Thankfully, 99% percent of the Bills of Lading will come in roughly the same format. So, to understand how to read a Bill of Lading, you just need to understand one format. The most important detail in the Bill of Lading are: –
- The Shipper (Exporter)
- The Consignee (Importer)
- Cargo Details
- Port of Loading and Discharge
This pertinent information is displayed prominently in the Bill of Lading where the column sections are the largest.
From the perspective of an importer or an exporter. You need only to focus on those four key details to get the general gist of the Bill of Lading.
Nevertheless, the Bill of Lading is a multi-faceted document, a document that is referred to not only by importers and exporters but also shipping carriers, freight forwarders, and customs officers, to name a few.
Are we better off if we can understand fully what the Bill of Lading is by reading every detail tabled in that document? We argue that it is for all parties.
Many importers and exporters tend not to focus on other aspects of the Bill of Lading, we want to provide you with a general idea of what contract you are signing into, by being able to read the Bill of Lading like a pro!
Table of Contents
The Important Details on the Bill of Lading
To repeat what we have mentioned above, the four most important details on the Bill of Lading are
- The Shipper Details
- The Consignee Details
- Cargo Details
- Port of Loading and Discharge
Here is a sample of Bill of Lading that you will most probably stumble upon when you are arranging ocean freight transportation. This format is pretty much similar as well if you are arranging an air freight too.
Shipper Details
The shipper, also known as the exporter, is also the primary exporter of the cargo listed in the Bill of Lading.
To elaborate further, the shipper is the main contracting party with the shipping agent or the freight forwarder.
Similar to any contractual agreement, since the Bill of Lading acts as a contract of carriage, the shipper detail has to be displayed on the Bill of Lading. To signify to whom the carrier has the contractual obligation.
The shipper detail has to include the shipper’s address. Sometimes, there are other details displayed on the shipper detail column such as: –
- Tel/Fax Number
- Person in Charge
- Company Registration Number
Consignee Details
The Consignee Details is displayed at the bottom of the shipper detail, but on the top left of the Bill of Lading.
Consignees are buyers of the cargo. Therefore, it stands to reason that the importer is also a very important detail that cannot be left out on the Bill of Lading.
Similar to the shipper detail, the consignee details always include the consignee’s business address. Other details displayed include: –
- Tel/Fax Number
- Person in Charge
- Company Registration Number
We did mention that a Bill of Lading is a contract of carriage between the exporter and the importer. But there are exceptions to that case too.
Some shipments are arranged by the importer themselves; this is indicated by the INCOTERM of the transportation arrangement.
Hence, the same rationale applies where the contractual parties of the contract of carriage have to be mentioned prominently on the Bill of Lading.
Trade Financing (To Order)
In instances where the consignee involves a trade financing facility, such as a bank, the bank is responsible to pay the shipper’s invoice on behalf of the consignee, albeit at a financing fee.
For this case, the rightful consignee is actually the financing bank instead of the actual consignee. Therefore, the bank is indicated on the Bill of Lading.
“To Order of Standard Chartered Bank”
There are other layers of administrative procedures that the consignee has to undergo. The underlying concept is that the bank has to approve the shipping documents before remitting the invoiced payment to the shipper.
This is why the consignee detail indicates the bank detail instead of the consignee.
Cargo Details
For any shipment, albeit containerized, or breakbulk cargo. The shipping carrier has to know what cargo is transported and to who is the rightful cargo owners.
This establishes a level of accountability. Carriers have to prepare for any contingencies.
For example, if the cargo is labeled as dangerous goods, the carrier needs to stow the container in strategic locations that provide accessibility to rescue crews and also far away from other reactive cargo that may cause an explosion.
If there is any accident that occurs, the shipping carrier needs to establish contact with the cargo owners as well, hence the importance of cargo details displayed on the Bill of Lading.
There is, however, more nuances into read a bill of lading’s cargo detail
Typically, the cargo details will be written as such: –
1 x 20’ S.T.C 20 Wooden Pallets of Manufactured Glass
1 x 20’: denotes that the contract of carriage is for 1 x 20’ container, a bill of lading can cover more than 1 container.
S.T.C: signifies “Said to Contain”, it is a term used by shipping agents, to separate its responsibility of checking the cargo container’s load and laying that responsibility to the shippers themselves.
