What Is a Bill of Lading?

A bill of lading (BOL) is a document used as evidence that a carrier or company received goods from a shipper. It demonstrates the chain of custody from shipper to carrier, creating a contract between two parties for the delivery of the merchandise to the next carrier or purchasing party.

A bill of lading is typically required for many land freight shipments, as well as some by air or sea. It's an important document for every party involved in the transportation of goods. Learn more about BOLs and why they matter.

What Is a Bill of Lading (BOL)?

The bill of lading is a contract between shipper and carrier that describes the merchandise or cargo being shipped. The document indicates the address of the shipper and the customer, the shipping method, any special instructions or terms of delivery, shipping charges, descriptions with order information, and signatures of both shipper and carrier.

• Acronym: BOL

How Does a Bill of Lading Work?

Bills of lading were used in some form as far back as the 16th century to track cargo moved by ships. The contents of containers were inventoried, signed for by the carrier and the shipper, with each new person taking custody signing for the cargo until it was delivered.

Modern adoption of bills of lading exists in every shipping transaction that requires a company to transport something for someone else. This document is filled out by the people that pack a shipping container. They then transfer custody of the cargo to the carrier by means of verification of contents and signatures.

The bill is given a lading number, which is then entered into a tracking database so that the carrier can keep track of the package. This is generally done with electronic scanners that document the location of the package when the lading number or symbol that represents it is scanned.

This document is required by law for certain modes of transportation, and only governed or guided by industry boards or associations in others. For example, airway bills of lading are not specifically required by U.S. law, but since carriers of goods are held responsible for goods in transit in courts, it is beneficial for airline shipping companies to make sure they generate lading bills.

Title 49 of the Code of Federal Regulations for the shipment of household goods states that a bill must be written for motor carriers conducting intrastate commerce when carrying property other than livestock or wild animals

The Federal Motor Carrier Safety Administration further requires all surface freight forwarders to generate lading bills for motor vehicles in intrastate commerce for household and nonhousehold goods. The International Air Transport Association has issued a bill of lading for use in international air freight transport, and the federal government has its own bill of lading requirements.

A BOL Example

Most companies have developed their own bills. For example, the United Parcel Service of America (UPS) has its own freight bill of lading that it uses. The first section of the bill is the shipping information, which details "from" and "to" addresses, third party freight information, the lading number, carrier name, a bar code for scanners, and any charges.

The second section outlines customer order information, such as order numbers, number of packages and the weight of each.

The third section is for carrier information, which is usually specific for different carriers. The shipper and the carrier must both sign that the container or shipment has been validated and contains what was ordered.

Each of the sections is filled out so that the shipper knows the carrier information, and vice versa. The customer is also aware of the shipper and carrier's information so that they can stay informed of the progress of their goods and be able to identify where in the chain of custody any damages or losses occurred. There is also a block for cash on delivery (COD), which indicates any amount of payment due upon the package's delivery.

Types of Bills of Lading

In general, bills of lading fall under two broad categories:

• Negotiable: The carrier is free to transfer merchandise or cargo to other carriers or responsible parties for delivery.
• Non-negotiable: The transfer is only authorized to a specific party, such as the customer or business that ordered the merchandise.

There are a wide variety of BOL types that can fall under either of these categories, depending on the type of goods and industry preferences. Some examples are:

• Master bIll of lading
• Clean bIll of lading
• Claused bIll of lading
• Straight bIll of lading
• Ocean bIll of lading
• Airway bIll of lading
• Inland bIll of lading
• Railway bIll of lading
• Bearer bIll of lading
• Through bIll of lading