In international shipping, the Bill of Lading document makes up a critical part of the shipment process. They are legal documents that provide evidence or proof of shipment. This is critical in the import export process as they provide title as to which party legally owns the cargo.
The Bill of Lading (BOL) acts as evidence of contract of carriage, receipt of goods and document of title to the goods. In some cases the BLs are negotiable which means that they can be transferred to another party. The holder of the original BL has the legal rights to claim the goods or arrange transfer of ownership of the cargo to another party.
In this article we’ll look at two types of Bill of Lading: House Bill of Lading (HBL) and Master Bill of Lading (MBL) to understand how the differ and how they are used along global supply chains.
Master Bill of Lading (MBL) explained
A Master Bill of Lading (MBL) is issued by the original carrier of the goods. It serves as the contract of carriage, confirming the carrier’s receipt of the cargo and specifying the terms and conditions for its transport. The MBL will be identified by the carrier using a unique Bill of Lading number.
The role of the carrier or shipping line in this process is central. By issuing the MBL, the carrier (usually shipping lines, airlines or trucking companies) confirm their commitment to deliver the cargo as specified to its intended destination. The MBL will contain all critical information relating to the shipment, including shipper’s details, consignee’s details, the notify party (if applicable), BL number, vessel & voyage number, container & seal numbers, description of goods, weights, port of loading and port of destination, alongside the terms & conditions of carriage. This provides a clear framework for the transportation agreement between the carrier and the shipper.
House Bill of Lading (HBL) explained
A House Bill of Lading (HBL) is a Bill of Lading document that has been re-issued, usually by a freight forwarder or a non-vessel operating common carrier (NVOCC). Freight forwarders are companies that buy allocated freight space from shipping lines, airlines or trucking companies, and on sell this freight to their customers.
The freight forwarder will issue their House Bill of Lading using their own unique Bill of Lading number, and use this to share to parties along the supply chain.
It shows that goods have been received for shipping. It is used when goods need to be moved from one place to another, especially across countries.
Key Differences Between a House Bill of Lading and Master Bill of Lading
Both a House Bill of Lading (HBL) and a Master Bill of Lading (MBL) contain uniform, detailed information about the cargo being shipped, and the logistics details of the shipment. Such detailed documentation ensures all parties involved in the shipping process have a clear and consistent understanding of the cargo’s specifics, streamlining logistics and customs clearance.
The main difference between them, is that the Master Bill of Lading is issued by the original carrier of the goods, whereas the House Bill of Lading is re-issued by the freight forwarder or transport company that is handling the shipment process.
What is the difference between Freight Collect and Freight Pre-Paid?
The Bill of Lading document will state that the shipment has been sent on ‘Freight Collect’ or ‘Freight Pre-Paid’ terms. These terms relate to which party will be paying for the Freight costs.
If the shipment is sent Freight Collect, then the freight charges will be ‘collected’ by the Consignee. If the shipment has been sent on Freight Pre-Paid terms, then the shipper will be charged the applicable freight costs.
When dealing with shipping lines, the carrier will require payment of the shipping charges before the cargo will be released to the consignee.
- Freight Collect Incoterms® include – EXW, FCA, FAS, FOB
- Freight Pre-Paid Incoterms® include – CFR, CIF, CPT, CIP, DAP, DPU, DDP
Export Documentation in the Shipment Process
Managing export documentation throughout the supply chain is critical to ensure a smooth logistics process from origin through to destination. Shippers must provide clear, accurate export documentation such as Commercial Invoices, Packing Lists and other documentation that clearly states every detail of the shipment, which will be used by the various parties along the supply chain.
Shipping documentation will be used by freight forwarders, customs brokers and customs authorities to accurately classify product details, and clear the goods through customs in the country of import. If shipping documentation is incomplete or contains errors, it can cause costly delays, fines and missed shipments. View the IncoDocs export documentation template library here.
The Evolution of Traditional Bill of Lading to the new Electronic Bill of Lading eBL
Since the beginning of the adoption of the Bill of Lading in the shipment process, the transfer of the shipment information relied on a physical BL document being posted from the shipper to the consignee, usually in far away countries. Over the past decade, the advancements in software and technology is transforming the traditional paper based BL into an Electronic Bill of Lading (eBL).
The eBL performs the same functions but provides many additional benefits such as improving the speed of data exchange, security and accuracy of data and information. Using the new eBL process, the data contained on the eBL can be transferred to other parties along the supply chain instantly, which brings a new level of efficiency to the global trade process. Read more about the new eBL process and how it will improve the supply chain into the future.
