Fundamentally, logistics service providers fill the Bill of Lading. However, as an importer or exporter, it is a good practice to inspect the draft bill of lading first before its confirmation.
Logistics service providers come in many shapes and forms. You may encounter a scenario where your service provider can either be the freight forwarder, shipping agent, customs broker, or an amalgamation of all the above.
Either way, a Bill of Lading is a form of a contract of carriage, between the logistics service provider and the importer or the exporter. There are several factors at play when determining whose job it is to fill the Bill of Lading.
Perhaps these factors are the reason why first-time exporters or importers are confused as to who is it that is actually responsible for the accuracy of the Bill of Lading.
You may also wonder, at the back of your mind, in case there are some inaccuracies in the Bill of Lading, who is responsible for it? What are the consequences of an inaccurate Bill of Lading information?
If these questions are bugging you, we can help you alleviate your concerns with this article.
INCOTERM Determines Contract of Carriage
INCOTERMs, a wonderful reference by the International Chamber of Commerce (ICC), is used predominantly to pinpoint which leg of the supply chain transportation the exporter/importer is responsible for.
Since we have already established that a Bill of Lading is a Contract of Carriage. To determine who is responsible for the Bill of Lading first is the key to determine who should fill the Bill of Lading.
Remember, although logistics service providers are tasked to prepare and fill the bill of lading, it is ultimately the importer or the exporter’s responsibility to ensure that the Bill of Lading is prepared properly.
In other words, although the logistics service providers are responsible to fill the Bill of Lading, the Exporter or Importer faces the consequence if the Bill of Lading is prepared wrongly.
There is a total of 11 INCOTERMs as tabled below (as of 2020). For your easy reference, we also labeled which INCOTERM arrangement points the responsibility of the Bill of Lading preparation to either the exporter or the importer.
|INCOTERM||Description||Bill of Lading Responsibility|
|FCA||Free Carrier (Place)||Importer|
|FAS||Free Along Ship (Port)||Importer|
|FOB||Free On Board (Port)||Importer|
|CFR||Cost and Freight (Port)||Exporter|
|CIF||Cost Insurance and Freight (Port)||Exporter|
|CPT||Carriage Paid To (Place)||Exporter|
|CIP||Carriage and Insurance Paid To (Place)||Exporter|
|DAP||Delivery at Place (Place)||Exporter|
|DPU||Delivered at Place Unloaded (Place)||Exporter|
|DDP||Delivery Duty Paid (Place)||Exporter|
International Chamber of Commerce
As an example, if you encounter a proforma invoice prepared with the term: –
“CIF Port of Shekou”
You know for a fact that the Exporter is responsible for preparing the ocean freight and therefore, responsible for the preparation of the Bill of Lading.
So, you have established who is responsible to prepare the Bill of Lading, it still doesn’t answer the question of who should fill out the Bill of Lading.
Well, it depends on whether the exporter or importer had outsourced transportation to a logistics service provider or not.
Freight Collect or Freight Prepaid
Perhaps a much simpler way to determine who is responsible for the bill of lading preparation is to look for the term “Freight Collect” or “Freight Prepaid”.
The importer or the exporter usually issues a Booking Instruction to shipping lines to prepare the Bill of Lading.
A Freight Prepaid means that the ocean freight rates are prepaid at the Port of Loading; whereas
A Freight Collect means that the ocean freight rates are collected at the Port of Loading.
|Freight Collect||Ocean Freight is collected at Port of Discharge||Importer is responsible for Bill of Lading|
|Freight Prepaid||Ocean Freight is collected at Port of Loading||Exporter is responsible for Bill of Lading|
We need to add in a caveat, the nature of business between the buyer and the seller ultimately determines who prepares the Bill of Lading. Both freight collect and freight prepaid terms do not exactly determine who is responsible for the Bill of Lading, it should be referenced as a guide only
Logistics Service Providers Responsible to Fill out the Bill of Lading
Ok, so an INCOTERM determines who is responsible for the preparation of the Bill of lading. An INCOTERM example below: –
“CIF Port of Shekou”
This establishes the Exporter is responsible to prepare the Bill of Lading.
