What is a Through Bill of Lading?

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The concept of a Through Bill of Lading is relatively simple, it is a reference to the use of multimodal transportation, where one carrier provides the full-length services via more than one transportation mode. Subsequently, a through bill of lading is then issued by the main carrier that covers multiple modes of transportation.

We have to familiarize ourselves with the function of a Bill of Lading. It is a contract of carriage issued by the main carrier or third-party logistics providers (3PL) that serves as a document of title of the underlying cargo. It indicates that either the main carrier or the 3PL has possession of the goods in transit, and is responsible for the goods in transit until the intended consignee takes possession of the goods.

While the concept of a bill of lading is covered extensively in this site, it is very important to have an understanding of the functions of a bill of lading first before getting to know the variations of the bill of lading.

Additional Reading: Terms and Conditions of a Bill of Lading

Besides, a BL as a shipping document applies to various modes of transportation. It is most commonly applied in sea transportation, inland waterway transportation, and air transportation. Rail transportation and road transportation are commonly “Last mile” transportation where a BL can be substituted with any forms of a consignment note.

As an example, TRACECA participating countries use a consignment note CIM/SMGS for its railway transportation documents.

So, what if the transportation is arranged by a single contractor, and utilizes multiple modes of transportation to reach its final destination?

Multimodal Transportation with Through Bill of Lading

For the shipper or the consignee, it may not be feasible to have 1 bill of lading per transportation, it poses significant administration works, and not to mention the liability of having multiple contracting parties.

In an event where the cargo is damaged or lost in transit, the cargo owner will have a difficult time investigating the root cause of the damage to raise a damage/loss claim, as there are multiple transportation parties involved.

Through Bill of Lading and Multimodal Bill of Lading

The logical way of curbing all those cumbersome documentation works is to engage with a single logistics service provider. From our perspective, a through bill of lading and a multimodal bill of lading carries the same meaning, it is a reference to the same document.

The key differentiator is worth stressing, that a bill of lading is for a single mode of transportation, and a through bill of lading, or a multimodal bill of lading is for multiple modes of transportation. The main logistics provider as the contracting party is the issuer of the through bill of lading.

There are 4 components of a multimodal transportation: –

  1. International Transport
  2. At least two modes of transport
  3. Performed by a single multimodal transport operator
  4. Single Document

Disadvantages of a Through Bill of Lading

On the flip side, organizing freight transportation across multiple modes of transportation, while at the same time accepting a single document of title indicates two possible scenarios: –

  1. Either the various transportation provider agreed on uniform standards and conditions of a contract of carriage; or
  2. The main carrier has physical ownership of the multiple modes of transportation (air, sea, land) and therefore can dictate the terms and conditions of the contract.

Either way, both scenarios require a lot of pieces to fall in place, not to mention a level understanding between international countries. Particularly when intermodal transportation involves multiple countries, all the involved nations have to have some sort of agreement to remove trade barriers enough so to facilitate intermodal transportation.

All things considered, multimodal transportation involves many parties singing the same tune together to make it work, and consequentially, the more parties are involved in a through bill of lading, the rarer it is to organize it under a single bill of lading.

Examples of a Through Bill of Lading

Through Bill of Lading

With the standards set by the FIATA (International Federation of Freight Forwarder Association), a multimodal bill of lading or a through bill of lading can be issued for the following transportation

  1. Road – Air – Road
  2. Road – Sea – Road
  3. Road – Sea – Road – Air – Road
  4. Road – Inland Waterway – Sea – Road
  5. Road – Sea – Rail – Road
  6. Road – Rail – Sea – Road
  7. Road – Rail – Sea – Rail
  8. RO/RO
  9. Piggyback

Specifically speaking, FIATA has two documents that cater to the contract of carriage for multimodal transportation: –

  1. FBL (negotiable FIATA Multimodal Transport Bill of Lading)
  2. FWB (non-negotiable FIATA Multimodal Transport Waybill)

FIATA Multimodal Transportation Documents

FBL is akin to an original bill of lading, whereas an FWB is akin to a seaway bill. The difference is, however, is the issuing party of an FBL or an FWB is the freight forwarder.

Recall that we interject that, to facilitate multimodal transportation, either various parties of the transportation have to agree to a set of conditions of transport or the main carrier has physical ownership of multiple modes of transportation.

Both scenarios require a lot of resources or political strength to facilitate transportation. The third option, or the easier option, is for a freight forwarder to be the main logistics service provider, hence the notion of a third-party logistics provider (3PL).

Engaging a 3PL allows a cargo owner to not worry about the ebbs of transportation, and transfer the risk and responsibilities to the 3PL provider.

The 3PL then engages multiple parties, i.e. the rail transporter, ocean carrier, land transporter and packages it nicely to an FBL and sells its service to the cargo owner.

The more common use of a Multimodal Transportation is for: –

  1. The transportation for locations with limited access (landlocked countries – Austria, Azerbaijan, Belarus, Bhutan, etc…)
  2. The transportation where the INCOTERM suggests that one party is responsible for the significant portion of the transportation (Ex-Work, DDU, DAP, etc…)
  3. The transportation of cargos that requires special handling (Out of Gauge Cargos, Project Cargos, RORO vehicles, etc…)

Key Takeaway

A through bill of lading is the same as a multimodal transport bill of lading, the primary feature is that more than one mode of transportation is arranged under one bill of lading.

As a cargo owner, an issue of a through bill of lading has to come from a reliable, if not a reputable freight forwarder or Vehicle Operated Common Carrier, the litmus test every cargo owner has to undergo is to ask themselves, whether the service provider is in a position of strength to provide such service and whether the service provider can fulfill dutifully its contract of carriage.

As a freight forwarder, an issue of a through bill of lading means that you are willing to take the risks and responsibilities associated with the contract of carriage. Hence, issue a through bill of lading with great care and caution.

Resources:-

fiata.com/about-fiata/fiata-documents.html
traceca-org.org
https://www.asean.org/wp-content/uploads/images/2015/september/transport-facilitation/batch-2/Multimodal-Transport-Law-and-Operations/Chapter%203_ASEAN%20disclaimer.pdf

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