US Trucking: LTL Shippers Pressured to Digitize Bill of Lading
Last Updated Aug 2, 2023
There are few areas of 21st Century society that have not been touched by advances in digital technology. A few decades ago, the thought of smartphones and social media were just dreamed of by future billionaires. The shipping industry and LTL shippers, in particular, have been significantly affected by these technological advances.
In most cases, technology is leading to increased productivity. A prime example is the use of computerized management systems to assist shippers to optimize their resources. Safety concerns related to overworked drivers have been addressed with Electronic Logging Devices (ELDs). According to forbes.com, not all carriers are happy about the expense and oversight of their operations, demonstrating that technology can be a two-edged sword. Regardless of their protests, ELD's are mandated for all carriers in 2018.
Currently, there is pressure for LTL shippers in the United States to take another technological step and digitize their bills of lading. Let’s take a look at what that would involve and what benefits might result from the elimination of paper bills.
What is a Bill of Lading?
A bill of lading (BoL) is essentially a receipt that is used in the shipping industry. A carrier will provide a shipper with a bill of lading and an invoice when transporting goods for them. Many different aspects of the shipment are documented in the BoL. Among the items recorded in a bill of lading are:
• The type and quantity of goods to be transported • The destination of the shipment • The means of transporting the goods • Payment terms, for instance, if the recipient needs to pay for the shipment • Special terms regarding the safe arrival of the transported goods.
Some bills of lading can be traded or bought while the goods are being transported. The BoL serves as proof that a carrier has accepted goods from a shipper and agreed to deliver them to the agreed destination. You may hear bills of lading referred to as freight bills.
What are the Advantages of a Digitized Bill of Lading?
There are general advantages that most businesses accrue from the digitization of their paper assets that include cost savings and environmental benefits. Here are some of the specific ways that digitizing the bill of lading process can be beneficial to LTL shippers.
Timely information exchange - Shippers can easily communicate shipment details to the carrier prior to pick up. An electronic BoL will contain the address of the origin and destination, details of the goods, and other details that are relevant to the carrier when preparing to supply the transportation.
Capacity verification - By having the shipment details available in advance of the pickup a carrier can ensure that they have assigned sufficient transportation capacity.
Minimize billing errors - Electronic BoL systems will prevent billing mistakes that can occur due to human error.
Better cube utilization - Due to the varied shapes and sizes of the parcels that LTL carriers need to deal with, they can make excellent use of the digital transfer of the physical attributes of shipments to achieve better cube utilization, according to joc.com.
These benefits can lead to real savings and increased profits for an LTL carrier. Large parcel carriers such as FedEx and UPS use predominantly digitized bills of lading. Smaller carriers still use paper bills for over 75% of shipments. The move from paper to electronic bills of lading has been slow for LTL carriers.
Which Obstacles Prevent the Adoption of Digitized Bills of Lading?
One of the overriding obstacles that are in the way of LTL carriers employing electronic bills of lading is the cost involved with setting up the system. This is in large part a reflection of the companies that are involved in the LTL shipping business.
Large parcel companies have invested the financial resources necessary to digitize their bills of lading as well as other aspects of their business. This investment was made as a strategic move with an eye toward future benefits. They control a large market share and could pass on some of the costs to their customers. A small LTL carrier may not be in a position to operate in this manner.
The LTL shipping industry is comprised of many small companies that do not have the excess capital or the customer base to allow them to invest to digitize their BoL generation. In many instances, shippers can play one carrier against the other in attempts to get better deals. This does not lend itself to an increase in prices to cover technological advancements that may not immediately benefit the shipper.
Another problem faced by small LTL carriers who are competing for customers is their inability to enforce policies without risking losing some business. They cannot demand that shippers use their electronic system to provide details prior to pick up in the same way that large carriers can.
For these reasons, LTL shippers are lagging behind in the drive to implement digitized bills of lading. The benefits are worth the investment, and as the shipping industry thrives from the growth of eCommerce, more small companies will make the inevitable move to an electronic means of creating and sending their bills of lading.