Nope! Unlike your water bill, It is not a bill that you owe. In this knowledge theme, we will explore the concepts of bill of lading and its applications in maritime trade in the oil and gas business.
“Gosh I am dying under the weight of all these bills that I am laden with” QUIRKY JOKE
A bill of lading is a very important shipping document. In the following example, we will demonstrate the basic application of a bill of lading (B/L or BoL) and its associated concepts.
Our petroleum product trading surrogate ENERGY SUPPLY & TRADING LIMITED (ES&T) has agreed to a sale and purchase contract with her counterparty COMMODIX TRADING S.A (CT-S.A) to buy 15,000 tonnes of Gasoil on laycan 06 – 09th January, 2017 at the seller’s storage terminal in Antwerp, Belgium (FOB – Free on board) for onward delivery to Lagos Nigeria. ES&T contracted the vessel M/T BETA PIKIN from her owners to load the cargo from Amsterdam and deliver safely to a nominated port in Lagos.
Once the product has been completely loaded on the vessel, the Master (acting on the authority of the shipping company or owners of vessel) of M/T BETA PIKIN must issue a bill of loading in respect of the cargo to the owner of the cargo (in this case ES&T) as;
Confirmation of a carriage contract, a proof that the vessel owner agreed to transport the cargo on the vessel from the terminal in Amsterdam to Lagos for ES&T
Proof of receipt, indicating that the cargo was indeed brought on-board the vessel for transportation to Lagos
A document of title and ownership (or transfer of ownership) of the cargo; in the case the 15,000MT Gasoil on the M/T BETA PIKIN
As seen in our sample B/L, it provides a summary of vital cargo information on first sight. These include;
- Consignee: The named owner or title holder for the cargo in this case ES&T
- Consignor: The seller or supplier of the cargo in this case CT-S.A
- Load port: The place or location where the cargo was loaded
- Destination: The destination where cargo is headed
- The incoterm guiding the transaction (click here for more on incoterms)
- Type of product and quantity in desired measurements
- Date of that the B/L was issued
- Number of B/L issued
- Signature of the Master and stamp of the vessel
As with loading from a storage terminal on shore, a bill of lading is also issued when the cargo is transhipped from a mother vessel to a daughter vessel. The slight amendment is that the load port is then listed as ex-the mother ship at the place or position of transhipment.
An ocean B/L may be issued by the shipping company straight to a specific title holder or transferable (negotiable) on the order of the initial title holder. B/L are usually part of the documents required in trade finance arrangement between buyers and seller in international trades.
Now that you know what a B/L is used for and how it helps to ease international trade, go ahead and brag to your colleagues.
There will be a class test on Friday. As always, your questions and comments are important to us.