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Lading is the activity or process of loading cargo onto a ship or other vessel. A bill of lading is a document that is provided to the shipper upon pickup and is then given to the receiver upon delivery. In international trade, the document ensures that an exporter is paid and an importer receives their merchandise, as both the shipper and carrier must sign the document upon pickup. Once goods have been successfully delivered, the receiver must also sign the document.
A bill of lading serves as the standard documentation required for the transportation of a freight shipment. Meanwhile, an ocean bill of lading is a similar standard document but required exclusively for freight shipments across international waters. Both documents serve as a receipt for freight services. That is, by signing the bill of lading, the receiver (or their agent) acknowledges receipt of the cargo.
Bill of Lading
A typical bill of lading outlines the specific details of the shipment and includes any pertinent information needed for processing and invoicing. Information on a bill of lading typically includes the names and respective addresses of all parties involved, the total number of shipping units, packing used, and the value of the shipment.
Key Takeaways
- The bill of lading is a document that ensures that exporters receive payment and importers receive merchandise.
- The ocean bill of lading applies to maritime cargo.
- The bill of lading is designed to accomplish three objectives: as a receipt and as confirmation that goods have been received, outline the terms of the contract, and serve as document of title for goods.
- The bill of lading may become obsolete if shippers begin adopting the newly-created transport document instead.
The bill of lading serves as a legally binding document between the shipper and carrier. For example, a California-based car company shipping a truckload of cars to a car company in Massachusetts would require a bill of lading. A gas station in Arizona buying gasoline from Texas will also need of bill of lading.
Ocean Bill of Lading
An ocean bill of lading follows a similar structure to that of a normal bill of lading, outlining the details and specifics of the shipment. However, an ocean bill of lading specifically handles overseas and maritime transportation.
For example, a Japan-based car manufacturer would require an ocean bill of lading for sending a freight shipment to a dealership based in the United States. It should also be noted that in addition to an ocean bill of lading, an inland bill of lading is required if a shipment must also travel on land to reach its shipper for overseas transportation.
The bill of lading is one of three essential documents used in trade. The policy of insurance and the invoice are the other two. The bill of lading might soon become obsolete, however, as new shipping rules have created a competing document called the “transport document,” which could eventually replace the long-established bill of lading.