What is a Bill of Lading (B/L)?
A bill of lading is the document a carrier issues to a shipper when cargo is taken on board. It performs three functions at once: it is a receipt for the goods, evidence of the contract of carriage, and — when made out as a negotiable document — a document of title to the goods.
At a glance
What it is used for
The document-of-title function is what makes international trade finance work. Whoever holds the original negotiable bill of lading can claim the cargo, so it can be endorsed and transferred, and banks can hold it as security under a documentary credit.
Key points
- Typically issued as a set of three original signed copies; presenting any one takes up the others.
- A 'clean' bill carries no notation of damage or shortage; a 'claused' or 'dirty' bill does, and is usually unacceptable under a letter of credit.
- Names the shipper, consignee, notify party, vessel, ports, cargo description and quantity.
- A telex release or an express seaway bill lets cargo be released without presenting originals — faster, but no title security.
What to watch for
- Losing an original negotiable bill of lading is serious. Release then requires a letter of indemnity, usually bank-backed.
- Details must match the letter of credit exactly — a mismatch in the cargo description is a discrepancy and can stop payment.
- Never release originals to a buyer before the agreed payment trigger; the originals are the seller's security.
Frequently asked questions
What is the difference between a bill of lading and a seaway bill?
A seaway bill is a non-negotiable receipt and carriage contract. It is not a document of title, so cargo is released to the named consignee without any original being presented.
What is a telex release?
The shipper surrenders the originals at origin and the carrier instructs the destination office to release the cargo without originals. It speeds delivery but gives up document-of-title control.
Why are there three original bills of lading?
Historical practice, to allow copies to travel by separate routes so loss of one set does not strand the cargo. All are equally valid and the first presented takes precedence.
Related terms
Lodfy verifies every company on the platform — registration, ownership and sanctions screening — before they can trade.