Bill of lading
A bill of lading (sometimes abbreviated as B/L or BOL) is a key document used in the transport of goods. As a document of title, it is also an important financial instrument.
At its most basic, a Bill of Lading is a document generated by a shipper, detailing a shipment of merchandise, giving title to the goods, and requiring the carrier to release the merchandise to a named party at the destination.
Bills of Lading are sometimes wrongly called "Bills of Loading"; while the words loading and lading are both derived from the Old English word hladan, lading specifically refers to the loading of cargo aboard a ship.
While there is evidence of the existence of receipts for goods loaded aboard merchant vessels stretching back as far as Roman times, and the practice of recording cargo aboard ship in the ship's log is almost as long lived as the ship itself, the modern Bill of Lading only came into use with the growth of international trade in the medieval world.
The growth of mercantilism (which produced other financial innovations such as the bill of exchange and the Insurance Policy) produced a requirement for a title document that could be traded in much the same way as the goods themselves. It was this new avenue of trade that produced the bill of Lading in much the same form as we know today.
The current regulations on bills of lading were codified by the Hague Rules in 1924.
As a receipt
The principal use of the bill of lading is as a receipt issued by the carrier once the goods have been loaded onto the vessel. This receipt can be used as proof of shipment for customs and insurance purposes, and also as commercial proof of completing a contractual obligation, especially under Incoterms such as CFR and FOB.
The bill of lading confers title to the goods to the consignee noted on the bill. The bill of lading may also be made out "To Order", which confers title to the goods to the holder of the bill of lading
As a negotiable document
Because the bill of lading represents title to the goods detailed upon it, it can be traded in much the same way as the goods may be, and even borrowed upon if desired. This is a very important and common document used in export and import trade globally.
Sea Waybills and Electronic Document Interchange (EDI)
In recent years, the use of bills of lading has declined, as they have been replaced in the most part with the sea waybill. The main difference between these two documents is that the waybill does not confer title of the goods to the bearer, and as a result there is no need for the physical document to be presented for the goods to be released. The shipping line will automatically release the goods to the consignee once the import formalities have been completed. This results in a much smoother flow of trade, and has allowed shipping lines to move towards Electronic document interchange which greatly eases the flow of global trade.
However, for letter of credit and Documentary Collection transactions, it is important to retain title to the goods until the transaction is complete. This means that the bill of lading still remains a vital part of international trade.