Master Bill of Lading (MBL) & House Bill of Lading (HBL)

A Master Bill of Lading (MBL), also known as carrier bill of lading, is issued by the shipping line. It may be issued directly to the actual shipper (in which case the freight forwarder will not issue an HBL), or issued to the freight forwarder (under this circumstance, the forwarder will issue a House Bill of Lading to the actual shipper).

A House Bill of Lading (HBL), also called a forwarder’s bill of lading. Strictly speaking, it is issued by an NVOCC (Non-Vessel Operating Common Carrier). China launched NVOCC qualification certification in 2002; forwarders need to deposit a security fund at a bank designated by the Ministry of Transport to obtain this qualification. Normally an HBL is issued to the actual shipper. In some cases, HBL can be issued to another forwarder, who will then issue their own HBL to their end shipper. HBL is widely used for export shipments, especially to Europe and America.

For exporters, both types of bills of lading are acceptable negotiation documents by banks.

Differences Between MBL and HBL

1. Different information filled in the SHIPPER and CONSIGNEE fields. For HBL, the SHIPPER is the actual exporter, and the CONSIGNEE is usually filled as specified in the letter of credit, often marked TO ORDER. When MBL is issued directly to the exporter, SHIPPER is the exporter and CONSIGNEE follows the instruction on the shipping order. When MBL is issued to the freight forwarder, SHIPPER is the forwarder, and CONSIGNEE is the forwarder’s overseas agent at destination.

2. Different document exchange procedures at destination. Holders of MBL can go directly to the shipping agent at destination to exchange the MBL for a delivery order. The procedure is simple and charges are relatively stable and low. HBL holders must first exchange the HBL for MBL at the destination office of the freight forwarder before obtaining the delivery order for customs clearance and cargo pickup. The exchange fee for HBL is higher and not fixed, which is determined by the destination forwarder.

3. MBL is the genuine and fundamental document of title for sea freight. The shipping line will release goods to the consignee stated on the MBL. If the exporter only holds an HBL, the actual control of the cargo remains with the freight forwarder (the consignee on MBL is the forwarder’s overseas agent). In the event of forwarder bankruptcy, exporters or importers cannot take delivery of goods from the carrier merely with an HBL.

4. For FCL shipments, either MBL or HBL can be issued. For LCL shipments, only HBL is available. Shipping lines do not consolidate cargo for shippers or split cargo at destination.

5. The HBL number generally will not be recorded in the customs manifest system, so it differs from the bill of lading number shown on the import customs declaration. The HBL bears the name and contact information of the document exchange agent, which is not a port shipping agent such as SINOTRANS or PENAVICO.

Advantages of HBL

1. For FOB shipments with freight collect terms, forwarders usually name their overseas agent as the consignee on MBL and issue HBL to the shipper. The destination agent will collect freight from the consignee. Carriers have restrictions on freight collect arrangements. In addition, the price gap between carrier rates and forwarder quotes is hard to handle if only MBL is issued, while NVOCC agents can resolve this easily.

2. For DDU and DDP shipments, the carrier only delivers goods to the destination port. If the shipper requires door-to-door one-stop service, the forwarder will issue HBL, with MBL consigned to its overseas agent. The agent handles destination customs clearance, delivery and even tax advance payment. This is the popular door-to-door service covering pickup at shipper’s premises through delivery to consignee’s premises.

3. For triangular trade, the domestic forwarder obtains MBL issued to itself by the shipping line and issues HBL showing the supplier as shipper and the middleman as consignee. SWITCH BILL OF LADING can be issued at the middleman’s location, where the shipper becomes the middleman and the consignee is the final buyer at destination.

4. When consolidating multiple small shipments from different customers into one container for the same destination, forwarders adopt the structure of one MBL linked with multiple HBLs. The MBL consignee is the destination agent, and separate HBLs (marked 001A, 001B, 001C…) are issued to each customer. The destination agent picks up the full container, and each customer clears customs and collects their respective goods against their own HBL.

5. Under L/C terms that accept HBL: if the exporter cannot finish production and load cargo on time, they may request the forwarder to issue an HBL with an anti-dated bill of lading, subject to the exporter providing a letter of indemnity.

Workflow of MBL and HBL

1. The SHIPPER sends the shipping instruction to the FORWARDER, specifying FCL or LCL.

2. The FORWARDER books space with the shipping line. After the cargo is loaded on board, the carrier issues MBL to the FORWARDER. The SHIPPER on MBL is the origin forwarder, and the CONSIGNEE is normally the forwarder’s overseas branch or agent.

3. The FORWARDER issues HBL to the SHIPPER. The SHIPPER on HBL is the actual cargo owner. For L/C business, CONSIGNEE is usually TO ORDER.

4. After vessel departure, the CARRIER transports goods to the destination.

5. The FORWARDER sends the MBL together with customs documents to its destination branch via DHL / UPS / TNT.

6. After receiving the bill of lading, the SHIPPER submits documents to the negotiating bank for payment within the presentation period. For T/T terms, the shipper sends documents directly to the overseas buyer.

7. The negotiating bank forwards the full set of documents to the issuing bank for settlement.

8. The CONSIGNEE pays the issuing bank to redeem documents.

9. The destination FORWARDER presents MBL to the shipping line for document exchange, cargo pickup and customs clearance.

10. The CONSIGNEE presents HBL to the FORWARDER to collect goods.

How to Distinguish HBL from MBL

Visual identification: Check the title to tell whether the bill is issued by the CARRIER or FORWARDER. Bills from major carriers such as EISU, PONL, ZIM, YML are easy to recognise.

Main criteria for distinguishing MBL and HBL:

1. Unless otherwise stipulated in the letter of credit, FREIGHT FORWARDER’S B/L (HBL) is not acceptable.

2. Identification mainly relies on the document title and signature. For MBL, ISBP and UCP600 clearly state that it must be signed and issued by the carrier, master or their named agent. The document title bears the shipping line’s name, such as EISU, PONL, ZIMU, YMLU. An HBL is issued under the forwarder’s name, and does not need to display the carrier’s name or state that it is an agent of the carrier or master.

There is also ordinary forwarder’s HBL. As long as the forwarder has or can borrow an overseas agent at destination, they can issue this type of bill. Such bills lack strict regulation in practice. Stamps marked AS CARRIER or AS AGENT may appear. Some irregular forwarders may issue anti-dated bills, advanced bills or falsify data, which carries high fraud risks with little recourse.