What's going on with the supply chain? Ever since the Ever Given got stuck in the Suez Canal, the eyes of the world seem to be on the global supply chain like never before.
In honor of that newfound popularity, we're diving into the similarities and differences between a waybill and a bill of lading. Why these documents? Well, if bills of lading (BOLs) are the primary document of land-based freight, waybills rule the high seas.
Both documents are integral to the supply chain industry. They also include a lot of the same information. But are these two documents interchangeable? Or does a waybill and a bill of lading mean two different things entirely? What if it's a little of both? Let's find out the truth about waybills versus bills of lading, including how it all relates to the discussion surrounding supply chains.
Waybills vs. Bills of Lading
First of all, why does drilling down on these definitions matter? Well, like most industries, there's a lot of terminology that gets thrown around in logistics. Different branches of the industry? Different countries? Even different companies can all use their own terms, acronyms, and shorthand!
In short, terminology can get confusing and lead to frustration. Have you ever seen two people use different names for the same thing? So let's do our part and try to tidy up this corner of the internet. Let's get clear on our definitions for waybills and bills of lading, then take a deeper dive into the documents behind your favorite latest freight stories!
So, what do these two documents share in common? They're both shipping documents, and depending on the shipment, you'll typically need one or the other.
Bills of Lading
BOLs are probably the most important document in the freight industry. That's because a BOL serves three primary functions:
- Evidence of a contract. A BOL is a contractually binding legal document used between a shipper and a carrier.
- A receipt of goods. A BOL specifies the type, quantity, and destination of the freight a driver is carrying.
- A document of title. A BOL is legal documentation of ownership.
On the other hand, waybills include much of the same information as a BOL but without the power of a contract.
A waybill is a document typically issued by the transporter of the goods and is sometimes called a "straight bill of lading" or a "consignment bill of lading." It shows basic details like the names and addresses of the sender and receiver. In addition, waybills include registration and identification numbers, as well as a description of the freight goods.
Here's a quick rundown of the primary information these documents include.
The Key Information Needed on Both Waybills and Bills of Lading
BOLs and waybills both include the following information:
- Shipper name
- Shipper address and contact information
- Carrier name
- Carrier address and contact or driver's information (identification number, phone number, etc.)
- Consignee name
- Consignee address and contact information
- Port or airport of loading
- Port or airport of unloading
- Ship or vessel's name and identification number
- Description of freight
- Condition of freight
- Identification marks on cargo
- Number of pieces, packages, or pallets
- Length, width, height, and weight of freight shipment
- Payment information
- Terms of the contract
Straight Bills of Lading, Seaway Bills, and Straight Consignments
When is a waybill good enough? When do we need a bill of lading? It's worth noting that in some countries, the consignee is required to produce a copy of the original BOL as well. If it's not required, a straight BOL streamlines the receiving process.
The waybill and straight BOL are typically used with prepaid freight, when the shipment won't be sold or traded during transit. A straight BOL will note only one consignee that can accept the freight.
A waybill is suitable for shipments between trusted parties that don't require letters of credit, settlements through a bank, or other third-party involvement. In other words, a sea waybill is valid instead of a BOL when a shipment is a straight consignment. And again, a straight consignment is a shipment that involves no credit, banking arrangements, or third-party sales of the goods.
A Note on Electronic Waybills and BOLs
Everything we've covered about waybills and BOLs is moving towards a digital standard. Digitized documents like electronic waybills and BOLs will streamline the entire supply chain documentation process. Digitized paperless documents lead to automating manual steps in the trade process. Once paperless, we should see fewer bottleneck issues.
The standardization process of digitized documents will be a challenge. But digitization will enable a greater level of security, visibility, and ease of transaction.
One example is e-waybills, an electronic version of waybills. India began implementing e-waybills across the nation. The idea was to find a way to optimize its freight delivery industry. The basic premise is that e-waybills provide a universal platform—one that allows shippers, carriers, and customers to get on the same page. Or should we say the same computer screen?
One way to think of the Indian e-waybill experiment is as a beta test for e-BOLs in North America and beyond. Regardless, the case for digitized documents is obvious. If you want to learn more about digitized documents, look into Vector, a leading digitization software company based in Silicon Valley.
So, Is the Ever Given Still Stuck?
As noted, it seems everyone is more aware of the supply chain than ever. For me, that goes back to when the Ever Given ran aground in the Suez Canal. Granted, the Suez Canal promptly returned to pumping ships through at a record pace. In fact, the canal averaged 51.5 ships in 2021. But that number continues to increase as new high-water marks for ship traffic keep getting set.
That said, it seems to me like the Ever Given is still stuck—in people's minds. Like a bad song on repeat, the Ever Given and its refrains seem to linger in our minds. Why?
Well, for starters, it was a powerful image that seemed to perfectly summarize a particular mood and moment in space and time. And yes, the Suez Canal and ocean freight are moving again. But now the bigger problem is the long delays at many worldwide ports. Indeed, the line of container ships waiting to get unloaded has kept getting longer!
The Supply Chain Narrative Kaleidoscope
The supply chain crisis is essentially like a mesmerizing kaleidoscope. Its reoccurring themes and colors keep popping up over and over again.
Even when we divert attention to other stories that might be more important, we get hit with another bizarre shortage report that relates to the supply chain. That said, when we dig into the issues facing exporters in Asia and importers in the US, it's important to remember one key thing. Loading ships for export is simpler! From a logistical standpoint, loading is easier than unloading ships full of imported goods.
That indicates a true trade balance may be very difficult to achieve. But we can hope to get there as an industry right? We can hope. Or we can take steps to actually get there with clean documents. Working with clean, digitized waybills and bills of lading is simply critical if we want to get out of our own way, and not hold up the process any more than it already is.
Finding the Way
Documents like waybills and BOLs are vital. They act as a receipt of cargo, and a negotiable bill of lading can also affect title transfer. Litigation in cross-border transactions is complex and costly. Not to mention, the legal system tends to create long delays. The best way to avoid litigation in general is to exercise due diligence. In other words, to fully understand the information and processes required.
I believe digitization, perhaps backed by blockchain, will ultimately be the path we'll take in the future. But first, we need to understand that a strong, efficient global supply chain is paramount to the success of all parties. I also believe we're getting there, albeit one supply chain news report at a time!
This post was written by Brian Deines. Brian believes that every day is a referendum on a brand’s relevance, and he’s excited to bring that kind of thinking to the world of modern manufacturing and logistics. He deploys a full-stack of business development, sales, and marketing tools built through years of work in the logistics, packaging, and tier-1 part supply industries serving a customer base comprised of Fortune 1000 OEMs.