Why is the Bill of Lading Important in Freight Shipping?

Bill of Lading benefits everyone in the shipping of freight.  It tells you when to release the product to the market and to anticipate profits.  It acts as a contract of carriage and can hold up if they take the matter into a legal situation.  Let’s look at all the aspects and types of a bill of ladings.

What is a Bill of Lading (BOL)? 

It is a document that established the terms and conditions of a contract between a shipper and a transportation company.  It serves as a contract of carriage and a receipt for goods.  The BOL is provided by the shipping company to the shipper and should be given to the driver upon freight pick up.

Information on a Bill of Lading

The basics that are on a bill of lading are pickup and delivery addresses, contact information, total weight, piece count, freight class, NMFC code, additional services, special instructions, commodity description, freight dimensions, billing party information, and shipping/purchase order numbers.  It can include other information that is critical to the shipment or destination.

• Names and Addresses – Both the shipper and the receiver (consignee) should be readable and on the document.
• Purchase Order or Reference Number – A requirement for pickup or accepted upon delivery.
• Date of Pickup – The date that the consignee can expect the goods to arrive.
• Special Instructions – This is for the carrier to ensure the integrity of the package.
• Description of Items – The quantity of the goods, dimensions, and weight, also information about the material.
• Packaging Type – The type of packaging, cartons, crates, pallets, or drums during shipping.
• NMFC code – This corresponds to the freight class of shipment according to its density, ease of handling, liability, and value.
• Department of Transportation Hazardous Material Destination – Whereby hazardous materials must be disclosed and which handling measures are necessary.

What is the Difference between a Freight Bill and a Bill of Lading?

A freight bill supports a BOL by providing the financial information about the shipment as well as clarifying any other details found in the bill of lading.  They use the freight bill for accounting and offers more details if questions arise.

Some other things of importance in regards to the two are a BOL is legally binding.  It can settle disputes between the shipper and the carrier.  A freight bill is not a document of service level agreement.  It does include information about additional costs incurred during transport.

Types of Bill of Ladings

There are several kinds of bill of ladings that depend on the freight shipping specifications.  These two categorizations are on the basis of execution and method of operation.

Basis of Executions

• Straight BOL – The cargo is consigned to one specific person and neither the endorsee nor the endorser is prioritized when claiming ownership of the delivery. Also referred to as a non-negotiable bill of lading.
• Open BOL – The transferring of cargo from one consignee to another. The goods can be transferred multiple times as long as there is the consignee’s signature.  Also known as a negotiable bill of lading.
• Bearer BOL – The cargo is delivered to those whoever possesses the bill of lading. The consignees may be unspecified originally or endorsed as blank.  They use this type for bulk shipments that are released in smaller quantities.
• Order BOL – They only deliver the cargo to the true holder of the bill, as determined by the shipper or consignee’s order. Also considered as a negotiable bill of lading, it is the most used type in the world.

Method of Operation

• Received for Shipment BOL – They send the bill to the carrier by an agent or middleman. This confirms that the goods have been received but not yet laden on to the ship.
• Shipped BOL – They issue it when the cargo onboard the vessel and binds the shipowner to the carrier directly.
• Clean BOL – The bill states that the cargo is in good condition aboard the vessel and cannot explicitly declare a defective condition of the packaging and/or the goods inside.
• Through BOL – A legal document that allows the cargo to be directly delivered from one location to another. Shipments can pass domestic and international borders since it serves a contract of carriage and receipt of cargo.
• Combined Transport BOL – The bill states that the transportation of the cargo is by multiple modes, land, sea, or air.
• Dirty BOL – The bill has a clause where the shipowner can declare the condition of the cargo to be “dirty”. This means the cargo is broke, an incorrect quantity of goods specified and packaging damage.