An Inaccurate Bill of Lading Can Put You at Risk
Every freight shipment transported by a carrier requires a bill of lading (BOL). A straight or non-negotiable BOL is evidence of a contract between you and the carrier and identifies the consignee as the owner of the goods. For that reason, it's imperative that the information on the BOL is complete and accurate. Because a BOL is a legal record of the transaction, it should be kept on file for seven years both for accounting purposes and to use as supporting documentation when needed for settling shipping claims and legal disputes.
Unfortunately, some businesses don't always understand its significance and can be negligent in completing it properly. But any error can have serious repercussions. For instance, you could incur additional expenses, your shipping service could be interrupted, or you could lose insurance coverage. If the inaccuracies are found to be intentional, you could face criminal charges.
Avoid repercussions like these to your business. Read on for descriptions of common information found on a BOL, tips on how to correctly complete one, and what can happen if the information is missing or inaccurate.
How to fill out a BOL accurately
Here are a few key types of information that can be required in a BOL. You'll see why accuracy is important and how inaccuracies can have adverse effects.
- Reference or purchase order numbers. A unique identifier for the sale of goods between the consignee or buyer and the shipper. It should be matched against the consignee's records before accepting the shipment.
- Shipping service. This provides all parties an understanding of the shipping expectations, such as mode of transportation and service type. Depending on the carrier, you may be able to specify a window of time for delivery or request a money-back guarantee, although these may incur additional fees. If the information isn't included, you likely won't be reimbursed if the delivery was delayed and a money-back guarantee wasn't added.
- Shipper/Ship From. The shipper's information indicates the shipment's origin point and is also used to verify the shipment upon delivery. The shipper must also sign the BOL certifying the information is complete and accurate and that the shipment is properly classified, packed, labeled, marked and in proper condition for shipping. If the statement is inaccurate, the shipper could be held liable for any damage to the goods because of improper packaging and/or be unable to recover costs via a claim.
- Consignee/Ship To: The consignee is the party authorized to receive the shipment. This is usually, but not always, the buyer of the goods. If the address is incorrect, you may be assessed a delayed delivery or second-attempt charge. Inform the carrier beforehand If you anticipate a delay, and always include the consignee's phone number for the driver.
- Special instructions. Include details on how to handle the freight shipment and where to deliver it. For instance, indicate if refrigeration is needed for perishable goods, or if a forklift or liftgate is required. Identify the dock number for delivery or if the delivery area has limited access. In addition to providing this information when you set up the shipment, adding it on the BOL will help ensure your shipment will receive the proper treatment. You'll be charged for the services, but if you neglect to include the information on the BOL, it can not only cause delays, but you could incur additional fees on top of the service charge.
- Third-party freight charges. A BOL assumes the freight charges are prepaid either by the shipper or the consignee. If neither party is responsible for the transaction, you must indicate the name and contact information for the third party paying the invoice.
- Section 7. As indicated above, the BOL assumes the freight charges are prepaid, in which case Section 7 is not relevant. You only sign Section 7 when the shipment is not prepaid (the "Collect" box must be checked) and you do not agree to pay additional charges incurred after pickup. This could be for delayed delivery or redelivery charges, for instance. Signing this area places the responsibility of paying the additional charges on the consignee. While a signed section 7 releases you from having to pay the extra charges, the carrier has the right to refuse to transport the goods until the freight charges are prepaid or guaranteed for payment. Note: Signing section 7 does not release you from the obligation to pay amended freight charges due to providing incomplete or inaccurate shipment information on the BOL.
- Collect on delivery (C.O.D.). If the shipper has not received payment for the goods being shipped, and the consignee will be paying the carrier upon delivery, indicate C.O.D. on the BOL. Once the payment is received, the carrier will release the shipment. If the consignee refuses the shipment (for instance, if the goods were damaged or unsatisfactory, or if the shipment wasn't expected), the shipper will retain ownership of the goods and the carrier will return the shipment.
- Shipment details. The carrier uses the BOL to verify the shipment and receive handling instructions. For this reason, it's imperative to include the correct number and type of handling units (pallets, crates, containers, etc.). Also identify any labels or special markings that indicate fragile, perishable or, dangerous goods. If this information is missing or inaccurate, a claim filed after delivery for damaged goods or missing items could get denied. Provide a detailed description of the goods, including the common name of the item, the material it's made of, the exact weight of the shipment (including packaging), and so on. If a shipment must be reweighed and corrected, you will be charged for the reweigh and the higher rate based on the revised weight.
- Packaging type. Your shipment must be properly packaged to avoid damage to its contents. On the BOL, identify the materials used to package and protect the goods, such as pallet, container, carton, etc. If this information is not accurate, you could be assessed additional charges. Improper packaging could compromise a timely delivery.
- National Motor Freight Classification (NMFC). Every less-than-truckload (LTL) freight shipment is assigned a standard freight code and class, or NMFC, as designated by the National Motor Freight Traffic Association (NMFTA). The price of the shipment is based, in part, on this information. If an incorrect freight class and code are used, your shipping price will be adjusted accordingly, and you may incur additional fees for the correction.
- Hazardous materials. Indicate in the appropriate field (often abbreviated as "H.M.") if the shipment contains hazardous materials and include a description of the goods and any special instructions. You must also include an emergency contact phone number to ensure someone knowledgeable about the goods can be reached if a situation occurs while the shipment is in transit. If this is incorrect or missing, you may be held liable for any damage. Also note: Department of Transportation (DOT) regulations must be followed when shipping materials, substances or products designated as hazardous materials. The shipment must be properly packed, labeled and marked. All parties handling or transporting the shipment must be trained and certified as required by the DOT.
- Declared value of the goods. This is the maximum value of a product, listed either below the sale price of the item or at a discount from the purchased amount. The declared value is used by the carrier to determine its limit of liability. You can enter a higher value for a greater limit of liability, but you will pay additional rates and charges.
- Broker information. Include your broker's name and contact information for international shipments so they can be reached if your shipment is delayed at customs. Some carriers may provide brokerage services. If needed, also include the Electronic Export Information (EEI) number or exception code for goods being exported to another country. Your broker can help you identify if an EEI is required for your shipment.
- Carrier name and driver signature. By signing the BOL, the driver confirms he or she has received and inspected the goods and found them to be properly packaged and labeled, and in good condition for shipping. It does not imply the carrier is aware of the condition of the actual packaged contents. It's important the carrier inspects the cargo before the document is signed at pickup and again at delivery to avoid liability in the event the consignee submits a claim for damaged goods.
We can help demystify bills of lading
While a BOL may seem simple enough, as you can see from the descriptions above, it's very critical that each field is accurately completed. Some errors can cost you money and time – and some errors can have serious ramifications.
No worries. We're here to help. At Worldwide Express, we know the importance of providing a correct BOL and how easy it is to make mistakes and omissions. We've been in the shipping industry for more than 25 years and have seen small and mid-sized businesses in situations like these. Rest assured when you partner with Worldwide Express, our consultants will help solve shipping challenges of all sizes. Get a custom shipping consultation today for expert guidance.