8-5. How a Bill of Lading is Issued

Overview

Yumeko san
Yumeko san
The most essential document in maritime transportation is a Bill of Lading (B/L).
Is it really that important?
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Yumeko san
Yumeko san
Of course, it is! A consignee can’t pick up the cargo without a B/L, and it may sometimes hold a value of tens of millions of yen!
Oh…come to think of it, you’re right.
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Yumeko san
Yumeko san
Let’s make sure to grasp the fundamentals of the Bill of Lading thoroughly in this lesson.

What You Learn in This Topic

  • What is a Bill of Lading (B/L)?
  • Roles of a B/L
  • The Cases When a B/L is Useful
  • How a B/L is issued
  • To Avoid Losing a B/L

What is a Bill of Lading? (B/L)

A Bill of Lading is one of the shipping documents and is crucial to international trade. And it possesses characteristics of negotiable securities.

Negotiable securities….?
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Yumeko san
Yumeko san
Imagine you’re importing a container with goods worth 10 million dollars. If you want to pick it up, you should submit the B/L to the shipping company.
I see, it means “the Bill of Lading is worth 10 million dollars” in this case.
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Roles of a Bill of Lading

The Bill of Lading serves as the following roles:

  • Certificate of receipt
  • Exchange certificate for goods
  • Transportation agreement 

B/L represents ownership of the goods being shipped. It is also used as negotiable securities.

What is negotiable securities?
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Yumeko san
Yumeko san
It is a document that guarantees the payment of a specific amount of money.

The Cases When B/L is Useful

Bills of Lading (B/L) can be used to manage transaction risk. The following cases are where it comes in handy:

  • When there are concerns about payment
  • When you want to prevent the risk of unshipped

When there are concerns about payment

B/L is used for the importer to claim the cargo. Therefore, the importer cannot pick up the cargo from the port without possessing the B/L.

The exporter can withhold the B/L until the payment has been transferred.

When you want to prevent the risk of unshipped

The shipping company issues a B/L or forwarder after loading the cargo onto the vessel.

Issuance of the B/L indicates the departure of the goods-carrying vessel. Paying after the issuance of the B/L allows the importer to reduce the risk of non-shipment.
Both are potential risks, aren’t they?
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Yumeko san
Yumeko san
Unfortunately It happens!

How a Bill of Lading (B/L) is Issued

Let’s take a look at how the Bill of Lading (B/L) is issued. It is important to note the following key players:

  • Shipper (Exporter)
  • Exporter Side Forwarder
  • Importer Side Forwarder
  • Consignee (Importer)

The Issuing Process

KEY POINT

Scenario: The exporter books FCL ocean transportation with a forwarder

  1. The vessel departs from the port
  2. The exporter’s forwarder issues a B/L
  3. The B/L is sent to the exporter
  4. The exporter receives the payment for the goods
  5. The B/L is sent to the importer
  6. The vessel arrives at the importing port
  7. The importer’s forwarder issues the Delivery Order (D/O)
  8. The importer presents the B/L to the forwarder
  9. The importer receives the D/O, which serves as the document for cargo release

Yumeko san
Yumeko san
A Delivery Order (D/O) is a document used to claim cargo at the port. The consignee can obtain the D/O in exchange for the B/L

To Avoid Losing a B/L

As a Bill of Lading is negotiable securities, the shipping company cannot issue a new one easily. It is customary to send B/Ls separately from the exporter to the importer via courier.

  • First mail: 2 B/Ls
  • Second mail: 1 B/L

If the importer submits any one of the originals to the forwarder, the other originals become invalid.

Yumeko san
Yumeko san
There are several types of Bills of Lading, and some types don’t require originals. We’ll discuss that on another topic!

Summary

The Bill of Lading (B/L) serves the following roles:

  • Certificate of receipt
  • Exchange certificate for goods
  • Negotiable Securities
  • Transportation Agreement

A Bill of Lading (B/L) is required on the importing side to claim the cargo at the destination. Losing it means you won’t be able to pick up your cargo, so it’s crucial to handle it with care.

Learn by Video

Take the Test

Review what you have learned in this topic by solving the exercises. You should solve the exercises without looking at the issues as much as possible.

IINO san
IINO san
The act of “remembering” makes it more readily retained in the memory.