Bill Of Lading in Shipping: Importance,

Purpose, And Types

If we search the meaning of the term “bill”, it is defined as a printed or

written statement of the cost for the goods or services delivered or

delivered. The term “lade” means to put the cargo onto a ship or other form

of goods carrier.

Land, ocean and air transport are the modes that use lading bills. Like the

inland bills of lading for goods transported via roadways or railways, a bill of

lading in shipping records the traded goods received on board. It is a

document that establishes an agreement between a shipper and a 

transportation company for the transportation of goods. The Transportation

Company (carrier) issues these records to the shipper.

There are usually two types of bill of lading, the House Bill of Lading and the

Master Bill of Lading. An ocean bill of lading indicates a particular carrier

through which the goods have been placed to their final destination and the

conditions for transporting the shipment to its final destination.

While many confuse the bill of lading with Proof of Delivery, the former is a
contract between the owner of goods and freight carrier, while the latter is
proof that the goods have reached their destination.
The Importance of Bills of Lading
The carrier need not require all originals to be submitted before delivery.
Therefore, the exporter must retain control over the complete set of the
originals until payment is effected, a bill of exchange is accepted, or some
other assurance for payment has been made to him.
A bill of lading is very important when making shipments to move the cargo
or freight from one point or distribution center to the other. On the one
hand, it is a contract between a carrier and shipper for the transportation of
goods, and on the other hand, it serves as a receipt issued by a carrier to
the shipper.

Hence, the bill of lading is considered a legal document which provides all

the vital details to the shipper and the carrier to conveniently process the
freight shipment through different maritime countries and invoice it
correctly.
The original copy of the bill of lading is provided to the carrier, and a copy of
the same should also be ascribed to the packaged freight.
A blank bill of lading template can be downloaded from this link here.

Negotiable and Non-negotiable bill of lading?

Negotiable bill of lading:  In this type of bill, clear instruction is provided to
deliver the goods to anyone possessing the original copy of the bill, which
signifies the title and control of the freight. In this type of bill, the buyer/
receiver or their agent has to acquire and present an original copy of the bill
of lading at the discharge port. Without an original bill copy, the freight will
not be released.

Non-negotiable bill:  This type of bill of lading fixes a specific

consignee/name of the receiver to whom the freights will be shipped and
delivered. It, however, does not itself serve the owner of the goods. Under
this bill, the assigned receiver/ buyers can claim the cargo by confirming
their identity.

https://youtu.be/BYfk3xst93s

Purpose

The bill of lading document is meant to act as a transport document as

evidence of the contract of carriage of the goods. A negotiable bill of lading
has the following legal qualities:
It acts as a piece of evidence for the carriage contract containing the
terms and conditions under which the goods transportation will be
carried out.
It represents a receipt which endorses that the carrier has received the
cargo as per the contract and the goods are received in good
condition.
It is a document of title permitting the sale of goods in transit and
raising financial credit.
Most local and international systems do not consider a bill of lading as
a title document. It provides the right for the delivery to be made to the
possessor.

Different Types
Depending on your shipping destination and type of cargo, there are
different bills of ladings. They can be classified based on “how it is
executed” and “Method of operation”-

Based on execution:

1. Straight bill of lading reveals that the goods are consigned to a

specified person, and it is not negotiable, free from existing equities. It
means any endorsee acquires no better rights than those held by the
endorser. This type of bill is also known as a non-negotiable bill of lading,
and from the banker’s point of view, this type of bill of lading is not safe.
This type of bill is prominently used for military cargo.

2. Open bill of lading – This is a negotiable bill of lading where the name of
the Consignee can be changed with the consignees’ signature and thus
transferred. This can be transferred multiple times. A switch bill of lading is
a type of open bill of lading
3. Bearer bill of lading is a bill that states that delivery shall be made to
whosoever holds the bill. Such a bill may be created explicitly or an order bill
that fails to nominate the Consignee, whether in its original form or through
an endorsement in blank. A bearer bill can be negotiated by physical
delivery. They are used for bulk cargo that is turned over in small amounts.

4. Order bill of lading is the bill that uses express words to make the bill
negotiable. This means that delivery is to be made to the further order of
the Consignee using words such as “delivery to A Ltd. or to order or
assigns. The cargo is only delivered to the bona fide holder of the lading bill,
which must be verified by an agent who issues the delivery order and the
verified bill of lading. The order bill of lading:
–    is the most modern type of bill which is widely used all over the world
–    ensures the safety of delivery of cargo to a bonafide holder of B/L
–    Since the ship visits several foreign ports where the language, practice,
and procedures may differ, the master might be inconvenienced during the
cargo delivery. People might fraudulently collect the cargo.
–    To overcome this difficulty and avoid future cargo claims and litigations,
the Consignee or the holder is required to surrender the bill of lading to the
ship’s agent at the discharge port, who will verify the genuineness of the bill
of lading. When satisfied, the agent will issue a delivery order and the
verified bill of lading. Now any person can collect the cargo from the ship by
surrendering the bill of lading and the delivery note to the ship.

