How To Manage Transport Documentation - Logistics and Supply Chain
Manage your freight bill, bill of lading and FOB terms of sale
When items are transported either domestically or internationally the delivery must be accompanied by the relevant documentation. The amount of documentation varies depending if the shipment is within the US or to another country.
As far as interstate transportation of goods in the US, there are three documents that are of greatest importance; the bill of lading, freight bill, and the Free On Board (FOB) terms of sale.
Bill of Lading
It provides any and all information that the carrier will need to transport the items. It contains the shipment origin and the contract terms for the transportation and is required by a carrier before the shipment is taken.
The bill of lading should include the name and address of the consignor and consignee, and often it will have the routing instructions for the carrier. It will contain a description of the goods to be transported, the quantity for each of the commodities, and the commodity class and rate.
The bill of lading will contain the terms of the contract for the movement of goods by a common carrier. This is the contract between the shipper and the carrier to transport the goods on the bill of lading to the consignee, i.e. the buyer.
The bill of lading contract has nine terms;
- Common Carrier Liability – the carrier is liable for loss and damage of the goods being transported, except if the goods were improperly packed by the shipper or if the goods themselves would be liable to a normal loss like through evaporation. The carrier is not liable for acts of God, public enemy or public authority.
- Delay in Transit – the carrier cannot be held liable if the loss or damage is due to a delay in the transportation of the goods.
- Freight Not Accepted – if the goods are not accepted within the time allocated, the carrier can store the goods at a cost to the owner.
- Extraordinary Value – the carrier is not liable and does not have to carry items of extraordinary value that are not on the rated in the published classifications or tariffs unless a special agreement with the shipper has been negotiated.
- Explosives – the carrier has to be given full written disclosure when they are shipping dangerous material, otherwise they are not liable for any losses.
- Recourse – the carrier cannot make additional charges to the shipper after making a delivery.
- Substitute Bill of Lading – if the bill of lading is a substitute or exchange for another bill of lading then the current bill of lading has to include all the clauses from previous documents.
- Alterations – the carrier must note any changes or additions to ensure that they can be enforceable.
- Claims – this clause specifies the details on how to file a claim against the shipper and the time period after delivery in which the claim will be accepted.
The freight bill is the carriers invoice to the shipper for all the charges that the carrier has incurred.
The carrier’s freight bill will include the details of the shipment, the items being shipped, the consignee, the origin, and destination, as well as total weight and total charges.
Some carriers can ask for prepayment from the shipper if the value of the items being shipped is less than the total expected freight charges. If the charges are not prepaid then the carrier can present a freight bill on collect. This implies that the carrier will present the freight bill on the day of delivery.
FOB Terms of Sale
Free on Board (FOB) terms of sales documents which party will be liable for the transportation costs, which party is in control of the movement of the goods, and when the title passes to the buyer.
If the FOB terms of sale indicate that it is FOB Delivered then this implies that the shipper will be responsible for all of the carrier’s costs.
If the terms of sale show FOB Origin, then this means that the buyer will take the title for the goods when they are shipped and they will incur all the transportation costs.
Updated by Gary Marion, Logistics and Supply Chain Expert.