Importing goods into the United States can be an overwhelming process for first-time importers....
What is Bill of Lading and When Do You Need It?
The freight shipping process is like a complex piece of machinery: There are many moving parts, and each one must be carefully maintained and cared for. Each of the documents in the transport process serves a very important purpose, and understanding the purpose can help us remember all the documents we do need. If you are involved in commercial transport then you will likely want to get familiar with a Bill of Lading. The Bill of Lading is essentially the document that ties all the parties together, in the shipping process. The primary thing to note is the parties involved and what their roles are, in order to understand your role in this process. Consignee and Consignor
When shipping across borders, we will find that an exchange occurs between a few key parties.
A consignor is the party that ships the products from one place to another (exporter). They are not necessarily an individual rather they can be any distribution center, factory or other entity holding the contract to ship goods on another's behalf. The ownership (title) of the goods will stay with the consignor until the consignee pays for them in full. This is why proper documentation helps keep things on track and legally correct.
A consignee is the receiver of the goods being shipped (importer), so essentially the customer in the shipping process. They would be the ones who purchased the product thus they would be the owners, once the shipment is paid for and bill of lading signed. They are required to be physically present to collect their shipment, unless it is otherwise specified for any reason.
The Bill of Lading is the legal document which facilitates the exchange between these parties and the carrier or shipping company.
Bill of Lading
The Bill of Lading (BOL) is a required and legally binding document within the shipping process, containing the relevant information about the shipment, indicating that goods have been shipped, where they've been shipped from and where they are going. This document acts as a contract between the parties involved in the transport and shipment process; the consignor and the carrier of the shipment, and then consignee (the receiver).
The Bill of Lading contains relevant details of the products being shipped (weight, contents, rate, terms of payment etc.), and shows that the product was loaded and shipped to the consignee. The reason this document is essential in the transport process is that it provides proof of ownership over the shipment, so the goods can be transferred between carrier and then consignee as the final destination.
There are 3 primary functions to the Bill of Lading:
- Contract between carrier and shipper
- Document of title (ownership) for the goods being shipped
- Receipt for the goods being shipped
This document should be present in every phase of the shipping process. The carrier will have the BOL when collecting the shipment, and then once the product is delivered, it will be handed to the consignee. For this reason, we usually have a few copies issued: for the consignor, consignee and the bank. This means that in the process, we see the consignee as the primary owner of the shipment and thus importer of record, on the BOL. The Bill of Lading travels with the goods and thus between relevant parties. It should be given to the carrier on pickup, and attached to the freight.
The Bill of Lading itself may contain some key information about the shipment, including:
- Dates (pick up or collection)
- Item description (weight, dimensions, materials etc.)
- Type of packaging used
- Information about parties involved (names and addresses of shipper and receiver)
- Special classifications (such as hazardous materials)
- Special instructions for the carrier, if they apply
- Terms of payment and value of shipment
- Special reference numbers or purchase orders (for tracking)
- Freight classification
Bill of Lading is important in the border crossing process. Customs officials refer to the BOL for a few key purposes. They may look at the quantity of the goods, the description of goods, weight, and the date of import/export to determine the exchange rate. You will often see a Customs Invoice being used alongside the Bill of Lading, to process shipments and clear them at the border. If you need to generate a Customs Invoice and Bill of Lading, you can use the simplified invoice generator on Zipments, where you can create the invoice and BOL within minutes, and even send the documents to broker or carrier if you choose.
Shipping is a complicated business, and there’s a lot to know about the process. When there are large quantities or value of product shipped, or many parties involved, documents like the Bill of Lading can help simplify and keep the process on track. Creating your invoices or Bill of Lading automatically can increase efficiency. While the shipping process undoubtedly has many components, planning ahead and ensuring you have all the required documents will help simplify and ease the journey.