An Interpretation of Knowledge Regarding Bills of Lading

Basic Knowledge and Key Considerations

Bills of Lading (B/Ls) typically consist of 3 originals and 3 non-negotiable copies, though sets of 2 originals and 3 copies are also common. If the Letter of Credit (L/C) specifies a particular configuration, you must explicitly inform your freight forwarder.

In the case of T/T payment terms, theoretically, only one original B/L is required (once the cargo is released, the remaining originals automatically become void, and non-negotiable copies cannot be used to claim the cargo). After receiving the full payment via T/T, when preparing to dispatch the originals to the client, you may consider retaining one original for your own records while sending the rest to the client (this serves as a safeguard in case the B/Ls are lost in transit).

2.The front of the Bill of Lading must display the Carrier's full name. While this is the generally accepted rule, in actual L/C transactions, banks have occasionally accepted and processed documents—leading to successful payment collection—even when the Carrier's name was not explicitly displayed on the B/L (though, theoretically, it should be displayed).

If the Carrier's name is displayed on the front of the B/L, the Carrier company should simply affix its stamp and signature in the bottom right corner.

If the Carrier's name is not displayed on the front, and the B/L is signed by a freight forwarder, the signatory's capacity (i.e., their relationship to the Carrier) must be explicitly stated at the time of signing.

If the Carrier's full name is displayed on the front, but the B/L is signed by a freight forwarder, the freight forwarder's capacity must still be explicitly stated at the time of signing.

3."Shipped" Bills of Lading vs. "Received for Shipment" Bills of Lading:

"Shipped" B/L: A Bill of Lading issued after the cargo has been loaded onto the vessel.

"Received for Shipment" B/L: A Bill of Lading issued before the cargo has been loaded; it merely serves as an acknowledgment that the Carrier has taken custody of the cargo delivered by the Shipper. Consequently, this type of B/L cannot serve as proof of the actual loading date (the date appearing on a "Received for Shipment" B/L does not constitute the shipment date).

A "Received for Shipment" B/L can only be converted into a "Shipped" B/L once it has been stamped with an "On Board" endorsement that explicitly specifies the actual loading date.

4.Bills of Lading must be "clean"—that is, they must not contain any adverse or "unclean" notations regarding the condition of the cargo or packaging.

The consignee and the party to be notified (Notify Party) listed on the Bill of Lading must be filled out in strict accordance with the requirements stipulated in the Letter of Credit.

Issuance, Date, and Number of Copies: The Bill of Lading must be issued by the Carrier, the Master (Captain) of the vessel, or their authorized agent, and the capacity of the signatory must be clearly indicated. Common methods of indication include: "CARRIER," "CAPTAIN," or "AS AGENT FOR THE CARRIER: [Name]."

For Bills of Lading (B/Ls) that bear the printed name of the shipping company (carrier), the freight forwarder typically includes the notation "as agent for the carrier." If the shipping company's name is not pre-printed on the B/L, it must be authenticated by the shipping company's official stamp and signature (the specific shipment you are handling is likely a carrier-issued B/L signed by the carrier itself).

Discrepancies related to the Bill of Lading within the context of a Letter of Credit (L/C): The carrier is not identified on the Bill of Lading. Upon consultation, the official interpretation is as follows: In accordance with Article 23, Paragraph 1 of the Uniform Customs and Practice for Documentary Credits (UCP), a marine Bill of Lading must expressly indicate the name of the carrier on its face. Furthermore, it must be signed—or otherwise authenticated—by the carrier, by a named agent acting on behalf of the carrier, or by a representative of the carrier; alternatively, it may be signed—or otherwise authenticated—by the master (ship's captain), by a named agent acting on behalf of the master, or by a representative of the master.

Based on the identity of the issuer, Bills of Lading can be categorized as follows: A "FREIGHT FORWARDER B/L" refers to a Bill of Lading issued by a transportation company engaged in international cargo transport that does not, however, own any vessels of its own. An "ORIGINAL BILL OF LADING" is the standard carrier-issued document, commonly referred to as a "Marine B/L."

Classification of Bills of Lading

Bills of Lading are classified into the following three types:

First is the Straight Bill of Lading (Straight B/L)—that is, a bill of lading that explicitly lists the name of the consignee. my country's Maritime Code stipulates that a straight bill of lading is non-negotiable; the carrier is legally obligated to deliver the goods solely to the consignee named on the bill.

Straight bills of lading are not widely used in international maritime trade; they are generally employed only when shipping personal effects or exhibition items. (In my very first shipment—settled via T/T—I listed the client's name directly as the consignee, failing to realize the inherent risk: under no circumstances should one issue a straight bill of lading without a guarantee of payment.)

