Without a doubt, all transportation land, air or sea, as long as the destination crosses borders, a bill of lading is required as the de facto transport document. So, what is the purpose of an Airway Bill?
An Air Waybill is evidence of a contract of carriage between the cargo owner and the air freight carrier. It also serves as proof that the carrier has received the goods for transport. But, an air waybill is a non-negotiable document of title. This essentially means the transfer of ownership of goods is not allowed apart from what has been described on the Air Waybill. In aviation logistics, this type of document comes as a Master Air Waybill and also a House Air Waybill.
How an air waybill functions is similar with the sea waybill. Waybills are a faster alternative to the standard bill of lading because you don’t need to surrender an original bill of lading in exchange for the goods if you arrange cargo transportation with a waybill. This is especially important in air transportation where time is sensitive. Let’s learn more about what’s the purpose of an Air Waybill.
Functions of an Air Waybill
There are 3 distinct functions of a contract of carriage that lies true with an air waybill. They are: –
- Contract of Carriage
- Proof of Receipt
- Non-negotiable document of title
Hence, knowing the purpose of an Air Waybill steeps in the 3 functions mentioned above.
Contract of Carriage
Like all contracts, an air waybill details all the terms and conditions of air transportation for the cargo owner. It provides: –
- An indication of a place of departure and destination of arrival
- An indication of the cargo details
- Rules and Conventions applicable to the contract of carriage
- Responsibilities and limited liabilities of all parties to the contract
The Air Waybill is prepared by the carrier to the cargo owner when the cargo has been transferred to the air freight carrier.
Proof of Receipt of Goods
The Air Waybill also doubles as a proof of a receipt of goods, since the issue of the Air Waybill is done after the cargo is received by the air carriers.
This has several implications for the responsibilities of both the carrier and the prevalent cargo owner. First-off, the cargo owner has the duty to provide an accurate description of the cargo transported.
The implication is that the cargo owner is responsible to prepare the cargo to be safe for transportation, and insert all the necessary details of the cargo that will help the carriers decide on the safest methods of transporting the goods.
This means that in the event there are damages to the cargo that happened in transit, the cargo owners will not hold the air carriers responsible for the damage.
If the cargo carrier failed to deliver the cargo as detailed in the contract of carriage, where it is established that the failure is through no fault of the cargo owner. The cargo carrier is liable for any damage claims the cargo owner brings forward.
The Airway Bill serves the purpose of providing evidence that the cargo is received by the carrier at an apparent condition detailed by the cargo owner.
Non-Negotiable Document of Title
The Air Waybill details the consignor and consignee in that document. Whoever is written as the consignee in the Air Waybill is non-negotiable.
In other words, either the consignor, consignee or their appointed agents cannot change the details of the consignee (the final intended cargo owner) or any other details of the air freight such as the place of destination. Simply put, the ownership of the cargo is not transferrable to another consignee.
Why has the waybill been set up this way? This is to assist with the speed of documentation. Airfreight transit time rare go over 3 days, an air waybill’s immutable nature allows parties involved to claim ownership of the cargo with ease. Without the need of an original bill of lading in exchange for the document.
In place of that, a copy of the air waybill produced by the named consignee is sufficient for the carriers to release the cargo. Alternatively, the named consignee also can produce a cargo receipt of delivery that is separate from the Air Waybill to claim the consignment.
Air Waybills are prepared in 3 original copies.
We have tried to look through any contract of carriage laws in order to find out why must there be 3 copies issued. Turns out that it has been an industry practice since the 1920s. This standard is drawn up by the IATA and it is based on the maritime practice of issuing 3 copies.
Conventionally, Air Waybills are prepared for 3 main users, one for the consignor, one for the consignee, and one for the appointed agents (if any) responsible for handling the cargo.
Details on the Air Waybill
- Cargo information including weight, dimension, description, and type of packing
- UN Number in the instance of Hazardous Goods (HAZMAT)
- Shipment Route including Place of Departure, Destination of Arrival and Stoppage Point
- Carrier Details including Flight Voyage Number and Flight Call Sign
Difference between a House Air Waybill and Master Air Waybill
The purpose of either the HAWB and MAWB is similar. The difference is determined by the contracting parties of the Air Waybill.
In a HAWB, the contracting parties are the Freight Forwarder or NVOCC with the cargo owner. Whereas in a MAWB, the contracting parties are the air freight carrier and the Freight Forwarder or NVOCC.
Freight Forwarders and NVOCCs act as intermediaries between the air carrier and the cargo owner. An intermediary, therefore, has to issue its own contract of carriage and undergo the risks and responsibilities of the transport operation.
The value of using a Freight Forwarders and NVOCCs service, however, instead of contracting directly with the air carrier is that cargo owners benefit from other value-added services that are tagged along the with the supply chain cycle. Those services include: –
- Multimodal Transportation (Sea, Air, and Road)
- Cargo Consolidation
- Cargo Reconditioning (labeling, storage, packing)
- Benefit from lower freight rates
Using E-Air Waybill (E-AWB) in place of Air Waybills
According to IATA, in 2017, there are still 50% of the global air trade that still relies on paper documentation, and an air freight shipment can generate up to 30 paper documents.
The industry is gearing towards the Electronic Air Waybill submission, and towards the second half of 2019, two-third of the aviation industry uses E-AWB.
However, due to the idiosyncrasies of the freight forwarders system, local airport capabilities, and airline systems. Getting every stakeholder on board to switch to E-AWB is crucial for the technology’s adoption.
Application of International Air Conventions
There are several Conventions that air cargo logistics potentially adhere to here are a few: –
- Warsaw Convention 1929
- Hague Protocol 1955
- Guadalajara Convention 1961
- Guatemala City Protocol 1971
- Montreal Additional Protocols 1975
- Montreal Convention 1999
As you can see above, there is more than one convention that outlines the terms of a contract of carriage.
How one determines which convention the cargo consignment adheres to is to first determine if the carriage of goods is an “international carriage”. We can determine that by referring to the Air Waybill’s place of departure, destination, and stoppage.
You need to consult the carriers or the appointed agents if you have the necessity to determine the applicable conventions of your air freight. The implications of each individual convention may determine your risks and liabilities as well as damage claim ceiling.