Logistics Terms What Are the Differences? Bill of Lading vs Air Waybill

There are several forms of freight forwarding contracts. In this article, we will compare the bill of lading, which is commonly used when transporting cargo by sea, and the air waybill, which is used when transporting cargo by air.

A bill of lading is a document in which the shipowner certifies that he has loaded his vessel with the cargo commissioned by the shipper or has received the cargo for shipment, and undertakes to carry it to the port of discharge or destination, where it will be delivered to the consignee or his instructions under certain conditions.

A bill of lading is a security that entitles the carrier to take delivery of the goods at a specified port of discharge after the goods have been loaded on board a vessel in accordance with the terms and conditions stated in the security. The issuer of a bill of lading is the carrier or shipowner, and it serves as evidence of delivery of the goods. Bills of lading can be divided into straight bills of lading, where a specific consignee is named on the bill of lading, and order bills, where the bill of lading does not name a specific consignee but simply states “To Order”, “Order of Shipper”, or “Order of xx Bank”. In practice, order bills of lading are commonly used and are transferable and tradeable.

The original bill of lading (OBL) can be a single document, but usually three documents (original, duplicate, and triplicate) are issued as a set. The original bill of lading must be handled with care, as the consignee will not be able to locate the shipment, and reissuing it is a complicated process. In addition, the bill of lading contains all the information related to the contract of carriage, so it is important to fill in the information carefully as any mistakes can be costly.

With the rapid growth of maritime transportation at the turn of the 19th century, ocean carriers began to include many disclaimers in the original bills of lading to secure favorable terms for themselves. However, these disclaimers became increasingly problematic, and in 1924, the International Law Association enacted the Hague Convention, which imposed a duty of care on carriers and prohibited disclaimers for breach of that duty. Finally, in 1971, the Hague Rules were amended to create the Hague-Visby Rules, which define the responsibilities of carriers and users.

1) Original Bill of Lading
This is the most fundamental bill of lading and is usually required to take delivery of the goods. The original bill of lading consists of three copies: the original bill of lading, a bank draft, and a photocopy. All three must be present in order to take delivery of the cargo, and a photocopy is not legally binding, thus requiring extra caution when handling.

2) Straight Bill of Lading
This is a non-transferable document, which means that only the party named in the document can take delivery of the goods. Straight bills of lading are often used for the transportation of cargo that does not require distribution, such as personal effects or moving goods, rather than trade cargo transactions.

3) Order Bill of Lading
The order bill of lading is a security that can be traded and can act as a security. In the case of an order bill of lading, the consignee field is left blank and is filled out by the instructor only. It is commonly used in most types of trade transactions.

4) Bearer Bill of Lading
On a bearer bill of lading, the consignee line is left blank and no specific consignee's name is written on it, meaning that anyone who holds it can take delivery of the goods.

5) Switch Bill of Lading
This is a document with a different exporter and actual shipper and is used to replace the original bill of lading provided at the time of shipment. It is usually used by intermediary traders to protect the exporter from exposure if the importer is reluctant to divulge the exporter's information.

6) Surrender Bill of Lading
This is a document representing that the exporter has relinquished its authority over the cargo. It is a kind of evidence that does not have the nature of a security but only proves the transportation contract and the acceptance of the cargo, and when issued as such, the goods can be delivered without the original bill of lading.

1) B/L No
- Bill of lading number to track the location of the shipment.

2) Shipper
- Name or business name of the shipper who contracts with the carrier and sends the cargo.
Shipper does not have to be the same as the beneficiary of the letter of credit, address and contact information may be omitted, and depending on the bill of lading, it may be listed as consignor instead of shipper.

3) Consignee
- The business name or name of the consignee receiving the goods.

4) Notifying Party
- Name and address of the importer.
Party to be contacted when the shipment arrives in the importing country.

5) Ocean Vessel (Vessel Name)
- Name of the vessel responsible for the transportation.

6) Port of Loading
- The place of loading to confirm the origin of the shipment.

7) Place of Receipt
- The place where the carrier receives the shipment from the shipper.

8) Voyage No.
- The direction of east, west, south, and north shall be written before and after the voyage number.
This is used to categorize exports and imports based on the port of departure.

9) Port of Discharge
- The place where the cargo is actually loaded onto the ship.

10) Place of Delivery
- The place where the carrier delivers the cargo to the consignee
This is where the carrier's liability actually ends.

Bills of lading come in a variety of forms, and you should add the information as appropriate for each form.

The air waybill usually consists of three originals and nine copies, each with a different color and purpose: green for the carrier, red for the consignee, and blue for the shipper. Only one blue shipper's original needs to be presented during the transaction.

The Warsaw Convention was the first air transportation convention, signed in Warsaw in 1929 to limit the liability of international air carriers and establish a uniform system for the handling of claims arising out of international aviation. In 1955, a treaty was signed in The Hague to amend the Warsaw Convention on certain rules of international air transportation, known as The Hague Amendment Treaty.

1) ①
Airline's unique number

2) ② ~ ⑥ Shipper(Sipper’s Name, Adress)
Shipper and consignee information

3) ⑦ Agent's IATA Code
The IATA code of the agent issuing the air waybill

4) ⑩ Account Information
Accounting information such as transportation fee payment method

5) ⑪(a,c,d,f) to/by
If transported by more than one aircraft, indicate the code of each arrival and transit airport

6) ⑪(b) By First Carrier
The exact name and code of the airline

7) ㉒ ~ ㉖
Describe the cargo details

1) Master Air Waybill (MAWB)
Master air waybill is a document issued by the airline that ships the cargo, and since the forwarder is basically involved in the trade transaction, the airline first issues the MAWB to the forwarder to confirm the cargo transportation. The owner of the document can be either the shipper or the forwarder, so the shipper fills out the HAWB. MAWB is a higher-level document.

2) House Air Waybill (HAWB)
House air waybill is a document issued by the forwarder to the shipper, and the forwarder, having received the MAWB, distributes the waybill of the cargo to each shipper based on the MAWB issued by the airline. HAWB is a lower-level document.

Since air freight transportation takes less time than ocean transportation, there is no need to transfer the rights of the cargo during transportation. Therefore, the cargo delivery process is performed in a relatively simple and straightforward manner.

If the cargo has not yet been shipped, the transaction may become void, and if it has already been shipped and delivered, you will need to obtain a court declaration of possession.
Then you have to apply for a reissuance, which is a long and complicated process that can take months. Since you do not have ownership of the cargo, you cannot take it out, which means you will have to pay for warehousing costs.

In Korea, if the bill of lading does not prohibit assignment, it can be transferred by assignment. However, since international law prohibits assignment, it is not possible to assign the bill of lading in cross-border transactions.