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Shipping 101: Definition, Functions, and Importance of Bill of Lading

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As an eCommerce business, you must have used freight shipping frequently or at times, where you might have come across the term “bill of lading” or BOL, which is simply a detailed list of all the products that are being shipped.

But is that it? Why is a simple document containing all the items shipped so important? Well, that’s not all a bill of lading is. It’s also an agreement between the shipper (you) and the consignee (your customer/client). The bill of lading also comes with all the necessary information about the products shipped so that the shipping carrier can process the shipment and ensure safe delivery.

Initially, you would be giving the carrier a rough list of products, and the carrier issues the bill of lading to you with the conditions of the shipment, the mode of transport, the destination, and other necessary information needed for the shipping and delivery. Along with all this information, the receipt will also carry a unique identification number, which you can use to track the shipment.

What information is included in a Bill of Lading?

The following information is generally included in a BOL:

  • Shipper’s and consignee’s name, contact, and full address
  • Product count
  • Product descriptions
  • Special instructions, if any
  • Date of the shipment
  • “Must arrive by” and “Required by” dates
  • Details of any products/contents that require special attention or are dangerous
  • The weight of the shipment
  • Declared value

Why is a BOL Important?

There are a couple main reasons why having a BOL for each shipment is important.

  • Evidence of Contract: Whenever you ship any products, whether it’s a small product or a big one, a single piece or a carton of them, the bill of lading acts as a legal contract between your eCommerce business and the shipping carrier. Since it has all the information about the products shipped, the details of the buyer and seller, and more, you can track and cross-check in case of any damage, delays, or missing products.
  • Receipt of Goods Shipped: The bill of lading is a confirmation from the carrier to the 3PL fulfillment partner or the shipper that the goods have been received in good condition. This is extremely important because damages and losses while shipping is a serious threat to any eCommerce business big or small. When you have a signed agreement with every detail on it, it’ll be easier to figure out, who should bear the costs for damages and losses during the shipping. Above all, the bill of lading defines who is responsible for the customs, taxes, and other duties on the goods and the freight charges.

Types of BOLs

There are four main types of bill of lading.

Straight Bill of Lading

The bill is specified to a particular person/party and it cannot be transferred or re-assigned to someone else. The goods must be received by the specified party and they also have to submit an identification when accepting the delivery.

Original Bill of Lading

Simply put, this type of BOL defines the original agreement between the shipper (your business) and the carrier, with every information about the shipment mentioned in detail.

Order Bill of Lading

This is a negotiable contract. The BOL will be issued in the name of the consignee or to their order – which means the consignee can ask the shipment to be delivered to anyone who they entrust with, considering they present the BOL at the time of accepting the delivery.

Express Bill of Lading

This is usually used to expedite the shipping process and is often used for express deliveries. The physical BOL need not be produced at the time of accepting the delivery and anyone can accept the package on behalf of the person.

Electronic Bill of Lading

The world is becoming more digitalized and automated, and this is one of the significant stages of optimizing your eCommerce business. Having an electronic bill of lading over a traditional method–using a piece of paper–is not only efficient but also prevents you from making a lot of errors.

  • It is environmentally friendly as there is no paper involved and reduces the cost significantly
  • Whether you are shipping internationally or domestically, the electronic bill can be easily transferred to different locations or parties, ensuring quick trade
  • If any modifications, additions, or omissions are to be made on the BOL, they can be done effectively and without much hassle
  • It helps in efficient tracking of shipments, including audit trails, signatures, and more, reducing the chances for fraud significantly

Key Takeaway

Whether you are a budding eCommerce business or an established one, understanding the bill of lading and its functions forms the basis of your shipping and delivery. Depending on many factors including the products, destination, international trade guidelines, and more, you need to choose which type of bill of lading suits your orders. It may vary depending on various factors and a 3PL fulfillment partner will be able to help you figure this out.

At ShipBots, we understand both regional and international business guidelines and shipping methods. We will ensure you choose the right bill of lading for fulfilling your orders efficiently and effectively and help with any necessary documentation. Get in touch with us today to learn more about how we can help your eCommerce business with efficient shipping and delivery.