In many countries, the named consignee of a straight bill of lading is permitted to take delivery of the goods without presenting the actual bill of lading itself. Consequently, the bill of lading effectively loses its function as a document of title (control over the goods). Much like an Air Waybill, the consignee need only present proof of identity to claim the cargo. Even in transactions settled via Letters of Credit (L/C), issuing banks are typically reluctant to accept straight bills of lading. Therefore, L/C terms usually mandate a bill of lading with a blank or "To Order" consignee field, thereby ensuring that the bank retains control and possession of the goods.

Therefore, one must not merely remember the non-negotiable nature of a straight bill of lading in isolation; one must also bear in mind that "the named consignee of a straight bill of lading can take delivery without presenting the bill itself, thereby rendering the bill ineffective as a document of title." This is a critically important point! One must grasp the concept comprehensively to avoid errors and financial losses in one's work. Consequently, if you accept only a 30% down payment and agree to a "70% balance via T/T after shipment" payment arrangement—and then issue a bill of lading designating a specific consignee (i.e., a straight bill of lading)—you run the risk of losing both the goods and the payment should the client prove to be dishonest and refuse to pay. Of course, if you have absolute confidence in the client's integrity and are certain of receiving payment, then this caveat would not apply.

Second is the Open Bill of Lading (also known as a Blank B/L or Bearer B/L)—that is, a bill of lading in which the consignee field is left blank (no specific name is listed). This type of bill of lading is freely negotiable without the need for endorsement; the carrier is authorized to release the goods to whoever presents the physical bill of lading. A bearer bill of lading is one in which the name of the consignee is not specified. Whoever holds the bill of lading is entitled to present it to the carrier to claim the goods; the carrier delivers the goods based on the document itself, rather than on the identity of the person presenting it.

In such cases, the "consignee" field on the bill of lading typically bears the notation: "To the order."

Third is the order bill of lading—a bill of lading under which the goods are to be delivered in accordance with the instructions of a designated party specified therein. This is the type of bill of lading most commonly used in current international trade.

To the order of a bank: The "consignee" field on the bill of lading is filled out as "to the order of XX Bank."

To the order of the consignee: The "consignee" field on the bill of lading is filled out as "to the order of A.B.C. Co., Ltd."

To the order of the shipper: The "consignee" field on the bill of lading is filled out as "to the order of shipper," and the shipper executes a blank endorsement on the reverse side of the bill of lading. Depending on the stipulations of the Letter of Credit, this type of bill of lading may also be endorsed specifically (i.e., to a named party). Alternatively, the shipper may choose not to endorse the document; in this scenario, only the shipper is entitled to claim the goods—effectively meaning that the seller retains title to the goods.

Unauthorized delivery without production of the bill of lading (commonly referred to as "delivery without bills") refers to any act by a carrier involving the delivery of goods without requiring the presentation of the original bill of lading.

Currently, regarding order bills of lading and bearer bills of lading, carriers are strictly required to deliver goods only upon presentation of the original bill of lading. If a carrier delivers goods without requiring the original bill—regardless of which party ultimately receives the goods—the lawful holder of the original bill of lading may hold the carrier liable for breach of contract arising from such unauthorized delivery. This principle is consistently applied throughout maritime judicial practice in my country. However, in the case of a straight bill of lading (a non-negotiable bill issued to a named consignee), if the carrier delivers the goods to the named consignee without requiring the presentation of the original bill, can the lawful holder of the original bill of lading still hold the carrier liable for breach of contract? At present, both legal theory and judicial practice tend toward a negative answer to this question. In summary, domestic shippers must fully recognize the inherent risks associated with straight bills of lading. They should not readily accede to requests from trade buyers to issue bills designating the buyer as the named consignee; doing so ensures that, in the event of payment settlement failures—such as those involving Letters of Credit—they retain the ability to hold the carrier liable for breach of contract in cases of delivery without presentation of the original bill.

Form of Bill of Lading Issuance

Telex Release: You are required to provide an original "Telex Release Indemnity Letter." This indemnity letter is essentially a formal declaration stating that the specific shipment in question is to be released to your designated client; it must bear your company's official seal and be transmitted to the freight forwarder, after which you need not concern yourself with the remaining formalities. (Naturally, the prerequisite for a telex release is the secure receipt of payment! Typically, the release is executed only after the funds have been received via Telegraphic Transfer [T/T]). Once the Bill of Lading is confirmed and the shipment has departed, simply await the freight forwarder's transmission of the Bill of Lading copy, which you can then forward to your client.

