This particular piece is a comprehensive overview on the Bill of Lading. In it, you will learn everything you will need to know about a Bill of Lading. It is the explicit goal of the blog to help you learn all the information you need for this important document and your sourced Chinese products.
Normally, the buyer and seller with have freight forwarders handle all of the paperwork and logistics with the shipping companies. Shipping companies do not work with either buyers or sellers as a general rule.
You, as a buyer, do not need a master BoL from the shipping company. You will instead need a house BoL from the freight forwarder. There is a good bit to understanding everything about the BoL and Telex Delivery. Does this sound like a lot of information? It actually is, but it is not hard to understand.
What is the Bill of Lading?
The Bill of Lading, sometimes called the BL or BoL, is another important piece of paperwork you need for the shipping company when your products arrive in your country’s import location. Without it, you will not take ownership of your products.
Bill in BoL stands for the charges for the products you buy.
Lading is the physical loading of the products, normally in a cargo container, into a shipping vessel.
The paperwork lists three elements of your products: the type of product, quantity and destination (For the U.S., it is likely the particular port your products will come to when coming into U.S. territory.) The purpose is very simple – it is a contract that lays out the details of the shipping from China to the U.S.
The BoL is also a receipt for when the shipping company delivers the products to a destination. Three authorized people are required to sign the BoL: shipper, the shipping company and you. This way the BoL qualifies as the title of your products.
House Bill of Lading
An Ocean Transport Intermediary, OTI, normally a freight forwarder or non-vessel operating company, NVOCC, creates the House Bill of Lading, HBL. The HBL is passed to the shipper, responsible for carrying the products, after its creation.
It is important to note the NVOCC or freight forwarder can only issue the HBL. Neither the NVOCC or freight forwarder own boats but are considered carriers of products – falling under local and international laws. The NVOCC is not necessarily a freight forwarder, but some freight forwarders can be licensed as NVOCC.
The HBL is then passed to Sourcing Nova when taking official control of, and receipt for, your products.
You will get a copy of the HBL from Sourcing Nova’s freight forwarding company and is necessary for Incoterms like CFR, cost and freight or CIF, cost, insurance and freight. The original is required for you to claim your products at the port.
Requirements of the HBL
- The consignee – you as the actual receiver of the products
- Shipper – the exporter
- The notify – you as the importer or other person/party mentioned in the HBL
Master Bill of Lading
The Master Bill of Lading, MBL, goes to the shipper from the shipping company. If you elect the purchasing agent services with Sourcing Nova, we function as your shipper, apply for the MBL and take care of its details.
The MBL is one of the de facto documents for ocean transport. It is printed, signed, or stamped, by the carrier as an official receipt of the products and is only released to the consignee or products owner.
Requirements of the MBL
The requirements of the MBL are the same as the HBL and contain the same information. The only difference is the MBL comes from the shipping company and not a freight forwarder or NVOCC.
The Telex Release
A shipper can file a Telex Release application. The Telex Release means the shipping company can turn over the products to you without the original BoL. You can then get a Delivery Order after the products are released to you at customs.
Sellers will, as a rule, send the original BoL to the buyer rather than via Telex. The Telex release is more expensive and more complicated as it requires a Letter of Indemnity.
Depending on the distance, the products may arrive at the destination more quickly than the documentation. In this case, the extra expense of Telex will prevent unnecessary delays with customs at the import location.
The shipping company will turn all three BoLs over on written request of a Telex Release with the Letter of Indemnity. The letter will contain the specific numbers for each BoL, the vessel name, port of discharge/final destination and consignee’s information.
The main advantage to the Telex Release is the speed and convenience. The disadvantages are file cost, increased the workload of the shipper and some potential risks.
Non negotiable BoL vs. Negotiable BoL
It is important to note the non-negotiable BoL cannot transfer ownership of products from one person to another since it is not a title document.
The negotiable BoL can go to a third party or individual to take ownership of the products so long as they have the negotiable BoL in hand and signed by the original consignee. It is a consignment process, and the third party will sell products for the manufacturer. The third party consignee will earn a commission on the sales.
Who issues a BoL?
The freight forwarder will generate, print, sign the first BoL, the house BoL, HBL, and pass it to the seller, in this case the sourcing agency responsible for your Chinese products.
