Bill of Lading

What is Bill of Lading?

Bill of Lading refers to the legal document that is issued by the carrier to the shipper and it captures all the details pertaining to the shipment, such as quantity, type and destination of the consignment. It serves as the shipment receipt when the carrier hands over the consignment to the intended merchant at the scheduled destination. It must have the signature of an authorized representative of the shipper, carrier and receiver.

The word “bill of lading” is the combination of a Latin word “billa”, which means document with a seal, and a derivative of the old English word “hladan”, which means loading of cargo. So, the literal meaning is “sealed document for loaded cargo”.

It is one of three vital documents that are used in international tradeInternational TradeThe trading or exchange of products and/or services across international borders is referred to as international trade. It frequently includes other risk factors such as exchange rate, government policies, economy, laws of the other nation, judicial system, and financial markets that impact trade between the more for ensuring that the importers receive their merchandise while the exporters receive their payments. It is a legal document that represents the agreement between the shipper and the carrier for the transportation of the consignment.


It serves three primary purposes, and they are as follows:

  1. Evidence of the carriage contract between the shipper and transporter
  2. A shipment receipt for the delivered consignment
  3. A document of title to the goods

Example of Bill of Lading

Let us assume that ASD Inc., a full-service restaurant in Ohio, requires a shipment of fresh fish and meat. Consequently, the restaurant manager raised a purchase order, and the restaurant owner signed it after which it was emailed to the food vendor.

Next, the food vendor procures the fish and meat from the market and then gets in touch with the logistic company. Then, authorized representatives from the food vendor and the logistic company sign a carriage contract or bill of lading.

Next, the logistic company delivers the consignment to the restaurant, and the manager reviews the items in the bill of lading and compares them with the consignment received. On confirmation, the restaurant makes the payment to the food vendor.

Bill of Lading

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Types of Bill of Lading

There are several types available that are classified based on different criteria. Here are some of the most commonly used types:


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  1. Clean: The shipper provides it, and it doesn’t mention anything about damaged goods.
  2. Claused: It implies that there is some damage to the consignment, such as some parts or the entire goods are missing.
  3. Container: It implies that the goods are delivered in a protected container from the origination port to the destination port.
  4. Received for Shipment: The carrier provides it as an acknowledgement before loading the vessel with the consignment.
  5. Through bill of lading: It permits the carrier to transport the consignment through multiple distribution centres, which may include a combination of the ocean and inland bill of lading.
  6. Master: The carrier issues it, and it indicates all the details of the shipment, such as terms of transportation, name of shipper, consignee, consignorConsignorThe consignor is an independent owner who transfers goods to the consignee for sale on their behalf. The consignee acts as an agent or middleman, and the stock's ownership remains with the consignor until the goods are more etc.
  7. Short-form bill of lading: In this document, the terms and conditions of the carriage contract are not mentioned.
  8. Straight: It is a non-negotiable document wherein the endorsee is not granted any better rights than the endorser. From a banker’s perspective, it is not a safe form of carriage contract.
  9. Order: It implies that the delivery has to made according to the additional instructions received from the consignee.
  10. Charter Party: It is a carriage contract between the charterer for the shipped goods and the vessel owner.
  11. Stale: It is issued after 21 days (or other stipulated time frame) from the date of shipment.

Who issues the Bill of Lading?

The shipper’s custom house has to approve the ‘let export’ order for the subject consignment. Then, it is the responsibility of the carrier to issue the bill of lading after confirming receipt of cargo from the shipper. Now, the consignment/ cargo is under the carrier’s custody, and they have the official permission to transport it from the origination port to the destination port.


The freight is the aggregate of all the charges, expenses and costs associated with the transportation of the consignment, which is in accordance with the applicable tariff and the bill of lading. It includes the cost of storage and demurrage. The freight expense is calculated based on the particulars provided by the shipper.

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