Are you shipping your goods by sea, air, truck, or rail? The terms and types of bills of lading differ with the mode of transportation.

Ocean Transportation

When goods are transported by ship, an ocean bill of lading is issued. Ocean freight to or from the U.S. is regulated by the Federal Maritime Commission (FMC). Common types of ocean bills of lading or releases are:

A straight bill of lading: This is a non-negotiable form of the B/L which is addressed / consigned directly to the buyer, with the buyer’s customs broker listed as a “Notify Party.” In this case, the carrier will issue a set of three original Bills of Lading, one of which must be endorsed by the consignee and presented in order to obtain the cargo at destination. Typically the straight bill of lading is issued if buyer still owes payment for all or part of the goods.

An “order” bill of lading: This is a negotiable form which is addressed “to order” or “to order of [a party]” instead of being consigned to the buyer. The carrier will hand over the shipment to whoever presents this bill of lading, as long as it is endorsed on the back. The holder of the order bill of lading is assumed to be the owner of the goods being shipped. The order bill of lading is commonly used when the purchase of goods is covered by a letter of credit or if the goods are expected to be traded on a mercantile exchange while the shipment is still in transit.

The electronic “telex” release: An electronic “telex” release eliminates the need for an original bill of lading to be presented at the destination for the release of the goods. Instead, the shipper endorses an original bill of lading and submits it to the carrier’s agent at the origin. The origin agent then notifies the agent at the destination in a simple message that the goods may be released without the hard copy bill of lading present. In the past, this notification was done by telex (hence the name), but today electronic releases are done by email or via integrated system notes in carrier booking systems. This is often used when a buyer still owes for all or part of the goods, but then pays before cargo arrives.

An express bill of lading: With this type of bill of lading, the carrier agrees to only release the goods to the named consignee or notify party. It is a non-negotiable document, and no original bills of lading are issued at all. The express bill of lading is frequently used if the importer paid for the goods before shipping or has credit with the supplier. It expedites the release of the goods upon arrival and saves on time and mail courier fees by eliminating the need for a physical bill of lading to be presented.

Air Transportation

Air waybills, or AWB, are issued when goods are transported by air. They are non-negotiable, so once cargo arrives at the destination airport it is immediately handed over to the consignee or their customs broker for customs clearance and final delivery. Air waybills therefore serve only as:

• A contract of carriage
• A cargo receipt, i.e. the carrier has received the shipment
• Delivery instructions, if special handling is necessary

However, if goods are shipped under a letter of credit or the shipper is using his bank to collect payment for goods prior to release to the consignee, the air waybill may be consigned to a bank. In such cases, the consignee must pay the bank, who in turn provides a bank release to the airline to authorizing the carrier to release the goods. This process typically takes several days during which the goods will sit at the airline warehouse and possibly incur storage charges.

Land Transportation Waybill

A “Waybill” is widely used in North America for overland shipments. This is a short form contract of carriage that usually refers only vaguely to terms and conditions in the carrier’s tariff. Be sure to request them – you will want to know the limits of liability under which your shipment moves. Just like an Air Waybill, a Waybill is never consigned “to order” and is never negotiable. However, the shipment can be sent under “Collect on Delivery” terms with an additional carrier’s handling fee to protect the interests of both the buyer and the seller.

Uniform Bill of Lading

This type of bill of lading is issued for overland shipments and is subject to “uniform” terms and conditions with widely adopted transportation tariffs and/or contract carriage agreements. The uniform bill of lading (aka uniform waybill), may be consigned “to order,” thereby becoming a negotiable bill of lading – just like an ocean B/L. A uniform bill of lading is a long version of the “Waybill,” and it includes the entirety of the terms and conditions, whereas the waybill only nominally refers to the terms of conditions.

Hand Tag

The hand tag is typically used when a truck driver shows up at a shipping dock or door for cargo pickup and fills in a form by hand – hence its name. This is a short form contract, with only a brief note of certain terms and conditions. Despite its casual nature, it is still covered by the carrier’s liability limit and refers to the carrier’s underlying tariff. Because of its convenience, the hand tag is frequently used in the air freight and local carriage business by courier services and other electronically dispatched trucks that are hired to pick up cargo from shippers who did not prepare a uniform waybill for the driver to sign as a cargo receipt.

Watch our FlexU course on Bills of Lading.