Straight, order and bearer bills of lading compared
The three types of bill of lading, when each suits a shipment, and what a forwarder should check on the bill before paying a carrier's freight invoice.
By Achekam · · 5 min read · For Logistics businesses in South Africa, Nigeria, Kenya
A container of machine parts leaves Durban for Mombasa. The importer in Nairobi has not paid yet, the exporter's bank is involved, and somewhere in the middle a clearing and forwarding agent is about to receive the carrier's freight bill. Everyone in that chain is relying on one document: the bill of lading.
Which kind of bill is issued changes who can claim the cargo, whether it can be sold while still at sea, and how much protection the seller has. For the forwarder paying carriers and billing shippers, the bill is also the yardstick against which every freight invoice should be measured. This article compares the three types and sets out the checks that belong between a carrier's invoice and your bank account.
One document, three jobs
Investopedia explains that a bill of lading serves three purposes at once:
- A receipt. It confirms that the carrier has received the goods in the condition stated on it.
- Evidence of the contract. It records the agreement between the shipper and the carrier for carrying the goods.
- A document of title. It allows the holder to claim the goods on delivery.
Investopedia also states that a bill of lading must accompany shipped goods and be signed by an authorised representative of the carrier, the shipper and the receiver. A bill missing a signature is weaker on all three counts, which is why the signature check below matters.
Straight, order and bearer: how they differ
| Type | Can it be transferred in transit? | Typical use, as Investopedia describes it |
|---|---|---|
| Straight | No. It names a specific consignee and is non-negotiable. | Payment has already been made, or goods move between trusted parties |
| Order | Yes, by endorsement. It is made out "to the order of" a named party. | Letter-of-credit transactions and as collateral in trade finance |
| Bearer | Yes, by handing over the original document | Rarely used in modern trade because of security and fraud risks |
When a straight bill fits
A Johannesburg distributor shipping stock to its own branch in Lagos, or a long-standing customer who pays upfront, has little reason to keep title in play during the voyage. A straight bill names the consignee and ends the matter: the goods go to that party and no one else can claim them by endorsement.
When an order bill earns its keep
Where the buyer has not yet paid, or a bank is financing the deal, the seller needs a document that controls the cargo until money changes hands. An order bill does that. It can be endorsed to pass title while the goods are in transit, which is what makes it useful under a letter of credit and as security for trade finance.
Why bearer bills are avoided
A bearer bill passes title to whoever physically holds the original. Lose it, or let it be stolen, and the goods go with it. Investopedia notes that this is why bearer bills are seldom used today. If a counterparty proposes one, ask why.
What to check on the bill itself
Investopedia recommends verifying all details on a bill of lading, including product codes, quantities and the carrier's signature. In practice, a short checklist on the operations desk covers most of it:
- Shipper, consignee and notify party match the booking.
- Product codes and descriptions match the commercial invoice and packing list.
- Quantities, packages and weights match what was loaded.
- The condition noted on receipt is what you expected; a remark about damaged packaging changes the picture.
- The carrier, shipper and receiver have signed.
- The type of bill matches the payment terms agreed with the customer.
Matching freight bills to bills of lading
Investopedia also advises regularly matching freight bills with the corresponding bills of lading to make sure payments are accurate. A carrier's invoice that charges for more containers, more weight or a different route than the bill shows is the classic overpayment, and it rarely announces itself.
The match is simple to describe: before a freight bill is approved, someone puts it next to the bill of lading and confirms that what is being charged is what was carried. Investopedia's other recommendation fits here too: use dual authorisation for important transactions, so that the person who checks the bill is not the only person who releases payment.
How Achekam supports the match
Achekam handles the paperwork and the payables, not the voyage. A forwarder can use it like this:
- Purchase orders for carriers. When a supplier invoice is recorded against an order, Achekam matches it with what was ordered and what arrived. If price or quantity differ, the invoice is held until someone writes a resolution note.
- Supplier bills with an approval step. Bills are recorded line by line with VAT. A bill without a purchase order waits for approval before it posts, and it can then be paid in full or in parts from a chosen bank account.
- The bill of lading on file. Document Centre is a folder-based store where you can upload the bill, the packing list and the carrier's invoice into one shipment folder, tag them, search them and archive them later. A corrected bill uploaded as a new version keeps the earlier one.
Comparing the carrier's figures with the bill of lading remains a person's job; Achekam holds the invoice while the difference is explained. For how carrier invoices are posted once approved, see posting carrier invoices from suggestions.
Keeping the evidence
Investopedia recommends keeping bills of lading and related documents for at least five years for potential audits. Store each bill with the matching freight invoice and proof of delivery, so that a query from a customer, an auditor or a customs officer can be answered from one place. Filing proof of delivery covers the delivery end of that folder.
Before your next shipment
Investopedia's guide to the bill of lading and its types sets out each type with examples. Agree with each customer which bill their payment terms call for, add the six checks above to your operations desk, and route no carrier invoice for payment until it has been placed next to its bill.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
