Understanding Its 3 Core Functions, Classification of Master B/L, House B/L, Original B/L, Telex Release, Seaway Bill, and the Role of B/L in Logistics
In international trade and logistics, the Bill of Lading (B/L), also known as the Ocean Bill of Lading, is one of the most essential documents.
For newcomers to the supply chain, a B/L may appear to be a complicated piece of paperwork. In reality, however, it is the “soul” of the shipment, as it determines ownership rights and controls the delivery of goods.
This article provides a clear and comprehensive explanation of what a Bill of Lading is, its core functions, and how different types of B/Ls are classified.
1. What is a Bill of Lading (B/L)?
A Bill of Lading (B/L) is a transport document issued by a carrier (shipping line) or its authorized agent (freight forwarder) to the shipper after receiving the cargo for shipment.
Simply put, a B/L serves as:
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A receipt confirming that the carrier has received the goods
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A contract of carriage outlining the terms and conditions of transportation
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A document of title, granting the holder the right to claim the goods at the destination port
Because of its role as a document of title, the Bill of Lading is a critical legal document, widely used in banking transactions (such as L/C payments) and in dispute resolution.
2. Core Functions of the Bill of Lading
Regardless of its form, every Bill of Lading performs three fundamental functions:
a. Receipt of Goods
This is the most basic function. The B/L serves as evidence that the carrier has received the cargo in the quantity and condition stated on the document (e.g., “10 cartons”, “Sealed container”).
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Clean Bill of Lading:
A B/L with no adverse remarks regarding the external condition of the cargo. This is the type of B/L exporters always aim for. -
Unclean / Claused Bill of Lading:
A B/L containing remarks by the carrier about damaged or defective cargo (e.g., “02 cartons damaged”, “Barrels leaking”).
Banks usually refuse L/C payments if an unclean B/L is presented.
b. Evidence of the Contract of Carriage
The Bill of Lading serves as proof of the transportation agreement between the shipper and the carrier. It specifies key contractual details, including:
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Description of goods
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Port of Loading → Port of Discharge
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Shipper and Consignee
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Vessel and Voyage number
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Freight terms (Freight Prepaid / Freight Collect)
The reverse side of the B/L typically contains detailed terms and conditions defining the rights and obligations of each party.
c. Document of Title
This is the most important and unique function of the Bill of Lading.
Whoever lawfully holds the Original Bill of Lading is considered the legitimate owner of the goods and is entitled to claim delivery at the destination port.
Thanks to this function, an “order” B/L can be endorsed and transferred, allowing ownership of the cargo to change hands while the goods are still in transit. In this sense, the B/L has asset-like value.
3. Common Classifications of Bills of Lading
Bills of Lading can be classified in several ways. Below are the most important and practical classifications that logistics professionals must understand.
Classification by Issuer
a. Master Bill of Lading (MBL)
Definition:
A Bill of Lading issued by the shipping line (carrier), such as Maersk, MSC, ONE, etc.
Usage:
Issued by the carrier to the shipper.
Details:
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If the shipper books directly with the carrier, the MBL is issued directly to the shipper.
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If a freight forwarder books space on behalf of the shipper:
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Shipper on MBL: Forwarder at the port of origin
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Consignee on MBL: Forwarder or its agent at the port of destination
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b. House Bill of Lading (HBL)
Definition:
A Bill of Lading issued by a freight forwarder under its own format.
Usage:
Issued by the forwarder to the actual shipper.
Details:
When the forwarder consolidates LCL cargo or provides logistics services for FCL shipments:
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Shipper: Actual exporter
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Consignee: Actual importer
MBL vs. HBL Summary:
In shipments handled through a forwarder, two B/Ls usually coexist:
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MBL: Carrier → Forwarder
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HBL: Forwarder → Shipper
Classification by Release Method
This classification determines how cargo is released at the destination.
a. Original Bill of Lading
Definition:
A set of original Bills of Lading (usually 3 originals) printed, signed, and stamped “Original” by the carrier.
Process:
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Shipper receives the original B/L at the port of origin
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Shipper sends the full set of originals to the consignee (via DHL/FedEx, etc.)
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Consignee presents at least one original B/L to obtain the Delivery Order (D/O) and collect the cargo
Advantages:
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Maximum security
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Required for L/C transactions or low-trust trade relationships
Disadvantages:
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Time-consuming
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Courier costs
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Risk of loss (very troublesome to resolve)
b. Surrendered B/L (Telex Release)
Definition:
A cargo release method where the consignee does not need to present original B/Ls.
Process:
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Carrier issues original B/Ls
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After payment, the shipper surrenders all originals at the port of origin
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Origin office sends a Telex message to destination office confirming surrender
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Consignee collects cargo with a copy of the B/L and identification
Advantages:
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Fast and cost-effective
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No risk of losing original B/Ls
Disadvantages:
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Shipper loses control of the cargo once Telex Release is requested
c. Seaway Bill (Express Release)
Definition:
A non-negotiable transport document with no document-of-title function.
Process:
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Carrier issues a Seaway Bill (usually PDF or printed copy)
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Cargo is automatically released to the named consignee upon arrival
Advantages:
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Fastest release
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No document courier costs
Disadvantages:
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High risk for shipper
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Suitable only for parent-subsidiary companies or highly trusted partners
Classification by Consignee Information
a. Straight Bill of Lading
Definition:
A B/L naming a specific consignee.
Characteristics:
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Only the named consignee can receive the goods
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Non-transferable
b. Order Bill of Lading
Definition:
The most common B/L in international trade, especially under L/C terms.
Characteristics:
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Consignee field states “To order of…”
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Ownership can be transferred by endorsement
Examples:
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To order of Shipper
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To order of ABC Bank
This type of B/L is negotiable.
4. Key Information on a Standard Bill of Lading
A typical B/L includes the following details:
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Shipper
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Consignee
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Notify Party
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Carrier
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Vessel / Voyage No.
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Port of Loading (POL)
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Port of Discharge (POD)
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Description of Goods (quantity, gross weight, measurement)
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Container No. / Seal No.
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Freight & Charges (Prepaid / Collect)
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Place and Date of Issue
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Shipped on Board Date (critical for L/C compliance)
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Number of Originals
Conclusion
A Bill of Lading is far more than a simple receipt—it is a complex legal document that governs ownership of goods. Understanding its functions and classifications is essential for anyone involved in import–export operations.
Choosing between an Original B/L, Telex Release, or Seaway Bill depends entirely on the level of trust between buyer and seller and the agreed payment terms. Even a minor mistake on a B/L can result in cargo delays, demurrage charges, or total loss of goods.
Having Trouble with Import–Export Documentation?
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