Glossary


Terms & Glossaries of Shipping and Trading

Lading

Lading is a ​critical freight industry term, primarily associated with ​Bill of Lading (B/L), the cornerstone document in international shipping. While "lading" itself refers to the act of loading cargo, its significance lies in its integration into standardized freight documentation and contractual frameworks.

What is Lading?

1. Definition and Core Function

The term ​lading is most prominently used in the phrase ​Bill of Lading (B/L), a legally binding document issued by a carrier (e.g., shipping company) to acknowledge receipt of goods and outline the terms of transport to a specified destination.

It serves three key purposes:

Receipt of Goods: Confirms the carrier has received the cargo in apparent good condition.

Contract of Carriage: Specifies obligations between shipper, carrier, and consignee, including delivery terms under ​Incoterms 2020.

Title of Ownership: Acts as a negotiable instrument, enabling transfer of cargo ownership during transit.



2. Operational and Legal Implications


Documentation Standards

Clean vs. Unclean B/L: A ​clean bill of lading indicates no visible damage to cargo during loading, while an ​unclean B/L notes defects, impacting payment under letters of credit (LCs).

On-Board Notation: Phrases like ​**"Laden on Board"** or ​**"Shipped in Apparent Good Order"** are added to B/Ls to confirm cargo loading onto a vessel, aligning with ​ISBP 79 banking practices.


Risk and Liability

Under ​Incoterms 2020, the B/L defines risk transfer points. For example, in ​FOB (Free on Board) contracts, liability shifts from seller to buyer once cargo is loaded.

Discrepancies in lading details (e.g., weight, cargo condition) can lead to disputes, demurrage charges, or customs delays.



3. Types of Lading Documents

Straight Bill of Lading: Non-negotiable, specifying a fixed consignee.

Order Bill of Lading: Negotiable via endorsement, commonly used in LC transactions.

Through Bill of Lading: Covers multimodal transport (e.g., sea-to-rail).

Express Bill of Lading: Expedited version for time-sensitive shipments.



4. Compliance and Global Trade

Customs Clearance: Accurate lading details (e.g., gross weight, HS codes) are mandatory under WCO SAFE Framework to prevent penalties.

SOLAS VI/2: Requires verified gross mass (VGM) of laden containers to ensure vessel stability.

Banking Compliance: Banks rely on B/Ls to release payments under LCs, emphasizing the need for error-free lading annotations.