Split Bills of Lading: 3–4 days after vessel departure (This option is utilized when a client has booked a single container to consolidate cargo from both your company and other factories; for the sake of convenience—and security—separate Bills of Lading can be issued, allowing each supplier to dispatch their respective document directly to the client.)

Consolidated Bills of Lading: Same as above.

Remote Release of Documents: This requires the prior approval of the shipping line.

The Bill of Lading Notify Party: Not to Be Underestimated

On a sea waybill, there is a specific role that is often overlooked, yet its importance cannot be underestimated: the Notify Party. Typically, the destination port information section of a sea waybill requires the entry of details for two—or sometimes even three—entities; these are generally designated as the "Consignee" and the "Notify Party." Some shipping lines' bills of lading may even distinguish between a "First Notify Party" and a "Second Notify Party."

Distinguishing Between the Consignee and the Notify Party

The Consignee refers to the receiver of the goods—typically the client at the destination port, who is the actual buyer. In transactions settled via Letter of Credit (L/C), the Consignee is often designated as the issuing bank. The Notify Party refers to the notification contact—specifically, the party to be notified regarding the shipment's arrival at the destination port. If the client themselves is to be notified, this field may simply be marked "Same as Consignee"; otherwise, it is typically designated as the client's local agent or trading partner at the destination port.

The Significance of the Notify Party

Upon the shipment's arrival at the destination port, the shipping line will immediately issue an arrival notice to the Notify Party. This facilitates the prompt notification of the Consignee regarding cargo collection or other necessary procedures, thereby preventing delays in cargo clearance that could result in demurrage charges, container detention fees, or even substantial fines. Consequently—and to ensure that notification is successfully delivered—some shipments involve the designation of a second Notify Party. This is particularly relevant in L/C-based transactions, where the Consignee listed on the bill of lading is often the issuing bank rather than the actual end-receiver; once all shipping documents have been submitted to the issuing bank, the bank will then notify the actual receiver to proceed with the negotiation process and cargo collection.

The Importance of Accuracy: Do Not Treat This Field Lightly

In many instances, a party is designated as the Notify Party without their prior knowledge or without adequate prior communication. This can result in the arrival notice failing to reach the actual Consignee in a timely manner, leading to delays in cargo collection and the incurrence of additional costs. Therefore, when reviewing and confirming the details of a bill of lading, particular attention must be paid to the "Notify Party" field; it should never be filled out arbitrarily or without due care.

Regarding "To Order" Bills of Lading

Occasionally, one may encounter a "To Order" bill of lading. Generally speaking, a "To Order" bill of lading is a type of negotiable bill of lading (also known as an "order bill"). Its standard format reads "To order of [Name]," signifying that an endorsement from the named party—"[Name]"—is required to transfer ownership of the goods or to take delivery. If the "Consignee" field on the bill of lading simply reads "To order" (without a specific name following it), the implied meaning is "To order of the Shipper," thereby requiring an endorsement from the Shipper. In such cases, the Notify Party serves solely the function of notifying the Consignee of the shipment's arrival and plays no role in the endorsement process itself. Questions Regarding the "Notify Party"

If the Consignee and the Notify Party listed on the Bill of Lading (B/L) are different entities, to whom is the arrival notice typically sent? Generally, the arrival notice is sent to the Consignee. For most Bills of Lading, the information provided for the Notify Party serves as the primary contact information used by the shipping agent at the destination port to reach the Consignee. This is because, in many cases, the Consignee field on the B/L is marked "To Order" rather than specifying a direct, named entity. Occasionally, if the designated Notify Party cannot be reached, the agent will attempt to contact the Consignee directly, or—if necessary—reach out to the Shipper.

When issuing an "Express Release" (Telex Release) for a Bill of Lading, to whom should the release be directed? To the Consignee. Whether the B/L is issued as an original paper document or via Express Release, the fundamental principle remains the same: it signifies the transfer of title to the goods, and this title must ultimately be transferred into the hands of the rightful owner. The entity that truly holds legal title to the cargo is the Consignee.

Is it permissible for both the Consignee and the Notify Party fields on a Bill of Lading to be marked "To Order"? On the surface, this approach appears convenient, as it theoretically allows the title to be transferred to any subsequent consignee. However, in actual practice, shipping lines typically stipulate that the Consignee and the Notify Party cannot both be marked "To Order" simultaneously. Only one of these fields may be designated as "To Order"; this restriction is in place specifically to mitigate shipping-related risks.