As the bill of lading is made to “to order” of the Consignee, it is a negotiable

instrument of title. This means that the ownership of the bill of lading can be
transferred from one person to another by authorising the signature and
delivery of the bill of lading.
All goods which have not been paid in advance and are shipped under “To
order” of the bill of lading can be categorised into two types:
To Order, Blank Endorsed: not consigned to any named party but ‘To
Order’ of the consignor, with the intended – Consignee’s name given
 under ‘notify party.’ The consignor must stamp and sign (endorse) this
B/L so its title can be transferred.
To Order, Bank: consigned to a bank with the intended Consignee’s
name under ‘notify party.’ The bank endorses the B/L to the intended
Consignee against payment of (or a pledge to pay) the amount of the
accompanying bill of exchange. ‘To Order’ B/Ls are used commonly in
the letter of credit transactions and may be bought, sold, traded, or
used as security for borrowing money from banks or other lenders.

Based on Method of Operation:

1. Received for shipment bill of lading–This bill is sent from agent

/charterer to shipper. The endorsement of this bill ensures that the
carrier has received goods but does not confirm it is onboard the
assigned vessel.
2. Shipped B/L – This bill of lading is Issued when cargo is loaded on
board. It binds the shipowner and the shipper directly.
3. A clean bill of lading states that the cargo has been loaded on
board the ship in apparent good order and condition. Such a bill of
lading will not bear a clause or notation which expressively
declares a defective condition of goods and/or the packaging. The
opposite term is a soiled bill of lading. It reflects that the carrier
received the goods in anything but good condition.
4. Through B/L – This bill of lading is a legal document allowing
direct cargo delivery from point A to point B. The bill provides
transportation of goods both within domestic borders and through
international shipment as it serves as a receipt of the cargo, a
contract of carriage, and sometimes title for the products as well
 5. Combined transport B/L – This bill gives information about cargo
transported in large containers by sea and land, i.e. through multi-
model transport.
6. Dirty bill of lading: If the shipowner objects to “the condition of
the cargo are in good order”, they can include a clause thereby
causing the bill of lading to be “claused or dirty” along with the
remarks as per the finding of the cargo condition. E.g. torn
packing, broken cargo, shortage in the quantity of the goods etc.

Based upon carriers responsibility

1. Port to port bill of lading (also called Ocean bill of lading)

In this kind of bill of ladings, Carrier’s responsibility starts at the port of
loading and ends at the port of discharge

2. Multimodal or Combined bill of lading

This kind of bill of lading covers more than one mode of transfers (for
example, Ocean and rail or Ocean and road) and covers all the modes of
transfers.Carrier has the responsibility from a place of receipt to place of
delivery of the cargo.Carrier can hire/subcontract to carry the cargo in one
or more modes of transfers.

3. Through bill of ladings

The main difference between multimodal and through bill of lading is that
in through bill of lading there is only one mode of cargo movement but
has different legs, like sea and inland waterways.Whereas in the
multimodal bill of lading there have to be at least two modes of cargo
movement (like sea and land).With respect to carrier’s responsibility, in
through bill of lading, the carrier is responsible only for their leg of sea
transport.

Many believe there is no difference between the Multimodal and through

bill of ladings which is not correct.

Sets of Bill of Lading:

This is an old practice where the bills are signed in the sets of three
originals to facilitate the goods are timely delivered even when the
original is lost. They are stated as the first original, second original, and
third original on top of the bill. A duplicate copy with the stamp – “Non-
negotiable” may also be distributed.
The master will sign the original bill of lading, and when the master of
the agent signs the three-bill of lading, all other copies are considered
void. This clause is written on the bill of lading supplied in sets.
This is why the bank, negotiating a letter of credit covering the cargo,
will always ask for the full set of B/Ls. This prevents other B/L holders
from legally claiming the cargo before the bank does.

Bill of lading as Contract Of Carriage:

The contract between the carrier and the shipper is already created
before issuing the bill of lading when the cargo is loaded on the ship.
This is done to safeguard the shipper in case the cargo is damaged
before loading it on board the vessel and to help the shipper in the
claim process. For the carrier and the Consignee, the bill of lading will
act as the actual contract of carriage.

The popularly used conventions and rules which cover the contract of
carriage for carrying goods by sea  :
–    Hamburg Rules
–    Rotterdam Rules
–    Hague Rules
–    US COGSA
–    Hague – Visby Rules

The convention governing the carriage contract is usually stated on the

first page of the bill of lading. Upon booking space for shipment by the
Consignee, the carrier sends a booking confirmation which states 
Clauses sent by the carrier. It will indicate the terms and conditions
governing the booking and carriage contract.

