Understand and Prepare a Transportation Bill of Lading like a Pro

UC Factors has specialized in freight bill factoring since its inception in 1975. One common thread we have noticed during all of the decades since then is the importance of the bill of lading has always been underrated. Trucking has mostly been regarded as a macho profession and the paperwork is looked upon as a nerdy necessary evil. It is a bitter pill that must be swallowed but is never enjoyed. The sad truth is we have witnessed an enormous amount of money that has been lost because bills of lading were mishandled.

First, we should state what information is supposed to be on a bill of lading. Section 373-101 of FMCSA regulations defines a bill of lading as having the following information;

  1. Names of consignor and consignee with addresses
  2. Origin and destination points
  3. Number of packages
  4. Description of freight
  5. Weight, volume, or measurement of freight.

 

How a Bill of Lading Works

Once the bill of lading is filled out with the above information, the shipper signs first and the bill of lading now becomes a document of title which identifies the shipper as owner of the described property. Second, the carrier’s name is placed on the bill of lading and the driver signs.

This now has created a contract whereby the carrier agrees to deliver the freight at the destination point and now has possession and responsibility for the freight. The last signature is the consignee and that signature relieves the carrier from possession and responsibility for the freight and represents a receipt for completion of the freight service.

If the signatures are placed on different documents instead of all placed on the same document there is the risk that the information on the various documents is not identical which can be cause for a dispute and no one is responsible for the information on a document that they didn’t sign, even if that was the correct one.

Over the years we have witnessed about every kind of claim imaginable but here are a few examples of claims that our carrier/client suffered simply because the bill of lading was improperly prepared and they didn’t change it or catch the error.

  • Freight shortages due to miscount on either end
  • Freight delivered to the wrong destination
  • Damages to freight because it wasn’t noted at origin
  • The wrong carrier name placed on the bill of lading (which can lead to the carrier not being paid at all)

Most errors on bills of lading are typically accidental, but we have also known instances where this has been intentional. For example, we dealt with a shipper we had to put on a blacklist because they would intentionally over state the amount of freight put on the truck. Drivers would almost always miss this because of the volume of boxes involved. When the delivery came up short the shipper would deduct the shortage from the freight bill and the carrier had no leg to stand on because they signed for the erroneous count at the origin.

 

Bills of Lading and Freight Brokers

Many loads that are handled by carriers have a freight broker involved and this adds an extra layer of complication in making sure the paperwork is right.

The broker is hired by the shipper to find a carrier to haul the load. Once the broker makes a deal with a carrier, the broker issues a load confirmation to the carrier which is supposed to have all of the same information of the load being hauled; yet, in many cases the shippers BOL doesn’t actually match where the load is coming from and going to. Note: Shippers make up the BOL for their own records, not for the records of the Broker or Carrier.

Many times, they will have pre-printed BOL with their corporate address as the Shipper, so if the loads are being picked up anywhere else (like an offsite warehouse) the BOL won’t match the load being hauled. Sometimes they purposely list a different Consignor or Consignee, trying to mislead who the actual Consignor or Consignee is. This is called a “Blind Shipment”.

Most Brokers supply the Carrier with the Shippers BOL (to be used for the haul). We frequently see that the information doesn’t match and the carrier doesn’t take the steps to have it corrected or create their own BOL as the FMCSA requires them to do.

Normally, a Shipper will indicate on their BOL who the carrier of record is - either they list the Broker or the Carrier they hired directly. It’s not unheard of to only see the Broker’s name on the Shippers BOL, since many shippers use Brokers to get their loads hauled (20 years ago, most Shippers only wanted to hire Carriers and didn’t want to use Brokers at all). In repetitive loads, you may see the carrier of record as the actual carrier and not the Broker directly hired, since the Shipper is very familiar with the carrier hauling these loads.

A growing issue we have seen, is where a Broker gives a load to our client (Carrier), and the carrier listed on the BOL is a related trucking company (Carrier) of the Broker. In cases like this, these loads appear to be Brokered without authorization (illegally brokered), since the load was most likely given to the Carrier company directly from the Shipper.

If the carrier company couldn’t haul the load, they could have their Brokerage subsidiary company hire a different carrier and the Shipper would never know - especially since the Carrier is not making up their own BOL or even listed their company name on BOL. We have seen where the Broker demands that they check in as a different carrier name. Both actions are a violation and can be reported to several firms.

If the broker’s name is on the shipping order (bill of lading prepared by the shipper) the carrier can be safe if they have a signed load confirmation from that broker. However, if a different carrier name is on the shipping order, the correct carrier name should be placed on it and the carrier's own bill of lading becomes critically important to show ownership of the freight charges. Far too many times the load confirmation isn’t even signed and as previously stated, no one can be made legally responsible for a document they didn’t sign.

Carriers have to realize that they are the only one that is doing all of the work and putting out all of the expenses. If the paperwork is done wrong and someone gets screwed, it is always going to be the carrier. Carriers, therefore, have to be the ones to make sure that the paperwork is correct and they cannot be swayed by someone saying they are nitpicking. No one else is going to lose if there is a problem, and when there is a problem, everyone falls back to the paperwork, including the ones that may have complained about nitpicking.

Failure to have or create a BOL with all the correct shipping information, also inhibits your remedies to collection if the Broker doesn’t pay you. You may file on their $75,00.00 Bond along with everyone else, but you may also demand payment from the Shipper and/or Consignee. If your paperwork doesn’t note the correct shipper or consignee, then you have no other remedies.

BOL- Do’s and Don’ts

DO’S:

  • Create your own BOL
  • Get your BOL signed by the Shipper and Consignee
  • Have your Driver note any issues pertaining to the load on the BOL (like shipped short, count of product, concealed, etc.).
  • Make sure your company name is on the BOL
  • Make sure Consignee notes any issue with load

DON’T:

  • Take loads where you must check in as another party
  • Pick up a load where the carrier of record isn’t you or the Broker
  • Only use the Shippers BOL as your records

 


One of the benefits of working with a good factoring company is that they know the industry well and have the knowledge and expertise to help make sure your BOL is going to protect you and not harm you. Take a look at the best way to find a factoring company that's a good fit for your business and industry here:

Free PDF Download: How Do I Choose a Factoring Company?