What Is a Bill of Lading (BOL)?

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The bill of lading (BOL) is a legal document used in domestic and international trade that shippers must complete before a freight shipping process begins. A bill of lading protects both the carrier and the shipper, and accuracy is vital to a successful shipment. The document contains complete information on the goods' type, quantity, and destination.  

3 Main Purposes the Bill of Lading (BOL) Form Serves:

1. Receipt of goods

The carrier issues the BOL to the shipper in exchange for the receipt of the cargo. This exchange proves that the carrier has received the goods from the shipper in good condition.

2. Evidence of the contract between carrier and shipper

As evidence of a contract, the BOL is the contract of carriage between the carrier and shipper to transport freight.

3. Document of title to the goods

A document of title allows the freight to transfer to the holder of the BOL. Now, the holder of the BOL has the right to claim to transfer the goods to another party.

What are the five types of BOLs?

There are two primary types of bills of lading: a straight BOL and an order BOL. There are also a few less common types to consider. Understanding the difference between these BOLs is crucial because it determines whether the document is negotiable in terms of delivery.

1. Straight bill of lading

A straight bill of lading is a non-negotiable bill of lading used where the goods have been paid for or do not require payment. The shipping company will deliver the shipment to its consignee upon confirmation of their identification. This type is also called a consignment bill of lading.

2. Order bill of lading

An order BOL is consigned to the order of a specific party that did not prepay for their shipment. It is a crucial designation in determining whether the BOL is negotiable. Also, an order BOL can transfer title to the goods covered under it by its delivery or endorsement.

3. A Negotiable bill of lading

A negotiable BOL can be transferred by its consignee to a third party through signing (endorsement) and delivering it to another consignee. The new consignee can transfer the document again, and so on. To issue a negotiable BOL, you must write it "to order" of the consignee.

4. Claused bill of lading

This type of BOL shows there has been damage to the delivered goods. If something is missing or goods are damaged, the carrier may have difficulty receiving payment.

5. Electronic bill of lading

This type is self-explanatory. It is a paperless version of the bill of lading.

What is the difference between a BOL and a freight bill?

The bill of lading and the freight bill are similar documents. However, they are not the same. Unlike a BOL, a freight bill cannot serve as evidence in a claims dispute or shipping mistake. The freight bill should include extra information on accessorial charges, fees, and notes to clarify any data on the BOL. Freight bills are invoices that 3PLs or an internal logistics team can assess to improve costs, solutions, and time.

When do freight claims occur?

Freight claims occur when the information on a bill of lading does not match the actual service provided or product received. If the BOL indicates that the goods were loaded in good condition, but the consignee receives them damaged, the consignee is entitled to make a claim for the damage against the carrier. Or, if the bill of lading states there are 100 boxes, but only 75 arrive, the consignee can make a claim for the shortage. A freight claim may also occur if the product does not make it to the destination.

4 Types of Freight Claims:

  • Limit Liability: The company may lose its right to limit liability for a claim for freight damage or shortage.
  • Lose P&I Cover: P&I cover may not be available for claims in situations where the description of goods is incorrect.
  • No Indemnity from Charterer: This means there is no obligation to sign a bill of lading that wrongly describes the cargo.
  • Refused Claims: This describes claims received and processed by the party paying and rendered unpayable.

Before signing off on the BOL, the receiver should inspect the cargo to ensure that the product is not compromised. Double-check the BOL is accurate compared to the delivery of goods and verify the accuracy of the cargo description before signing. Be sure to record any damage or defect in detail.  

Since the bill of lading is your boarding pass into the freight shipping process, all the information matters. Make sure to thoroughly check all the data on the document to avoid additional charges and claims. Once you know all is clear and concise, you are ready to ship!  

Everything comes down to triple-checking all the information in your BOL. Before you sign the document, make sure you will not regret signing it later. With these steps and precautions, you are ready to ship freight successfully!

Simplify Your Shipping by Partnering With a 3PL  

The best way to ensure you understand the BOL is to partner with an experienced 3PL who can simplify your logistics operations and assist you with all your documentation. By partnering with PLS Logistics Services, you will have access to our robust, in-house TMS that can generate an easy-to-use electronic BOL. You'll also have a single point of contact for all your shipments to enhance your transportation strategy even more. We also have a resource explaining how to complete a BOL if you need immediate guidance for completing your document.  

Contact us to learn more about how we can serve you and ask questions about approaching BOL documentation.  

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