Contents of Freight Bill of Lading:

The bill of lading comprises the following details:

The complete name and official address of the receiver and the
shipper.
The Purchase order numbers, special reference/ invoice or
reference numbers, and special instructions to help the shipper
and the Consignee release the goods for pickup or are accepted
at delivery.
The date of the pickup acts as a reference to track the freight.
 The description of items includes the number of units being
shipped, NMFC freight class, the weight and dimension of the
products, and the nature of the cargo being carried, i.e. dangerous
goods etc.
If the goods are hazardous, the Department of Transportation
hazardous material designation is tagged, and it is cited on the bill
to follow particular rules and requirements when shipping.
The packaging details include crates, pallets, cartons, pills, drums
etc.
Any special notes or instructions for the carrier.

Bill of Lading Tracking:

Different companies use different forms of bill of lading, making

tracking challenging unless the carrier provides a specific tracking
service. A few companies tie up with the shipping carriers to track the
bill of lading for easy trade.
However, these precautions must be taken before signing the bill of
lading.

Electronic Bills of Lading:

With the modernisation of the shipping industry as a whole, the bill of

lading is also modernised to the electronic bill of lading to solve the
issues occurring while using a paper bill of lading under the latest
iteration of the International Group of P&I Clubs. The problem faced
when using a paper bill of ladings are:
The paper bill uses printed bills of lading which are both costly. The bill
has to be couriered, which is an additional cost.
–    The slow movement of the paper-based bill of lading.
–    Carriers are obligated to release the goods on the production of an
original bill of lading, which will slow the process if not received in time.
–    The paper bill can be forged, and delivery of goods against a forged
bill of lading will lead to a huge loss

Advantages of Electronic Bill of Lading:

As there are no papers involved, it saves paper cost as well as the

cost involved in sending the paper to a different destination by
courier
 The electronic bill of lading can be transmitted instantaneously
worldwide in the presence of an internet connection, enabling
quick trade and ease of multiple ownership transfers during the
cargo carriage.
If any modifications are required in the bill, they can be made
quickly and cost-effectively compared to the bill of lading paper
system.
If the electronic bill of lading system is drawn correctly, such as
introducing audit trials, PIN, electronic signature etc., it will be
difficult to commit fraud.

Problems with the Electronic Bill of Lading

It is possible to negotiate and transfer the possession of the paper bill

as it is evidence of the title of the goods. However, this is not
automatically the case with e-bill.
(Source – A paper bill of lading is a title document, enabling it to be
negotiated and transferred as possession of the bill is evidence of title
to the goods. This is not automatically the case at law with an e-bill)
If the electronic bill system is not secured, it can be hacked, and the
details can be manipulated as per the hacker’s convenience, leading to
fraud and loss of cargo.

Implementation of an electronic bill system across the industry needs

consent from all the stakeholders, which will take time.

Frequently Asked Questions

1. What is the purpose of a bill of lading?
A bill of lading is a contract issued by a transportation company to a
shipper that gives out the quantity and types and specifies the
destination of goods being shipped. It is also a receipt of shipment and
prevents the goods from being robbed while transported.

2. Who is responsible for the bill of lading?

It is a legal document issued by a carrier to a shipper. It must be signed

by an authorised representative from the carrier, shipper, and receiver.

3. Why is it called a bill of lading?

The term ‘lading’ means loading and is derived from the old English
word hladan. Lading refers to loading cargo onboard a vessel.

4. What is the main purpose of a master bill of

lading/MBL?

MBL is issued by a carrier and represents the legal contract for the
carriage of goods from one destination to another. Once the carrier
receives the goods, it would issue the document to the party that
booked the freight, the freight forwarder or shipper.

5. When was the bill of lading invented?

According to Researchers and Historians, the earliest bills of lading

date back to Spain in 1544. Before the commencement of air travel,
sellers would send cargo to distant buyers via waterways.
What is Blind and Double-Blind Shipment?
Typically, a blind shipment is one where the identity of the seller is masked
from the buyer by a third party handling the shipment.
An example is when a distributor acts as the intermediary between the
buyer and seller and he does not wish the buyer to find out the actual seller.
In such cases, the documents will show the distributor as the shipper. It is
used to prevent customers from dealing directly with a supplier.
When a seller is not aware of the actual destination address of his
consignment and the buyer is not aware of the origin address, it is called a
double-blind shipment. As in blind shipments, there is an intermediary,
usually a freight forwarder, in this kind of shipping arrangement.
This freight forwarder provides a dummy buyer address to the seller. As the
identities of the seller and buyer are masked in double-blind shipments, it is
the intermediary who has control over the consignment.

