December 6, 2023
AGI News
Sea Freight
When it comes to international shipping and logistics, two essential documents often come into play: the Sea Waybill and the Bill of Lading. Both are crucial for shippers and freight forwarders alike, ensuring the smooth transport of goods via the sea.
But what are the key differences between these two documents, when would you use a sea waybill vs a bill of lading, and what are the different types of bills of lading? We’re here to answer those questions, and more, to help you make informed decisions for your shipping needs.
What is a Bill of Lading?
A Bill of Lading (B/L) is a document issued by the carrier (usually the shipping line or freight forwarder) to the shipper, providing a detailed list of cargo present on the ship, as well as the type, quantity and destination of said cargo. It’s a critically important document in international shipping and trade, and serves three core purposes:
Title document: The Bill of Lading serves as a title document, representing ownership of the goods. Possession of the original B/L allows the consignee to claim the cargo upon arrival at the destination port.
Receipt of goods: It acts as a receipt, confirming that the goods have been loaded onto the vessel in the condition described in the document, meaning you can verify any discrepancies at the destination.
Contract of carriage: The B/L outlines the terms and conditions of the contract of carriage, including the agreed-upon freight rates, responsibilities, and liabilities of the parties involved.
Bill of Ladings are also required for customs clearance at the destination port, helping customs authorities verify the legitimacy of the shipment and ensure that appropriate duties and taxes are paid.
Additionally, many cargo insurance policies require a Bill of Lading as proof of shipment if they need to initiate a claim in case of loss, damage, or theft during transit. Finally, in case of disputes or legal issues related to the shipment, the B/L can serve as a crucial legal document, to help resolve conflicts and determine liability.
Correctly managing the Bill of Lading is fundamental for ensuring the smooth and secure transportation of goods in international trade overseas. Any discrepancies or inaccuracies in the B/L can lead to delays, disputes, and financial losses, making it imperative to handle this document with care and precision.
Types of Bills of Lading
Bills of Lading come in various types, each tailored to specific shipping and trade scenarios. Understanding the specific type of Bill of Lading used in a shipment is vital, as it determines factors like ownership, transferability, and the terms and conditions of the contract of carriage. Shippers, consignees, and logistics professionals should carefully choose the appropriate type of B/L based on their needs and the nature of the goods being shipped.
If you’re not sure which Bill of Lading you need for your cargo, contact our friendly team for support.
Straight Bill of Lading
This type of B/L is non-negotiable, meaning it specifies a specific consignee, making it less flexible in terms of ownership transfer. It is typically used when the shipper has a high level of trust with the consignee and does not intend to transfer ownership during transit.
Order Bill of Lading
An Order Bill of Lading is more flexible than a Straight B/L as it is negotiable and can be transferred. It allows the goods to be delivered to anyone in possession of the original, properly endorsed B/L. The process of endorsing an Order B/L involves signing the back of the document, which effectively transfers ownership to the new holder.
Bearer Bill of Lading
A Bearer B/L is even more negotiable than an Order B/L. It can be transferred simply by physical possession without the need for endorsement. Bearer B/Ls are pretty rare and not commonly used due to the higher risks associated with their transfer.
Through Bill of Lading
This type of B/L covers the entire transportation journey, including multiple modes of transport (e.g., sea, rail, truck). It is often used for intermodal shipments where goods are transported by various carriers and through different transport modes to reach their final destination.
Combined Transport Bill of Lading (CTBL)
A CTBL is similar to a Through B/L but is specifically designed for multimodal transport, where goods move by more than one mode of transportation. It covers the entire transport chain from the origin to the final destination.
Clean Bill of Lading
A Clean B/L is issued when the cargo is in good condition and has been received without any apparent damage or discrepancies. It indicates that the goods have been loaded in the described condition, which can be crucial in cases of disputes or insurance claims.
Claused (or Dirty) Bill of Lading
A Claused B/L is issued when there are discrepancies or issues with the cargo, such as damage or shortages. It includes notations (clauses) specifying the problems or discrepancies, which can be important for insurance claims or disputes.
What is a Sea Waybill?
A Sea Waybill is a transport document that simplifies the shipping process by eliminating the need for original documents, allowing for direct release of goods, and reducing paperwork. It is a suitable option when cargo ownership does not change during transit, and there is a high level of trust between the parties involved.
However, it lacks the negotiability and flexibility of traditional Bills of Lading, which are useful in scenarios where cargo ownership and transfer are likely.
One of the primary distinctions of a Sea Waybill is that it is non-negotiable and non-transferable. This means that it does not confer ownership of the goods to anyone and cannot be transferred, endorsed, or assigned to another party.
Sea Waybills are also typically used for shipments where the shipper and consignee have a well-established relationship and trust each other. They simplify the documentation process by eliminating the need to handle original documents. Plus, with a Sea Waybill, the goods can be released directly to the consignee at the destination without requiring the surrender of an original B/L.
What’s the difference between a Sea Waybill and a Bill of Lading?
The main difference between a Sea Waybill and a Bill of Lading is in their transferability, negotiability, and the level of trust and control they provide in the shipping and trade process. Sea Waybills are straightforward and efficient, but lack the flexibility and security of certain types of Bills of Lading, which are often chosen to meet specific needs and requirements in international shipping and logistics.
Transferability and negotiability
A Sea Waybill is non-negotiable and non-transferable. It cannot be endorsed, assigned, or transferred to another party, and the consignee named in the Sea Waybill is the only entity that can take possession of the cargo. Depending on the type however, some Bills of Lading can be either negotiable (like an Order B/L) or non-negotiable (like a Straight B/L). An Order B/L can be transferred through endorsement, allowing for the change of cargo ownership during transit, compared to a Sea Waybill which cannot.
Direct release of goods
With a Sea Waybill, goods can be released directly to the consignee at the destination port without requiring the surrender of an original document. This simplifies and speeds up cargo release. When you choose Sea Waybill, however, the original B/L would usually be presented at the destination for cargo release, which can involve additional time and administrative steps.
Documentation requirements
Sea Waybills streamline the documentation process by eliminating the need for original documents. Copies or electronic versions are usually sufficient for cargo release. But Bills of Lading often require the presentation of original documents for cargo release, which can be more cumbersome and time-consuming.
Security and regulation
Sea Waybills are suitable for situations where there is a high level of trust between the shipper and consignee and where cargo ownership remains unchanged during transit, therefore they may be less secure when strict regulation of cargo transfer is necessary. However, B/Ls, especially Order B/Ls, provide a higher level of security and regulation for cargo ownership transfer and are typically used when cargo ownership needs to be carefully documented and controlled.
In the world of international shipping, understanding the difference between a Sea Waybill and a Bill of Lading is crucial. Your choice between the two depends on the nature of your cargo, your relationship with the consignee, and the level of security and control you require.
Whether you opt for the security of a Bill of Lading or the simplicity of a Sea Waybill, both documents play pivotal roles in the global logistics chain, ensuring that goods reach their intended destinations smoothly and efficiently.
If you need further guidance on which document suits your needs, speak with our team of experts, who have decades of experience with all types of import and export documentation. From Commercial Invoices, Insurance and inspection certifications, to Airway bills, Bills of Lading, Itemised content lists and Completion of Certified and Legalised Chamber of Commerce paperwork.
If you require assistance with any documentation, get in touch with the team today! And for all of the latest AGI news, don’t forget to follow us on LinkedIn and Facebook!