Understanding the Bill of Lading in Maritime Trade

By Jean-Désiré Groguhé, Ph.D.

Maritime transport plays a central role in international trade. In fact, more than 80% of goods traded worldwide are carried by sea. In this context, the bill of lading (B/L) is one of the most important documents in international maritime carriage of goods by sea.

It fulfills several essential functions, both legal and practical/logistical. A good understanding of the bill of lading and all its details is therefore essential for exporters, importers and other players in the logistics chain.

To better understand the importance of the bill of lading in modern maritime trade, it is useful to briefly recall its historical origins, which date back to the medieval period, between the 12th and 14th centuries. At that time, maritime carriage was based mainly on a relationship of trust between the ship’s master and the merchant. In the earliest forms of maritime trade, it was common for the merchant to personally accompany his goods on board the vessel to the port of destination in order to supervise their sale.

However, with the expansion of international trade, particularly in major commercial cities such as Venice and Genoa, this practice became increasingly difficult to maintain. Merchants could no longer systematically travel with their cargoes. It was in this context that they began entrusting their goods to the ship’s master, who in return issued them a written document certifying that he had duly received the cargo for carriage. This receipt, serving as an acknowledgment of delivery, may be regarded as the ancestor of the modern bill of lading, which gradually evolved into the key document of maritime transport and international trade that it is today.

1. Definition of a bill of lading

A bill of lading is a document issued by the shipping company certifying that the goods have been received on board its ship for carriage to a specified port of destination.

It therefore constitutes proof that the carrier has taken charge of the shipper's (or sender's) goods in accordance with the maritime carriage contract. In the practice of international trade, the bill of lading plays a fundamental role in commercial and financial operations.

2. The three main functions of the bill of lading

The bill of lading generally fulfills three major legal functions . First, it is a receipt for the goods, second, it is proof of the transport contract, and finally, it is the title of ownership of the goods.

a. Received of the merchandise

The bill of lading serves primarily as a receipt issued by the carrier confirming that the goods have been received and loaded onto the ship. It contains essential information such as, description of goods, quantity and weight, the apparent condition of the goods, the name of the transport ship, the loading port, the port of destination.

b. Proof of the transport contract

The bill of lading also constitutes proof of maritime carriage contract concluded between shipper and carrier. It specifies transport conditions, carrier responsibilities, the rights and obligations of the parties.

The rules applicable to international maritime transport are often inspired by international conventions such as the Hague-Visby Rules , which govern the liability of maritime carriers.

c. Title of ownership of the goods

The bill of lading also serves as a title for the goods. This means that only the person holding the original bill of lading can claim delivery of the goods at destination. This characteristic allows the document to be used in commercial and financial transactions, particularly in the context of documentary credits .

3. The main information contained in a bill of lading

A bill of lading typically includes several essential pieces of information, including:

On the front :

Name and address of the sender (shipper), recipient's name (consignee), party to be notified (notify party), name of the carrier, name of the ship, loading port, port of destination, description of goods, number of packages or containers, identification marks and numbers, document's issue date, who pays the freight and how? etc…

This information makes it possible to clearly identify the goods, to track their carriage and to deliver them to the correct recipient.

On the reverse side :

The clauses in small print on the back of the bill of lading constitute the general terms and conditions. They encompass all the contractual rules applicable to the transport and form an integral part of the carriage contract, even though they are generally in English and in small print. In the event of dispute, their interpretation is often left to the discretion of lawyers and specialists.

4. The main types or kinds of bills of lading

In the practice of international maritime trade, there are several types of bills of lading.

a. Bill of lading issued in the name of a specific person or to a named person or straight bill of lading.

This bill of lading, also called a named person bill of lading, indicates the precise name of the consignee authorized to receive the goods. This document is generally not transferable. At destination, the goods must only be delivered to the person presenting the bill of lading, whose name is written in the consignee box. This is why it is called a named person bill of lading. Delivering the goods at destination to someone other than the person named on the bill of lading can engage carrier liable.

b. Order Bill of lading

An order bill of lading allows the transfer of ownership of goods through endorsement of the document. It is frequently used in commercial transactions involving bank financing. As the title of the goods, as previously mentioned, the order bill of lading can be traded and transferred to the highest bidder even before the goods arrive at their destination. The last person to hold the document will then take delivery of the goods. In this scenario, the carrier (or their agent) must exercise caution and perform thorough checks before delivering the goods to the last endorser of the bill of lading.

c. Bearer bill of lading

A bearer bill of lading allows anyone in possession of the original document to claim the goods. Due to the risks involved, this type of document is less commonly used today. Indeed, if such a bill of lading is lost or stolen, the thief in possession of it will simply receive the goods from the shipping company.

d. Bill of lading "received for shipment" and "shipped"

There are also two main forms related to the time of emission:

• Bill of lading received for shipment : certifies that the goods have been received by the carrier but not yet loaded on board the ship.

• On Board Bill of Lading : confirms that the goods have actually been loaded on board the ship.

5. Types of bills of lading

From a practical point of view, depending on the contract, maritime carriers use different types of bills of lading, including:

• Port-to-port bill of lading

• Direct bill of lading

• Combined transport bill of lading

• FIATA Bill of Lading

• Bill of Lading NCOCC

• Charter party Bill of Lading

• The Waybill or maritime transport document

• The Master bill of lading

6. The role of the bill of lading in international payments

The bill of lading plays a crucial role in international trade finance, particularly in documentary credits. In this type of transaction, the bank typically requires the presentation of an original bill of lading (on-board bill of lading) before making payment. This ensures that the goods have been shipped in accordance with the terms of the commercial contract.

The rules relating to documentary credits are established by the International Chamber of Commerce.

7. The evolution towards electronic bills of lading

Today, with the digitalization of international trade, electronic bills of lading (e-Bills of Lading) are beginning to develop. These digital documents offer several advantages:

Reduction of transmission times, reduced risk of document loss, improved security and traceability, simplification of administrative procedures,

However, their adoption remains gradual due to legal requirements and business practices that are still largely based on paper documents.

Conclusion

The bill of lading is a fundamental document in international maritime transport. As we have seen, it serves as a receipt of goods, proof of transport contract, and title of goods ownership.

A good understanding of this document, which contains practical and legal information (front/back), is essential to secure commercial and logistical operations in international trade.

G.Pac Consulting Group assists businesses and individuals in better understanding the information contained in this important document for the legal and strategic management of their maritime carriage and international trade operations. The firm offers specialized services and targeted professional training on this maritime transport document to help you secure your international transactions.