What Is a Bill of Lading?

Quick Answer

A Bill of Lading (B/L or BOL) is a legal document issued by a carrier (or its agent) that serves three functions: receipt of goods, evidence of the contract of carriage, and document of title. For piping material shipments, the B/L is required to claim goods at the destination port, process letters of credit, and prove shipment under the agreed Incoterms.

Three Functions of a Bill of Lading

Function	Description
Receipt of goods	Confirms the carrier received the described cargo in apparent good order
Contract of carriage	Evidences the terms under which the carrier will transport the goods
Document of title	The holder of the original B/L can claim the goods at destination

The title function makes the B/L unique among shipping documents. Whoever holds the original B/L controls the cargo. This is why banks require original B/Ls for letter-of-credit transactions—it gives the bank security over the goods until the buyer pays.

Key Information on a Bill of Lading

Field	Content
Shipper	Seller or seller’s freight forwarder
Consignee	Buyer, buyer’s agent, or “To Order” (negotiable)
Notify party	Party to be notified upon arrival (often the buyer)
Vessel name	Ship carrying the cargo
Port of loading	Origin port (e.g., Shanghai, Mumbai, Pohang)
Port of discharge	Destination port (e.g., Jubail, Jebel Ali, Houston)
Description of goods	Quantity, weight, dimensions, marks, number of packages
Freight terms	Prepaid (CIF) or Collect (FOB)
Date of shipment	On-board date (critical for L/C compliance)
Number of originals	Typically 3 originals (3/3)

Types of Bills of Lading

Type	Description	Use Case
Ocean B/L (OBL)	Issued by the shipping line	Direct carrier booking
Master B/L (MBL)	Issued by the shipping line to a freight forwarder	Forwarder consolidates multiple shipments
House B/L (HBL)	Issued by the freight forwarder to the shipper	Forwarder-managed shipments
Switch B/L	Replacement B/L issued at an intermediate port	Trading companies that do not want to disclose the origin supplier
Through B/L	Covers multimodal transport (sea + rail/truck)	Inland destination beyond the port
Seaway bill	Non-negotiable; consignee receives goods directly	Trusted buyer-seller relationships (no L/C)
Clean B/L	No clauses noting cargo damage	Required for L/C transactions
Claused B/L	Carrier notes damage or discrepancies	Banks typically reject for L/C payment

Clean vs Claused B/L

A clean B/L states the goods were received in “apparent good order and condition.” A claused (or foul) B/L includes notations such as “bags torn,” “rust stains on pipes,” or “bundles damaged.” Banks universally require clean B/Ls for letter-of-credit transactions per UCP 600 rules.

Common Mistake

Shipping pipes with visible surface rust without protective coating. The carrier notes “surface rust” on the B/L, creating a claused document that the bank rejects for L/C payment. Always ensure proper surface preparation and packaging before delivery to the port.

Bill of Lading in the Payment Cycle

For L/C-backed transactions—common in large piping material orders—the B/L is part of the document set presented to the bank:

Document	Purpose in L/C
Bill of lading (original)	Proves shipment and transfers title
Commercial invoice	Confirms price and quantity
Packing list	Details weights, dimensions, bundle marks
Certificate of origin	Confirms manufacturing country
Mill test certificates	Proves material compliance (EN 10204 3.1/3.2)
Insurance certificate	Proves cargo insurance (if CIF/CIP)

The seller presents these documents to the advising bank, which forwards them to the issuing bank. Payment is released only if all documents comply with the L/C terms. A single discrepancy—wrong date, missing original, claused B/L—can delay payment by weeks.

For the complete list of shipping documents and their role in EPC procurement, see the detailed guides.

Read the full guide to pipe classes and specifications