What is a Bill of Lading and Purchase Order

Exporting and Importing can often be an extremely complicated and mundane process as there are so many rules, regulations as well as countless  number of procedures to adhere to. This, many a times, may require to prepare and submit documents for import and export. Usually, freight forwarders would prepare it  for us, but it is also good to know for ourselves as to how to complete the relevant documents by understanding what the terms mean. As such, in our new article series titled “Export Terms”, we would  introduce you to all the various terms used in the international trade, be it through air, land or sea freight. We would roll out one related article on a regular basis, which would help you to get a comprehensive understanding as to the document preparation for the purpose of doing trade internationally.

So what is a bill of lading?

A Bill of Lading refers to a legal document between the person shipping the goods, who is known as the shipper, as well as the carrier or transporter of the goods.  Key information on the Bill of Lading include information related to the named destination, the type as well as quantity of the goods being shipped. Furthermore, the document doubles up as a receipt of shipment when the goods are delivered at the named destination. Regardless the mode of transport taken, the Bill of Lading must be shipped with the goods and must be a signed as well as verified by the shipper, carrier and person receiving the goods.

How does it work?

In most cases, the Bill of Lading needs to be utilised alongside a Purchase Order. Take for example,, a furniture  producing plant needs more wood to produce the furniture. As such, the manager prepares the Purchasing Order filling in the type of wood as well as its quantity needed. After, completing the Purchasing Order, he emails it to the wood  supplier, who in turn prepares the goods.

When the logistics company receives the goods from the supplier, both he logistics company and the supplier sign a Bill of Lading, before attaching it to the goods for the shipment. When the wood arrives at the furniture factory, the manager would verify the accuracy of the goods delivered by comparing his Purchasing Order with the Bill of Lading that just arrived with the shipment. If the information matches, the manager also signs the Bill of Lading and pays any sum that is owed to the logistics vendor.

Information On The Bill of Lading

A bill of lading contains the consignor’s  as well as consignee’s name, port or place of departure and destination, name of the vessel or mode of transport, dates of departure and arrival, list of goods being transported, with the number of packages and packaging type, weight or volume of the cargo as well as the freight charges are all included in the Bill of Lading. It is important to know that the document serves as a proof of ownership to the goods.

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