Bill of Lading (B/L) Types & Uses

Bill of Lading (B/L)

• Used when goods are shipped by sea
• Shows goods received for transport
• Contains the contract between the shipper and the carrier
• Divided into three types based on how it's issued

Original B/L (Original Bill of Lading)

• The original document must be presented by the consignee to receive the goods
• Typically, three original copies, along with three additional non-negotiable copies, are issued
• Copy 1 is sent to the consignee to receive goods at the destination port
• Copy 2 is sent to the bank to prove the transaction under the L/C (Letter of Credit)
  • In an L/C transaction, a bank acts as an intermediary, ensuring the buyer pays when the seller provides all required documents, including the original bill of lading
  • This protects the seller, because if the buyer doesn't pay, they won't have the B/L to collect the goods
  • The bank only holds the B/L as a payment guarantee
  • When the buyer pays, the bank transfers the B/L, transferring the right to claim the goods
• Copy 3 is kept by the shipper for record-keeping
• An original copy ensures the shipper can ask the carrier not to release the goods if issues arise
• If only a non-negotiable copy is kept, it has no legal value for controlling the goods
• Keeping one original copy gives the shipper more control in certain situations
• Three original copies are transferable documents
• Non-negotiable copies are for storage and reference

Seaway Bill (Electronic or Non-Negotiable Bill of Lading)

• Delivers goods using system information, no presentation of the original document is required
• Used when the relationship between seller and buyer is trustworthy
• Simplifies administrative procedures
• Non-negotiable copies are copies of the original bill of lading that do not have transferability and cannot transfer ownership
• Original copies are transferable and serve as proof of ownership to claim goods
• Additional non-negotiable copies are for storage, reference, or exchanging information without affecting ownership rights
• A Seaway Bill does not require an original copy because it is not a document of ownership
• With an Original B/L, the consignee must present the original copy to collect the goods
• With a Seaway Bill, the carrier only needs to check system information, confirm the consignee, and deliver goods without the original copy
• The reason is that Seaway Bills are used in high-trust transactions with no need to transfer ownership through multiple parties
• No need to send the original copy with a Seaway Bill
  • Original B/L is often sent via mail or courier (DHL, FedEx, etc.) to the consignee which is time-consuming and risky
  • Carriers using seaway bills need only check system information to deliver the goods immediately
• There is no risk of losing the original B/L
  • If the Original B/L is lost, the consignee must apply for a reissue that can take weeks, with bank guarantee fees
  • A Seaway Bill has does not have originals making it impossible to lose
• Faster and more cost-effective
  • Releases goods faster
  • Reduces document courier costs

Switch B/L (Switch Bill of Lading)

• A replacement for the original B/L, typically to hide the original seller's information
• Used in intermediary transactions (trading) to prevent the final buyer from knowing the original seller, protecting the intermediary's interests
• It's legal if only commercial details change (shipper's name, consignee, port of loading, etc.)
• Illegal if it changes the quantity of goods, type of goods, or delivery date to deceive or evade taxes

Air Waybill (AWB)

• Transport document issued by the airline when receiving goods for air transportation
• Confirms goods are received for transport and contains information about the shipper, consignee, route, and quantity
• Has multiple copies, with at least three original copies
• Not a document of ownership, meaning it can't be transferred like a Bill of Lading (B/L) in sea transport
• Two main types, divided based on the issuing party:
  • Master Airway Bill (MAWB)
  • House Airway Bill (HAWB)

Master Airway Bill (MAWB)

• Issued by the airline
• Records details of the shipper (sender) and consignee (receiver)
• Used when the shipper works directly with the airline or when a freight forwarder consolidates multiple small shipments

House Airway Bill (HAWB)

• Issued by the freight forwarder
• Used for Less than Container Load (LCL) or consolidated shipments
• Records details of the real shipper and real consignee (unlike MAWB)
• Only serves as a receipt and evidence of the transportation contract between the shipper and airline, despite the use of multiple copies
• It does not prove ownership of the goods, so you cannot transfer the ownership of goods by transferring the AWB, unlike an Original Bill of Lading in sea freight

Commercial Invoice

• Also known as a trade invoice
• Used for payment between importers and exporters
• Issued for the buyer to pay the amount on the invoice to the seller
• Includes information about the characteristics of the goods, quantity, delivery terms, value, payment method, and shipping terms
• Plays an important role in international trade
  • Used for customs declaration to determine customs duties and fees on imported goods
  • Helps in payment transactions by providing clear transaction details
  • Enables the buyer to verify information on quantity and value of received goods

The information on a commercial invoice includes

• Seller and Buyer Information with names, addresses, and contact details
• Description of Goods including product name, quantity, unit price, and total value
• Invoice Number as a unique code
• Issue Date
• Payment Terms (e.g., immediate, deferred payment)
• Delivery Terms, often based on Incoterms
• Shipping and Insurance Costs
• Total Amount including taxes, shipping fees, and insurance

Packing List

• Details goods being packed for shipment, including sender and recipient information, item descriptions, quantities, sizes, weights, and packaging details
• Includes shipping information, package identification numbers, and special requirements
• Confirms shipment accuracy, assists with customs clearance, manages the shipping process, and minimizes errors

Certificate of Origin (CO)

• Certifies the origin of goods in international trade
• Provides essential information like exporter/importer details, goods description, origin country, and transportation details
• Required by customs authorities to determine tariffs and trade regulations
• Helps ensure compliance with customs regulations, qualifies goods for preferential tariff rates under trade agreements, and serves as proof of origin
• Typically required for goods:
  • Exported to countries with Free Trade Agreements (FTAs)
  • Subject to high import tariffs
  • Special or sensitive (food, pharmaceuticals, cosmetics, agricultural products, animals)
  • Automotive, electronics, and machinery industries
  • Industries with strict controls (defense, strategic products, energy)
  • Required by importing countries
• Applied to products needing origin confirmation to ensure correct tariffs, trade preferences, and compliance

Certificate of Quantity/Weight

• Confirms the quantity or weight of goods being shipped
• Provides information such as the quantity/weight of the goods, description, lot number, exporter's details, and issuance date
• May be part of shipping documentation or integrated into transport bills
• Important for customs clearance, verifying cargo details, resolving disputes, and optimizing shipping processes
• Ensures transparency and accuracy, facilitating smooth international trade