents
• 3.2 Characteristics of and contents in
Multi-modal Transport Document
• The multi-modal transport document
(M.T.D.) is a document which evidences the
combined transport contract and indicates
that the multi-modal transport operator
shall take over the goods and shall be
responsible for delivering the document
according to the clause in the contract.
•
3 Multimodal transport documents
• Characteristics attributes to the M.T.D. are:
• 1) Two or more successive modes of transport
are undertaken;
• 2) The liability of M.T.O. ranges from the receipt
to delivery of the said cargo;
• 3) The bank can accept the M.T.D. in terms of
vessel name, port of loading and port of
discharge with “intended” and similar
expressions;
• 4) FCA、CPT and CIP can make M.T.D. feasible.
•
3 Multimodal transport documents
• A M.T.D. should contain the particulars below:
• Cargo description.
• M.T.O. business name and address; receipt and delivery
time and locations;
• Name of consignor and consignee and freight
settlement;
• Transport modes and cruise;
• M.T.D. issuing date and place;
• Negotiability claim.
• Others necessary.
•
Document
• WHAT EXPORT SHIPPING DOCUMENTS DO I NEED?
– vary widely according to the country of destination and
the type of product being shipped.
– Failure to comply can delayed or end payment; goods
could be seized or you could be fined, denied further
export privileges, or jailed.
Most Commonly Required Documents
• U.S. Shipper's Export Declaration
– Used by the U.S. Census Bureau to compile trade statistics and to help prevent
illegal exports.
– The SED and instructions on how to fill it out are available from a variety of
sources including the U.S. Government Printing Office (202-512-0000) and the
U.S. Census Bureau's home page.
• Do I Need to Submit an SED for My Shipment?
– Required for any shipment valued at $2,500 or above (If the shipment is valued
at over $2,500 but is made up of various commodities falling under several
Schedule B numbers none of which is valued at $2,500 or higher, no SED is
required.)
– Required for any shipment to particular countries, such as Cuba, Libya, and
North Korea, and for any shipment requiring a validated export license.
– Required for shipments to Puerto Rico, the U.S. Virgin Islands and the former
Pacific Trust Territories even though they are not considered exports (unless
each Schedule B item is under $2,500).
– Shipments to Canada do not require an SED. (Shipments to third countries
passing through Canada do need an SED.)
– Sample http://www.citd.org/startup/eb/appendix.cfm?sec=89
Bill of Lading
• Def.: “Document issued by a carrier to a shipper, signed by the
captain, agent, or owner of a vessel, furnishing written evidence
regarding receipt of the goods, the conditions on which
transportation is made, and the engagement to deliver goods at the
prescribed port of destination to the lawful holder of the bill of
lading.” “Both a receipt for merchandise and a contract to deliver it
as freight.”
• Contract among three parties to provide transportation of cargo
• Consignor -party delivering goods to the carrier; usually the seller
• Carrier - party accepting legal responsibility to provide transportation; often the
transportation company
• Consignee - party entitle to receive the cargo; buyer, bank, an agent
Types of Bill of Lading
• Straight bill of lading:
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Indicates that the shipper will deliver the goods to the consignee.
Document does not give title to the goods. It is non-negotiable.
Consignee need only to identify himself to claim the goods.
Often used when payment for the goods has been made in
advance.
– http://www.export911.com/e911/ship/docBL.htm(See for ocean
bill of lading) or
http://www.citd.org/startup/eb/appendix.cfm?sec=91
• Shipper's order bill of lading:
– Def. Title document to the goods, issued “to the order” of a
party, usually the shipper, whose endorsement is required to
effect its negotiation. Title remains with whose order it is made
out to. If made to ‘to order’ title remains with shipper –until it
is endorsed.
– Commonly used for letters of credit transactions.
– Negotiable and the surrender of the original, properly
endorsed (by the shipper), is required for delivery of the
merchandise.
– Title remains with whose order it is made out to. If made to
out ‘to order’ title remains with shipper –until it is endorsed.
– The customer usually needs the original or a copy as proof of
ownership to take possession of the goods.
• Air waybill - carrying agreement between the shipper
and the air carrier.
