What is a bill of lading?
A bill of lading is a document issued by the shipping company upon shipment of goods. It is a contract between the shipper (exporter) and the shipping company for the carrying goods to port of destination. It is a document of title to goods and required by the importer to clear the goods at the port of destination.
Importance of bill of lading
The importance of bill of lading may be explained from the points of view of the exporter, importer and shipping.
Importance to title exporter:
1. A bill of lading acts as a proof that the goods have been loaded on board the ship.
2. It helps the exporter to send a shipment advice to the importer.
3. The exporter can hold the shipping company responsible for the damage caused to the goods due to the negligence of the crew.
4. Incentives such as duty drawback can be claimed with the help of the bill of lading.
5. Under the CIF contract, a bill of lading enables the exporter to pay the exact amount of freight to the shipping company.
Importance to the importer:
1. It is document of title to goods. The importer can claim possession of goods from his customs.
2. The bill of lading enables the importer to pay proper freight amount under FOB contract.
Importance to title shipping company
1. It helps the shipping company to collect the freight from the shipper or the importer.
2. Interest of the shipping company is protected against false claims by either exporter or importer due to damage of goods prior to loading.