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House Bill of Lading

House Bill of Lading – Introduction
When discussing Bills of Lading, we must distinguish between a carrier B/L (B/L)
and a House B/L (HBL). Please see separate chapter for carrier B/L.
In Maersk Logistics, we can issue HBL when we act in the role as NVOCC. We do
so as agents for the principal carrier DSL Star Express Inc. Therefore, our HBL is
called a DSL Star Express B/L (DSE B/L).
We do not issue a “Maersk Logistics HBL” unless there are specific reasons to do
so and appropriate management and legal sign-off is in place.
House Bill of Lading – Issuing Party
The HBL is issued by a NVOCC (non-vessel operating common carrier), also
called a NVO.
In some countries, any freight forwarder can act as NVOCC and issue HBL for their
ocean shipments. In other countries (e.g. the USA), only companies registered
specifically as NVOCC are licensed to issue HBL.
House Bill of Lading - Functions
Basically, a House Bill of Lading has 3 functions:
1. A receipt for the cargo
2. A document of title
3. Evidence of a contract of carriage
1. Receipt for cargo
The HBL is a receipt by the NVOCC that the goods are in his custody. The HBL
acts as a receipt between the shipper and the NVOCC until such time as title has
been passed to a third party (the consignee). Then it becomes an independent
contract between the NVOCC and the third party. The third party assumes the
rights, responsibilities and obligations identical to those of the shipper.
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Remember that when the NVOCC delivers the goods to the ocean carrier for
shipment, he will in turn receive a carrier B/L or a Sea Waybill which will act as his
receipt that the cargo is in the custody of the carrier.
To the owner of the goods, however, the NVOCC is the party who is responsible
for the cargo.
2. Evidence of contract of carriage
The contract of carriage is the underlying agreement between the NVOCC and the
customer to transport his goods. The HBL is the evidence of this.
You should note that the HBL is NOT evidence of a contract of carriage with the
ocean carrier. The HBL is a matter between the NVOCC and the customer.
The contract of carriage with the ocean carrier is a matter between the NVOCC
and the ocean carrier and is evidenced by the carrier B/L.
This means that the seller or the buyer will not be able to file a claim directly
against the ocean carrier for loss or damage to his goods, because they are not
party to the contract of carriage. The buyer or seller will file claim against the
NVOCC who in turn will file claim against the ocean carrier.
Nor should the ocean carrier provide shipment details and information to the seller
or the buyer directly. The ocean carrier should regard the NVOCC as his customer.
The NVOCC must keep his customer (the seller/buyer) informed.
Document of Title
A HBL is a Document of Title, and the legal right to the goods covered by the HBL
can therefore pass from one party to another by means of endorsements.
The NVOCC will only release the goods at destination to a rightful holder of a duly
endorsed original HBL.
The NVOCC will check the endorsements on the original HBL documents before
releasing the goods. If he is in doubt of the HBL holder’s legal right to the cargo, he
should check with the shipper, notify party and/or any other intermediate party.
To enable endorsement (transfer of title), the HBL must be consigned “To order”
(of shipper), or “To order of [name/company/bank]”. Example: “To order of Import
Ltd”.
If the HBL is consigned to a named individual or company (e.g the HBL is
consigned to Import Ltd) without the notation “to order”, it becomes a “straight HBL”
and cannot be endorsed to another party (unless domestic law or market practice
allows this).
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The carrier B/L works the exact same way.
House Bill of Lading – Originals and Copies
The NVOCC will normally print a HBL document in 3 originals and a reasonable
number of copies. It is only an Original HBL document that can be transferred to
another party. The copies may be pre-printed ‘Copy’ or ‘Non-Negotiable’. Both are
non-transferable.
House Bill of Lading – NVOCC’s responsibility
The three main areas of responsibility of the NVOCC are similar to the ocean
carrier’s responsibility under a carrier B/L:
1. Responsibility for correct description of the goods
2. Responsibility to release the goods to the properly entitled party at the proper
location
3. Responsibility to care for the cargo while it is in the carrier’s custody
1. Responsibility for correct description of the goods
Any third party buyer may purchase goods by relying on the description of the
goods in the HBL (quantity, condition, etc.).
The description of the goods on the HBL is usually supplied by the shipper or his
agent. (The NVOCC will not know what is inside a container or carton packed by
the shipper). It is however essential that if the NVOCC knows that the description
of the goods supplied by the shipper is not correct (for example that cartons are
damaged), the NVOCC clearly notes the discrepancy on the HBL or refuses to
accept the cargo and issue the HBL.