Some corporations perform their supply chain operation internally, large companies such as Maersk Line, a multinational shipping line, are also in the business of oil exploration. So, it would make sense that Maersk Line prepares the Bill of Lading internally for its own bulk cargo transportation.
Other companies tend to outsource their transportation requirements to third-party logistics service providers.
Hence, it is therefore the outsourced logistics service provider that is responsible to prepare the Bill of Lading.
Here is the flowchart of how a bill of lading is prepared and filled.
Apart from large multinational corporations, companies that outsource its logistics services tend only to perform
- Issuing Shipping Instruction
- Issuing Booking Confirmation
- Loading Empty Container
- Confirming Draft Bill of Lading
- Endorsing and “Releasing Bill of Lading
The rest of the procedures performed in the flowchart are prepared by logistics service providers, albeit the freight forwarder, customs broker, haulage transporter, shipping agent, shipping liner, or NVOCC.
Types of Bill of Lading Filled
Among all the types of Bill of Lading, such as: –
- Telex Release BL
- Switch BL
- To Order BL
To name a few. There are fundamentally two types of Bill of Lading filled.
- House Bill of Lading
- Master Bill of Lading
A House Bill of Lading is prepared by freight forwarders or NVOCC. Freight Forwarders or Non-Vehicle Operated Common Carriers (NVOCC) do not own the vessels and planes required to perform the transportation. Yet, they are able to prepare a legitimate Contract of Carriage.
A House Bill of Lading also functions as a Contract of Carriage. In this instance, it is the freight forwarder or the NVOCC’s task to fill out the Bill of Lading.
A Master Bill of Lading is prepared by the Carriers. Commonly known as a Vehicle Operated Common Carrier (VOCC), they are the owner/charterers of the vessels and planes that move the cargo.
What is the difference between a House Bill of Lading and a Master Bill of Lading?
As an exporter, you have to be particularly aware of accepting a House Bill of Lading. Freight forwarder companies range in shape and sizes.
Unless you are very confident in the financial ability of the freight forwarder to perform its task and adhere to its limited liabilities, you should always request a Master Bill of Lading.
Confirming Draft Bill of Lading Information
As we have mentioned before, although the task of filling out the Bill of Lading lies upon the logistics service providers, the exporter or importer is ultimately responsible for the information filled in the Bill of Lading.
The reason for this is two folds: –
- The logistics service provider will not have the ability to determine what cargo is loaded into the container, only the exporter ultimately knows that.
- Only the exporter has the most understanding of
- The importer/consignee information
- Cargo weight and measurement
So, exporters are fundamentally liable for what cargo is loaded, ergo the information on the Bill of Lading. This is also why the Bill of Lading is always filled with a disclaimer
“Said to Contain”
Information that requires the exporter’s confirmation are: –
- Delivery address
- Container/Seal Number
- Cargo Description
- Weight and Measurement
- Freight Collect/Prepaid Note
- Number of copies issued
- Port of Loading/Discharge
- Vessel Details
Inaccurate Bill of Lading Information Filled
What happens if the description on the Bill of Lading is inaccurate?
It depends entirely on the nature of the inaccuracy. Some inaccuracies can be a misrepresentation of the cargo detail, others can be honest typing errors or other non-crucial errors.
For honest mistakes and errors, the bill of lading can be amended. The process of amending the bill of lading lies in who is responsible to submit the shipping manifest.
Amending the bill of lading requires the logistics service provider to amend the shipping manifest as well.
Bill of Lading amendments often comes at a cost. Depending on who is to blame for the error, the party responsible has to absorb that cost.
However, if the bill of lading error can be construed as misrepresentation, the customs officer has to approve of the amendments.
We hope that this article can help you gauge roughly who is supposed to fill out the bill of lading. The straight forward answer is the logistics service provider, but the accuracy of the bill of lading detail is the responsibility of the parties of the contract of carriage.
How to Read a Bill of Lading
When is a Bill of Lading Issued?