The bill of lading is a key shipping document issued by the carrier to shippers. The shipper is the party that owns the goods being shipped. The document acts as a contract between the carrier and shipper. The purpose of the document is to establish the terms and conditions of transportation.

The document also acts as confirmation that the carrier has received the goods in the agreed-upon conditions. This shipping document is also required for customs clearance at the destination port.

The bills of lading come in various types, depending on the trade scenario and shipping conditions. Let us understand the types of bill of lading in detail.

Straight Bill of Lading

This type of bill of lading is non-negotiable and specifies a particular consignee, which makes it less feasible for ownership transfer. This type of bill of lading is used when the shipper has a high level of trust with the consignee.

Order Bill of Lading

Another type of bill of lading is an order bill of lading, which is negotiable and can be transferred. For anyone who has an original and properly endorsed bill of lading, the goods can be transferred to them.

By signing the back of the original bill of lading document, the ownership is transferred to the new holder.

Bearer Bill of Lading

This type of bill of lading is more negotiable than the order bill of lading. Under this, the transfer can be done by simply possession without the need for endorsement. However, this type of document is rarely used due to the high risk associated with the transfer.

Through Bill of Lading

Under this type of bill of lading, the complete transportation journey via different modes, such as sea, road, rail, etc, is covered. This type of bill is used for intermodal shipments.

Clean Bill of Lading

The clean bill of lading is issued when the goods have been received in good condition without any damage or loss. It specified that the goods had been loaded in the mentioned condition necessary for insurance claims.

Claused Bill of Lading

The claused bill of lading is issued when there have been issues with the goods or cargo. The issue can be damage to the cargo, shortage of goods, etc. The document includes the notations specifying the discrepancies, which are crucial for insurance claims.

Combined Transport Bill of Lading

This type of bill of lading is similar to a through bill of lading, which is generally used for multimodal transport. Under this type of bill, the whole transportation chain is covered from the origin to the final destination.

Also Read: What is Bill of Entry: Guide to its Types, Importance, and Process

A sea waybill is a transport document used to simplify the transportation process. It serves as a receipt for the goods and evidence of the contract of carriage. It is non-negotiable and does not confer title to the goods, allowing for quicker cargo release without the need for presenting original documents.

This type of document is ideal for routine and regular transactions between trusted entities. If the shipper can use the letter of subrogation, then the goods can also be accepted by the recipient other than those mentioned in the seaway bill.

There are generally two main types of sea waybills:

Straight Sea Waybill

This type of sea waybill is issued to a named consignee and is non-transferable. It allows for direct delivery of goods without presenting the original document, commonly used in transactions with trusted parties.

Express Release Sea Waybill

This type of bill is also non-negotiable and used when the cargo does not require a physical document for release. It's often used for fast transactions, such as between branches of the same company or when payment is secured.

Let us understand the different scenarios and use cases for a bill of lading and sea waybill in ocean freight shipping.

Use Cases of Bill of Lading

• A bill of lading is preferred when the titles of the goods are likely to change during the transportation mode.
• This type of document is also used when there is a lack of trust between the consignee and shipper.
• It is used when the shipment involves complex financial transactions such as letters of credit.
• The bill of lading document is used when there is a legal dispute over conditions of goods or ownership of goods.

Use Cases of Sea Waybill

• This type of bill is used when there is trust between the consignee and the shipper.
• The sea waybill is used when there is no need to transfer the title to a third party.
• This document is used when a faster cargo release is crucial, such as for just-in-time delivery models.
• A sea waybill is used when electronic documentation is used to reduce administrative paperwork.

The bill of lading and sea waybill are different from each other based on various parameters. Let us understand the sea waybill vs bill of lading in detail.

Transferability and Negotiability

A bill of lading can be either negotiable or non-negotiable. A negotiable bill of lading serves as a document of title and can be endorsed and transferred to third parties, enabling the transfer of ownership while the goods are in transit.

While on the other hand, a sea waybill is a non-negotiable and non-transferable document. It is issued to a named consignee and the goods can only be delivered to that specific party. It cannot be transferred or endorsed to another party.

Documentation Requirements

A bill of lading, especially if it is negotiable, requires the original copy to be presented at the destination port for the release of cargo. This adds a layer of documentation and control but can slow down the delivery process if the documents are delayed.

In the sea waybill, there is no requirement to present the original document for the release of goods. The consignee named in the waybill can claim the cargo directly upon arrival, which significantly reduces paperwork and speeds up the logistics process.

Security and Regulation

The bill of lading provides a higher level of security and legal enforceability. It is widely used in international trade and is essential in transactions involving letters of credit, where financial institutions require a negotiable document to secure payment and ownership rights.

On the other hand, the sea waybill offers less security in terms of ownership control. Since it does not act as a title document, it is typically used in low-risk transactions or between trusted parties, such as intra-company shipments.

Direct Release of Goods

With a sea waybill, the goods can be released directly to the named consignee without any need for the physical document to be submitted. This is particularly useful in fast-moving supply chains or where quick cargo clearance is essential.

A bill of lading often requires the submission of the original document before the goods are released. This ensures that only the rightful holder of the bill, typically the buyer or their agent, can take delivery.

When deciding between a bill of lading and a sea waybill, several important factors need to be considered. These factors will help in smoothening the sea freight management. These factors include:

Title Transfer

When deciding between the bill of lading and sea waybill, the business needs to consider the title transfer factor. A bill of lading is the best choice when the title transfer is mandatory for loans or deals, while the sea waybill is best when the goods need to be transferred without ownership.

Speed of Delivery

A bill of lading is a comparatively slower process because of the extensive paperwork. When fast delivery is required, it is best to consider a sea waybill because the paperwork is less and the process is more efficient.

Custom Clearance

Another key factor in deciding between the bill of lading and sea waybill is custom clearance procedures. In many international transactions, a bill of lading is the mandatory requirement for customs clearance.

Legal Considerations

Legal consideration is another deciding factor when choosing between a sea waybill and a bill of lading. Many countries require bills of lading as important documents for certain shipments or deals.

A shipment comes with documentation work and compliance risks. That is why businesses must choose the right documentation between sea waybill and bill of lading. This selection of documentation is a must for smooth shipping operations and customs clearance.

In addition to this documentation, businesses should also consider purchasing marine Insurance plans. TATA AIG offers marine insurance online plans that are designed to offer protection to shipments during transit against unforeseen damage, loss and other risks.

We have other small business insurance options too, such as Shop insurance, Fire insurance, Worker Compensation Insurance etc., to safeguard your business from business interruptions and financial losses.