As you know, the NVOCC will arrange for a carrier B/L. The NVOCC should ensure
that the description of the goods is the same on the HBL and the carrier B/L.
If the ocean carrier at time of receipt of the goods, notes a discrepancy on the B/L
about shortcomings or damages, the NVOCC must ensure that the same
discrepancy clause is noted on the HBL. Otherwise, the NVOCC can become liable
and have to pay compensation to the consignee, but cannot re-claim the money
from the ocean carrier.
2. Responsibility to release the goods to the properly entitled party at the proper
location
Whoever presents a duly and properly endorsed HBL at the correct destination is
entitled to take delivery of the goods from the NVOCC.
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The NVOCC receiving a HBL and being satisfied that the proper endorsement is in
place, when releasing the goods, is relieved of any responsibility should it later
appear that the HBL holder was in fact not the proper receiver.
The NVOCC must of course also ensure that the person who submits the HBL and
take delivery of the goods is a representative of the consignee (e.g. an employee
or an agent of the company to whom the HBL has been consigned).
Release of the cargo without receipt of a properly endorsed HBL compromises the
NVOCC’s responsibility towards the true owner of the goods. This may expose the
NVOCC to unlimited liability inclusive of consequential damages.
If the NVOCC is in doubt about who the rightful owner of the HBL is, e.g. because
there has been a chain of endorsements and the NVOCC is not familiar with all
signatures and stamps of the intermediate consignees, the NVOCC should in
principle contact these parties to check. The NVOCC may also contact the shipper
and/or the notify party on the HBL to hear their views.
In order to effect release of the goods to the consignee, the NVOCC must ensure
that he obtains the goods from the carrier (by paying applicable freight and charges
and submitting any required documentation). Until the NVOCC has obtained
release from the carrier, he cannot release the goods to his own customer.
2a. Release at different destination
If the release of the goods is requested at a destination different from the one
mentioned on the HBL, the NVOCC should first collect the full set of original HBLs
(all originals) for the particular shipment.
2b. Release of goods without original B/L or issuance of a new set of Bills
It is a critical situation when the full set of original Bills are lost. By releasing the
goods without obtaining a duly endorsed original B/L, the carrier (in case of a
carrier B/L) or the NVOCC (in case of a House B/L) expose themselves to
unlimited liability, incl. consequential damages, in case a rightful holder of the B/L
later turns up and expects to receive the cargo. On the other hand, the consignee
may in fact be the legal owner of the goods after having paid the shipper and the
carrier/NVOCC will be under pressure from the consignee to release the goods as
soon as possible.
In such a situation, the carrier or NVOCC will typically ask both the shipper and the
consignee to confirm that they agree to the issuance of a new set of bills or release
of goods without the bills. In addition, the party who has asked for a new set of bills
(the shipper or the consignee), or has asked to have the goods released (the
consignee), is asked to sign a Letter of Indemnity (LOI) and this must be backed up
by a first class bank guarantee which is valid for a minimum of 6 years or whatever
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the B/L filing period is in that country. The process must be approved and release
signed off by appropriate management.
If documents are delayed, not lost, we should – in principle - not release goods
without obtaining the original B/L. We should wait for them to arrive. Release of
goods based on a Letter of Indemnity should be our last option and we should be
very cautious about it. The problem about releasing goods without an original B/L
is that the consequences can be very serious:
• Maersk Logistics is in fundamental breach of contract with the shipper and is
denied the benefits of legal limitations under Hague Visby rules/our Standard
Terms
• our insurer will most likely consider such a release intentional or reckless and
therefore deny any coverage under our insurance policy
• our liability to our client and/or shipper therefore unlimited in the event of
improper release of goods, unless proper procedures are followed
1. Responsibility to care for the cargo while in the carrier’s custody
When issuing the HBL, the NVOCC takes on the responsibilities, obligations and
liabilities as a carrier. Even when sub-contracting the carriage to a carrier, the
NVOCC is responsible for the goods towards his own customer (the shipper /
consignee).
If the goods are damaged or lost during transit, the shipper or consignee can file
claim against the NVOCC. The NVOCC may be able to re-claim from the ocean
carrier but this is independent from the claim received from the customer.
House Bill of Lading - Amendment
When a shipper requests an amendment to a HBL which has already been printed
and issued, the NVOCC must make a judgement of the request and decide if the
HBL can be amended accordingly.
The HBL must ensure that the full set of original Bs/L are returned (if 3 originals
were issued, 3 originals should be returned for amendment) and ensure that the
description of the goods is still correct.
