It’s understandable that the terms “waybill” and “bill of lading” might cause some confusion since they sound so similar. However, it’s important to understand the difference between these two terms so that you can safely and effectively ship and receive products. So here’s everything you need to know about waybills and bills of lading, including the similarities and differences between the two terms:
What Is a Waybill?
A waybill is a shipping document that is used to properly identify the shipper and the recipient in addition to the origin and the destination of the goods in question. A waybill also provides a detailed description of the goods included in the shipment. Essentially, a waybill is a document that provides important information about a shipment.
There are several different types of waybills, including astray waybills, blanket waybills, and interline waybills. An astray waybill is used for shipments that were separated from the original document. A blanket waybill can be used for two or more shipments on a single document. An interline waybill can be used for a shipment by two or more different carriers.
As you can see, waybills are pretty straightforward and pretty important.
What Is a Waybill Used For?
A waybill is used to provide relevant information about a shipment. It is also used to track the shipment. Several copies of the waybill are used during the shipping process so that each party involved can have all the information needed to get the shipment from its origin to its destination.
What Is the Difference Between a Sea Waybill and a Bill of Lading?
A sea waybill is used to provide information about a sea shipment. As you know, a waybill describes the origin, destination, shipper, and sender. However, a sea waybill is not a legal contract, whereas a bill of lading is. A bill of lading essentially acts as the title to the goods in question, so if you have possession of the bill of lading, you have possession of the goods.
What Is a Bill of Lading?
A waybill and a bill of lading may look similar at first glance, but there are some key differences. For starters, a waybill is merely informative, whereas a bill of lading is authoritative. A waybill is also non-negotiable, whereas a bill of lading can be negotiated between the shipper and the recipient.
For example, a formal bill of lading may not be needed if the two sides have an established and trusting relationship. However, it’s a good idea to establish a bill of lading since it also serves as a receipt for the goods since three different parties must sign it along the way — a carrier’s representative, a shipper’s representative, and the recipient.
There are a few different types of lading bills depending on the shipment method. An ocean bill of lading (OBL) is used for shipments transported by boat, an airway bill of lading (ABL) is used for shipments transported by plane, and a ProBill is used for shipments transported by boat the ground on a truck or train.
What Information Is Included in Waybills and Bills of Lading
Even though waybills and bills of lading serve different purposes, they both include the same information. Here’s what you can find on both a waybill and a bill of lading:
- The name of the shipper
- The address of the shipper
- The shipper’s contact information
- The name of the carrier
- The address of the carrier
- The carrier’s contact information, including identification number
- The name of the consignee
- The address of the consignee
- The consignee’s contact information
- The port or airport of loading
- The port of airport of unloading
- The ship or vessel’s name
- The ship or vessel’s identification number
- Shipment dates
- The description of the freight
- The condition of the freight
- Number of pieces, packages, or pallets of cargo
- Length, width, height, and weight of the freight
- Payment information
- Terms of the contract
- Special handling instructions
What Is the Power of a Contract?
The power of a contract refers to the legally binding nature of a contract. According to the legal definition, a contract is an agreement between private parties creating mutual obligations and is enforceable by law. In order to be legally enforceable, the contract must feature a mutual asset, adequate consideration, capacity, and legality.
In the case of shipping, the mutual asset would be the goods being shipped; adequate consideration would be the promise of funds in exchange for the goods being shipped, and capacity would be the ability of the shipper to provide the goods and the recipient to provide the payment.
Since a contract is legally binding, both sides have avenues to remedy a potential breach of contract through the courts. The court may choose to award expectation damages, reliance damages, or unjust enrichment to the plaintiff as a result of the breach of contract.
Are There Any Similarities Between a Waybill and a Bill of Lading?
By now, you should be familiar with the differences between a waybill and a bill of lading. But what about the similarities? At the most basic level, waybills and bills of lading are both shipping documents that are used to ship goods via truck, train, plane, and boat. Waybills and bills of lading also contain a lot of the same information, specifically, information about the shipper, recipient, carrier, and goods in question. However, that’s where the similarities end since waybills aren’t legally binding and bills of lading are.
Why Are Bills of Lading Important?
Bills of lading are an important component of a safe and efficient shipping process. And while they may seem extremely formal and even unnecessary, here are some reasons why you may need a bill of lading:
- Legal protection: First and perhaps most importantly, a bill of lading provides legal protection to all parties involved in the shipment. It protects the recipient in the event that the goods are not provided as promised and protects the shipper if payment is not provided as promised. With a bill of lading, there are legal remedies that parties can undertake to rectify the breach of contract.