Wooden Pallet: the form of packaging has to be mentioned in the Bill of Lading as practice. This is an industry practice that serves the purpose of all parties to know how the cargo is stored.
Some countries require all wooden materials to undergo fumigation, which includes the packaging as well.
Cargo Description: in this example, Manufactured Glass is the underlying commodity transported.
Cargo descriptions are intentionally vague in order to save space. However, it cannot be too vague as it may seem as the shipper is not being fully forthright with what cargo is being transported.
Additionally, cargo description has to match other shipping documents such as: –
- Bills of Lading
- Invoices
- Packing Lists
- Permits
- Certificate of Origin.
Any vagilities will alert local customs officers when the undergoing customs clearance.
Weight and Measurement
- Gross Weight – total weight of the shipment including the packaging (in kg)
- Net Weight – the weight of the underlying cargo only (in kg)
- Measurement – dimensions of the cargo (in m3)
Port of Loading and Port of Discharge
Well, this one is rather obvious. The details of the Port of Loading and Port of Discharge are normally displayed here: –
It is however the most overlooked detail when we read a bill of lading.
Port of Loadings and Port of Discharges are normally denoted with 5 alphabets. This short-form differs between air freight and sea freight. For example: –
USLAX
US – denotes the country origin
LAX – denotes Los Angeles Port
Compared to Air Freights, the IATA code for Los Angeles International Airport is LAX, whereas the ICAO code is KLAX.
Another example would be
SGSIN
SG – indicates the country of origin (Singapore)
SIN – Singapore.
The short code SGSIN is for the Port of Singapore
Other Important Details on the Bill of Lading
Notify Party
Notify Parties are usually either: –
- The clearance agent
- Other interested parties such as the trader information
Either the shipper or the consignee can instruct the shipping agent/carrier to indicate a notify party.
Certain shipments have multiple parties involved in the sales and purchase of the cargo, for instance, cargo may be imported by a third-party trader. However, the consignee may want to receive the cargo that accompanies an original Bill of Lading, therefore the trader can be indicated as a “Notify Party”
In most countries, an appointed customs broker or freight forwarder is tasked to manage the arrangement between the consignee and the shipping agent. To ease administration processes, the consignee may opt for the freight forwarder details be displayed on the “Notify Party”
Once the vessel berths at the port of discharge, the shipping agent will issue an “Arrival Notice” to both the consignee and the notify party.
Terms and Conditions
The terms and conditions are displayed at the back of the Bill of Lading copy.
These conditions display the limited liabilities of the shipping agents and more importantly, the total amount the shipping carriers are responsible for (paid in Special Drawing Rights) if the carrier is negligent in handling the cargo transportation.
The Terms and Conditions are pretty standard for all Bill of Ladings, albeit a House Bill of Lading or an Original Bill of Lading. Therefore, as a shipper or a consignee, it is best that you read through the bill of lading terms and conditions carefully to understand what the terms of the contract entails.
Number of Bill of Lading Issued
As the name suggests, this section notes how many Bill of Lading is issued. The normal practice of the shipping agent is to issue 3 original copies.
- 1 intended for the shipper
- 1 intended for the freight forwarder (if any)
- 1 intended for the consignee
The contracting party with the shipping agent can indicate as many bills of lading as they want, nevertheless, it comes at a monetary cost to the contracting party.
Freight Prepaid/Freight Collect
Freight Prepaid/Freight Collect generally indicates who should be responsible to pay for the freight rate.
Freight Prepaid indicates that the freight arrangement is paid for by the shipper.
Freight Collect indicates that the freight arrangement is paid for by the consignee.
Bill of Lading Number
The reference number that the shipper, consignee, freight forwarder, customs broker, or any permit issuing agencies referred to when handling the underlying shipment.
This serves as an anchor datapoint, where all contracting parties refer to indicate what shipment is under process.
More Info
We only scratched the surface. But for interested parties, particularly the shipper and the consignee. These are the pertinent information that you must be able to read and understand the bill of lading to: –
- Avoid any ambiguities and misunderstanding in the supply chain
- Understand your rights as a contracting party with the shipping agent
Here are some other articles we have written to elaborate further about the fabled Bill of Lading document.
To Order Bill of Lading
Through Bill of Lading
Bill of Lading Terms and Conditions
