Air waybill and bill of lading

Air waybill. The Montreal Convention makes it, or an electronic record, prima facie evidence of the contract, of the acceptance of the cargo, and of the conditions of carriage. IATA describes it as a non-negotiable document. Note that a master air waybill goes from the airline to the forwarder, and a house air waybill from the forwarder to the shipper. You'll usually hold the house document, and the AWB generator can draft that for you.

Bill of lading. This works as a receipt, as evidence of the carriage contract, and, in the negotiable form, as a document of title. In the UK, an electronic version now has the same legal effect as paper if it meets the requirements of the Electronic Trade Documents Act 2023. Check whether the carrier and your bank will accept it.

This is our own illustration. You sell GBP 48,000 of machine parts to a new buyer, on CIF terms, 30 days after arrival, with no letter of credit.

• On a straight bill or sea waybill, the buyer named on the document can take delivery with ID. If it doesn't pay, you're an unsecured creditor for GBP 48,000, chasing it in another country.
• On a negotiable bill, sent through a bank for collection, the bank only releases the original against payment or acceptance. If the buyer refuses, the goods are still under your control, although you now face storage charges, return freight, or a discounted resale.
• By air, the first option is the only one available. The goods go to the consignee, unless you name a bank or agent as the consignee and hold it through them. That needs the bank's agreement before you ship.

For customs, either document shows what arrived, from whom and on what transport. Its description, weight, and marks should match the commercial invoice. In the US, evidence of the right to make entry is normally a bill of lading or an air waybill, presented by the holder, or a carrier's certificate. A non-negotiable bill or air waybill can't be endorsed by the named consignee to give someone else the right to make entry. So name the party who'll actually be clearing, or use a carrier's certificate.

Who's named as shipper and consignee also feeds the security filing that goes in before loading, such as ICS2 in the EU. And note the Convention's point on customs: the consignor may be asked to supply a document indicating the nature of the cargo. Vague descriptions on any of these documents cause trouble, for the reasons set out in product descriptions.

• The wrong consignee. On non-negotiable documents, changing this after departure usually needs the carrier's agreement, and it can cost you.
• An original bill that's stuck in the post. Without it, the ship's agent won't release. Consider a telex release or a sea waybill where you trust the buyer.
• "Freight prepaid" not matching the Incoterms rule. That means someone gets billed twice.
• Gross weight mismatch. This is one of the easiest ways to bring on a query at customs clearance.