A bill of lading (BOL) is a legal document issued by a carrier to a shipper that details the type, quantity, and destination of the goods being carried.This document must accompany the shipped products and should be signed by an authorized representative from the carrier, shipper, and receiver.
BOL server three key purpose:
- Receipt of the cargo: Once a shipment arrives and the carrier gives the shipper the BOL, the shipper acknowledges that the cargo was received without damage and provides the carrier with a receipt that acts as legal evidence of delivery.
- A document of title to the cargo: When the record of title switches hands, the new owner of the BOL gains responsibility for the freight. The new owner can then choose to hold onto or transfer those goods and BOL.
- A contract of carriage between the carrier and shipper: A BOL is a legally binding contract that evidences an agreement of shipment between the carrier and shipper.
Why is Bill of Lading Important?
The importance of a bill of lading lies in the fact that it’s a legally binding document that provides the carrier and shipper with all of the necessary details to accurately process a shipment. This implies that it can be used in litigation if the need should arise and that all parties involved will take great pains to ensure the accuracy of the document.
Essentially, a bill of landing works as undisputed proof of shipment. It must be properly managed and reviewed to prevent asset theft. It is therefore important to have a good system of internal control to manage the review and processing of BOLs.
Details included in Bill of Lading
For any BOL to be considered legitimate and satisfy legal requirements, it must be truthful and include several details, such as:
- Personal information: This includes the full names, addresses, and contact information of the shipper and the consignee. This information should be easy to find on the form and readable.
- Purchase order number: These reference numbers are essential to discharge freight for shipment or transfer it after delivery.
- Description of items: The shipper notes the number of goods, the weight, the dimensions, and any other vital details that are necessary to safely transport the shipment.
- Freight class: The National Motor Freight Classification (NMFC) classifies freight into one of 18 classes based on density, stowability, portability, and liability. Calculate density by dividing the mass of an object by the volume of the object.
- The pickup date: This includes the specific date and time that the carrier will pick up the cargo. It can be used as a reference for tracking freight.
- Type of packaging: Are you shipping pallets, drums, crates, or cartons?
- Special instructions: If you have any additional requests or specific notes for the carrier, include them.
Why BOLs Processing must be well managed
The importance of ensuring the accuracy in BOLs in usually underestimated. It is advisable for carriers and shippers alike to ensure BOLs are processed as soon as shipments are delivered to ensure all details pertaining to the load was correctly recognised on the BOL.
- An efficient and effective BOLs processing system can help carrier secure payment promptly and help keep customers i.e., brokers and shippers satisfied.
- Helps mitigate potential freight claim. An inaccurate BOL can lead to freight claim against the carrier which can be costly. Not documenting certain items in the BOL, such as being disallowed by shipper from inspecting the loads, can also result in carrier assuming liabilities it could potentially avoid.
- Missing BOLs can lead to carrier not getting paid, therefore it is important to track and ensure BOLs are scanned and provided by the drivers immediately after the load is delivered.
How your assigned Freight Analytics Associate can help you manage this process better:
- Maintain close communication with drivers and dispatch team to ensure BOLs is retrieved and scanned to the team right after the load is delivered and that the details in BOLs are accurate.
- Increase the efficiency and effectiveness of the freight billing process by ensuring all invoices are issued correctly with clear supporting documents especially when additional charges such as detention time is included in and that these records are well maintained in the firm database.
- Develop controls within the freight billing process to ensure risk of errors on BOLs is reduced significantly and that drivers understand their role and responsibility in this process.
