The ocean bill of lading serves as both a contract for carriage and a document of title for the cargo. The bill of lading identifies the parties on both ends of the shipment, as well as a description of the goods and routing instructions.
There are two categories of ocean bills of lading that reflect the terms and conditions of the sale of the goods.
The straight bill of lading is used when the shipment is consigned directly to the named consignee and no other party. Typically this type of consignment is used for open account or cash in advance transactions. The consignee can take possession of the goods at arrival by presenting a signed original bill of lading to the carrier.
An ocean bill of lading consigned “to order” or “to order of shipper” is negotiable once it is endorsed on the back by the shipper or their representative. The endorsed original bill of lading is usually sent to the bank in the buyer’s country and held until the transaction is satisfied under a document collection, cash against documents, or a letter of credit. Once the endorsed original bill of lading and other required documents are in the hands of the buyer, the buyer can transfer the bill of lading.
As an exporter, correctly filling out a bill of lading is important if you want to get paid on time. Why? Because it determines the shipment date, and payment date is often associated with shipment date. Financing, too, is often associated with shipment date, as banks often refer to pre-shipment financing or post-shipment financing. Plus, more than 10,000 shipping containers are lost annually. Without a correctly completed bill of lading, that could mean a major headache trying to get compensated for your loss.
