One of the most important documents that businesses in the trade industry have to deal with is the Bill of Lading.
The Bill of Lading is used by exporters to take control of merchandise while waiting to get paid by the importer.
Even Letter of Credit transactions can use Bill of Lading. It is also preferred by bankers. There are different types of Bills of Lading.
This post will detail the Charter Party Bill of Lading (CPBL), which is part of vessel chartering and its importance.
What is a bill of lading? A Bill of Lading (BL) is a document that contains all the details of the consignment
that is being shipped.
It is issued by the carrier to the shipper and works as a receipt for goods that are moved by the vessel.
Apart from acting as a receipt for the goods that are loaded and transported by ships it also works as proof of the contract of carriage.
The BL can be used to offer title to the goods to the holder of the BL or the consignee. The BL serves three purposes:
● Proof of contract for the goods carried
● Proof of receipt of goods
● As a title document to enable the transfer of goods
A Charter Party Bill (CPBL) of Lading applies to the Charter Party. It is an agreement made between the vessel owner and the charterer.
Here the latter issues the CPBL to the former for the goods that are loaded and shipped on the vessel.
It is considered as proof of a contract of carriage and as a receipt for the consignment that is shipped.
Importance of Bills of Lading Before delivery, the carrier does not have to submit all the original documents.
At the same time, the exporter needs the originals until they receive assurance of payment,
bill of exchange or the payment itself.
What does the charter party stand for? A contract of affreightment is called a charter party.
Under this contract, a shipowner provides his vessel to carry goods by sea in return for an agreed sum.
Various international organizations have played a major role in developing a standard for charter parties that are accepted internationally.
Based on the growth of the shipping industry and maritime commerce, the terms and conditions of charter parties have evolved over time.
This means that the Bill of Lading (BL) has an important role to play when moving freight or cargo from a location to another.
On one hand, it serves as a receipt issued by a carrier to the shipper. On the other hand, it works as a contract between both parties.
This way the Bill of Lading is a legal document that offers all the information about the carrier and the shipper so that the shipment can easily pass through different countries.
The carrier is provided with the original Bill of Lading while a copy remains with the packaged freight.
Different types of charter contracts
● Full charter: The whole ship is chartered by the shipper.
● Bareboat charter: Here the shipper gets the ship only. This does not include
fuel, crew or other provisions.
● Split charter: The charterer charters unspecified space on the ship.
● Time charter: The Charterer charters the ship for a specified period.
● Space charter: The charterer charters a particular cargo vessel.
Why charter?
The availability of container ships has made sea trade all the more popular and standardized. Container ships come with standardized trucks, cranes, vessels and charges.
This makes it easy for the charterers to charter them based on their needs and deploy where needed.
Things are quite different in the case of bulk-cargo transport. Here specialized vessels are used to transport merchandise like chemicals, timber, ore, coal and sugar, for example.
These vessels are used specifically to address particular needs.
For businesses, it is uneconomical to buy and maintain such a fleet of vessels.
This is why they prefer to charter the vessels under the charter party and move bulk cargo efficiently. Benefits offered by a charter party Exporters get the benefit most from a charter party.
This can work well in cases like where exporters are planning to transport the same kind of cargo to the same destination and they can constitute the full capacity of the vessel.
This way they will be able to charter ships at an economical rate compared to the normal freight contract.
This comes on a pro-rata rates basis. The expenses and risks get divided among the shippers when it comes to loading and transportation.
The importer can also benefit. The importer may need different materials for a project. They can have them delivered from different suppliers through a single shipment.
This way the importer will be able to collect all the materials from different shippers using a chartered vessel.
This is significantly cheaper for the importer when generally compared to individual liner shipping contracts. This means the business can save on freight costs.
Summary
There are reasons to choose a charter party. It has many benefits and plays an important role in transporting merchandise through ocean transportation.