1. What the bill of lading is
A receipt for the goods.
Evidence of the contract of carriage.
A document of title, in its negotiable form.
2. Types
Original bill of lading
Issued in a set, typically three. The holder of an original can claim the goods.
Sea waybill
Non-negotiable, naming a consignee. The consignee claims by identification.
Telex release
Originals surrendered at the load port; the carrier releases at destination on identification.
3. Release mechanisms and their risk
Originals
Control sits with whoever holds the set.
Risk: courier delay, loss.
Telex release
Fast and cheap.
Risk: the carrier releases once instructed. If the buyer has not paid, the goods are gone.
Sea waybill
Fastest.
Risk: the goods go to the named consignee regardless of payment.
4. How to choose
Start with who bears the payment risk.
Buyer prepaid: any of the three.
Letter of credit: follow the credit, usually a full set of originals.
Documentary collection: originals.
Open account, new buyer: originals, or telex release after payment.
Open account, long-standing buyer: telex release or sea waybill.
5. The cost comparison that settles it
Compare the daily port storage and container detention cost against the courier cost of an original set.
On many routes, one day of detention exceeds the courier cost.
That calculation usually decides the question.
6. The losses that repeat
Telex release issued before payment.
Originals lost in transit, requiring a bank guarantee to release the goods.
A credit requiring originals, released by telex, producing a discrepancy.
7. Closing view
The three release mechanisms are a pricing of risk.
The cheapest is appropriate only for the lowest-risk transaction.
*This article is based on international shipping practice and the Uniform Customs and Practice for Documentary Credits. Exporters should confirm arrangements with the carrier and the bank.*