What Is an Ocean Bill of Lading?

What Is an Ocean Bill of Lading?

Let me explain what an ocean bill of lading is—it's a document you need for transporting goods overseas across international waters. This document acts as the carrier's receipt to you as the shipper, and it also functions as a collection document or an invoice. Essentially, it's a legally binding contract between you, the shipper, and the carrier handling the shipment.

Key Takeaways

You should know that an ocean bill of lading is required for moving goods over international waters. It serves as a legal contract specifying the type, quantity, and destination of the goods being carried. Both you as the shipper and the carrier sign it when the shipment begins, and the receiver signs it upon receipt.

How an Ocean Bill of Lading Works

An ocean bill of lading is a legal document or contract between you, the shipper, and the carrier. It details the type, quantity, and destination of the goods you're transporting. This bill acts as a receipt when the goods arrive at the predetermined destination. There are various kinds of bills of lading, each with their own stipulations and conditions.

It enables you to move goods across international waters. The contract covers details about the shipment, such as what and how much material is being transported, where the goods will be shipped, the value of the goods, and the type of packing used.

You receive the contract when the goods are picked up, and it must be signed by both you and the carrier. Once the shipment is complete, the document goes to the receiver, who must sign it upon delivery. If you haven't sold the goods before they arrive, the bill of lading can be a blank endorsement, making it negotiable, and the receiver's line might read 'to the order of.'

Important Note on Inland Bills

Remember, inland bills of lading are required if your shipment needs to travel further within the destination country after arriving at the dock.

Special Considerations

If the goods need to be transported over land first, you'll require an additional document called an inland bill of lading. This is often the first document issued for international shipments. It only allows the materials to reach the shore, while the ocean bill handles the overseas transport. Since no international transport is involved here, the inland bill is usually arranged with a third party, not the foreign party in the contract.

Types of Ocean Bills of Lading

There are several types of ocean bills of lading used in the transportation industry. The most common include the straight bill of lading and the negotiable bill of lading.

The straight bill of lading is non-negotiable and marked as such. Only the person named on the bill has a claim to the goods at the destination port. It's typically used with parties that have open accounts, where you as the shipper might not need upfront payment from the receiver. This non-negotiable version allows the buyer to receive the goods by showing identification.

A shipper's order is a negotiable bill of lading, used when you want to ensure certain terms and conditions are met before releasing the shipment to the receiver. This is common when the receiver's payment is backed by a letter of credit.

Example of an Ocean Bill of Lading

Ocean bills of lading come into play when goods are transported internationally over waterways. For instance, if a car manufacturer ships vehicles to an overseas dealership, they need an ocean bill of lading to complete the transfer.

If those vehicles need further transport into the destination country away from the port, an inland bill of lading is required. So, a U.S.-based dealership would sign an ocean bill of lading with a Japanese carmaker for vehicles heading to the United States. If the shipment arrives in Seattle but is destined for Billings, Montana, you'd need that additional inland bill.

Why Are Bills of Lading Issued?

A bill of lading is issued as a legal contract that outlines the details and responsibilities of all parties involved in the shipment of goods. It also serves as proof that the shipment has occurred.

What Details Are Found in an Ocean Bill of Lading?

An ocean bill of lading must include the date, method of shipment, and your name and address as the shipper, along with the name and address of the consignee. It also covers details about the goods, such as their nature, the number of goods or containers, and their value.

Who Pays for a Bill of Lading?

Typically, it's your responsibility as the shipper to provide and pay for the bill of lading. In some cases, you and the buyer might arrange for the buyer to cover the cost.

The Bottom Line

International shipping can be complicated, which is why legal documents like the ocean bill of lading exist to detail shipments and the rights and responsibilities of everyone involved. Use it when shipping goods internationally over water.