Last Updated: 9/15/2024
If you’ve ever looked at a bill of lading (BOL), you’ll see three parties named on the document: the shipper, the carrier, and the consignee.
If you’re new to the logistics world, these terms may be unfamiliar—or confusing.
In order to make it simple for you to 1) understand your bill of lading and 2) give your freight forwarder the information they need to effectively move your shipment, we’ll walk you these three main parties on your bill of lading.
What Is a Bill of Lading
A bill of lading (BOL) is a legal document issued by a carrier that contains all the information it needs to correctly move a shipment, including the type, quantity, and destination for the cargo.
Party #1: The Shipper
The shipper on a bill of lading is the person who is responsible for packing and preparing a shipment to turn over to the carrier for transport.
For example, the shipper might be:
- A supplier sending parts to a manufacturer.
- A vendor sending goods from China to a reseller in the U.S.
Why this term can cause confusion: Many people new to logistics confuse the terms shipper and carrier. For example, you might hear someone call UPS “the shipper.” Let’s clear this up by talking about the carrier.
Party #2: The Carrier
The carrier is the party that actually moves your cargo.
For example:
- UPS is a carrier.
- Steamship lines, truck lines and airlines—these are all carriers who own and operate transportation equipment.
The carrier will ultimately deliver the shipment to the third party in the agreement, the consignee.
Party #3: The Consignee
This final term is probably the least intuitive of the three.
A consignee is the person who’s designated to receive the shipment.
Let’s look at an example: a supplier (the shipper), sends parts via a steamship line (the carrier), which are intended for a manufacturer (who would be considered the consignee).
If you’re curious, the term originates from the concept of consigning, which Merriam-Webster simply defines as: “to give, transfer, or deliver into the hands or control of another.” In the arrangement, you have:
- A consignor, the party who hands over the goods, and
- A consignee, the party who ultimately receives these goods.
Why This Term Can Cause Confusion
In some scenarios, the consignee is not the person paying for the freight.
Take the example of a company who supplies mini shampoos and conditioners for hotels. Instead of charging its customers separately for freight, the supplier simply builds shipping into their overall cost.
When they need to send a shipment to one of their hotel customers:
- The supplier pays its freight forwarder to deliver the shipment to the hotel.
- However, the hotel would still be the consignee. Even though the hotel isn’t paying for the freight, they’re still receiving the shipment.
Why Is a Bill of Lading So Important to the Shipping Process?
As we mentioned earlier, a bill of lading is a legal document. It outlines the obligations and responsibilities of the shipper, carrier, and consignee.
In its role as a legal document, the bill of lading serves three broad purposes:
- Acknowledges receipt of cargo by the carrier: In other words, the BOL is proof that the carrier has taken control of the goods from the shipper.
- Provides evidence of “contract of carriage:” In plain language, the bill of lading documents the agreement between the shipper and the carrier for the transport of the freight.
- Acts as the “document of title:” In other words, the bill of lading proves the ultimate ownership of the goods.
Given these important functions—and the legal weight of the document—make sure you check all of the information on your bill of lading carefully before signing it.
Decoding the Terminology of Logistics
As with many specialized industries, logistics has its own set of terminology. Many of these terms can be confusing to newcomers. (Take “drayage,” for example!) If you’re looking for more information about the terms you hear when shipping freight, check out our glossary of common transportation and logistics terms.
Our experts would be happy to help with any additional questions you might have. Whether you’re the shipper or the consignee, we can help you make your next shipment simpler. Just reach out to us for a free consultation to get started.
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