Shipping & logistics B/L

Bill of lading (B/L)

The key document of sea transport, issued by the carrier to show that it has received or loaded the goods. It has three functions: a receipt for the cargo, evidence of the contract of carriage and, when issued “to order”, a document of title. Because whoever presents an original can take delivery, it is the backbone of letters of credit and cash-against-documents deals. A “clean on board” B/L shows the goods were loaded in apparent good order.

Related terms

Telex release and sea waybill

Ways of releasing cargo at destination without waiting for the original bill of lading to reach the buyer. With a telex release, the originals are surrendered to the carrier at the load port and the carrier instructs its destination agent to release the goods. A sea waybill is a non-negotiable transport document under which the goods are simply delivered to the named consignee. Both are fast, but the seller loses control of the goods, so payment should be secured beforehand.

Letter of credit (L/C) L/C

A documentary payment method in which the buyer’s bank (issuing bank) undertakes to pay the seller against timely presentation of complying documents specified in the credit – bill of lading, invoice, certificate of analysis, certificate of origin and so on. Banks deal only with documents, not goods, so the credit terms must match the sales contract exactly and be achievable. It is the most common secure payment method for large raw material deals and first-time counterparties.

Charter party (C/P) C/P

The contract between a shipowner and a charterer governing the use of a ship. Under a voyage charter a specific cargo is carried between named ports at a freight per tonne; under a time charter the ship is hired for a period at a daily rate; under a bareboat charter it is leased without crew. Standard forms include GENCON, NYPE and ASBATANKVOY. Bulk sales contracts should be drafted so that loading rates and demurrage terms are back-to-back with the charter party.

Free On Board FOB

One of the most common terms in raw material trade, used only for sea and inland-waterway transport. The seller loads export-cleared goods onto the vessel nominated by the buyer at the port of shipment, and risk passes once the goods are on board. The buyer arranges freight and insurance; for bulk cargo the loading rate, laytime and demurrage must be agreed separately. For containerised goods FCA is the more accurate choice.

Explained in the trade handbook

Trade handbook