Understanding how money moves and how cargo moves are two pillars of global trade—and in shipping, Letters of Credit (LCs) and Bills of Lading (B/Ls) sit right at that intersection.
Although both documents are mentioned together in almost every discussion on maritime transactions, they serve entirely different functions, involve different parties, and carry different risks.
Yet, for many young professionals and even mid-level executives, the boundary between the two can still feel blurred. A Beginner’s Guide to Maritime Law describes these documents in detail, but this article offers a structured overview of their most defining contrasts—enough to sharpen understanding while leaving plenty to explore further.
1. One Controls the Money, the Other Controls the Cargo
A Letter of Credit is a financial guarantee issued by a bank, ensuring that a seller gets paid if they submit the documents exactly as required.
A Bill of Lading, on the other hand, is a transport
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