Bill of Lading: Definition, Function, Types, and Components

In the freight transport sector, you might handle a document called a bill of lading. A bill of lading is released by a transportation company for the shipper and includes details and information about the goods they deliver.

This important document helps prevent administrative fraud and theft. To learn more about a bill of lading, read this article thoroughly!

What Is a Bill of Lading?

A bill of lading is a crucial shipping document that contains a description of the goods being shipped, their destination, and other important details and information It generally serves three main functions: as a shipping contract, as a legal document of ownership of the goods, and as a receipt issued by the carrier to the shipper.

In this document, you will see some general information as follows:

Shipper, receiver, and/or the notified party’s information.
Types of bill of lading.
Cargo description, including volume, amount, and weight.
Payment requirement.
Unloading and loading port.
Vessel’s name.
Shipping origin and destination.
Vessel’s identity.
Purchase number.
Special instruction (if needed).
Pick-up date.
Packaging types.
Dangerous goods regulation (if sending hazardous goods).

Here is an example of a bill of lading you can learn:

In Indonesia, the legal basis for the bill of lading is regulated in Putusan Mahkamah Agung Nomor 76 K/Pdt/1984. A bill of lading also becomes a transportation agreement between the transportation company and the shipper. This document is issued upon the vessel's departure from the port of loading.

Why Is a Bill of Lading Important?

A bill of lading is a crucial document in cargo shipping, either via land, sea, or air. Here are some purposes of why you need a bill of lading:

Valid shipping documents.
Serves as a basic fulfillment letter. For example, a bill of lading is used to indicate ownership of goods or receipt of goods.
Proof that the carrier company has received the goods from the shipper.
Shows important data related to the shipment, such as the weight of the goods, quantity, destination, receiver/shipper information, and so on.
Proof of ownership of the goods. Upon signing this bill of lading, the shipper transfers ownership of the goods to the receivers.
A shipping contract between the shipper and the carrier containing the terms and conditions of shipment, route, shipping costs, and so on.

Types of Bills of Lading

There are several types of bills of lading based on your cargo, shipping needs, and destination. Here is the complete information:

1. Order Bill of Lading

An order bill of lading is a negotiable document that allows for the transfer of ownership during legal shipment. Due to this flexibility, goods can be sold multiple times during transit.

The security level of this bill of lading is considered moderate, and it can also be used as collateral for trade financing with banks, allowing the bank to control the cargo until payment is received. It is commonly used in international sales, financial transactions involving letters of credit, and deals that involve transactions of multiple buyers.

2. Straight Bill of Lading

Unlike an order bill of lading, a straight bill of lading is a non-negotiable document that cannot be transferred. Therefore, this document is designed for receivers who have paid for the goods in full and must receive them.

This makes the bill of lading more secure because there is no transfer of ownership during the shipping process. It is suitable for direct shipments, returned goods, gifts, and prepaid goods.

3. Bearer Bill of Lading

This bill of lading is the easiest to negotiate because it allows you to transfer the ownership by handing the document, even without the destination party’s name.

As a result, it may carry a higher risk of fraud and security issues.. Therefore, it is only used during emergencies and controlled situations.

4. Through Bill of Lading

This bill of lading is usually implemented for multimodal transport of goods to reach the destination. It explains the entire voyage, including the transportation types. Typically, it is issued by a multimodal logistics company.

5. Inland Bill of Lading

It is used for domestic shipping. In international shipping, the document only applies from the origin to the harbor or airport.

6. Ocean Bill of Lading

An ocean bill of lading is used in sea freight. It informs you about the goods, vessels, terms, and conditions during the voyage.

7. Air Waybill

It is specially issued for air freight. In this document, you will see the terms and conditions for air freight, flight information, and cargo description.

Functions of a Bill of Lading

A bill of lading is important in the goods shipping process. Here are the functions of a bill of lading you must know:

1. Receipt for Goods

A bill of lading serves as a receipt for goods. It indirectly confirms that the goods are already on board the vessel and will be shipped.

2. Ownership Document

A bill of lading also serves as legal proof of ownership of goods. Therefore, if one day the receiver needs proof of ownership of the goods, they can show the bill of lading.

3. Delivery Contract

A bill of lading also works as a delivery contract. The information provided is binding contractual obligations and limitations, including objectives, quantities, and other terms.

That concludes the information about the bill of lading. It is an important document showing a valid delivery contract and ownership of goods.

You can also find the regulations and special treatment for dangerous goods, one of which is chemicals, to ensure that they are shipped safely.

If you are looking for a chemicals and LPGs shipping service, you can entrust it to Chandra Asri Group!

Chandra Asri Group, through PT Chandra Shipping International and PT Marina Indah Maritim, offers logistics solutions using 9 vessels with a capacity of up to 106,650 DWT. This number may increase over time.

In addition to sea freight, we also serve land transportation with PT SCG Barito Logistics and PT Chandra Cold Chain, operating 155 trucks and warehouses.

Always opt for the best logistics service! Entrust your chemical and gas logistics needs to Chandra Asri Group!