What is Switch Bill of Lading?

When we talk about shipping documentation, the first thing that comes to
many people’s minds is the bill of lading. A typical bill of lading is a
document that confirms the receipt of goods by the shipping company from
a shipper, for transport. It also serves the purpose of proving the ownership
of the cargo.

While there are several types of bills of lading, where does the switch bill of
lading come in?

A switch bill of lading is not to be confused with another type of bill of

lading. It is another set of bills of lading issued by the shipping company,
which replaces the first set of originals that was issued by it at the time of
shipment.
A switch bill of lading can be issued anytime once the cargo has left its port
of origin, but before it is handed over to the original receiver. Now, what is
the need to issue a second set of bill of lading?

Why a Switch Bill of Lading?

Many things can change in the course of sending goods from one location
to another. Corrections or changes to an original bill of lading calls for
issuing another set with the correct details on it by way of a switch bill of
lading.
While some very minor alterations are endorsed on the original bill of lading
itself, there may be other changes that require the issuance of a fresh set.

These include changes to the port of discharge, the buyer or receiver, the
description of goods to include its full details or certain specifications, or
the trading terms. Any of these pre-agreed points may have changed while
the goods are in transit.
Shippers sometimes request for a switch bill of lading to disguise the name
of the actual seller or even to mislead the buyer as to the actual country of
origin of the cargo. While not a very ethical thing to do, some shippers
resort to this for various reasons.

A switch bill of lading cannot be issued while the original set is being used
or the buyer has already taken delivery of the cargo.
The first set of the original bill of lading has to be returned to the issuing
shipping company with a signed and stamped request from the party that is
authorized to request the changes, which will be in most cases, the original
shipper. This request should be supported by the consent and authorization
of the buyer, in writing.

Once the switch bill of lading is issued, the first set ceases to be part of the
shipping documents of the particular consignment. The most important
thing here is that there can never be two different sets of bills of lading for
the same cargo.
Global trading and transportation of goods is a dynamic field that
undergoes a continuous transformation. Buyers and sellers negotiate for the
best deals, terms, and conditions for their goods.

Certain terms and conditions covering the goods that have been sold to a
buyer and put on board a ship to its destination may be changed during its
voyage. In such cases, the original trading terms between the seller and
buyer mentioned on the original bill of lading must be changed.

The parties to a trade agreement may sometimes agree to change the

original port of discharge for reasons that are beneficial to both.
Sometimes, to correct an error or to incorporate additional details for
customs clearance purposes, the description of goods may have to be
changed. This is done mostly to meet legal or governmental requirements
of import.
It is also a common practice for the buyer to sell the goods that are in transit
to another buyer. In all the above cases, the original bill of lading has to be
changed to show the new details.

Clearance of cargo at the destination port may get affected if the original
bill of lading is retained and submitted for clearance. In most cases, the bill
of lading will have to be changed to a fresh set showing all the corrected
details. The switch bill of lading that is issued subsequently will show the
correct and changed details to facilitate the clearance of cargo at the new
destination port by the legitimate buyer.

Stack Dates and Switch Bills

One question that often comes up is whether a switch bill of lading is
applicable when a consignment misses its stack dates. No, not at all. As we
have seen earlier on, a switch bill of lading is a replacement for an existing
bill of lading. In the case of missing on stack dates, a bill of lading is yet to
be issued and therefore the switch bill of lading does not apply.

What is a stack date?

Stack dates are dates fixed by the port within which containers booked for
sailing have to reach the port. They usually vary between 2 – 5 days.
Bad planning, incidents beyond the shipper’s control such as strikes, natural
calamities, etc. may all be reasons why a container could not make it to the
port on time. Containers that miss their stack dates are usually not allowed
into the port. It will then have to take the next sailing out of the port by a
different ship.

What Should Not be Changed in a Switch Bill of Lading

While issuing a switch bill of lading, it must be noted that there are certain
things that should not be changed from what is mentioned in the original.
The basic description of the cargo cannot be changed as the contract
to sell and buy is for specific commodities. Any changes to the basic
description would change the contract completely. The description
shown on a bill of lading can be elaborated in the switch bill of lading to
meet certain requirements.
The base quantity of the cargo will also not change as the cargo is
already on its voyage.
 In case of hazardous cargo, the Dangerous Goods Declaration (DGD)
will be the same as it covers the items coming under the dangerous
goods category showing the special packaging and packing
requirements, marks, and labels on them.
The undertaking that all national and international laws have been
followed for transporting hazardous goods will also remain unchanged.
Similarly, cargo that is transported in refrigerated containers (reefers)
will have a set of original instructions and details of the goods. This set
of instructions and details will be the basis for its temperature and
humidity settings inside the reefer container that will remain unchanged
throughout the voyage.
Like all other cargo dimensions, Out-of-Gauge cargo dimensions also
stay fixed. Hence a switch bill of lading for an OOG cargo will not show
any changes to the dimensions of the cargo.
The port of loading will not change on a switch bill of lading as the
voyage already began from a certain port. This will be the case with the
date of sailing as well.
Original clauses on the original bill of lading will also remain unchanged
in a switch bill of lading.

