A bill of lading is a legal contract between carrier and shipper for transporting goods. It also specifies the terms and conditions of carriage, and influences the rates and charges associated with that carriage and serves as a receipt for goods received by the carrier from the shipper.
I am amazed at what I see being used by many small to medium sized shippers to tender a shipment to their carriers. Documents used range from a packing slip to a print out from their order entry system, neither of which serve the purpose of a bill of lading. Of those shippers that use a standard uniform bill of lading form available almost anywhere; many have no idea how to fill out the form.
The handwritten scrawl used to describe the commodities being shipped routinely use "pet" names for their product such as " 20 cases of brightener". While "brightener" as a product description might convey exactly what it is to anyone within the company, I can guarantee you it would cause most rating clerks for the carriers involved to scratch their heads, provided they could read the writing in the first place.
You might ask.... "So what's the big deal? We may not have a perfectly executed Bill of Lading every time we ship something but we haven't had any problems." You haven't had any problems that you are aware of yet, would be my response.
Your product descriptions are an important part of insuring a correct application of rates and charges on your outbound shipments. Those descriptions need to carry a National Motor Freight Classification (NMFC) item # and attendant freight class. When carrier rate clerks have to interpret what you are shipping they generally interpret your freight to be a higher rated class carrying a higher rate.
Here's a specific example of what improper commodity descriptions could be costing you:
One of our client's inbound vendors located in Butner, NC shipped three freight collect shipments of the exact same commodity by the same carrier.
The product is listed and described on all three bills of ladings filled out by the vendor as: " polymers/iokyurethanes combined with textiles".
Because there is no NFMC description that matches that description rate clerks for the same carrier interprets the description and rates each shipment in the following manner:
One as: Item#49880-Sub 3 - Class 100- Clothing, density of less than 12 Lbs per cubic ft.- 2,195 Lbs rated @ $32.52 per hundred lbs.
Another as: Item #29275-Sub 1- Class 92.5- Corrugated boxes, less than 12 Lbs per cubic ft.-1,013 Lbs rated @ $36.83 per hundred lbs.
Another as: Item #43490-Sub 2- Class 85- Chemicals, not otherwise indicated in bags, boxes, drums or packages -1,426 Lbs rated @ $34.00 per hundred Lbs.
Does anyone know how to fill out a bill of lading with proper National Motor Freight Classification Item #'s and Freight Class anymore? Short answer- not many, and especially not this vendor.
The product in question happens to be cloth or fabric coated with vinyl in rolls with cloth backing. Item # 49210- Class 65. The collective overcharge resulting from improper product descriptions on these three shipments alone is: $385.81 not a large sum, but as a percentage, 24.6% greater than correctly applied contract charges.
What is a 24.6% overcharge on your current annual outbound freight bill worth to you? Is your vendor properly describing your inbound freight collect shipments? If you don't have a Freight Audit, Payment and management company looking out for your interests, money could be flying out the door.
Additional more obvious problems from bill of lading issues could range from denied freight claims for loss or damage to recourse against you for freight charges that weren't supposed to be your responsibility in the first place. Volumes have been written on the legal problems involving improperly conveyed goods on an improperly executed bill of lading, suffice it to say It's in your best interest to do it right the first time.
For many companies the solution to these issues may be Bill of Lading software packages. There are a number of on line bill of lading software packages that automate the execution of a bill of lading with pre-programmed freight descriptions carrying accurate NMFC item #'s and freight classifications. You may need to consult a Transportation Spend Management company to insure that the set up of your product descriptions are accurate.
These on line bill of ladings systems are generally not expensive and can save you time and money in a number of ways. In addition to accurate product descriptions that will eliminate overcharges, some additional benefits to name a few are:
- 1. Stored carrier, and customer records for retrieval and reuse
- 2. Pre programmed routing instructions to know which carrier to use for different customers
- 3. integration with your order entry system to auto generate the Bill of Lading
- 4. Pre shipment carrier rating functions
- 5. Shipment summary detail used for reporting
- 6. Shipment tender and pickup notification to the carrier
For most companies the time, effort and expense associated with purchasing a bill of lading software system and setting it up properly will be paid back quickly in efficiencies received and costs avoided.