– In contrast to the ocean bill of lading it is a non-negotiable
instrument and serves as a shipping contract and receipt to
the shipper.
– certifies that the airline has accepted the goods as listed on
the air waybill and agreed to carry the goods to the airport
of destination in accordance with the conditions of the
contract.
– Sample
http://www.export911.com/e911/ship/docAWB.htm (See
for airway bill of lading)
Or http://www.citd.org/startup/eb/appendix.cfm?sec=92
• Export Packing List
– itemizes the material in each individual package and
indicates the type of package: box, crate, drum, carton,
and so on.
– shows individual net, legal, tare, and gross weights and
measurements for each package (in both U.S. and metric
systems).
– The list is used by the shipper or forwarding agent to
determine the total shipment weight and volume and
whether the correct cargo is being shipped.
– Sample
http://www.citd.org/startup/eb/appendix.cfm?sec=90
• Certificate of Origin
– Some nations require a signed statement as to the origin
of the export item.
– Available through chamber of commerce.
– May be required even though the commercial invoice
contains the information
– Sample
http://www.citd.org/startup/eb/appendix.cfm?sec=96
DELIVERY OF THE GOODS TO THE OWNER WITHOUT A BILL OFLADING
Under the contract of carriage, the carrier must deliver the goods to the holder of a
properly endorsed bill of lading, regardless of the capacity in which he holds the
bill. Failure to do so will make the carrier liable for breach of contract to the lawful
holder of the bill.
The carrier will not normally know who the owner of the goods is, nor is he obliged
to investigate this matter; his obligation is merely to deliver the goods to the lawful
holder of the bill. For the carrier, the rights of the holder of the bill towards the
goods are not relevant. This person can be either the seller who kept the bill
because the buyer failed to make the payment, the buyer who acquired the bill
after payment or an agent for either of these parties. The lawful holder of a bill can
even be the bank acting as pledgee. The carrier cannot and should not get involved
in examining all these relationships. All the carrier should do is to check with due
care whether the person presenting the bill is its lawful holder and deliver the
goods to the lawful holder in exchange for the bill of lading. In the words of Leggatt
LJ in The Houda, ‘delivery without production of the bill of lading constitutes a
breach of contract even when made to the person entitled to possession’.
In Japan, the courts have adopted a practice that runs counter to
the nature of the bill of lading as a document of title. Japanese
courts approve the practice of delivery of the goods without a bill of
lading so long as the goods are delivered to the owner of the goods;
the carrier will be liable only if the goods are delivered to the wrong
person. This practice is contrary to the nature of a bill of lading as a
document of title because a bill of lading embodies the right to
receive the goods from the carrier which may exist independently
of the property rights; ownership of the goods is not relevant to the
right to receive them from the carrier.
The carrier is not justified in delivering the goods to a cargo unless
the bill of lading is produced, even if the carrier knows that he is the
owner of the goods. Besides legal reasons, there can be practical
reasons for this rule. For example, if the holder of a bill of lading is a
freight forwarder, he can have a right of lien on the cargo if the
cargo owner fails to pay him the agreed fee and/or costs. In such a
case, the carrier will be liable to the freight forwarder for delivery
without production of a bill of lading, even if delivery is made to the
lawful owner of the goods. This kind of situation may not often
arise in practice, but the principle should be clear.
CARRIER’S LIABILITY FOR DELIVERY OF GOODS WITHOUT A BILL OF LADING
• The carrier must not deliver the goods in any way other than
against presentation of an original bill of lading. The carrier who
delivers the goods without production of a bill of lading, he does
so at his own risk. If the goods are delivered to a person who was
not entitled to receive them, the carrier will be liable for breach of
contract and for conversion of the goods. The carrier who
delivered the goods without production of bill of lading has a right
of action for the recovery of the goods or their value against the
person to whom delivery has been made.
There are some exceptions to the rule that the consignee must
present the bill of lading before delivery. The carrier might deliver
the goods without production of a bill of lading if it was proved to
his reasonable satisfaction both that the person demanding
delivery was entitled to possession of the goods and that there
was some reasonable explanation of what happened to the bill of
lading. However, carriers should be very cautious with respect to
this exception, until it is clarified with greater precision