Misuse of Switch Bill of Lading

Can the switch bill of lading be misused? If changes are made without the
knowledge of the buyer, then it is tantamount to fraud. In an ideal scenario,
it is in the buyer’s and seller’s interest to ensure that they ‘get it right in the
first place.
This means that before the signing of a contract to do business, both
parties should discuss and agree on all the aspects of doing business with
each other, including transportation of the goods from the seller’s location
to the buyer’s designated warehouse.
Transportation is a very important factor in doing business. An agreement
should state that any changes to an original document, such as the bill of
lading, can only be with the written consent of the buyer. The insurance
policy covering the transaction can also be made to include eventualities as
a result of misuse of a switch bill of lading.

What Precautions Should be Taken Before

Signing the Bill of Lading?
A Bill of Lading is a receipt for the goods carried on ship, or when
technically put, is an evidence of contract between the shipper and the
carrier. It is a documented title for the goods, signifying that the holder of
the Bill of Lading is the legal owner of the goods it states. These days even
on ships loading oil in bulk, the ship’s masters are required to sign the Bill of
Lading ( B/L). Generally, there are separate departments looking after the
cargo documentation and the authorization for cargo contracts.

However, the Master of the ship is still required to endorse the cargo carried
on board for all legal proceedings. As a general rule, the Master has the
authority by law to sign the Bill of Lading on behalf of the Ship Owner.
Sometimes the legal jargon mentioned on the Bill of lading can be unclear
and confusing. It is therefore, essential that the Master of the ship who is
the owner’s representative should thoroughly go through and if required be
advised systematically before signing the bill of lading.

Following are the points that must be considered before signing the bill of
lading:

The Shipper’s Identity

The shipper is at a contract with the carrier which means that any
information provided by the shipper if untrue could make the carrier liable.
The shipper has to indemnify the carrier and may also have to back freight
in this respect.
Therefore it is essential that the name, identity and addresses are clearly
mentioned on the Bill of Lading.

Port and Date of Loading

The date of loading should coincide with the date as stated in the Mates’
receipt. This provides an indication of the origin of goods and is at times
crucial to determine the customs duty structure or permissibility of the
goods into a country.

Port of Discharge

Unless the charter party for a port to be nominated after the vessel sails to
avoid deviation charges, the ship must precede with all dispatch to the port
of discharge as said. The master must ensure that this falls within the
charter party limits.
Condition of the Goods

Confirm that the goods have indeed actually or physically been shipped on
board the ship. Check accordingly that an accurate description of the
goods is present on the Bill of lading, whether any short-loading or dead-
freights are correctly mentioned. Ensure that all of the conditions must be in
lieu with the Mates’ receipt and the Bill may have a clause to reflect the
actual condition of the goods.

Quantity and Description of Cargo Loaded

Prior to endorsing the Bill of lading, the master should ensure that the
quantity and description of the goods is true to its correct value of that
loaded on board. This can be done by counter-checking the Mates’ receipt
along with the other cargo documents.

Freight
Ensure that the Bill of Lading is not marked “Freight Paid” or “Freight
Prepaid”, as in certain cases, if not true. The master must confirm and verify
the factual position of the freight with the ship owner or shipper.
It is also recommended to get a written confirmation from either of the two.

Conflicting terms

No clause of the Bill of Lading should ever conflict with that of the charter
party terms. If the Bill has to be claused as per the charter party terms then
such references must be clear and unambiguous
Finally, check to see whether the number of original Bill of ladings are in the
set provided as stated.
Do you know any other important points that must be considered before
signing the bill of lading?

Rotterdam Rules – Redefining and Introducing

the Electronic Bill of Lading
Bill Of Lading – In a layman’s language, one who possesses the original bill
of lading is the owner of the Cargo. Bill of lading is a receipt and should not
be mistaken for a contract of carriage. Primarily, it is a document under
which cargo is carried onboard. Also defined as a receipt of goods, signed
by the master on behalf of the ship owner, it constitutes a document of title
to the goods specified in it.
On 11 December 2008, the UN General Assembly adopted the “Convention
of Contracts for the International Carrying of Goods Wholly or Partly by
Sea” and authorized a signing ceremony for the Convention to be held in
Rotterdam, recommending the new convention to be known as the
“Rotterdam Rules”.

The “Rotterdam Rules “consists of 96 articles and has 24 countries,  

including United States of America, who have signed the convention so far.
Spain is the first and only country to ratify the Rotterdam Rules so far.