The sourcing agency, acting as the first shipper, passes your products to the freight forwarder, who now becomes the official carrier of your products. The freight forwarder is not a shipping company and has no way to ship the products to your destination country. The freight forwarder, acting as the second shipper, books space on a ship for the products. Now, the freight forwarder passes the products to the shipping company for transport.
The carrier, generates a second BoL, the master, and passes this MBL to the freight forwarder. The shipper is now the carrier of your products and will transport them to the destination country.
Why is the BoL important?
It seems there is quite a bit of paperwork to follow with sourcing products. The BoL seems like just another unnecessary document, but this is not the case. The BoL matters.
Making sense of the BoL
These are the three functions of the BoL:
- Title – It is the official title to your products. Title, in this case, means a document showing ownership of products or properties.
- Receipt – The products you order from China need a receipt. The BoL doubles as one.
- Terms and conditions – The BoL lays out the terms for the transportation.
Example of a BoL and its functions
A truck driver for a grocery chain picks up a load of dog food to take back to the warehouse. Someone from the dog food plant and the driver sign off on a BoL. The driver carries the dog food to the warehouse, where another person will receive the dog food and sign off on recognizing receipt of the dog food.
Why does this matter?
Ordering products from China and delivering them to you in a different country means your products are going to change hands several times over. Since so many people are in the product chain, the BoL is one of several documents that keep theft and fraud at a minimum. The standard protocols of the BoL are the same no matter what the business and their internal practices.
The BoL is also evidence to those in the chain that the products transported are paid in full and ready for transport. A transportation company could be moving products from countless manufacturers for importers. The BoL keeps everything in order, legal and correct.
Are there other uses for the BoL?
The BoL is important for the description of the products and receipt, but there are other uses as well.
A legal document
There is always a chance for human error during the entire chain from the initial product order to the delivery at your specifics location. The BoL functions as a legal instrument in the case of something happening during the entire logistical operation when the BoL is enforced.
Here is an example:
You decide to oversee the shipping of your products rather than with a shipping agent or freight forwarder (Something Sourcing Nova is absolutely against you doing). The BoL will be necessary for you on the export and import side. You will forward a copy of the BoL to your import location and shipping agent. Your shipping agent in turn does a Delivery Order to the port for the product release.
It is still wise for you to have a copy of the BoL for product shipping even if done with the services of a freight forwarder.
The BoL allows you, as the buyer, to follow product shipping information and ensure its correctness. You can also trace your products and their location by the vessel information on the BoL.
How much does it cost to apply for the Bill of Lading form?
The original BoL will cost anywhere from 300 – 500 RMB ($46.00 – $77.00 USD).
The Telex release is 100 – 300 RMB ($15.50 – $46.00 USD) more than the original BoL.
When is the Bill of Lading issued?
As soon as your products are put onto the specific vessel, boat, plane or train, for transport, the BoL form is issued.
The Telex release can be issued after the other BoL are surrendered. This eliminates confusion as to whom can take possession of the products.
How to fill out a Bill of Lading?
It may seem with everything you have read so far that a BoL form must be almost impossible to fill out. This is not the case. In fact, the form is very easy to fill out. Read on to see the basic information you need.
What is the consignee on a BoL?
The consignee is the person who will take the products. This person must be explicitly named on the BoL.
Main sections of a Bill of Lading
A Bill of Lading is much like any important document. There are a number of important places to provide necessary information. Each BoL will have certain individual requirements. These are the commonalities across any BoL.
The same basic information you typically provide – name, email, address and the like.
Purchase order number
The freight forwarder will generate this for tracking, confirmation and accounting purposes.
The date is more important for records and can help determine when to reorder.
The same information needed on all other documents: # of packages, # of units, descriptions, weight and other information. Product condition is listed here.
Crates, pallets, drums or cardboard box.
The NMFC is detailed above and is included here.
Some products require special handling or delivery. This is noted here.
DOT Hazmat designation
Any hazardous materials must be listed. Hazmat products have specific instructions. (Note: Sourcing Nova will not import any hazmat materials.)
The BoL is absolutely necessary when your products arrive in your country. Have you decided what products you want to source from Chinese manufacturers? Sourcing Nova can help you get those products. Let us know below when you are ready to get started.