- Evidence of shipment: Furthermore, a bill of lading provides evidence that the goods in question have actually been shipped and are on their way to the recipient. Since the bill of lading is established when the order is placed, it then acts as evidence that its terms are being met when the goods are shipped and eventually delivered.
- Receipt of goods: Speaking of delivery, a bill of lading also provides proof that the goods have been received as promised. Since signatures are required on the bill of lading at every step, it’s easy to see who took control of the goods and when. Additionally, it can help determine which party is responsible for any damage that occurs to the goods along the way.
- Proof of title: On a similar note, the bill of lading acts as the title for the goods in question since whoever is in possession of the bill of lading is in possession of the goods and is, therefore, responsible for them.
When Are Bills of Lading Necessary?
While bills of lading aren’t necessary in all cases, here are some circumstances in which they should be used:
Letters of Credit
A bill of lading is necessary when a letter of credit is being used. A letter of credit is a document issued by the recipient’s financial institution that essentially promises payment for the goods being shipped. Letters of credit are commonly used in the international shipping of goods wherein the buyer and the seller are located in different countries. However, the line of credit can only be utilized if certain conditions are met — these conditions can be outlined in the bill of lading.
So how does the process work? For starters, the shipper and the recipient will come to an agreement regarding the goods being shipped, the price, quantity, time, and place of delivery. From there, the recipient will contact their bank and have them issue a letter of credit with the shipper listed as the beneficiary. Depending on the situation, the letter of credit can stipulate that the payment is taken out of a bank account or provided through a loan.
In the meantime, the shipper provides the letter of credit to their financial institution and is provided a line of credit until the delivery conditions have been met. Once the delivery conditions have been met, the shipper can provide the bill of lading to their financial institution as proof of this so that they can receive the final payment. However, it’s important to keep in mind that it can take some time to verify that the delivery conditions have been met and to receive the final payment.
Bank Settlements
A bill of lading is also necessary when a bank settlement is being used. A bank settlement is used to process electronic transactions between merchants and customers. Similar to a letter of credit, a bank settlement involves a financial institution to make sure that any agreed-upon conditions are met before the customer’s payment is released to the merchant. In most cases, settlement can take anywhere between 24 to 48 hours to process if there are no issues or disputes.
Third-Party Involvement
Finally, a bill of lading is necessary when there’s third-party involvement in a shipment. Most of the time, a shipment involves two parties — the sender and the recipient. However, sometimes a shipment involves a third party in addition to the two main parties. This is because a bill of lading can be used to transfer the goods in question to a third party effectively.
How to Create a Bill of Lading?
Now that you know what a bill of lading is, why they’re important, and when to use them, it’s time to create one of your own. With the right information and template, creating your own bill of lading can be easy! If you don’t want to do it on your own, there are software tools and templates out there that you can use.
As the seller, you’re responsible for filling out the bill of lading based on the information of the shipment. For starters, you need to fill in the date that you’re creating the bill of lading. Then, you will need to enter a bill of lading number. From there, you will need to apply a barcode so that it can be easily scanned along the way.
The next step involves entering the ID number or PRO number for both the seller and the shipper. Most importantly, you need to add the full address of where the goods are being shipped and where the goods are being shipped to. In addition to the address, you need to include both parties' names and phone numbers so that they can be easily contacted. If any third parties are involved in the shipment, you should also provide their names, addresses, and phone numbers.
Provide a guaranteed delivery date and time based on your initial agreement with the recipient. Include the necessary payment amount and payment information for the shipment. Then, provide information about the goods being shipped, including the number of pieces, the measurements, the weight, the value, and a description.
Finally, have an authorized agent sign the bill of lading so that it becomes legally binding and can be used to ship the goods in question.
Conclusion
As you can see, shipping can be complicated, but it doesn’t have to be with the right logistics provider. RPM is a top logistics provider in both vehicle and freight transportation. We offer a whole host of transportation services to meet your diverse needs. For example, we have experience with countless industries from food and beverage to chemicals and everything in between.
We have an extensive network of over 30,000 carriers offering dry van shipping, flatbed shipping, reefer shipping, and more. We offer less-than-truckload shipping (LTL), full truckload shipping (FTL), expedited shipping, intermodal shipping, cross-border shipping, and drayage shipping.
No matter what you need to be shipped, we can make it happen safely and efficiently with our 98% on-time delivery rating and our network of vetted and monitored carriers.
So reach out to our logistics experts today for a customized quote.
Sources: Bill of Lading Definition | Investopedia
Contract | LII / Legal Information Institute
Bill of Lading Form: How to Fill Out | Adobe