However, ratification still remains a burning and debatable issue in regards

to its extended liability for the contract of carriage and moreover its
implementation as a new set of rules which needs to be comprehended,
due to its vast text and complicated clauses.
Above all the whole convention if implemented will make a major change in
the working practices, interpretation and ease of operation in the shipping
trade. Despite all these reasons, various ship owner associations are
favoring the rules due to their feature to achieve global uniformity for
liabilities of carriage of cargo and are keen to implement the rules which will
replace the paper documentation involved with Bill of Lading. This would
facilitate e – commerce through use of electronic documentation.

The Rotterdam Rules has created widespread support for the convention
which will come into force one year after the 20 UN member nations have
ratified it.

Speaking about some primary differences between Rotterdam rules

and Hague Visby rules

Hague Visby and Hamburg rules of carriage of goods by sea -deals with
liabilities of carrier (a person who carries objects for others) only from
loading of goods onboard ship up to the discharge of goods ashore or at
the terminal and not up to the actual receiver.

However, Rotterdam Rules extend this liability to door-to-door delivery and

carriage, or can be explained at the start, when the carrier receives goods
from the load port and ends when the goods are delivered.  These rules
provide the flexibility that  the ’ door  to door ’ contract can be limited to
‘port to port’ contract or if parties agree to restrict their liabilities to a
certain leg excluding or including  land legs.
For e.g.:  If a parcel has been shipped from Zhuhai ,China and has to be
delivered to ONGC Delhi ,India, Under Hague Visby rules the liability will
cover Zhuhai as load port and Mumbai ,India as the discharge port since
Mumbai is the port where the goods were discharged. From Mumbai to
ONGC Delhi the local or National laws will govern the liabilities on the
Contract for Carriage of goods. Under Rotterdam rules the liability will cover
Zhuhai as load port and ONGC Delhi as final destination where goods are
actually delivered.

Hague Visby rules comprises of several exemptions including the error in

navigation which limited the liability of carrier. On the contrary Rotterdam
Rules have adopted a fault based approach. They limit the list and scope of
exemptions provided to the carriers. Under these rules the carrier and the
crew including Master can be held liable for damage, losses or delays
arising due to negligent ship management or navigation.

Rotterdam Rules emphasize on liability being imposed on the carrier if it has

been established that the delay, damage or loss occurred due to fault or
conduct of carrier or lies within the period of carrier’s responsibility. These
rules relieve carrier in case of fire or peril at sea if the cause is not related to
carrier’s fault. Hague Visby rules required the carrier to ensure that the
vessel is seaworthy before and at the beginning of the voyage. Including the
above, Rotterdam rules require vessel to be seaworthy throughout the
voyage by sea.

Another highly appreciated feature of Rotterdam rules is they advocate the

prevalence of negotiable electronic transport document or the Electronic
Bill of Lading. The Electronic BL can be transferred and holds the same
liability as the paper form. The rights incorporated in it can be transferred
by the holder to the other person by transferring the electronic transport
record. It is issued only if the parties agree to issue a negotiable electronic
transport document and thus it consequently replaces negotiable transport
document .

The carrier while issuing the electronic record to holder should also include
a statement that it replaces document form and all copies of it. The same
procedure can be reversed to replace the electronic form of document
issued under the convention to paper form .Thus the electronic format of
Bill of Lading if accepted will be of great help in achieving cost reductions,
since paperwork accounts for considerable cost in maritime industry.

Info: As per a research it was concluded that transporting a single

consignment averagely includes 36 original paper documents and
approximately 240 copies from 27 parties. As per an estimate from the
World Bank paper documents waste 7 % of the total value of world trade
which in terms of cost amounts to USD 660bn annually.

Parties often run independent IT systems to prevent data sharing and hence
80 % of the data on the documents needs to retyped , which  is time
consuming and prone to errors and variances.

The rules which are talk of the town these days are waiting for ratification
and once enforced will have far reaching impact on maritime trade and its
legal aspects. Offering e – Documents to replace Traditional Bills of lading is
a major selling point of the Rotterdam Rules. Already, some IT providers,
such as Electronic Shipping Solutions, GSA are offering them because of
their promising capabilities for ease of access to information and how e
commerce will transform relationships between transport service providers
and their users by making it competitive and highly responsive.
Huge response and support is being observed from ship owners too due to
their flexibility in terms of Contract for carriage of goods and the savings
they offer in terms of waste reduction and electronic format.

What is Seaway Bill in Shipping?

A seaway bill is a receipt of goods issued by the ocean carrier to the
customer (also called the consignor or shipper).
It is a contract by which the ocean carrier undertakes to transport the
customer’s cargo in its vessel or vessels, from one point to the other.
It is a non-negotiable contract between the ocean carrier and the customer
to deliver the goods booked by the customer to a specific consignee.
It is this non-negotiable nature of the bill that sets it apart from the regular 
bill of lading.

