Bill of Lading: What It Is and What You Need to Know
It seems that many shippers have a lot of questions about the Bill of Lading (BOL) document used when shipping freight. This document is essential for shippers and carriers alike, and even more important that the information is accurate. Here at LTX Solutions, we deal with all types of BOL’s, depending on our customer’s preferences and needs.
In this article, we will review what exactly a bill of lading is, who/how they are created and some important exceptions to remember.
What is a Bill of Lading?
A bill of lading is a legally binding document between the shipper of the goods and the carrier detailing the type, quantity, and destination of the goods being carried. The BOL also serves as a receipt of the shipment once they are received at the agreed upon destination. This document must accompany each freight shipment and must be signed by an authorized representative from the carrier, shipper, and consignee.
Bills of lading are official documents and can be admissible in a court of law. They represent an official agreement between a shipper and carrier they lay out where the goods will be transported, and when it will arrive. The BOL can also serve as the title to the goods being moved, or an official description of loan collateral.
Who Issues a Bill of Lading?
This is where it can sometimes get tricky, especially if you have very specific information that you need on your BOL, such as specific order numbers, reference numbers, or elaborate descriptions. In the end, a BOL can be created by one of three entities: the shipper, the carrier or the 3PL working on the shipper’s behalf.
Oftentimes a shipper will prefer to use their own BOL generated through their ERP system as it can be super specific and customized to what they need. For example, one of our customers has a very detail BOL that they use as both their packing slip and BOL, so it must have extra information on it. This is also helpful when sales/order numbers are used and tracked within the ERP, all the information is in one place.
A BOL can also be created through your third-party logistics companies freight management system. These are also quite customizable, giving the shipper the ability to add in reference numbers they may need. These BOL’s can be very similar to a shipper’s, but often they use their own to avoid extra work in having to go back and re-enter this information into their ERP.
Lastly, if you are working direct to carrier and are not creating your own BOL, the carrier will create one for you. These will have the very basic information, basically only what the carrier needs to complete the shipment.
BOL Exceptions and Specifics
If you are doing regular FTL or LTL shipments, once you have a process of how the BOL is produced it’s fairly simple. But, there are a few specifics to remember when it comes to your bill of lading process.
Shipper Load and Count Agreement
A common problem for carriers is the liability for damages on loads when a driver isn’t present for the loading of the shipment or picks up a pre-loaded trailer. This happens a lot with LTL shippers that have drop trailers at one or more of their dock doors. Because of this issue, they have included shipper load and count agreement under the Bill of Lading Act.
This agreement basically states that a carrier can’t be responsible for a load’s count and condition if a driver is unable to count the load or check the condition prior to departing the shipper’s dock. In this situation, it is important that the driver documents “shipper load and count” on the bill of lading and has it signed.
Another important section of the BOL is Section 7 which refers specifically to collect shipments. It is important to remember up front, that a shipment is automatically assumed pre-paid unless marked as collect. When the BOL for a shipment is marked as collect, and Section 7 is signed by the shipper that signifies that if the consignee does not pay the freight charges, the carrier cannot go back to the shipper for payment. Therefore, the carrier can hold the freight until payment from the consignee is received.
In this situation, the best practice would be that the driver immediately call his/her dispatcher so that payment can be demanded prior to delivery. This shipment should be considered as C.O.D or “cash on demand.”
Overall, bill of ladings should be very simple to create and use if you have an in-house process or are working with a reputable partner. If you are rate quoting manually on carrier sites and using their bill of lading, it might be time to consider a 3PL that can help save you time and money on that tedious task. If you’re interested in learning more about a 3PL partnership, or just have a general freight/shipping question, don’t hesitate to reach out to us here at LTX Solutions!