Bill of Lading vs customs documents

Recently I had a question from a reader related to the checking of Bill of lading vs customs documents

Dear Sir, Every shipping line check bill of lading with shipping bill. why they are checking with s.bill. is this advised by Indian gov. or as per IMO. wht are the details to match….

A very pertinent question, thanks Krish..

The customs documents

If you are wondering what a “shipping bill” is (referenced in the above question), you are not alone.. In India a shipping bill is the document you pass with customs before you export the cargo.. It is known by many names in different countries..

South Africa calls it “Bill of Entry – SAD500”, UK calls it “Export Declaration (using the NES)”, Japan calls it “Customs form C-5010”, Canada terms it “B13A – Export Declaration”, and so on and so on..SAD500 - South African customs document

But whichever country it is or whichever document is used as a customs declaration , the common thread here is that, it is always or should always be checked and verified by the shipping line against the bill of lading issued by the shipping line..

I don’t think there is any shipping line or agent in the world that does not do this check.. If there are some, in their best interest, it is necessary that this check is done..

WHY..??

Customs and the shipping line

First and foremost, every shipping line or agent operating in a country must adhere to the rules and regulations of that country..

When it comes to foreign trade, the main body that regulates and polices the movement of cargo in and out of the country is the Customs and Excise department..

bill of lading vs customs documentsAll cargo moving in and out of the country should be cleared with Customs before the cargo is released (in the case of imports) or shipped (in the case of exports)..

The responsibility of securing this clearance from Customs rests with the importer or exporter as the case maybe..

A shipping line or agent must be registered with Customs in order for them to operate their services within the country..

As part of this registration, the shipping line has a responsibility to Customs to ensure that none of the goods are released to the customer (in the case of imports) or shipped on board any vessel (in the case of exports) without getting the release from customs which maybe in a manual or electronic format..

So what is the shipping line checking for and what do they check against..!!

In my article about “What is a Bill of Lading“, I wrote that a bill of lading has 3 basic purposes or roles..

  1. Evidence of Contract of Carriage
  2. Receipt of Goods and
  3. Document of Title to the goods

As an evidence of the contract of carriage and receipt of goods, the bill of lading is the key document used by the shipping line to declare the nature of the cargo that is carried under this contract of carriage..

In case of any queries by customs anywhere in the world relating to the cargo on board a ship, the first document they will ask the shipping line is the “manifest“..

The manifest as you maybe aware is essentially a collection of information from all the bills of lading released so naturally will have the same information as from the bill of lading..

Answer to the question

To answer the above question, the shipping line is checking (or should be checking) to verify that the cargo description and other information shown on the import or export declaration to Customs is the same as that is shown on the line’s bill of lading..

image for checklistThis is especially important when the shipment is in containers because in a containerised shipment and specially FCL cargoes, the shipping line/agents are not privy to the packing of the containers or the nature of the cargo that is inside the containers..

The shipping line relies on the information provided by the shipper in terms of the cargo, number of packages, weight and measurement..

For example, there could be customers who book Cargo A with the shipping line but this Cargo A maybe prohibited by customs and therefore the declaration to customs could be Cargo B..

Some situations could occur innocuously.. For example, a customer could book the cargo with the shipping line as “Books and Artwork“.. Nothing harmless right, and a shipping line or agent may not think twice about it..

But in South Africa for example, there is an item under Prohibited & Restricted Imports and Exports called “Unlawful reproductions of any works subject to copyright“.. Any books or artwork exported in violation of this requirement may fall under this category and the shipping line may unknowingly be allowing the export or import of this prohibited item..

The shipping line is the custodian of the cargo till it is accepted for release by customs and if they release or ship the cargo without receiving the release from customs, the shipping line maybe liable for heavy penalties, legal action which may also result in the revoking of their operating license..

Therefore it is imperative that the shipping line checks the bill of lading vs customs documents to ensure that the cargo declarations on the bill of lading and customs documents match..

Have you had any experiences (positive or negative) in this regard..?? Do share it..


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23 thoughts on “Bill of Lading vs customs documents

Be part of the discussion and share your views about the article here..

  1. I work for a company and have used a shipping agent and used their export license, however they want to invoice the buyer. They say there are customs implications if they do not receive the funds. However we the company want to invoice the buyer. the BL has been issued and the goods have left the port. The goods left from a Brazilian port. is this law?

  2. Dear Hariesh,

    Thank you for this great educational blog. It s a sea of information that anybody involved in the shipping industry needs to refer to.
    I did not know where to post my question so I chose this as it relates to documentations.
    This relates to courier services from the US. When couriers receive let s say 200 small parcels from 50 different suppliers and those parcels belong to 20 different clients at the country of destination. My questions are as follow:

    1 – Do couriers consolidate all invoices for those parcels into one in order to file US customs(if necessary)?
    2 – At destination, do clearing agents at destination need the invoice for EACH parcel?

