When and Why You Should Use a Service Bill of Lading

Logistics and freight transportation demands critical paperwork as they move the goods across the world. They include various documentations and legal formalities, one of the most important documents is a service bill of lading. A service bill of lading a legal document mandatory in different scenarios. Here, you will understand when and why you should use a service bill of lading to streamline shipping processes and come under legal records for the movement.

What Is a Service Bill of Lading?

A service bill of lading is a specific legal document issued not by the actual vessel operator but by a freight forwarder or a non-vessel operating common carrier (NVOCC). People still confuse it with a bill of lading issued by the shipping line, but it is issued by a freight forwarder. It acts as a receipt and legal contract between the shipper and the freight forwarder.

To understand it simply, think of it like a moving company that transports your household items during relocation. Similarly, when you hire a freight forwarder to handle your cargo, they issue a service bill of lading as proof of the arrangement between the two parties.

When Should You Use a Service Bill of Lading?

The following are various situations where a service bill of lading is a mandatory document to meet compliance requirements.

• Working with Freight Forwarders

The primary scenario for using a service bill of lading occurs when you engage a freight forwarder to manage your shipment. Freight forwarders are not the actual vessel owners but act as intermediaries to arrange transportation on your behalf.

For instance, if a small-scale electronics retailer plans to import goods from overseas but lacks the shipment volume to deal directly with shipping lines, the retailer would hire a freight forwarder who issues a service bill of lading and deals with the shipping lines on the retailer’s behalf.

• Consolidated Shipments

You also require a service bill of lading when your cargo is part of a larger consolidated shipment. Freight forwarders are hired when shipments are small, as they combine multiple smaller shipments from different clients into one container to reduce costs. They may use one container for several small shipments, but each shipper receives their own service bill of lading. The main or master bill of lading, which is issued by the shipping line, is held by the freight forwarder.

• Door-to-Door Services

A service bill of lading is also needed for comprehensive logistics services beyond basic ocean transport. These services include inland transportation, customs clearance, and warehousing. A service bill of lading is required beyond ocean transport because it covers the entire service package provided by the freight forwarder.

• Limited Direct Access to Carriers

Small and medium-sized businesses that do not ship frequently enough to establish direct relationships with major shipping lines should use a service bill of lading. In such cases, the freight forwarder acts as an intermediary, making international shipping accessible to businesses of all sizes.

Why You Should Use a Service Bill of Lading

A service bill of lading is one of the most essential legal documents in the maritime industry and offers several significant benefits, making it an important tool for water movement.

• Simplified Operations

You receive a service bill of lading when you hire a freight forwarder who is your presenter for the shipping process. The freight forwarder manages everything for you, including ocean and road transportation. You are saved from the hassle of coordinating with various shipping lines, trucking companies, and custom brokers as your freight forwarders handle that for you. For you, the freight forwarders are the single point of contact and to get things done professionally.

• Cost Efficiency

Freight forwarders are professionals with significant experience and therefore negotiate better rates and find alternatives to save you money. They generally move goods in bulk and provide you with a legal document for this arrangement known as a service bill of lading. These forwarders also ensure that you only pay for the space your goods occupy in the container rather than paying for the entire container.

• Flexibility and Convenience

A service bill of lading provides flexibility in shipping arrangements when freight forwarders handle end-to-end services for you. They arrange various transportation modes as needed and handle all documentation, even any adjustments needed in the routes. Small businesses greatly benefit from such arrangements and save on expenses.

• Comprehensive Service Coverage

A service bill of lading is essentially your ticket to end-to-end service. The freight forwarder is legally appointed to handle every task from origin to destination. Legal documentation, industry compliance, various modes of transportation are all responsibilities of a freight forwarder. This is a comprehensive approach for any type of business planning to move goods overseas. 

• Better Support for Small Volumes

According to a study, small-scale businesses find freight forwarders a great option to move goods across the world even with small quantities. The businesses don't need to pay for the entire container but the portion occupied by their goods. This arrangement is legally documented via service bill of lading. 

Key Considerations

A service bill of lading is a shipping document with known benefits to the industry. This document authorises a freight forwarder to represent you in shipping operations. It also helps you claim in case of any disputes or legal misunderstandings.