The seaway bill is usually preferred by companies that deal directly with
each other on a regular basis. There is no involvement of a third party in
such dealings in which instruments such as bank letter of credit, etc. are not
used.
A seaway bill will show a consignor and a single consignee who can receive
the goods at the port of discharge.
Both the seaway bill and bill of lading are issued by the carrier to
acknowledge receipt of cargo and undertake to transport it from one place
to another as per terms and conditions mentioned in the bill.
However, the main difference between a seaway bill and a bill of lading is
that while the former is non-negotiable, the latter is negotiable.

When a bill of lading is made to the ‘order of’ a certain party, it means that
the ownership of the goods shipped under the document is transferable to
a different party.
If the bill of lading is endorsed in the name of another party and the party is
in possession of the original endorsed bill, then this party can claim receipt
and ownership of the goods.

Negotiable V Non-Negotiable Documents

A negotiable document or instrument allows the holder to transfer the title
of ownership of goods to a third party. Normally, there are two parties to
such a transfer – the endorser and the endorsee.
The original bill of lading can change hands through endorsement whereby
the endorser (the original owner of the cargo) transfers ownership of cargo
to the endorsee (the new owner of the cargo as agreed between both the
parties).
The cargo is shipped and delivered to the party who holds the original,
endorsed bill of lading.
A non-negotiable instrument specifies a single party as the owner and this
ownership cannot be endorsed to a third party. The cargo, in this case, is
shipped to the originally specified party.
An endorsement to be valid must be signed by the endorser or holder either
on the face of the bill or its back-side. The transaction is said to be
complete when the instrument is delivered to the endorsee in whose name
the ownership has been transferred

Issuing the Seaway Bill

A seaway bill is usually issued in triplicate – the original and second copies
are given to the shipper or consignor, and the third to the consignee. The
consignor sends the original to the consignee for clearance and receipt of
the cargo into his warehouse.

A seaway bill is a non-negotiable instrument that facilitates easy and fast

clearance of goods through telex release or expresses release.

Telex Release
Sometimes the shipper and customer may agree to do away with the
practice of exchanging the original bill to facilitate timely clearance and
receipt.
Instead, the shipper will surrender the original bill to the ocean carrier or his
appointed agent at origin. When it is surrendered, the carrier will send an
electronic message confirming this to their office at the destination port.
Once the vessel reaches its destination port and the cargo that is
mentioned in the bill is offloaded, the goods will be handed over to the
consignee, after verification of the consignee’s identity, etc.
It is normal practice for the shipper to send the customer a confirmation
message on the surrender of the original seaway bill. This method is called
Telex Release.
An ocean carrier will need all the original copies of the seaway bill to be
surrendered at their office. The clearing agent at the destination only has to
contact the carrier’s office at the destination with the necessary credentials
and documentation to get details of the cargo and its clearance.

An advantage of the telex release is that cargo will be released at the

destination port without having to produce the original seaway bill as they
are already surrendered at the port of origin.
It, therefore, avoids delays that can happen in the exchange of original
documents and subsequent clearance of goods. All that the consignee has
to do is to clear Customs, pay all dues to the concerned parties, and take
charge of the consignment.
The term ‘telex release’ has stuck on to date even though the message to
release cargo without the original bill is conveyed through email or by other
electronic means. Earlier this message was conveyed by sending a telex
message.

Express Release
In an Express Release, the carrier, after completion of the necessary
paperwork and other formalities produces an electronic bill of lading called
the Express Bill of Lading. An electronic copy is given to the shipper.
There is no other physical document in this kind of bill of lading and this is
all that is required for the consignee to clear the goods once the carrier
offloads cargo at his end.
The customer has to just establish his credentials at the carrier’s office.
There is no OBL (original bill of lading) when it comes to an express release.

Telex and express release save time and money. An original bill of lading
may be lost or delayed in transit. The vessel carrying the cargo might have
already reached the discharge port by this time and if it is not cleared within
the stipulated period it could lead to storage or demurrage charges – both
from the port as well as the ocean carrier.
Telex and express release is mostly used with seaway bills. In other words,
these two methods of releasing cargo to the consignee do not work with
bills of ladings that are negotiable documents.
There may be exceptions to this whereby, when a telex or express release is
requested of a bill of lading, it loses its ‘negotiable document’ status. In
such cases, the consignment is delivered only to the consignee named in
the bill of lading and cannot be endorsed to another party.
Contents of a Seaway Bill
What does the seaway bill show? The answer to this is simple; pretty much
everything that is shown on a bill of lading.
However, a key difference between the two is that a seaway bill will always
be titled ‘SEAWAY BILL NON-NEGOTIABLE’.