    Any clarification is highly appreciated.

    Thank You

  3. Hello,

    I have just started a personal quest for information that can increase my knowledge and appreciation of the operations that govern freight forward services. I found the article to be quite informative and written with such clarity that I look forward in great anticipation for addition reading opportunities. Thank you very much.

  4. That is interesting Explanation. rather we have to be Clear that the separation b/n manifest and Bill of lading. In my understanding manifest is a first docs that prepared for preparation of bill of lading. that send by the exporter to the shipping line. Thus, here in our country the custom docs and the bill of lading are two side of one Coin. We can not provide customs docs with out bill of lading and we can not obtain cargo release if their is discrepancy between customs docs and bill of lading. that is why sometimes when the payment term is CAD payment effected after 60 days of the bill of lading.

  5. Dear Hariesh,

    Thank you for your thorough approach and great effort to share your knowledge and experience with readers from all round the world.

    I would like to start a discussion about certain topic, and even though this article is not strictly related to this topic, and as far as I am aware, this subject has not been discussed yet here, so I’ll just throw it here and see if it has potential to be discussed.

    Situation when shipper (usually trader or manufacturer of the goods) sends goods to foreign port and fails to get payment from customer. Of course, as payment is not made original documents including OBLs are still at shipper’s (shipper’s bank , shipper’s forwarder…) disposal, so material is still under control of the shipper (let’s exclude hypothetical situations when supposed to be consignee get some kind of LOI and somehow manages to get local shipping line office release the goods). However, even though material is still under shipper’s control, if shipper do not succeed selling to different buyer in the same country, he or she might be forced to reexport this material from initial POD.

    As for what I understand, exceptionally huge costs are to be incurred in such situation. Especially bearing in mind that shipper (shipper’s forwarder) usually is not so versed in handling procedures in foreign country port. Costs will differ from port to port, however, I think three main type of costs might be considered as common in every port:

    -Customs penalty for reexporting material from the initial country of destination.
    -Port demurrage for period full containers are stored at port premises.
    -Shipping line’s demurrage for a days in excess of free demurrage for equipment.

    Dear readers, what’s your opinion on this?
    Have somebody been in this situation as shipper or forwarder or as part of shipping line administration? In which country?
    Would you be so kind to share your experience with us?

    Thank you/Best Regards,
    Ljubisa Djuric

    • Hello Ljubisa, this situation happens more often than we can imagine.. Therefore it is incumbent that the seller conduct due diligence on the buyer before the trade happens especially if it is a first time sale.. There are a lot of trade finance options (such as Letter of Credit) that maybe used to ensure that the seller gets his money once the cargo has arrived or shipped depending on the sales contract and terms of payment agreed between the seller and buyer..

  6. Hello,

    Need your expertise, is shipping bill copy mandatory at the time of BL issuance ?
    if yes.. Please advise the reason. Awaiting your prompt reply.

    Thanks & BRgds/

  7. Dear Hariesh, Bill of entry is allowed to be processed in SA by customs even after the ships sails so if shipping line don’t get the bill of entry (if, it had prohibited cargo) b/l will not be issued by carrier… this practice will put the carrier at risk.

    Ideally the carriers should not be loading the ctr’s on board if the bill of entry is not processed as followed in other countries.

    • Dear Vinnu

      Please be cautioned as you may be in contravention of : Customs & Excise Act 91 of 1964, Chapter IV – please read as you may not export any goods without an export declaration.

    • Dear Shaun, What I meant was different. Yes, it is not allowed by customs but have seen it happening… In India, you cannot pack a container without the presence of customs or excise authorities. Without this procedure how can authorities determine what is packed inside ? Based on shipper declaration ? No ways. Random checks may be the usual answer, then again what percentage of packed ctr’s are opened for checking.

  8. I have keyed in the wrong product description in the manifest. Is it possible to change the manifest after the ship has departed?

  9. when i handle some cargos which are into mexico From others countries, one of clients stuffed some cocaine there but reported that it was food, so when they were on the process at below of custom clearance, Custom broker asked us to open to check all of things because it is first shipment so, for declareration, it was imperative process, when they opened, there were bunch of cocaine and this one was confiscated by authorization of port.

    • Dear Hariesh

      Thank you for a very helpful article and blog. Vinno Jo Mathew above indicates that is SA it is allowed for the B/E to be processed after the ship has sailed. Would it be possible to determine where this authority stems from or where can I find confirmation that this is allowed?

    • Hi everyone, what if the declaration in bill or enrty/ export declaration and bill of lading has discrepancy like description of cargo, gross weight or number of packages? And the shipper insisting that the details in bill of lading is correct not the bill of entry. It is ok to get LOI from shipper?