Bill of lading: the carrier's receipt, contract and title document

The three jobs of a bill of lading

A receipt. Once the carrier has the goods, it must, when the shipper asks, issue a bill showing the leading marks, the number of packages or pieces or the quantity or weight, and the apparent order and condition of the goods^[1]. Under the Carriage of Goods by Sea Act, that bill is prima facie evidence of the receipt by the carrier of the goods as therein described^[1]. If cartons were crushed or short when they were handed over, the bill is where that gets written down, so a bill with no remarks is the first evidence that your goods left in apparent good order.

Evidence of the contract of carriage. The same act treats a bill of lading as evidence of a contract for the carriage of goods by sea^[1]. The carrier's terms, including its limits of liability, sit behind the document.

A document of title, if it is negotiable. A bill is negotiable when it states that the goods are to be delivered to the order of a consignee^[2]. Whoever holds a negotiable bill, properly endorsed, controls the cargo, which is why the originals matter.

Negotiable and straight bills

With a negotiable bill, the paper matters as much as the cargo. If your order ships on a negotiable bill, agree in writing when the seller will release the originals, for example once the balance is paid, so the goods are not stuck at the destination port waiting for paper.

House bills and master bills

When a small shipment travels in a shared container, the company that consolidates the cargo may be a non-vessel-operating common carrier (NVOCC): a carrier that issues its own house bill of lading or equivalent document^[4]. The shipping line then issues its own bill for the whole container.

So on a shared container, the house bill is the one that names you. Give its number to your customs broker as soon as it is issued.

The bill of lading at US customs

To enter goods that arrived by common carrier, the importer must show a right to make entry, and the first form of evidence the regulation lists is a bill of lading or air waybill, presented by the holder thereof, properly endorsed when endorsement is required under the law^[3]. A bill that names you as consignee, or an original endorsed to you, is the simplest way to show that right.

The bill can also change your duty. If the factory's price includes trucking to the port, that inland freight comes out of the dutiable value only in limited cases, and one of the conditions is a through bill of lading to be presented to CBP^[6].

Damage, shortages and the carrier's limit

• The per-package limit. Unless the shipper declares the value before shipment and it is written into the bill, the carrier's liability under the act is capped at $500 per package^[1]. If a carton is worth more than that, the carrier's liability will not cover it in full, so insure valuable cargo rather than relying on the carrier.
• Hidden damage. If loss or damage is not apparent when you collect the goods, notice to the carrier must be given within three days of the delivery^[1]. The clock runs from the carrier's delivery, which may be at the port, so inspect the cartons at pickup where you can and again as soon as they reach your warehouse.
• Time to sue. A claim against the carrier must be brought in court within one year after delivery of the goods or the date when the goods should have been delivered^[1].

Example: reading a house bill of lading

What each field of a house bill of lading tells you

Field	Example entry	What to check
Shipper	The company that handed the goods to the carrier	It may be the factory rather than the company that invoiced you, so do not read a different name as an error
Consignee	Your company's name and address	It is you, the importer of record
Notify party	Your customs broker	The broker gets the arrival notice
Port of loading and port of discharge	Ningbo to Los Angeles	They match the named place in your shipping terms
Marks and numbers	PO 1182, cartons 1 to 400	They match the carton labels in your spec
Number of packages	400 cartons	It matches your packing list
Description of goods	Knitted sweatshirts, polyester	It matches the invoice description your broker will classify
Freight	Freight collect	Collect on an FOB order, since you pay the ocean freight
Remarks	Shipped on board, no exceptions	Any note of damage or shortage needs raising with the seller and your insurer straight away

Illustrative figures, not a quote. Real prices depend on the spec, quantity and factory.

When the bill of lading is issued

• The consignee is your company, or the bill is to order and you will receive the endorsed originals.
• The package count, marks and description match your packing list and invoice.
• The bill carries no remarks about damaged or missing packages.
• Your customs broker has a copy before the ship arrives.