The NVOCC must also ensure that HBL still corresponds with the carrier B/L, and if
not, that the carrier B/L is amended accordingly. The HBL should not be amended
if the carrier will not agree to amend the carrier B/L.
If a shipper requests a completely new set of House Bs/L, this is considered an
amendment and the full set of originals must be surrendered.
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House Bill of Lading – Cargo Description
Cargo description
The transport provider cannot physically verify the contents of the cartons and
packages received from the shipper. For legal reasons, the description of the
goods must therefore always include the wording “Said To Contain” or “S.T.C.” to
signify that the transport provider is relying on the description of the goods supplied
by the shipper. Example: S.T.C. 1020 cartons of CD players.
If the NVOCC knows that the description of the goods supplied by the shipper is
not correct (for example that cartons are damaged), the carrier should note the
discrepancy on the HBL or refuse to accept the cargo and issue the HBL.
No. of packages
If cargo is lost during transit, it is the number of units as stated in the “no. of pkgs”
field that will be used for calculation of potential compensation to the owner. For
this reason, this field should always reflect the smallest number of shipping units.
Example 1 (FCL container): “1 x 20’std” instead of “500 cartons”. Example 2 (LCL
shipment): “5 pallets” instead of “50 cartons”.
After issuing the HBL to our customer, we must ensure that our own carrier B/L or
SWB adequately covers our liability. For insurance reasons, we need to receive a
carrier bill evidencing the same number of packages as shown on the
corresponding House bills.
Example: You have issued 5 HBLs, each for 100 cartons. You have loaded the
goods into a 40’ container. The carrier bill must show 500 cartons in the goods
description: 1x40’std S.T.C. 500 cartons of general merchandise.
Clauses
Maersk Logistics should insert the clause “Shipper’s load, stow and count” if the
customer is loading the container at his premises.
“Shipped onboard” must only be used when the document is issued after vessel
sailing. If the customer wants the document issued before vessel sailing, the
clause “Received for shipment” is used instead. A “Shipped on board” HBL cannot
be issued until Maersk Logistics has received confirmation from the ocean carrier
that the goods have been loaded onboard the vessel.
Maersk Logistics will not insert the clause “Clean onboard” on the Bill. Even for
LCL-shipments where we are physically handling the cartons, we cannot check the
quality and condition of the merchandise inside the cartons.
24-hour manifest rule (U.S. customs)
You may have heard about the 24-hour manifest rule established by U.S. Customs
and its requirements regarding description of goods – for example that “S.T.C.” is
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not allowed and that the cargo description must be very specific (i.e. “general
merchandise” and other general cargo descriptions are not allowed).
For the purpose of transport documentation, you should be aware that the U.S.
Customs rules relate to the vessel manifest, not the printed Bill of Lading or Waybill
document. The vessel manifest is used for customs purposes. The printed Bill or
Waybill is used for legal and commercial purposes.
House Bill of Lading – Document Date
The date of the HBL must be the date on which it is actually issued, irrespective of
the date the cargo was received or loaded, however not earlier than the date the
cargo was received or loaded respectively.
For a “Shipped on Board” HBL, the date cannot be earlier than the date the cargo
was actually loaded on board the first vessel or conveyance mentioned in the
document. A “Shipped on board” HBL cannot be issued until Maersk Logistics has
received confirmation from the ocean carrier that the goods have been loaded
onboard the vessel.
For a “Received for Shipment” HBL, the date cannot be earlier than the date the
cargo was actually received at the place of receipt or load port mentioned in the
document.
Sometimes, a shipper will request a NVOCC to issue the HBL with earlier or later
dates in order to comply with time restrictions in the shipper’s Letter of Credit. The
carrier is not obliged to do so and should not do so. It would be considered an
attempt to defraud the buyer.
House Bill of Lading – Freight payment
The charges payable at origin (usually by the shipper) are called “prepaid”. The
charges payable at destination (usually by the consignee) are called “collect”.
In order to secure payment, the NVOCC will usually not release the original HBL
document to the shipper at origin before he has paid all prepaid charges.
At destination, the NVOCC will usually not release the goods at destination until all
freight charges are paid (even when a duly endorsed B/L is presented).
It is a commercial decision by the NVOCC whether they wish to grant the shipper
and/or consignee credit. If credit has been granted, the NVOCC will release the
goods and expect the freight and other costs to be paid within the agreed time.
The shipper is responsible for advising the NVOCC which charges are prepaid and
collect. If the NVOCC is in doubt whether the consignee will pay for the collect
charges, he may check with the consignee before accepting the shipment.