A seaway bill typically shows the following details, each in their separate
fields:

Seaway Bill Number

This is a unique alphanumeric identification code issued by the ocean

carrier for identification of the consignment and which is usually quoted on
all correspondence related to the shipment.

Consignor

The consignor field shows the name and address of the party who ships the
goods through the ocean carrier to his customer. The consignor is the
shipper or exporter sending goods and as such, this field may also be
labelled as ‘shipper’ or ‘exporter’.

Consignee

In a seaway bill, the consignee is the consignor’s customer. It is the party

who receives goods at the port of destination, through his clearing agent,
after payment of all customs duties and other dues. The consignor, having
sold or transferred the goods to the consignee, cannot change hands
further through endorsements or other means.

Notify Party

In a seaway bill, this field is usually left blank as the consignee is the party
that is to be notified upon arrival of the vessel at the destination. Some
shipping companies may enter the same address as shown under the
‘consignee’, in this field.

Vessel Name and Voyage Number

The name of the vessel on board which the consignment is loaded is shown
here. If the vessel has a voyage number, that will be mentioned alongside
the vessel name.

Place of receipt

The place of receipt is the location where the goods are handed over to the
ocean carrier by the shipper (consignor), which is usually the port of
loading. The goods may also have been handed over to the carrier or its
agent from a different location, other than the load port.

Port of Loading

Port of loading is the port from where goods are loaded on board the ocean
vessel.

Port of Discharge

The port of discharge is the destination port of the cargo where the goods
are off-loaded from the vessel for delivery to or collection by the customer
(consignee).

Place of Delivery

When the ocean carrier is contracted to deliver the consignment to the

address of the customer or an alternative storage location, that is shown
under ‘Place of Delivery’. In such cases, the carrier’s office will make
arrangements to transport the cargo overland or by other means to the
specified place of delivery. The consignee takes delivery of his goods from
this location.

Booking ref./ Shipping ref.

The shipping company may have their booking reference or shipping

reference numbers. If these are available, these numbers are shown under
this field.

Cargo description /Dimensions /Container details

The details shown above is followed by a table that shows the unique
container number (or numbers) and the seal numbers. The description of
packages and the goods contained therein with the total number of
packages are shown in this table. It also contains the gross cargo weight
and measurements. These are normally shown in kilograms (KG) and cubic
meters (CBM).
International Maritime Organization and Lloyds Register Numbers

Another important number shown on a seaway bill is the IMO (International

Maritime Organization) or the Lloyds Register number.
The IMO number is a unique and permanent number that identifies the ship.
A unique seven digits number is preceded by the letters IMO (example
IMO1234567). This number does not change irrespective of changes to the
ship’s owner, flag, or name.
A specialized wing of the United Nations, the IMO is responsible for
regulating shipping activities worldwide that include their safety and
security.
One of the main tasks of Lloyds Register is the classification of marine
vessels. Based in London, it has other business interests that stretch into
engineering and technical fields. The Lloyds online register includes
information on marine vessels besides other assets that have been classed
by the Lloyds Register.

Other Fields on the Seaway Bill

Carrier Endorsements

A seaway bill may include endorsements regarding the mode of freight

payment, whether telex or express release, etc. This field will show the
ocean carrier agent’s endorsements, both at the port of loading as well as
discharge.
It is also common to find details of cargo insurance, inland routing
instructions – if any, and such other details in the seaway bill.

Shipped on Board Date

As the heading specifies, this is the date when the goods are taken on
board the carrier.

Declared Value of Goods

The declared value of goods is the value as shown on the invoice by the
shipper. This value is used for computation of customs duty or any other
taxes that may be applicable in the normal course. The ‘declared value’ may
or may not be printed on the seaway bill.

Place and Date of Issue

The seaway bill is usually issued from the ocean carrier’s office. It is signed
and issued to the shipper or his agent. The place from where it is issued will
be shown on the seaway bill.
The date on which the seaway bill is prepared and released to the shipper or
his agent is the ‘date of issue’.

Signature

The signature field is normally the last field on the seaway bill. This holds
the signature of the ocean carrier’s authorized signatory. It formally binds
him as the carrier of cargo as mentioned in the seaway bill. These days
most bills do not carry signatures as they are generated digitally.

Disadvantages of a Seaway Bill

Upon issue of a seaway bill, the consignee shown on the bill cannot be
changed and goods will only be delivered by the ocean carrier to the
specified consignee. Therefore, the seaway bill cannot be used as a
negotiable document.
Banks and financial institutions do not accept seaway bills from companies
to issue financial guarantees as it does not give them control over the title
of goods. On the other hand, bills of lading, because of their negotiable
nature, are accepted by such organizations to issue letters of guarantee
(letter of credit).