What is a Bill of lading? Meaning, Types, Purpose, Importance

What is a Bill of lading? Meaning, Types, Purpose, Importance

In the world of logistics and maritime trade, the function of a Bill of lading holds significant importance. It is a crucial document serving as a contract, receipt, and title for goods transported by sea, air, or land. Here, you can explore the purpose and bills of lading types. You can also discover their importance in the shipping industry.

What is a Bill of Lading?

A Bill of Lading is a crucial document in Ocean transport, serving as a contract, receipt, and title for goods being shipped. It establishes an agreement between the shipper and the carrier, specifying the nature of the Cargo, destination, and terms of transportation. It acts as proof of shipment and safeguards the interests of both parties during the shipping process.

The characteristics of bill of lading include its use as proof of shipment and its requirement for claiming goods. Understanding what is bill of lading used for and its functions of bill of lading helps in recognizing its purpose of bill of lading in ensuring smooth transactions in international trade. The carrier or their agent is typically who issues bill of lading, highlighting its role in the logistics chain. The importance of bill of lading lies in its role as a receipt for shipped goods, a document of title, and a contract for the transportation.

Types of Bill of Lading

You can find various bills of lading types, each serving different purposes and functions. As the owner of a Logistics company, you must know about different kinds of BOL. Let's explore some of the common types:

  • Negotiable Bill of Lading: This type of Bill allows the goods to be delivered to anyone possessing the original copy of the Bill, signifying control of the freight. The buyer, receiver, or agent must present the original Bill at the discharge port to claim the Cargo.
  • Negotiable Bill of Lading
  • Non-Negotiable Bill of Lading: It designates a specific consignee or receiver to whom the goods will be shipped and delivered. It does not act as a title document, and the assigned receiver can claim the Cargo by confirming their identity.
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What is Non-Negotiable Bill of Lading?

A Non-Negotiable Bill of Lading, also known as a Straight Bill of Lading, designates a specific consignee or receiver for the goods' delivery. Unlike a negotiable bill of lading, which allows delivery to anyone with the original copy of the Bill, a non-negotiable bill of lading restricts delivery to the named consignee. This type of bill of lading is used when there's a predetermined consignee, and it doesn't act as a title document. The assigned receiver can claim the cargo by confirming their identity.

What is included in the Bill of Lading?

A bill of lading is a comprehensive document containing essential information about a shipment. It typically includes the names and addresses of both the shipper (the consignor) and the receiver (the consignee). The document specifies the shipment date, quantity, exact weight, value, and freight classification of the transported goods. A complete description of the items is provided, and if they are classified as hazardous, it is duly noted.

The Bill of lading also mentions the type of packaging used for the goods and includes any specific instructions for the carrier regarding handling or delivery. Additionally, it may list particular order tracking numbers to facilitate easy monitoring of the shipment's progress. The inclusion of such detailed information ensures smooth and accurate transportation and serves as a receipt and contract for all parties involved in the shipping process.

Purpose of Bill of Lading

The primary purpose of a bill of lading is to serve as a transport document and evidence of the contract of carriage of the goods. It has the following legal qualities:

  • acts as evidence of the carriage contract, containing the terms and conditions under which the goods will be transported.
  • serves as a receipt, endorsing that the carrier has received the Cargo as per the contract and in good condition.
  • functions as a document of title, allowing the sale of goods in transit and raising financial credit.

The Importance of Bills of Lading

A bill of lading plays a vital role in international trade and transportation. Its importance lies in several key aspects:

  • It acts as a contract.

    The BOL is a contract between the shipper, the seller or exporter of the goods, and the shipping carrier. It outlines the terms and conditions of the shipment. It includes the type and quantity of goods being transported. It also includes the agreed-upon destination, the agreed-upon freight rate or charges, and the responsibilities and liabilities of both parties. By setting forth these crucial details, the BOL ensures that all parties know their obligations. Hence, it reduces the likelihood of disputes and misunderstandings during the shipping process.

  • It serves as a receipt.

    In addition to its role as a contract, the Bill of lading serves as a receipt. It provides evidence that the carrier has received the goods from the shipper in the condition stated in the document. As the carrier takes possession of the cargo, the BOL confirms the quantity and apparent condition of the goods, protecting both parties from potential claims of Mis-shipments or damage. This receipt aspect also facilitates efficient tracking and tracing of the cargo during its journey, ensuring transparency and accountability throughout transportation.

  • It acts as a title document.

    In certain circumstances, the BOL can act as a title document, particularly when goods are sold and transferred while in transit. By endorsing the BOL to the new owner, the shipper can transfer ownership rights to the goods, making the BOL an essential negotiable instrument in international trade. This aspect is particularly crucial in scenarios involving letters of credit and other financial transactions where proof of ownership and shipment is necessary to facilitate payment and ensure a smooth trade flow.

  • It functions as a legal document.

    The Bill of lading holds significant importance as a legal document. Customs authorities, port officials, and other regulatory bodies in various countries rely on the information provided in the BOL to process the freight shipment accurately. It contains vital data related to the cargo, such as its description, weight, and value, which is used to assess import duties, taxes, and other fees. Moreover, the BOL acts as a documentary record of the shipping process, helping resolve disputes and legal claims that may arise during transit or at the destination.

Electronic Bills of Lading

With the modernization of the shipping industry, the traditional paper bill of lading is being replaced by an electronic Bill of lading to address its challenges. Electronic BOL offers advantages like cost savings, instantaneous transmission, quick modifications, and enhanced security. However, their widespread implementation requires the consent of all stakeholders and addresses security concerns.


The Bill of lading is critical in international trade and shipping, serving as a contract, receipt, and title for goods transported. It comes in various types, each serving different functions and purposes. As the industry evolves, the electronic Bill of lading offers a promising alternative to the traditional paper system, bringing efficiency and security to global trade. However, its widespread adoption requires addressing security issues and gaining consensus among all parties involved.

With the Citrus App, exporters can manage their bills of lading more effectively. This shipping management app allows you to generate, track, and manage bills of lading. By automating the Bill of lading process, storing and sharing bills of lading, tracking shipments, and managing shipping documents, shipping apps can help you to save time, improve efficiency, and ensure that your shipments are handled smoothly.