A clean bill of lading confirms the secured possession of shipping goods in international trade. It is issued by the carrier of goods as a receipt to the exporter. It is then presented by the importer along with other shipping documents such as an invoice and a letter of credit to claim the possession in the final destination.
A clean bill of lading is issued by the carrier to confirm there is no apparent damage, missing items, or packaging flaws in the shipment. If there is any damage or missing items, the carrier would issue a foul, dirty, or claused bill of lading.
A clean bill of lading is a document issued by the carrier to declare no damage or loss of goods. The bill is issued to the exporter at the time of loading the goods. In some cases, it can be issued after getting the goods on board on the ship as well.
It is an important shipping document. It is one form of ocean bill of lading that is used in international shipping through the water. It then becomes an important part of the shipping documents such as invoices, letters of credit, etc. For the importer to claim possession at the destination.
How Does a Clean Bill of Lading Work?
When two parties in an international contract agree on different terms, they can decide on a clean bill of lading as well. Once the exporter prepares the goods for shipment, it then delivers these items to the carrier.
If the exporter requires a clean bill of lading, the carrier will inspect the goods. The shipping carrier will examine goods for any apparent damages, quality, and quantity of goods as described in the order form. Once the carrier examines the goods, it will decide to issue a clean bill of lading.
The exporter can then send an original copy to the importer. The importer can use the original copy along with the LC to claim possession of these goods. The importer’s bank also ensures through a bill of lading the transfer of goods as per terms in the letter of credit.
It is an importer document, especially in international trade contracts between two new partners. The importer cannot verify the quality and quantity of packaged goods before receiving them. Hence, the shipping companies act as facilitators to both parties by issuing a clean bill of lading.
Special Considerations with a Clean Bill of Lading
The shipping company may issue a claused or dirty bill of lading. It issued if there are any damages or loss of quantity is found on the shipment. In some cases, the importer may refuse to accept the shipment if the carrier issues a foul or claused bill of lading.
It can be issued either as a “clean on-board bill of lading” or “shipped on board bill of lading”.
Clean on-Board Bill of Lading
An on-board bill of lading is issued when the carrier receives the goods and sends the container for shipment. It is issued before the goods are transferred to a named vessel for transportation.
Shipped on Board Bill of Lading
For further security, an exporter can ask for a clean bill of lading after the goods have been actually shifted to the vessel. The carrier issues the “shipped on board” bill after confirmation of the loaded container.
These days most bills of lading are issued as shipped onboard for further clarification and security purposes.
Note: if the carrier cannot examine the quantity of packaged goods properly, it will issue a “said to contain” bill of lading. The STC bill secures the carrier from any claims from either party on the shipment ends.
Advantages of a Clean Bill of Lading
A bill of lading is an important document in international trade. It legally binds the shipping company and the shipper in a contract. It further provides security to the exporter and importer.
A clean B/L ensures the shipment of goods safely and in the correct quantity. It prevents the loss or damage of the shipped goods. It also boosts confidence between the importer and the exporter, especially in a new trade contract. It also ensures the delivery to the right consignee at the right destination.
Disadvantages of a Clean Bill of Lading
Issuing and implementing the clean bill of lading can come with some limitations for all parties. The bank may refuse to transfer funds or hand over the original LC to import if there is no “clean bill of lading” issued.
The shipping carrier may be exposed to risk if it cannot fully examine the packaged goods, which is often the case. Packaged goods can become faulty during long shipping periods, for instance, due to loose or wet packaging.
A clean bill of lading provides security for shipping goods safely to the traders. It is issued when the shipping carrier ensures the goods are received in good condition and quantity. However, it can be a risky issue for the shipping company to examine all the packaged goods.