Master bill of lading

Master bill of lading when the bill of lading is issued by the ship owner or operator, know as the carrier, this is called a master bill of lading. This type is the best type for the financier because it represents the contract of carriage between the shipper and the carrier.

Sometimes an agent will sign the master bill of lading. The full name of agent must be shown, together with an indication on whose behalf they are signing and what capacity. For example, a signature placed along with the words For and on behalf of the carrier, signed by Agencia Logistics as agent for the carrier Transporte Sud would be acceptable.

Functions of Master bill of lading

A Master bill of lading may perform three functions.

1. It is usually very good evidence of the terms of the contract for the receipt, carriage and delivery of the cargo.
2. It is often a negotiable document of title to goods carried, providing evidence of ownership of the cargo
3. It is acts as a receipt of cargo loaded aboard the vessel

Before signing the bills of lading, the Master should ensure that:

• the goods are actually aboard and the bill of lading is correctly dated
• the description of the goods complies with the mate's receipts, failing which the bill of lading should be claused
• that he only ever signs the same number of originals as is shown on the face of bill of lading
• the bill of lading contains a clause referring to any relevant charterparty, and includes the protection clause specified in that charerparty. Very specific wording is often required in order to achieve the protection of all relevant charterparty provisions, and if in doubt the master should consult the owners

Types of Bill of Lading

There are different types of Bill of Lading depends on the issuing party and its intended use:

• Ocean Bill of Lading (aka Master Bill of Lading) is issued by an ocean freight carrier and would generally cover the transport from sea port to sea port. Ocean Bill of Lading's are commonly requested for in Letter of Credits as only they truly represent the cargo.
• House Bill of Lading (aka Trough Bill of Lading) is issued by a Freight Forwarder and may be for the whole transport from origin to destination or only a portion of the transport. Lading for every shipment inside the container.
• Sea Waybill of Lading just like a Bill of Lading, is a transport contract between a merchant and the carrier to transport the goods from and to a said location. Unlike a Bill Of Lading, a Sea Waybill is not a document of title and need not be presented to the carrier in exchange of the cargo
• Feeder/Service/Cover bill a bill of lading issued by a sub-carrier to the main carrier under a combined transport or trough Bill of Lading, which covers only the stage and form of carriage performed by the sub-carrier, e.g. carriage by barge of parcels of cargo either from inland ports or from smaller or more remote coastal ports to a principal coastal port served by a combined transport liner service operator

Examples of Master bill of lading

• A Master bill of lading is typically issued when goods are shipped in containers, such as in a container ship, and represents the contract between the shipper and the carrier.
• It is also used when goods are shipped by air. A Master bill of lading is issued by the carrier to the shipper, and is usually required for customs clearance.
• It is issued by a freight forwarder when goods are shipped by multiple carriers, such as from point A to point B to point C.
• When goods are shipped by rail, a Master bill of lading is often used to document the contract between the shipper and the railway company.
• In the case of bulk cargo, such as oil or grain, a Master bill of lading is issued by the carrier to the shipper and is used to document the terms of the contract.

Advantages of Master bill of lading

A master bill of lading provides several advantages to the shipper and financier, including:

• It is usually considered the most secure document in the shipping process, as it is a legally binding contract between the shipper and carrier.
• It can be used as a document of title and evidence of ownership of the goods, allowing the financier to take possession of the goods without having to take physical delivery.
• The shipper can use the master bill of lading to prove that the goods have been delivered to the carrier, so that they can be released to the consignee.
• It can also be used as a negotiable instrument, allowing the shipper to transfer ownership of the goods to a third party.
• The master bill of lading can also be used to determine the liability of the carrier in case of damages or loss of the cargo.

Limitations of Master bill of lading

A master bill of lading has several limitations, including:

• It does not guarantee the condition of the goods upon delivery, as it is the responsibility of the carrier to ensure safe transport.
• It does not provide any legal protection to the shipper or recipient of the goods, and it is the responsibility of both parties to be aware of any applicable laws or regulations.
• It is not a valid document of title, meaning that the ownership of the goods cannot be transferred through the master bill of lading.
• It does not provide any evidence of payment, meaning that the shipper must provide a separate document to prove payment has been made.
• It does not guarantee that the goods will arrive at the agreed upon destination, as the carrier is responsible for navigating the sea route safely and efficiently.

Other approaches related to Master bill of lading

Apart from the Master Bill of Lading, there are other commonly used approaches in the shipping industry which can be used to facilitate the transportation of goods.

• Through Bill of Lading: Through Bill of Lading is an agreement between the shipper and the carrier which allows the goods to be transferred from one carrier to another during the course of shipment.
• Order Bill of Lading: This is a bill of lading which is issued to the shipper on request and orders the carrier to deliver the goods to the consignee, specified in the document.
• Negotiable Bill of Lading: This type of bill of lading is transferable to another party, as it is not linked to the original shipper and consignee.
• Combined Transport Bill of Lading: This type of bill of lading is used when the goods are transported using multiple modes of transport, such as ship, truck, train, etc.

In summary, apart from the Master Bill of Lading, other commonly used approaches in the shipping industry are Through Bill of Lading, Order Bill of Lading, Negotiable Bill of Lading and Combined Transport Bill of Lading.

Footnotes

Master bill of lading — recommended articles

Bill of lading — Ocean bill of lading — Sea waybill — Waybill — Shipping note — Contract of affreightment — Free carrier (FCA) — Acknowledgement of receipt — Freight prepaid

References

• Jones S.A., (2018), Trade and Receivables Finance,Springer, Switzerland.
• Michelmann M., (2010), Load, Seal & Ship, Cengage Learning, Singapore.
• Randhawa G.S., (2016), Cargo Handling & Stowage, Jones & Bartlett Learning, New York.

Author: Daria Polewka