Bill of lading explained: types, fields and telex release
The three functions of a bill of lading, straight, to-order and bearer types, the fields to check on the draft, the full set of originals and when a telex release is safe.
Alper AzakoğluForeign trade consultant
4 min read
Updated:
What is a bill of lading?
A bill of lading (B/L) is the document a carrier issues to show it has received goods or loaded them on a vessel. In sea trade it often acts like the goods themselves: whoever holds the original can collect the cargo at the destination port.
Three functions
- Receipt: Shows the carrier received a stated quantity of goods in a stated condition.
- Evidence of the contract of carriage: The terms of carriage are on the bill or in the conditions it refers to.
- Document of title: A “to order” bill is transferred by endorsement, and control of the goods moves with it. That is why banks ask for it under letters of credit.
Types of bill of lading
| Type | Meaning |
|---|---|
| Straight | Names the consignee; the goods are released only to that party. Not transferable by endorsement. |
| To order | Marked “to order” or “to order of [bank]”; transferable by endorsement. The usual type under letters of credit. |
| Bearer | Whoever holds it can take the goods. Rarely used because of the risk of loss and misuse. |
| Shipped on board | Shows the goods have been loaded on the vessel. Banks and buyers usually require it. |
| Received for shipment | Shows the carrier has received the goods, not yet loaded. An “on board” notation can be added later. |
| Clean | No remarks about defective goods or packing. |
| Claused | Carries remarks such as “packaging torn” or “wet”. Usually not accepted under a letter of credit. |
| Master and house | The carrier issues the master bill of lading; a freight forwarder that consolidates cargo issues the house bill of lading. |
What to check on the draft
When the carrier or forwarder sends the draft, compare these fields with the proforma, commercial invoice, packing list and, if there is one, the letter of credit before you approve it.
| Field | What it says |
|---|---|
| Shipper | Usually the exporter |
| Consignee | The buyer, a bank, or “to order” |
| Notify party | Who is told on arrival, often the buyer |
| Port of loading / discharge | Where the goods are loaded and unloaded |
| Vessel / voyage | Vessel name and voyage number |
| Description of goods | Goods, number of packages, gross weight, volume, container and seal numbers |
| Freight prepaid / collect | Whether freight is paid at origin or at destination, matching the delivery term |
| Number of originals | Usually three (3/3) |
| Shipped on board date | Loading date; under a letter of credit, checked against the latest shipment date |
Watch out
Under a letter of credit, a single letter of difference in the buyer’s name, the port or the goods description can make the documents discrepant and delay payment. Check the draft line by line against the credit.
The full set and release
Bills of lading are usually issued in three originals plus copies; “3/3” means all three originals. Once one original is presented and the goods released, the others are void. That is why banks ask for the full set.
Sending originals straight to a buyer who has not paid means giving up control of the goods. Depending on the payment method, sending them through your bank is safer: how a letter of credit works.
Common mistakes
- Approving the draft without checking: Corrections after sailing cost money and time.
- Giving a telex release before payment: The goods can reach the buyer before you are paid.
- A freight remark that contradicts the delivery term: An FOB sale should say “freight collect”; CIF and CFR “freight prepaid”.
Documents without discrepancies
We check proforma, invoice, packing list and bill of lading against the contract or the letter of credit, and run the shipment with your forwarder and broker.
Frequently asked questions
What if the original bill of lading is lost?
The carrier will not release the goods without an original. Release usually needs a bank-backed letter of indemnity, which is slow and costly. Send originals by courier with tracking.
What is a telex release?
The originals are surrendered to the carrier at the port of loading, and the agent at destination is told to release the goods without them. It saves courier time, but the buyer can take the goods before paying, so use it only when payment is secured.
What is the difference between a sea waybill and a bill of lading?
A sea waybill is not a document of title: it does not need to be presented to collect the goods and cannot be transferred by endorsement. It is practical with trusted buyers and prepaid sales, but it does not keep control of the goods with you.
Who issues the bill of lading?
The carrier or its agent, or a freight forwarder for consolidated cargo. The exporter provides the details in the shipping instructions and checks the draft.
Sources
- International Chamber of Commerce (ICC), UCP 600 rules on transport documents: iccwbo.org
Author
Alper Azakoğlu
For 30 years he has worked as foreign trade consultant and foreign trade manager for manufacturers in industrial zones across Türkiye. He writes these guides from his own work in the field.