Understanding the Ocean Bill of Lading in Shipping

Definition of Ocean Bill of Lading in Shipping

The ocean bill of lading in shipping is a legal document issued by the ocean carrier to the shipper, which allows legal transportation of goods and easy customs clearance. The OBL is a standard and universal document used by shippers, consignees, banks, customs authorities and ports around the global maritime industry. The content of the ocean bill of lading helps specify the details about the goods, importer, and exporter and verify the container in which it is being transported. Digitisation in shipping has made it easier to receive orders and issue bill of lading documents paperlessly. Let us learn more about the ocean bill of lading in shipping. 

What is the ocean bill of lading? 

Shippers transport different types of goods loaded in shipping containers across international waters using vessels. The logistics and transportation process requires the shipper to connect with a shipping line or ocean carrier that operates their ships on various trade lanes. For this, the shipping carrier and exporter make a shipping contract highlighting the transportation details. This document is an ocean bill of lading, in which the shipping carrier notes the goods’ specifications and other details to transport them to its designated port.  

It acts as evidence that a booking has been made with a shipping company and highlights various terms and conditions for shipping. The documented agreement also acts as an invoice or receipt for all the goods meant for transportation. Different shipping parties, such as the importer, customs authorities and border protection, require the bill of lading (BOL) as a legal document to certify shipping. 

How does an ocean bill of lading in shipping work? 

The exporter of goods can contact a shipping carrier directly or hire a 4PL service provider or freight forwarder to make bookings with ocean carriers. After a unanimous agreement about shipping charges and other terms and conditions, the shipping carrier drafts an ocean bill of lading (OBL). Signing and releasing the OBL declares the shipping line’s responsibility towards transporting goods to its destination port. The bill of lading holds details, including the container seal and numbers. Therefore, it is only released at the time of shipment. Once the bill is made, generally by using EDI in shipping, several copies of the OBL are distributed to shipping parties, including the exporter, importer, and any third party if involved, such as a freight forwarder of the bank for cargo insurance.  

The shipper or the consignee can pay, and there are two types. Payment done post-paid basis suggests that the shipping line will get the payment once the goods reach the destination port. The consignee will be responsible for it. A pre-paid means of payment suggests that the responsibility of making payments lies in the hands of the exporter. When initiating the shipment, the carrier picks up the goods, and the carrier and the exporter duly sign the bill of lading. When handing over the goods to the consignee, the bill is again signed by the importer and the carrier. 

What are the functions of the bill of lading? 

The ocean bill of lading is an essential document required for international transportation of goods. Let us learn more about the purpose of ocean bill of lading-  

  1. When given to the exporter, the ocean bill of lading is used as a receipt to confirm that the carrier has received the goods. When given to the importer, the document acts as an invoice and agreement that the goods have been received safely. 
  2. It acts as a document stating terms and conditions, shipping rates, and trade lanes agreed between the shipper and carrier. 
  3. The bill of lading is also used to specify the type of (FOB) free on board in shipping, which addresses the change in ownership of the goods while in transit. 
  4. The customs clearance authorities demand the ocean bill of lading to ensure the goods meet all standard regulatory compliances. 
  5. In the case of cargo insurance in shipping, a bill of lading is a crucial document required by the bank or concerned authority to ensure the safety of goods. 

Content of the ocean bill of lading in shipping 

An ocean bill of lading includes these key information- 

  • Exporter’s information, including their name and address  
  • Importer’s information, including their name and address  
  • Import-Export code  
  • Cargo specification: Quantity, value, weight, and type of goods. 
  • Container number and container seal number 
  • Date of shipment  
  • Terms and conditions  

These are the standard details that must be listed on the ocean bill of lading. More information can be added depending on the purpose and use of the bill of lading. 

Types of ocean bill of lading in shipping 

There are different types of ocean bills of lading based on the terms and conditions listed in the contract. 

  1. Onboard bill of lading (OBL) – This is an OBL signed by the vessel’s owner and issued while loading goods onto the vessel. The OBL specifies that the goods have been stowed onto the designated vessel. 
  2. Clean bill of lading – Upon receiving the shipment at the port of destination, the product carrier issues a clean bill of lading to specify that the goods have safely reached the port in proper condition and have no damages. It is issued after carefully inspecting the shipment. 
  3. Shipper’s order bill of lading – In postpaid payment, the consignee signs an order bill of lading upon receiving the shipment, and a signed copy is sent to the importer’s bank. The bill remains with the bank until the consignee completes the shipping transactions. 
  4. Straight bill of lading – An SBOL is a non-negotiable bill of lading where it is necessary to assign the receiver of the goods, which cannot be changed later. The shipper makes payment for the transportation of goods using ships. 

Ocean bill of lading vs seaway bill  

Both ocean bills of lading and seaway bill are crucial documents required for international transportation of goods. Let’s learn more about their difference. 

           Bill of lading      Seaway Bill 
Use Acts as a contract and title document for goods being shipped. Used as a receipt when deliveries are made between an importer and exporter of the same company or group. 
Nature Based on its type, it can be negotiable and non-negotiable. It is a non-negotiable bill with a specified consignee. 
Applications Required by customs, banks, and other shipping parties. It is a non-commercial documentation that is not applicable in banks. 
  1. Definition – An ocean bill of lading in shipping is an essential shipping document the shipping carrier gives to the shipper to verify the load and transport of goods to their destination port. A seaway bill is an agreement between the carrier and shipper to transport goods to a known destination with a specified consignee. 
  2. Nature of bill – While an OBL can be negotiable and non-negotiable, a seaway bill is essentially a non-negotiable bill that serves as a transport document or receipt for any shipment. 
  3. Use – An ocean bill of lading is used for commercial shipment and as a contract between the shipper and carrier. It is also used by customs authorities to allow safe cross-border trade. A seaway bill is used for non-commercial transactions and does not represent the ownership of goods.  

The ocean bill of lading in shipping is essentially used across maritime shipping as an official document certifying goods’ transportation. 

LOTUS Containers is a shipping container service provider that sells and leases containers worldwide. You can buy used containers of different types and sizes based on your business’s commercial shipping needs.

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