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BOL, OBL, MBL, Telex Release...What is a Bill of Lading?

It is inevitable to run across many shorthand annotations no matter what line of work you may be in. The abbreviations and acronyms that we encounter in the supply extend far beyond the workforce within logistics, and trickle into every line of work imaginable. Whether you're an accountant, a delivery woman, a jewelry maker, an importer, a wholesaler or a retailer, you will eventually come across the words, "Bill of Lading". What exactly is a Bill of Lading? What is the significance of it?

In simple terms, a Bill of Lading, or BOL, is a representation of the purchase and sale of merchandise from a seller (shipper) to a buyer (consignee)...It's is a receipt like a title for a car. If you are in possession of the original title after completing all payments, it means the ownership has transferred from the issuer to purchaser.

The same rules apply for international trade. When one party needs to show transfer in ownership of cargo to another party, they will issue a

to do so. As we advance in technology, this transfer can now be handled in numerous ways but in order to adequately explain it, let's go back about 50 years prior to tech making life easier.

Example, a shoe manufacturer in Peru sold 100,000 pairs of slick, hand-made leather soled shoes to an Importer into the United States. The shipper arranges for the freight to load into a 20' container and books the freight directly with a Master Carrier like Hapag LLoyd, Maersk, Hyundai, ONE Line, Cosco, etc. Let's assume the importer paid for the goods and freight in full prior to shipping as per agreed upon negotiations between the seller and buyer. The seller will work with the Master Carrier to issue an Original Bill Of Lading (OBL). The Master Carrier sends the original to the shipper, who in turn mails the originals to the Importer in the U.S. (It is common for BOL's to be made in triplicate so that each party who retains ownership at some point can keep a copy.) Once the cargo arrives into U.S. and is ready for pickup, the Importer will take the OBL and present it to the Master Carrier as proof that they are the rightful owner of the freight. This allows the Master Carrier to release the freight to importer, as they've presented the "title" for the cargo.

Fast forward to the 1980's when the Telex Machine began to spread into heavy use within the supply chain. The telex machine allowed for an electronic message via telegraph to send from origin to destination. Instead of this Peruvian shoe maker sending the originals to the U.S., he could request (at a cost) for the carrier to issue a Telex Release of the BOL. As each letter transmitted increased the cost to do so, the abbreviation TLX RLS was born. This electronic notification signifies a transfer in ownership and allows the importer to recover goods with a copy of the bill of lading and proper identification.

Similar to a telex, we also have a "Surrendered" BOL. Let's say that are Peruvian shoemaker is in possession of the OBL but the agreement between seller and buyer states that 30% is required prior to shipping, and the remaining 70% upon arrival. In order to ship, an original has to be created and remains in the seller's possession until arrival. As the vessel arrives and freight is made available, Importer now sends the remaining balance due to shipper. Rather than waiting for the OBL to arrive by mail or courier, the importer can request that originals be surrendered at origin. Once the shipper follows this request, an electronic message is transmitted by the carrier to their counterpart in the U.S. who then releases the freight to importer based on the surrender message from origin.


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