When you are importing or exporting and opening an L/C (letter of credit), you often see the term “clean bill of lading” written in a contract between the seller and the buyer in the letter of credit.
What is a “clean bill of lading”?
Knowing about the concept of a clean bill of lading will be useful even if you are not shipping goods by opening a letter of credit. In the shipping and trading industry, the seaworthiness of packages is very important to carriers/consolidators and bonded warehouses. In addition, from the viewpoint of the buyer, the seller must deliver the cargo in good condition to the carrier at the origin.
Let’s take shipping freight from Japan for example.
At the time of delivery of packages to the bonded warehouse, they check the sufficiency of packing and also check if there is any visible damage or any other problems on the packages quite thoroughly. For example, they check if there is any dent or crush on the boxes or problems such as the lid is half open or looks as if it may open, packing is not proper etc.
They do this for all shipments. They are usually quite fussy about the condition of packages and if packages are not in a good condition, they make a remark and sometimes they would not even let the delivery agent deliver them.
Once goods are loaded on to the container and onboard the ship, the carrier issues the bill of lading. A bill of lading with no particular remark of damage or problem is called a “clean bill of lading”, i.e. if the bill of lading does not have any negative remark, then it is a clean bill of lading. In other words, a “clean bill of lading” principally verifies that the carrier/consolidator received the cargo in an apparent good condition and order, the cargo was loaded into the shipping container and on board the vessel. This concept of clean bill of lading is quite important to the carriers as well because they would not want to be held responsible for damages if there are already damages when they receive the cargo at the port of origin.
They normally inform concerned parties such as the shipper or their customs broker if they see any apparent damage or problems on the packages.
・Bonded warehouses check the outer conditions of the packages only but do not check the contents. Issuing of a clean bill of lading does not necessarily mean that the contents are in good order.
・If they find some damage and issue a bill of lading with such negative remarks, such bills of lading are called “dirty bill of lading”.
・If a damage is found after the shipment arrives at the destination but it is not known at what point the cargo got damaged, such damage is called “concealed damage” and regarded as if it had gotten damaged while it was transported in the container in accordance with maritime law.