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In some areas of the world, from where there is a great risk and/or cost for the
carrier to ship cargo, the carrier may require that all charges are prepaid.
House Bill of Lading – Filing
After collecting the original B/L and releasing the goods, the NVOCC should stamp
the original HBL “accomplished” (or similar).
The NVOCC must then file the original B/L for at least 6 years according to
international and domestic regulations. Local legislation may require a longer filing
period.
House Bill of Lading – Why use this document?
1. Why use a NVOCC?
You may wonder if it is not a complicated situation, having a NVOCC involved as a
middle man instead of just dealing directly with the ocean carrier.
In particular small and middle-sized companies often do not have enough
shipments (cargo volume) to negotiate good rates and conditions with the carrier
directly. They therefore use a NVOCC who has a large number of customers and
therefore can negotiate good freight rates with the ocean carrier. Although the
NVOCC may add a margin to the freight rate, the customer still obtains a better
deal. It becomes a win-win situation.
The customer will often also purchase additional services from the NVOCC (e.g.
documentation and customs clearance).
2. Why use a House Bill of Lading?
When a HBL is issued (a document of title), the NVOCC will only release the goods
at destination to the party who can present an original HBL that covers the goods.
The B/L becomes the “key to the cargo”.
When the buyer has paid for the goods, the seller will transfer the original HBL to
the buyer. If the buyer does not pay for the goods, the seller can keep the original
HBLs and in this way control that the buyer does not receive the goods from the
NVOCC. (In some cases, the buyer will require to receive the originals before
paying).
In cases where the payment for the goods is facilitated by a bank through a Letter
of Credit, the bank at origin may require that they obtain title to the goods in the
period between paying the seller and obtaining payment from the buyer or the
buyer’s bank. This is why the HBL is sometimes consigned “to order of [bank]”. If it
happened that the buyer could not pay for the goods after all, the bank would be
able to recover some of their loss by selling the goods.
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In other cases, the HBL is used because goods are sold during transit and there is
a need to have a negotiable/transferable document to cover the shipment. The
original consignee will endorse the HBL to the new consignee who can then obtain
release of the goods.
It is important to note that although the HBL is used to facilitate the payment of
goods between seller and buyer, the NVOCC does NOT take part in the change of
ownership of goods. This is only a matter between the seller and the buyer. The
NVOCC follows the rules and obligations as stated in the HBL and contract of
carriage (ships and releases goods in accordance herewith).
House Bill of Lading – Difference between HBL and HSWB
1. In which areas are the HBL and the HSWB the same?
�� They are both issued by the NVOCC to his customer
�� They both function as Receipt for the cargo and Evidence of contract of
carriage
�� They both contain details about the shipment such as shipper, consignee,
vessel, place of delivery, cargo description and date
�� They must not be issued with a date different than the true issuance date /
onboard date
�� They can both not be issued until the carrier has issued the B/L or SWB and
thereby confirmed that the shipment is onboard (unless the shipper asks for a
“received for shipment” bill)
�� They obligate the NVOCC to ensure correct description of the goods
�� They obligate the NVOCC to care for the cargo while in his custody
�� They obligate the NVOCC to ensure that he releases the goods to the correctly
entitled party at destination
2. In which areas are the HBL and the HSWB different?
�� The HBL is a document of title. The HSWB is NOT.
�� A HSWB cannot be consigned “to order”, it must always state a consignee.
�� The HBL is printed in sets of originals and copies (often 3 originals). A SWB is
only printed as copies.
�� The NVOCC does not require an original SWB in order to release the goods at
destination
House Bill of Lading – Difference between B/L and HBL
1. In which areas are the carrier B/L and the House B/L the same?
�� They have the same functions: A receipt for cargo, A document of title,
Evidence of contract of carriage
�� They can both be endorsed to another party if the document is consigned “to
order” or “to order of [name/company]”
�� They must not be issued with an onboard date different than the true onboard
date
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�� They are both issued in a set of (usually) 3 originals and a reasonable number
of copies
�� They often have the same format and fields
�� They obligate the issuing party to ensure correct description of the goods
�� They obligate the issuing party to care for the cargo while in his custody
�� They obligate the issuing party to ensure that the goods are released to the
correctly entitled party at destination
1. In which areas are the carrier B/L and the House B/L different?
�� The HBL is issued by the NVOCC. The B/L is issued by a VOCC.
�� The HBL evidences a contract between the NVOCC and his customer. The B/L
evidences a contract between the carrier and his customer.
�� Maersk Logistics can issue HBL. We cannot issue carrier B/L.

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