A client's Letter of Credit (L/C) requires that two separate companies be listed together in the "Notify Party" field on the Bill of Lading; is this arrangement acceptable? Some shipping lines' Bill of Lading templates feature separate fields for a "First Notify Party" and a "Second Notify Party." If the specific B/L template being used does not include these distinct fields, it is generally acceptable to list both companies collectively within a single "Notify Party" field.

In a scenario where the Consignee is designated as "To Order," can the entity listed as the "Notify Party" on the Bill of Lading take delivery of the cargo? No, they cannot. When a shipping line issues an original paper Bill of Lading with the Consignee designated as "To Order," the Shipper must formally endorse the document before forwarding it to the client. If the Shipper fails to provide this endorsement, the designated Consignee cannot take delivery of the cargo—let alone the entity listed merely as the Notify Party.

A client has requested that the "Notify Party" field on the Bill of Lading be marked "To Order"; is this permissible? It is strongly advisable not to mark the Notify Party field as "To Order." After all, the primary function of the Notify Party is to ensure timely awareness of the cargo's arrival status and to alert the Consignee so that they may take delivery promptly. If no specific entity is designated as the Notify Party, it is generally acceptable to simply enter "Same as Consignee."

What happens if the Consignee on the Bill of Lading is designated as "To Order," while the Notify Party is listed as "Same as Consignee"? If the Consignee is designated as "To Order," it is absolutely mandatory to provide a specific, named entity with valid contact details in the "Notify Party" field. Failure to do so means that once the vessel arrives at the destination port, the shipping agent will be unable to notify the importer or the relevant responsible party. This inability to provide notification will prevent the cargo from being cleared and taken delivery of—potentially leading to severe consequences, such as the confiscation of the goods by customs authorities. If AMS/ACI declarations are required, errors could potentially result in the destination customs authorities imposing substantial fines.

Does a "To Order" Bill of Lading require endorsement by the Notify Party? If the Consignee field on the Bill of Lading specifies "To Order"—without any further qualification (e.g., it does not read "To Order of XXX")—this is referred to as a "Blank Endorsement" Bill of Lading, and it requires endorsement by the Shipper. The Notify Party serves merely as the designated contact at the port of destination and has no role in the endorsement process.

The cargo has arrived at the destination port, but the client claims that the Notify Party's name was not listed in full on the Bill of Lading and is demanding an amendment, arguing that customs clearance is otherwise impossible. Does this error truly hinder the process?

An error in the Notify Party's name will not impede the process. Provided that the Consignee information on the Bill of Lading is accurate, and as long as the Notify Party details do not compromise the authenticity of the document, such a discrepancy will not prevent the client at the destination port from clearing customs and taking delivery of the cargo.

Are a freight forwarder's Bill of Lading and a carrier's Bill of Lading the same thing?

In actual practice, one encounters two types of bills of lading: the Carrier Bill of Lading (issued by the vessel owner) and the Forwarder Bill of Lading (issued by a freight forwarder). A "carrier"—or vessel owner—is a shipping company that owns its own fleet of ocean-going cargo vessels. Given the substantial cost of constructing an ocean-going freighter, companies that possess their own fleets are, by nature, financially robust. In a sense, such companies are also highly reliable; as they are engaged in long-term business, they place great emphasis on their reputation and would not jeopardize their standing for the sake of trivial, petty gains. Consequently, their operational procedures tend to be more standardized and formal. The other type of shipping entity is the freight forwarding company—commonly referred to as a "forwarder." Forwarders do not own their own vessels; in this respect, their nature is somewhat akin to that of a general trading company. After soliciting cargo from various clients, they consolidate these shipments and approach the vessel owner to book the necessary cargo space. We might usefully conceptualize the distinction and relationship between vessel owners and forwarders as analogous to that of wholesalers and retailers, wherein the "commodity" being traded is the cargo space—or "slots"—on the ocean-going vessels. The vessel owner wholesales this cargo space to the forwarder, while the forwarder, in turn, retails it to us.

It is not difficult to imagine that, while dealing with a vessel owner offers greater security, one inevitably encounters a certain degree of "institutional aloofness"—the tendency for a large, dominant entity to be less accommodating to individual clients. Consequently, vessel owners often fall short of forwarders in terms of service flexibility and attentiveness. Forwarders, being numerous and widely distributed, offer great convenience for communication to those of us engaged in foreign trade. Furthermore, they tend to be more willing to cooperate with our specific operational requirements—particularly regarding the aforementioned "special operations," such as the issuance of "antedated bills of lading." Thus, in our day-to-day professional activities, it is far more common for us to conduct business with freight forwarders.

