Bill of Lading BoL

Bill of Lading - A Document Steers the World Economy

Charlotte Goetz

Behind the scenes of global trade, where massive cargo ships crisscross the seas carrying countless containers with unknown contents, hides a special transport document: Bill of Lading (B/L or BoL).

Unlike other freight documents, this document assumes a securities function and plays a crucial role in directing the flow of goods and thus the entire global economy. The automation of business processes is also used in the Logistics industry is becoming increasingly important and is gaining in significance as digitization in maritime transport advances.

Are you in the freight industry and evaluating possible digitization options for your company? Our experts are available for a discussion. Contact us at any time via the Contact form.

Before we dive deeper into the topic, we'll start by explaining the background to the special document of sea freight.

What is a bill of lading?

What is a bill of lading?

A Bill of Lading is a legal document and is one of the so-called traditional documents. In overseas traffic, it serves as a document that accompanies the goods and proves that the merchandise has been transported by ship. In contrast to conventional transport documents - like the bill of lading or the waybill - a traditional document enables the transfer of ownership of goods. In international maritime transport, this traditional document is also known as a bill of lading. The bill of lading is a document issued by the shipper that allows the rightful owner to demand surrender of the goods at the port of destination and to collect them.

Issuance of a bill of lading

After loading the goods, the carrier is responsible for issuing the B/L. With this document, he certifies receipt of the goods and promises proper delivery. Transmission to legitimate consignees is possible as a printed document (physical) or electronically, with the latter option gaining importance in recent years. The bill of lading fulfills several essential functions, creates legal certainty and forms the basis for the entire transport process.

Physical exhibition - paper based

In the physical exhibition, it is customary to make several originals at once. The number of versions issued is recorded in the B/L itself. In addition, it is also possible to make non-transferable copies of a bill of lading (copy non negotiable). However, these copies do not entitle the holder to take delivery of the goods and serve only for documentation purposes.

Electronic issuance - Bolero Bill of Lading or eBL

The electronic bill of lading has established itself under the abbreviation eBL, but is equally known among industry experts as the Bolero Bill of Lading. Bolero" stands for "Bill of Lading Electronic Registry Organization". The Bolero organization originally pursued the goal of establishing a platform for the electronic exchange of transport documents. The Bolero B/L performs the same function as a conventional bill of lading, but can be created, transmitted and cancelled electronically. Digital versions of the B/L basically enable real-time tracking in today's connected world, which increases transparency and improves the efficiency of supply chain management.

Bill of Lading - mandatory data

The information and effect of the B/L, regardless of the form of issuance, are regulated by Section 515 of the Commercial Code and include the following items:

  • Place and day of the exhibition
  • Name and address of the unloader
  • Name of the vessel
  • Name and address of the carrier
  • Port of unloading and destination
  • Name and address of the recipient and any registration address
  • Nature of the goods and their externally recognizable condition and quality
  • Dimension, number or weight of the goods and permanent and legible marks
  • the freight due on delivery, costs incurred up to delivery and a note on freight payment
  • Number of copies (bill of lading rate)

In addition, in the case of waybills covering a multi-link transport or supply chain, there is also information on the pre-carriage and onward carriage and, in the case of container shipments, at least the container numbers and, if necessary, also seal numbers.

Automation of mandatory data

The automation of mandatory data in the bill of lading promises not only a time advantage. Digital document processing also enables a significant reduction in errors that can creep in quickly and unnoticed during manual processing. Konfuzio's unified AI platform transforms unstructured data into insights and accelerates this process via Hybrid multi-cloud infrastructures away. In short, the ideal all-in-one tool for automatic processing of the B/L. Feel free to contact us.

Functions - The versatility of the bill of lading

Receipt and acknowledgement of receipt

One of the basic features of the Bill of Lading is its function as a receipt and acknowledgement of receipt. It is proof that the goods have been properly handed over by the shipper to the carrier. This confirmation marks the beginning of the movement of goods and is the starting point for the entire transport process.

Proof of ownership

After the goods arrive at the intended destination, the B/L assumes the role of proof of ownership. The B/L entitles the consignee to receive the goods from the carrier at the port of destination. To do this, the person or organization listed in the bill of lading as having the right of disposal must present the original document. This procedure ensures the release of the shipment by the carrier and enables the claim of ownership.

Transport contract and delivery conditions

The Bill of Lading forms a legally binding contract between the shipper and the carrier. It is common that no separate contract of carriage is concluded. Instead, the terms of the contract of carriage arise directly from the bill of lading.

Liability and insurance

In the event of damage, loss or delays during transport, the B/L is used in the assertion of legal claims. The document forms the basis for any claims for damages or insurance, as it documents the time and condition of the goods at the time of handover.

Trade finance, payment processing and credit security

It is not uncommon for goods to be transported over long distances, which can lead to challenges in payment processing. In the financing of international trade transactions, B/L therefore plays an important role and is particularly significant for letters of credit and documentary collections. Banks have the option of acquiring bills of lading by means of endorsement as part of export and import financing. This allows them to use them as collateral for loans. Since the bill of lading represents the contents of the cargo, the banks also become owners of the cargo through the endorsement.

Excursus on the digitization of the bill of lading - legal situation in Germany

The 2013 Law on the Reform of Maritime Trade Law (SRG) completely revamped the entire regulatory complex of the German Commercial Code (HGB) under maritime trade law and inserted a new section 516 (2) HGB, which created a legal basis for the use of digital bills of lading. This states that digital bills of lading are to be treated in the same way as physical bills of lading under paragraph 1, "provided that it is ensured that the authenticity and integrity of the record are maintained at all times (electronic bill of lading)." The electronic bill of lading must perform the same functions as the traditional paper-based bill of lading. Although this regulation leaves room for maneuver, there is as yet no convincing overall solution for the switch to digital bills of lading. For this reason, it is important to define clear legal criteria for an electronic bill of lading and also for all other digital traditional papers.

Outlook - Blockchain technology as a solution?

Because of its decentralized structure, blockchain could serve as a suitable technological solution for converting the bill of lading into digital form. An indication of this can be found in the commentary on the Rotterdam Rules: "For example, one conceivable model could be based on a technical device that ensures the uniqueness of an electronic record, so that the record itself can be -passed- down a chain of negotiation." (translation). The difficulty lies in managing the tension between the legal requirements, the practical functions and the technical realization of the digital bill of lading.

Haptics project
In the brief profile of the "Smart Data Economy" funding projects, the German Federal Ministry for Economic Affairs and Energy presents the HAPTIK project. The research objective is to digitize the bill of lading using blockchain technology. In this project, a platform is being developed that will make it possible to replace analog ship bills of lading with their digital equivalent. The HAPTIK project fully maps this paper-based process in ocean freight onto a blockchain, digitizes the transport documents required in international trade, and can thus realize a huge increase in efficiency. The platform, which is based on blockchain technology, will be designed to be application-neutral so that it can act as a standard for any form of token-based trade. HAPTIK is expected to accelerate global trade shipping while making it more cost-efficient.

Conclusion

In ocean freight, a centuries-old documentation requirement still applies. Although the need for Automation steadily growing, the Bill of Lading is still in use today in paper form. This analog process is time-consuming and long since no longer appropriate. Whether blockchain technology will revolutionize overseas shipping has not yet been conclusively determined - but research is underway. How long it will take for digitization to completely reform maritime trade remains to be seen.

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