On the surface, the legal efficacy of a Carrier Bill of Lading and a Forwarder Bill of Lading appears similar: we sell the original bill of lading to the foreign buyer, who then uses it to claim the cargo. In reality, however, there are distinct differences. Fundamentally, a bill of lading serves as a "contract of carriage"; when a carrier issues a bill of lading to us, it is tantamount to signing a formal agreement for the transportation of goods. A Carrier Bill of Lading constitutes a direct contractual agreement between us and the vessel owner; a Forwarder Bill of Lading, however, does not. When we entrust our cargo to a forwarder—who subsequently hands it over to the vessel owner—a separate carriage agreement exists solely between the forwarder and the vessel owner. Consequently, the vessel owner bears contractual liability only toward the forwarder, not toward us—the actual cargo owners—because, within the operational framework of a Forwarder Bill of Lading, the forwarder is the party recognized by the vessel owner as the "shipper" (or cargo owner). .

Consequently, if you hold a Carrier Bill of Lading (MBL), you can collect the cargo directly upon its arrival at the destination port. However, this is not possible with a Forwarder Bill of Lading (HBL); instead, you must present the HBL to the port agent to undergo a "document exchange"—that is, to have a Delivery Order issued based on the HBL—before you can proceed to collect the cargo. Of course, from the perspective of the consignee, this merely appears to be an extra procedural step on the surface; it does not hinder the actual collection of goods and therefore poses no significant risk. On the contrary, we can leverage this very feature to better control the title to the goods. For instance, suppose we have already handed the HBL over to a client, only to suddenly discover that the client is engaging in fraudulent behavior—such as potentially withholding payment. In such a scenario, we can enlist the freight forwarder's assistance to instruct their agent at the destination port to "detain" the cargo. This ensures that the foreign buyer, despite holding the HBL, is temporarily unable to take possession of the goods, thereby buying us precious time. (While the destination port authorities cannot forcibly detain cargo without a formal legal justification—and thus can only delay its release for a few days—such a delay can be immensely advantageous to the exporter in the context of international trade disputes.)

In short, should an unfortunate incident occur during the actual transportation of the goods, and we need to seek recourse against the shipping entity, a financially robust carrier (shipowner) is clearly better equipped to assume liability than a standard freight forwarder. Conversely, in day-to-day operations, freight forwarders tend to be more cooperative than carriers; their assistance is crucial when it comes to flexibly handling bills of lading and safeguarding against commercial fraud. Furthermore, freight forwarders often offer highly competitive shipping rates, frequently including various discounts.

Operational Distinctions Between MBL and HBL: The MBL (Master Bill of Lading) is issued by the shipping carrier (shipowner), whereas the HBL (House Bill of Lading) is issued by the freight forwarder.

The SHIPPER (Exporter) transmits the Shipping Instruction (Booking Request) to the FORWARDER, specifying whether the shipment is a Full Container Load (FCL) or a Less than Container Load (LCL).

The FORWARDER books space with the shipping carrier. Once the cargo has been loaded "ON BOARD" the vessel, the carrier issues an MBL to the FORWARDER. On the MBL, the party listed as the SHIPPER is the FORWARDER at the port of origin, while the CONSIGNEE is typically the FORWARDER's branch office or agent at the destination port.

The FORWARDER then issues an HBL to the actual SHIPPER (Exporter). On the HBL, the party listed as the SHIPPER is the true owner of the cargo. The CONSIGNEE field is typically designated as "TO ORDER" in cases involving Letters of Credit (L/C).

The CARRIER transports the cargo to the destination port following the vessel's departure.

The FORWARDER dispatches the MBL to their branch office at the destination port via courier services such as DHL, UPS, or TNT. (INCLUDING: CUSTOMS CLEARANCE DOCUMENTS)

Upon receipt of the Bill of Lading, the SHIPPER submits the documents to a domestic negotiating bank within the stipulated presentation period to settle the foreign exchange. If the transaction is conducted via T/T, the SHIPPER sends the documents directly to the overseas client.

The negotiating bank submits the full set of documents to the issuing bank to settle the foreign exchange.

The CONSIGNEE makes payment to the issuing bank to redeem the documents.

The FORWARDER presents the Master Bill of Lading (MBL) to the shipping carrier to exchange it for a Delivery Order, and proceeds with customs clearance.

The CONSIGNEE presents the House Bill of Lading (HBL) to the FORWARDER to take delivery of the cargo.

An Interpretation of Knowledge Regarding Bills of Lading

Interested in Our Services?